<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 1, 1994
SEC REGISTRATION NO. 033-52255
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
INTERNATIONAL CONTROLS CORP.
(Exact name of Registrant as specified in its Charter)
<TABLE>
<S> <C> <C>
FLORIDA 3715 54-0698116
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code) Identification No.)
</TABLE>
SEE TABLE OF ADDITIONAL REGISTRANTS BELOW
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
INTERNATIONAL CONTROLS CORP.
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)
----------------
COPIES TO:
<TABLE>
<S> <C>
Paulette Kendler, Esq. Valerie Ford Jacob, Esq.
Hutton Ingram Yuzek Gainen Carroll & Bertolotti Fried, Frank, Harris, Shriver & Jacobson
250 Park Avenue One New York Plaza
New York, New York 10177 New York, New York 10004
(212) 907-9650 (212) 820-8000
</TABLE>
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
----------------
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 PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER UNIT (1) OFFERING PRICE FEE (2)
<S> <C> <C> <C> <C>
% First Priority Senior Secured Notes due 2001....... $200,000,000 $1,000 $200,000,000 $68,966
Units consisting of the following:...................... 100,000 Units $1,000 $100,000,000 $34,483
$1,000 principal amount of % Senior Subordinated
Notes due 2004......................................... $100,000,000 (3) (3) (3)
Warrants to purchase shares of Common Stock, $.01
par value per share (4)................................ Warrants (3) (3) (3)
<FN>
(1) Estimated solely for the purposes of calculating the registration fee in
accordance with Rule 457(a).
(2) Of the aggregate registration fee of $103,449, $77,586 was paid on February
11, 1994 with the initial filing of this Registration Statement $13,794 was
paid on June 9, 1994 and $12,069 was paid on July 25, 1994.
(3) The % Senior Subordinated Notes due 2004 and the Warrants being
registered hereby are being offered as part of the Units and will not be
offered separately.
(4) Includes the shares of Common Stock, $.01 par value, issuable upon
exercise of the Warrants, plus an additional number of shares of Common
Stock which may become issuable upon exercise of the Warrants pursuant to
the anti-dilution provisions relating thereto.
</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>
TABLE OF ADDITIONAL REGISTRANTS
(____% FIRST PRIORITY SENIOR SECURED NOTES DUE 2001)
<TABLE>
<CAPTION>
PRIMARY
STATE OR OTHER STANDARD I.R.S. ADDRESS, INCLUDING ZIP CODE,
JURISDICTION INDUSTRIAL EMPLOYER AND TELEPHONE NUMBER,
OF CLASSIFICATION IDENTIFICATION INCLUDING AREA CODE OF
NAME INCORPORATION CODE NUMBER PRINCIPAL EXECUTIVE OFFICE
- ---------------------------------- -------------- --------------- ------------ ---------------------------------------
<S> <C> <C> <C> <C>
Great Dane Trailers, Inc. Georgia 3715 58-0446840 600 East Lathrop Avenue
Savannah, Georgia 31402
(912) 232-4471
Great Dane Trailers Nebraska, Inc. Nebraska 3715 47-0734452 200 Centennial Road
Wayne, Nebraska 68787
(402) 375-5500
Great Dane Trailers Tennessee, Tennessee 3715 62-0531103 1095 Harbor Avenue
Inc. Memphis, Tennessee 38113
(901) 948-1611
Great Dane Los Angeles, Inc. Georgia 5012 95-3650164 15000 East Nelson Avenue
City of Industry, California 91744
(818) 336-9999
Checker Motors Corporation New Jersey 3465 38-0415420 2016 North Pitcher Street
Kalamazoo, Michigan 49007
(616) 343-6121
Checker Motors Co., L.P. Delaware 3465 13-3307242 2016 North Pitcher Street
Kalamazoo, Michigan 49007
(616) 343-6121
South Charleston Stamping & West Virginia 3465 55-0680662 3100 MacCorkle Avenue S.W.
Manufacturing Company South Charleston, West Virginia 25303
(304) 774-4601
Yellow Cab Company Delaware 4121 36-3967021 1730 South Indiana Avenue
Chicago, Illinois 60616
(312) 225-7440
Chicago AutoWerks Inc. Delaware 7538 36-3966884 1157 West Monroe Street
Chicago, Illinois 60607
(312) 421-1121
CMC Kalamazoo Inc. Delaware 3465 38-3189565 2016 North Pitcher Street
Kalamazoo, Michigan 49007
(616) 343-6121
</TABLE>
<PAGE>
INTERNATIONAL CONTROLS CORP.
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 Information
4. Use of Proceeds................................... Prospectus Summary; Proposed Refinancing; Use of
Proceeds; Capitalization
5. Determination of Offering Price................... Inapplicable
6. Dilution.......................................... Inapplicable
7. Selling Security Holders.......................... Inapplicable
8. Plan of Distribution.............................. Outside Front Cover Page; Underwriting
9. Description of Securities to be Registered........ Description of Units; Description of Warrants;
Description of Capital Stock; Description of Notes
10. Interests of Named Experts and Counsel............ Inapplicable
11. Information with Respect to the Registrant........ Outside Front Cover Page; Prospectus Summary; Risk
Factors; The Company; 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... Inapplicable
</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
AUGUST 1, 1994
INTERNATIONAL CONTROLS CORP.
$200,000,000 % First Priority Senior Secured Notes due 2001
100,000 Units consisting of $100,000,000 % Senior Subordinated Notes due 2004
and Warrants to Purchase Shares of Common Stock
-----------
International Controls Corp. ("International Controls") and certain of its
subsidiaries (each, an "Issuer," and together with International Controls, the
"Issuers") are hereby offering on a joint and several basis (the "Senior Note
Offering") $200,000,000 aggregate principal amount of % First Priority Senior
Secured Notes due 2001 (the "Senior Notes"). In addition, International Controls
is hereby offering (the "Unit Offering," and together with the Senior Note
Offering, the "Offering") 100,000 units (the "Units"), each consisting of $1,000
principal amount of International Controls' % Senior Subordinated Notes due
2004 (the "Senior Subordinated Notes," and together with the Senior Notes, the
"Notes") and one warrant to purchase initially shares of common stock,
par value $.01 per share (the "Common Stock"), of International Controls (each a
"Warrant," and the Warrants, together with the Notes and the Units, the
"Securities"). The Senior Subordinated Notes and the Warrants will not be
separately transferable until February 15, 1995 or such earlier date as (i) the
Underwriters may determine or (ii) the Warrants become exercisable (the
"Separation Date").
Interest on the Senior Notes is payable in cash semi-annually on May 1 and
November 1 of each year, commencing November 1, 1994. Interest on the Senior
Subordinated Notes is payable in cash semi-annually on February 1 and August 1
of each year, commencing February 1, 1995. The Senior Notes will be redeemable
at the option of the Issuers, in whole or in part, at any time on or after
November 1, 1998, and the Senior Subordinated Notes will be redeemable at the
option of International Controls, in whole or in part, at any time on or after
August 1, 1999, in each case at the respective redemption prices set forth
herein, together with accrued and unpaid interest, if any, to the date of
redemption. Upon a Change of Control (as defined herein), (i) holders of the
Senior Notes may require the Issuers to repurchase the Senior Notes and (ii)
holders of the Senior Subordinated Notes may require International Controls to
repurchase the Senior Subordinated Notes, in each case at a redemption price
equal to 101% of the principal amount thereof, together with accrued and unpaid
interest, if any, to the date of repurchase. In addition, the Senior Notes will
be subject to mandatory annual sinking fund payments of $10 million payable on
November 1 in each of the years 1995 through 2000.
The Issuers will be required to apply up to $40 million of the aggregate net
proceeds to International Controls of any Public Offering (as defined herein)
effected through November 1, 1999 to the redemption of the Senior Notes at a
redemption price equal to ___% of the principal amount of such Senior Notes,
together with accrued and unpaid interest, if any, to the date of redemption.
The Issuers, in the case of the Senior Notes, or International Controls, in the
case of the Senior Subordinated Notes, will have the option to apply the
aggregate net proceeds in excess of $40 million of any Public Offering effected
through August 1, 1997 to the redemption of (i) up to $20 million aggregate
principal amount of the Senior Notes and (ii) up to $30 million aggregate
principal amount of the Senior Subordinated Notes, at redemption prices equal to
____% of the principal amount of the Senior Notes and __% of the principal
amount of the Senior Subordinated Notes, as the case may be, in each case
together with any accrued and unpaid interest, if any, to the date of
redemption; PROVIDED that $110 million in aggregate principal amount of the
Senior Notes or $70 million in aggregate principal amount of the Senior
Subordinated Notes, as the case may be, remains outstanding immediately
following such redemption.
Any redemptions (whether mandatory or optional) of the Senior Notes other
than sinking fund payments shall be applied first against the aggregate
principal amount of the Senior Notes which become due and payable at maturity
and thereafter against sinking fund payments in inverse order of payment.
The Senior Notes will be senior secured obligations of the Issuers and will
rank PARI PASSU in right of payment with all other senior indebtedness of the
Issuers and senior in right of payment to all subordinated indebtedness of the
Issuers. The Senior Notes will be secured by a first priority security interest
in a substantial portion of the Issuers' real property, property and equipment
and other assets, including 1,350 taxi medallions, but excluding inventory,
accounts receivable and certain other assets (which will be subject to a lien
under the New Credit Facility (as defined herein)). The Senior Notes will also
be secured by a pledge of all the outstanding shares of capital stock (the
"Pledged Stock") of subsidiaries of International Controls now or hereafter
directly or indirectly owned by International Controls (other than the capital
stock of American Country Insurance Company and its subsidiaries) and a lien on
certain patents, trademarks and other intellectual property of the Issuers, in
each case on an equal and ratable basis with the security interest securing the
obligations of the Issuers under the New Credit Facility.
The Senior Subordinated Notes will be senior subordinated obligations of
International Controls and will be subordinated in right of payment to all
senior indebtedness (including, without limitation, the Senior Notes and the
obligations under the New Credit Facility); PROVIDED, HOWEVER, that the Senior
Subordinated Notes will rank PARI PASSU with or senior in right of payment to
all existing and future indebtedness of International Controls that is expressly
subordinated to senior indebtedness. Since International Controls is a holding
company, the Senior Subordinated Notes will be effectively subordinated to all
existing and future liabilities of International Controls' subsidiaries. After
giving effect to the application of the estimated net proceeds of the Offering
and the other transactions contemplated hereby (the "Refinancing"),
International Controls would have had outstanding consolidated indebtedness of
$348.4 million at March 31, 1994, including approximately $48.4 million of
secured revolving credit indebtedness estimated to be drawn under the New Credit
Facility, and the subsidiaries of International Controls would have had total
liabilities (including trade payables and indebtedness under the New Credit
Facility and the Senior Notes) of $541.5 million.
Each Warrant will initially entitle the holder thereof to purchase shares
of Common Stock of International Controls at an exercise price of $.01 per
share, which represent in the aggregate 7.5% of the outstanding Common Stock of
International Controls on a fully diluted basis as of the date of issuance of
the Warrants. In the event that an Initial Public Offering (as defined herein)
is not consummated on or prior to , 1995, the number of shares
purchasable per Warrant will be increased to shares of Common Stock of
International Controls, which represent in the aggregate 10.0% of the
outstanding Common Stock of International Controls on a fully diluted basis as
of the date of issuance of the Warrants. The Warrants will become exercisable on
February 1, 2004, or upon the earlier occurrence of (i) a Change of Control or
(ii) an Initial Public Offering.
The New York Stock Exchange has approved the listing of the Senior Notes,
subject to the satisfaction of certain listing requirements. After the
Separation Date, International Controls intends to apply to list the Senior
Subordinated Notes on the New York Stock Exchange. There can be no assurance
that the Notes will be listed.
--------------------
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES.
--------------------
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
TO UNDERWRITING
PUBLIC(1) DISCOUNTS(2)
<S> <C> <C>
Per Senior Note......................................................... % %
Total................................................................... $ $
Per Unit................................................................ $ %
Total................................................................... $ $
<CAPTION>
PROCEEDS
TO
THE ISSUERS(3)
<S> <C>
Per Senior Note......................................................... %
Total................................................................... $
Per Unit................................................................ %
Total................................................................... $
<FN>
(1) Plus accrued interest, if any, from , 1994.
(2) See "Underwriting" for information regarding the indemnification of the
Underwriters.
(3) Before deducting expenses payable by the Issuers estimated at $ .
</TABLE>
--------------------
The Securities are being offered by the Underwriters, subject to prior sale,
when, as and if delivered to and accepted by them and subject to various prior
conditions, including the right of the Underwriters to reject any order in whole
or in part. It is expected that delivery of the Securities will be made at the
offices of Alex. Brown & Sons Incorporated, New York, New York on or about
, 1994.
ALEX. BROWN & SONS SPP HAMBRO & CO.
INCORPORATED
THE DATE OF THIS PROSPECTUS IS , 1994
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES, THE
UNITS AND/OR THE WARRANTS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
AVAILABLE INFORMATION
The Issuers have 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 of
1933, as amended (the "Securities Act"), with respect to the Securities. 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.
International Controls 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. International Controls' 12 3/4% Senior Subordinated Debentures due
2001 and its 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.
The Issuers will furnish holders of the Securities with copies of reports,
proxy statements or other information as specified in "Description of Warrants
- -- Reports," "Description of Notes -- Certain Covenants -- Provision of
Financial Statements."
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. UNLESS THE CONTEXT OTHERWISE REQUIRES, REFERENCES IN THIS
PROSPECTUS TO (I) THE "ISSUERS," IN THE CASE OF THE SENIOR NOTES, MEAN
INTERNATIONAL CONTROLS CORP. ("INTERNATIONAL CONTROLS"), CHECKER MOTORS
CORPORATION ("MOTORS"), CHECKER MOTORS CO., L.P. ("CHECKER L.P."), CMC KALAMAZOO
INC., YELLOW CAB COMPANY, CHICAGO AUTOWERKS INC., SOUTH CHARLESTON STAMPING &
MANUFACTURING COMPANY ("SCSM"), GREAT DANE TRAILERS, INC. ("GREAT DANE"), GREAT
DANE TRAILERS TENNESSEE, INC., GREAT DANE TRAILERS NEBRASKA, INC. AND GREAT DANE
LOS ANGELES, INC., (II) THE "ISSUERS," IN THE CASE OF THE SENIOR SUBORDINATED
NOTES, MEAN ONLY INTERNATIONAL CONTROLS, AND (III) THE "COMPANY" MEAN
INTERNATIONAL CONTROLS AND ITS CONSOLIDATED SUBSIDIARIES (WHICH FOR THIS PURPOSE
INCLUDES A PARTNERSHIP WHICH IS CONTROLLED BY INTERNATIONAL CONTROLS).
THE COMPANY
OVERVIEW
International Controls is a holding company that is engaged in four
principal lines of business. Great Dane manufactures a full line of truck
trailers for the over-the-road tractor trailer long and short haul markets and
containers and chassis for intermodal shipping. Motors manufactures sheet metal
stampings for automotive components and subassemblies, primarily for General
Motors Corporation ("GM"). The Company's Yellow Cab Company division ("Yellow
Cab") is currently the largest owner of taxicabs and provider of taxi-related
services in Chicago, Illinois. American Country Insurance Company ("Country")
underwrites property and casualty insurance, including taxicab insurance,
workers' compensation and other commercial and personal lines.
Prior to 1987, International Controls engaged in various engineering,
aerospace and manufacturing operations, including truck trailer manufacturing.
In 1987, International Controls was taken private in a leveraged buyout
transaction and initiated a plan of divestitures to reduce bank debt. In 1989,
with Great Dane as its only remaining business, International Controls acquired
Motors and immediately thereafter, the major shareholders of Motors obtained
control of International Controls through a reverse acquisition (the "Reverse
Acquisition").
TRAILER MANUFACTURING
Great Dane, which generated approximately 78% of the Company's revenues and
62% of the Company's total segment operating profit (segment gross profit less
selling, general and administrative expenses) for the year ended December 31,
1993, designs, manufactures and distributes a full line of both standard and
customized 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 in the United
States with a 12.7% total market share, including an estimated leading 37.9%
share of the reefer market and a 23.3% share of the intermodal container and
chassis market. Great Dane believes it offers the broadest line of products in
the industry and emphasizes the production of customized and proprietary
products which generally have higher margins than more standard products. Great
Dane sells and services its trailers primarily through a nationwide network of
branches and independent dealers to gain access to a diversified customer base.
During the past several years, Great Dane has undertaken a number of
strategic initiatives designed to improve its competitive position and
capitalize on the growing intermodal container and chassis market. Accordingly,
Great Dane reduced corporate overhead through management consolidation,
increased operating efficiencies and capacity through plant reconfigurations,
and initiated product cost reduction and new product development programs. Great
Dane also increased its manufacturing flexibility by adapting certain of its
assembly lines to be efficient in filling both large and small orders, and
expanded its distribution network domestically, as well as in Canada and Mexico,
in order to provide new outlets for its products and high margin parts and
services business.
3
<PAGE>
Furthermore, during 1992, Great Dane entered the intermodal container and
chassis market as its engineering department, working in conjunction with J.B.
Hunt Transport ("J.B. Hunt"), one of the largest truckload carriers in the U.S.,
developed a unique line of intermodal containers and matching ultra lightweight
chassis. "Intermodal containers," as used in this Prospectus, refers to
containers which are designed to travel principally on rail car, and which, when
removed from the rail car, can be placed on a chassis for transportation by
truck to and from a rail yard. These products enable Great Dane's customers to
take advantage of new double stack intermodal shipping methods, generally the
most economical method of hauling freight over long and intermediate distances.
Great Dane believes that intermodal transportation, which has been expanding at
an approximately 10% compounded annual growth rate since 1988, will provide a
significant growth opportunity as carriers replace some or all of their trailers
with containers and chassis.
Great Dane's objectives are to increase its share of the truck trailer
market and continue to capitalize on the growing intermodal market. To achieve
these objectives, Great Dane will continue to emphasize the development of high
quality innovative products and improve the efficiency of its assembly
operations. Great Dane is presently adapting certain of its assembly lines to
produce either intermodal containers or truck trailers on the same line. In
addition, Great Dane plans to utilize its expanded distribution network and
manufacturing flexibility to broaden its customer base by increasing sales to
large customers.
AUTOMOTIVE PRODUCTS OPERATIONS
Through SCSM and its Kalamazoo, Michigan facility ("CMC Kalamazoo"), Motors,
together with its customers, develops, designs and manufactures a broad range of
sheet metal automotive components and subassemblies, including tailgates,
fenders, doors, roofs and hoods, primarily for sale to North American original
equipment manufacturers ("OEMs"). These operations generated approximately 14%
of the Company's revenues and 29% of the Company's total segment operating
profit for the year ended December 31, 1993. Motors focuses on the higher-growth
light truck, sports utility vehicle and van segments of the market and currently
supplies products primarily to GM. Other customers include Freightliner Corp.
and Saturn Corporation, and SCSM recently signed a contract with Mercedes-Benz
to produce parts for its new sports utility vehicle commencing in 1996 for the
1997 model year.
Through the purchase of SCSM in 1989 and the expansion of that facility's
press lines, Motors acquired a modernized stamping facility covering an area of
more than 900,000 square feet. Unlike many of its competitors, SCSM presently
has the equipment to supply complete assemblies including large stampings and
related assembly parts. SCSM provides a full complement of services, including
design, engineering and manufacturing, which enables the Company to play an
integral role in the development and execution of product programs for its
customers. SCSM's ability to provide customer service, timely delivery and
quality products at competitive prices has resulted in the receipt of GM's "Mark
of Excellence" award.
VEHICULAR OPERATIONS
The vehicular operations generated approximately 5% of the Company's
revenues and 12% of the Company's total segment operating profit during the year
ended December 31, 1993. Yellow Cab is the largest taxicab fleet owner in the
City of Chicago ("Chicago") and, as of March 31, 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 through two programs: the owner-operator
program and the daily lease program. In contrast to the daily lease program, the
owner-operator program, which covers approximately 65% of the medallions owned
by the Company, relieves Yellow Cab of vehicle maintenance and repair costs, as
well as the cost of housing and storing a large fleet. 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 Chicago AutoWerks.
4
<PAGE>
INSURANCE OPERATIONS
Country generated approximately 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) during the year ended December 31, 1993. 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, collision and workers' compensation
insurance in the State of Illinois. Through its longstanding relationship with
Yellow Cab, Country has developed a comprehensive understanding of the
associated risks of taxicab insurance underwriting and presently is one of the
few voluntary providers of such insurance. Country's strategy is to expand its
non-affiliated personal and commercial/casualty property lines by entering new
markets including Southern Illinois and the states surrounding Illinois while
maintaining its affiliated taxi liability and collision business. Country is
currently rated "A" by A.M. Best.
PROPOSED REFINANCING
The Company is implementing a refinancing (the "Refinancing") designed (a)
to increase its liquidity through (i) reduced amortization requirements and (ii)
the removal of certain restrictions on the use of cash from the Company's
subsidiaries providing for more flexible and efficient cash management and (b)
to simplify its corporate structure, thereby enhancing its ability to obtain
future financing. The Refinancing includes the following (all amounts are as of
March 31, 1994):
(A) the offering of the Securities;
(B) the entering into the New Credit Facility by the Issuers, consisting
of a revolving credit facility and pursuant to which an initial borrowing of
approximately $48.4 million (the "Initial Borrowing") will be made;
(C) the repayment of substantially all of the indebtedness of
International Controls' subsidiaries in the aggregate principal amount of
approximately $86.0 million;
(D) the redemption of all of the approximately $132.0 million
outstanding aggregate principal amount of International Controls' 12 3/4%
Senior Subordinated Debentures due 2001 (the "12 3/4% Debentures") at
103.18% of their principal amount, together with accrued and unpaid interest
to the date of redemption (the "12 3/4% Debenture Redemption");
(E) the redemption of all of the approximately $61.3 million outstanding
aggregate principal amount of International Controls' Subordinated Discount
Debentures due January 1, 2006 (the "14 1/2% Debentures") at their principal
amount, together with accrued and unpaid interest to the date of redemption
(the "14 1/2% Debenture Redemption");
(F) the redemption of all of the outstanding $30.0 million aggregate
principal amount of International Controls' senior notes (the "Existing
Notes") bearing interest at an annual rate of 3.5% above the prime rate of
interest, held by the stockholders of International Controls, maturing on
the earlier of September 30, 1997 or the payment in full of certain
subsidiary indebtedness (the "Existing Note Redemption"); and
(G) the redemption for $37.0 million (the "Minority Interest
Redemption") of the minority capital account in Checker L.P. which was being
amortized over a twenty-five year period, ending in December 2013, with
interest at a rate of 7.0%, and any minority equity interest in Checker L.P.
Simultaneously with the consummation of the Minority Interest Redemption,
Checker L.P. will be liquidated and its assets distributed to Motors, which will
immediately contribute these assets (except for the capital stock of Country) to
three newly-formed subsidiaries, CMC Kalamazoo Inc., Yellow Cab Company and
Chicago AutoWerks Inc., each of which is an Issuer.
See "Proposed Refinancing," "Use of Proceeds" and "Capitalization."
Before giving effect to the Refinancing, scheduled principal payments on
outstanding indebtedness in each of the five years ending December 31, 1998 are
$19.3 million, $44.4 million, $9.1 million, $54.1 million and $19.6 million,
respectively. After giving effect to the Refinancing, scheduled principal
payments on outstanding indebtedness for each of the next five years would be
$10 million, consisting of mandatory sinking fund payments with respect to the
Senior Notes. In addition, up to $40 million of the Senior Notes are required to
be redeemed in the event the Company effects any Public Offering during this
period. See "Description of Notes -- Sinking Fund," "-- Mandatory Redemption"
and "-- Additional Optional Redemptions."
5
<PAGE>
ORGANIZATION
The chart below sets forth the corporate structure of the Company after
giving effect to the Refinancing:
[CHART]
[See Appendix A]
6
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered................ $200,000,000 principal amount of % First Priority
Senior Secured Notes due 2001 of the Issuers and 100,000
Units, each consisting of $1,000 principal amount of
% Senior Subordinated Notes due 2004 of International
Controls and one Warrant to purchase initially
shares of Common Stock of International Controls. The
Senior Subordinated Notes and the Warrants will not
trade separately until February 15, 1995 or such earlier
date as (i) the Underwriters may determine or (ii) the
Warrants become exercisable. See "Description of Notes,"
"Description of Units" and "Description of Warrants."
Use of Proceeds................... The Issuers will use the net proceeds from the sale of
the Securities, together with proceeds of an estimated
$48.4 million of initial borrowings under the New Credit
Facility and approximately $22.2 million of Company cash
(assuming the Offering had been consummated on March 31,
1994) to (i) redeem all of the outstanding 12 3/4%
Debentures, (ii) redeem all of the outstanding 14 1/2%
Debentures, (iii) redeem the Existing Notes, (iv) retire
substantially all of the indebtedness of International
Controls' subsidiaries, and (v) redeem the minority
capital account and any minority interest in Checker
L.P. See "Use of Proceeds," "Proposed Refinancing" and
"Business -- Legal Proceedings -- Executive Life Liti-
gation."
</TABLE>
THE SENIOR NOTES
<TABLE>
<S> <C>
Issuers........................... The Senior Notes will be the joint and several
obligations of International Controls, Great Dane, Great
Dane Trailers Tennessee, Inc., Great Dane Trailers
Nebraska, Inc., Great Dane Los Angeles, Inc., Motors,
Checker L.P., CMC Kalamazoo Inc., Yellow Cab Company,
Chicago AutoWerks Inc. and SCSM.
Interest Payment Dates............ May 1 and November 1 of each year, commencing November
1, 1994.
Sinking Fund...................... The Senior Notes will be subject to mandatory annual
sinking fund payments of $10 million on November 1 in
each of the years 1995 through 2000. See "Description of
Notes -- Sinking Fund."
Mandatory Redemption.............. The Issuers will be required to apply up to $40 million
of the net proceeds to International Controls of any
Public Offering effected through November 1, 1999 to the
redemption of the Senior Notes at a redemption price
equal to % of the principal amount of such Senior Notes,
together with accrued and unpaid interest, if any, to
the date of redemption. See "Description of Notes --
Mandatory Redemption."
Optional Redemption............... The Senior Notes will be redeemable at the option of the
Issuers, in whole or in part, at any time on or after
November 1, 1998, at the redemption prices set forth
herein, together with accrued and unpaid interest, if
any, to the date of redemption. See "Description of
Notes -- Optional Redemption."
Any redemptions (whether mandatory or optional) of the
Senior Notes other than sinking fund payments shall be
applied first against the aggregate principal amount of
the Senior Notes
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
which become due and payable at maturity and thereafter
against sinking fund payments in inverse order of
payment. See "Description of Notes -- Additional
Optional Redemptions."
Security.......................... The Senior Notes will be secured by a first priority
security interest in a substantial portion of the
Issuers' real property, property and equipment and other
assets, including 1,350 taxi medallions, but excluding
inventory, accounts receivable and certain other assets
(which will be subject to a lien under the New Credit
Facility). The Senior Notes will also be secured by a
pledge of the Pledged Stock and a lien on certain
patents, trademarks and other intellectual property of
the Issuers, in each case on an equal and ratable basis
with the security interest securing the obligations of
the Issuers under the New Credit Facility. See
"Description of Notes -- Security for the Senior Notes."
Ranking........................... The Senior Notes will be senior secured obligations of
the Issuers and will rank PARI PASSU in right of payment
with all other senior indebtedness of the Issuers
(including the obligations under the New Credit
Facility) and senior in right of payment to all
subordinated obligations of the Issuers, including the
obligations of International Controls under the Senior
Subordinated Notes.
</TABLE>
THE SENIOR SUBORDINATED NOTES
<TABLE>
<S> <C>
Issuer............................ International Controls.
Interest Payment Dates............ February 1 and August 1 of each year, commencing
February 1, 1995.
Mandatory Redemption.............. None.
Optional Redemption............... The Senior Subordinated Notes are redeemable at the
option of International Controls, in whole or in part,
at any time on or after August 1, 1999, at the
redemption prices set forth herein, plus accrued and
unpaid interest, if any, to the date of redemption. See
"Description of Notes -- Optional Redemption."
Ranking........................... The Senior Subordinated Notes will be senior
subordinated obligations of International Controls and
will be subordinated in right of payment to all senior
indebtedness (including, without limitation, the Senior
Notes and the obligations under the New Credit
Facility); PROVIDED, HOWEVER, that the Senior Subor-
dinated Notes will rank senior in right of payment to
all existing and future indebtedness of International
Controls that is expressly subordinated to senior
indebtedness except for any future indebtedness of
International Controls which expressly provides that it
is PARI PASSU with the Senior Subordinated Notes (and,
until redemption thereof, the 12 3/4% Debentures). Since
International Controls is a holding company, the Senior
Subordinated Notes will also be effectively subordinated
to all existing and future liabilities (including trade
payables and obligations under the Senior Notes and the
New Credit Facility) of International Controls'
subsidiaries, including the Issuers under the Senior
Notes. After giving effect to the Refinancing,
International Controls would have had outstanding $248.4
million of indebtedness at March 31, 1994 ranking senior
in right of payment to the Senior Subordinated Notes,
the subsidiaries
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
would have had total liabilities of $541.5 million and
there would have been no indebtedness junior to the
Senior Subordinated Notes.
</TABLE>
GENERAL PROVISIONS OF THE NOTES
<TABLE>
<S> <C>
Additional Optional Redemptions... The Issuers, in the case of the Senior Notes, or
International Controls, in the case of the Senior
Subordinated Notes, will have the option to apply the
aggregate net proceeds in excess of $40 million of any
Public Offering effected through August 1, 1997 to the
redemption of (i) up to $20 million aggregate principal
amount of the Senior Notes and (ii) up to $30 million
aggregate principal amount of the Senior Subordinated
Notes, at redemption prices equal to % of the principal
amount of the Senior Notes and % of the principal amount
of the Senior Subordinated Notes, as the case may be, in
each case together with accrued and unpaid interest, if
any, to the date of redemption; PROVIDED that $110
million in aggregate principal amount of the Senior
Notes or $70 million in aggregate principal amount of
the Senior Subordinated Notes, as the case may be,
remain outstanding immediately following such redemp-
tion.
Change of Control................. Upon a Change of Control (as defined in the indentures
governing the Notes (the "Indentures")), each holder of
Notes may require the Issuers, in the case of the Senior
Notes, or International Controls, in the case of the
Senior Subordinated Notes, to repurchase all or a
portion of such holder's Notes at a purchase price equal
to 101% of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date of
repurchase. See "Description of Notes -- Change of
Control."
Certain Restrictions.............. The Indentures will contain covenants with respect to
the following matters: (i) limitations on additional
indebtedness; (ii) limitations on restricted payments;
(iii) limitations on transactions with affiliates; (iv)
limitations on compensation paid to certain affiliates;
(v) the application of the proceeds of certain asset
sales (including the obligation under certain circum-
stances to repurchase the Notes with such proceeds);
(vi) limitations on liens; (vii) limitations on
guarantees by subsidiaries; (viii) limitations on the
issuance and sale of capital stock of subsidiaries; (ix)
limitations on dividends and other payment restrictions
affecting subsidiaries; and (x) restrictions on mergers,
consolidations and transfers of all or substantially all
of the assets of the Issuers and International Controls,
as the case may be, to another person. In addition, the
Senior Subordinated Note Indenture will prohibit the
incurrence of indebtedness that is subordinated to any
senior indebtedness and senior to the Senior
Subordinated Notes. See "Description of Notes -- Certain
Covenants."
Original Issue Discount........... The Senior Subordinated Notes will be issued with
original issue discount for federal income tax purposes.
As a result, purchasers of Senior Subordinated Notes
will be required to recognize such original issue
discount as ordinary income in advance of the receipt of
the cash payments to which such income is attributable.
See "Certain Federal Income Tax Consequences."
</TABLE>
9
<PAGE>
THE WARRANTS
<TABLE>
<S> <C>
Warrants.......................... Each Warrant will initially entitle the holder thereof
to purchase shares of Common Stock of International
Controls at an exercise price of $.01 per share, which
represent in the aggregate 7.5% of the outstanding
Common Stock of International Controls on a fully
diluted basis as of the date of issuance of the
Warrants. In the event that an Initial Public Offering
is not consummated on or prior to , 1995,
the number of shares purchasable per Warrant will be
increased to shares of Common Stock of International
Controls which represent in the aggregate 10.0% of the
outstanding Common Stock of International Controls on a
fully diluted basis as of the date of issuance of the
Warrants.
It is the present intention of International Controls,
subject to various factors including prevailing market
conditions, to effect an Initial Public Offering of its
Common Stock within the next twelve months. There can be
no assurance if or when any such offering will be
consummated. Any such offering will be made only by
means of a prospectus pursuant to a registration state-
ment filed with the Securities and Exchange Commission.
Exercise.......................... The Warrants will become exercisable (an "Exercise
Event") on February 1, 2004, or upon the earlier
occurrence of (i) a Change of Control or (ii) an Initial
Public Offering.
Expiration........................ August 1, 2004.
</TABLE>
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective purchasers of the Securities should carefully consider the matters
set forth under "Risk Factors" prior to making an investment decision.
10
<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, independent auditors, and from the consolidated financial statements of
the Company for the three-month periods ended March 31, 1993 and 1994. The
summary consolidated financial information provided for the three-month periods
reflects all adjustments (consisting of normal recurring accruals) considered
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>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------------------- ----------------------
1989 1990 1991 1992 1993 1993 1994
--------- ------------ --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Trailer Manufacturing............ $ 575,793 $ 491,532 $ 400,196 $ 536,336 $ 711,862 $ 153,623 $ 215,050
Automotive Products.............. 99,886 133,401 84,401 112,631 127,925 34,685 38,253
Vehicular Operations............. 44,404 45,006 43,527 40,580 42,103 10,262 10,518
Insurance Operations............. 18,304 23,272 27,142 27,186 27,436 6,363 7,859
--------- ------------ --------- --------- --------- --------- ---------
Total Revenues................... $ 738,387 $ 693,211 $ 555,266 $ 716,733 $ 909,326 $ 204,933 $ 271,680
--------- ------------ --------- --------- --------- --------- ---------
--------- ------------ --------- --------- --------- --------- ---------
Segment Operating Profit (Loss):
(1)
Trailer Manufacturing............ $ 26,508 $ 13,109(2) $ 7,059 $ 17,590 $ 32,381 $ 5,144 $ 14,300
Automotive Products.............. 10,561 9,669 (4,237) 11,622 15,306 4,491 5,409
Vehicular Operations............. 9,437 9,751 7,139 5,727 6,251 1,323 1,330
Insurance Operations (3)......... (190) (980) (2,872) (1,557) (1,947) (450) (710)
--------- ------------ --------- --------- --------- --------- ---------
Total Segment Operating Profit... 46,316 31,549 7,089 33,382 51,991 10,508 20,329
Corporate Expenses................. (7,457) (8,115) (4,398) (4,396) (4,646) (1,192) (938)
Interest Expense (4)............... (57,879) (61,596) (47,425) (42,726) (41,614) (10,465) (10,044)
Interest Income.................... 15,494 14,696 11,634 8,895 7,396 2,018 1,660
Other Income (Expense)............. 4,704 (941) (1,078) (2,023) 3,494 991 604
Special Charge (5)................. -- -- -- -- (7,500) -- --
--------- ------------ --------- --------- --------- --------- ---------
Income (Loss) Before Minority
Equity, Income Taxes,
Extraordinary Items and Accounting
Changes........................... 1,178 (24,407) (34,178) (6,868) 9,121 1,860 11,611
Minority Equity.................... (2,424) (2,296) 1,931 -- -- -- --
Income Tax Benefit (Expense)....... (610) 6,429 5,241 (687) (5,757) (2,604) (5,225)
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) $ (47,370) $ 6,386
--------- ------------ --------- --------- --------- --------- ---------
--------- ------------ --------- --------- --------- --------- ---------
OTHER DATA:
Total Depreciation and Amortization
Expense (8)....................... $ 48,149 $ 49,791 $ 26,401 $ 26,506 $ 28,089 $ 6,747 $ 6,882
Capital Expenditures............... 20,513 21,564 16,457 17,549 20,006 7,843 6,903
EBITDA (9)......................... 80,200 61,940(2) 38,304 60,889 84,658 18,675 28,070
Ratio of EBITDA to Cash Interest
Expense (4)....................... 2.6x 1.7x -- 1.5x 2.1x 1.9x 2.9x
Ratio of Earnings to Fixed Charges
(10).............................. 1.0x -- -- -- 1.2x 1.2x 2.1x
Pro Forma Ratio of EBITDA to Cash
Interest Expense (11)............. -- -- -- -- 1.9x -- 2.6x
Pro Forma Ratio of Earnings to
Fixed Charges (12)................ -- -- -- -- 1.0x -- 1.9x
</TABLE>
(CONTINUED ON FOLLOWING PAGE)
11
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
---------------------------------------------------------------- ----------------------
1989 1990 1991 1992 1993 1993 1994
--------- ------------ --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
BALANCE SHEET DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Working Capital.................... $ 68,829 $ 81,111 $ 48,559 $ 51,091 $ 51,136 $ 61,119 $ 30,339
Property, Plant and Equipment --
Net............................... 134,691 133,116 125,681 119,492 122,355 129,274 123,111
Total Assets....................... 536,084 537,677 481,305 493,763 517,336 514,779 527,158
Long-Term Debt (Including Current
Maturities)....................... 405,167 376,692 312,324 305,368 291,273 316,028 287,113
Shareholders' Deficit.............. (111,799) (104,745) (98,374) (106,296) (149,517) (153,355) (143,538)
<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.
(3) Segment operating profit for the insurance operations does not include
portfolio interest income.
(4) Interest expense includes (dollars in thousands):
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1989 1990 1991 1992 1993 1993 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash interest expense...................... $ 30,873 $ 36,556 $ 46,081 $ 41,251 $ 39,948 $ 10,068 $ 9,577
Amortization of debt discount.............. 26,638 24,690 1,045 1,181 1,372 324 393
Amortization of debt expense............... 368 350 299 294 294 73 74
--------- --------- --------- --------- --------- --------- ---------
Total Interest Expense................. $ 57,879 $ 61,596 $ 47,425 $ 42,726 $ 41,614 $ 10,465 $ 10,044
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
<FN>
(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 gain or loss 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) Total depreciation and amortization expense includes (dollars in thousands):
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1989 1990 1991 1992 1993 1993 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Depreciation and amortization............... $ 18,186 $ 20,784 $ 20,931 $ 21,054 $ 23,295 $ 5,571 $ 5,631
Amortization of cost in excess of net assets
acquired................................... 1,252 1,250 1,250 1,250 1,250 312 313
Amortization of debt discount............... 26,638 24,690 1,045 1,181 1,372 324 393
Amortization of debt expense................ 368 350 299 294 294 73 74
Other amortization.......................... 1,705 2,717 2,876 2,727 1,878 467 471
--------- --------- --------- --------- --------- --------- ---------
Total Depreciation and Amortization..... $ 48,149 $ 49,791 $ 26,401 $ 26,506 $ 28,089 $ 6,747 $ 6,882
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
<FN>
(9) EBITDA represents income (loss) before minority equity, income taxes,
extraordinary items and accounting changes plus cash interest expense, total
depreciation and amortization expense and special charges. The Company
believes that EBITDA provides useful information regarding the Company's
ability to service its debt; however, EBITDA does not represent cash flow
from operations and should not be considered as a substitute for net income,
as an indicator of the Company's operating performance or for cash flow as a
measure of liquidity.
(10) For purposes of calculating the ratio of earnings to fixed charges, earnings
consist of income before minority equity, income taxes, extraordinary items,
accounting changes and fixed charges. Fixed charges consist of (i) cash
interest expense, (ii) amortization of debt discount and debt expense, and
(iii) that portion of operating lease rental expense which is representative
of the interest factor (deemed by management to be one-third of rental
expense). The Company's earnings were insufficient to cover fixed charges by
(in thousands) $24,407, $34,178 and $6,868 for the years ended December 31,
1990, 1991 and 1992, respectively.
(11) The adjustments made to the historical ratios of EBITDA to cash interest
expense to arrive at the pro forma ratios were to give effect to the
Refinancing as if it had occurred as of the first day of the period. No
adjustments have been made to reflect interest which will accrue on the
12 3/4% Debentures and the 14 1/2% Debentures during the requisite 30-day
notice periods.
(12) The only adjustments made to the historical ratio of earnings to fixed
charges to arrive at the pro forma ratio were to give effect to the change
in fixed charges resulting from the Refinancing.
</TABLE>
12
<PAGE>
RISK FACTORS
Prospective purchasers of the Securities should evaluate the following
factors, as well as the other information set forth in this Prospectus, before
making an investment in the Securities.
SUBSTANTIAL LEVERAGE
The Company currently is and, following the completion of the Refinancing,
will continue to be substantially leveraged. After giving effect to the
Refinancing, the Company's consolidated indebtedness would have been $348.4
million at March 31, 1994. See "Proposed Refinancing," "Use of Proceeds,"
"Capitalization," and "Selected Consolidated Financial Data." In addition, the
Company anticipates that the New Credit Facility would have provided
approximately $32.2 million of available additional funds at March 31, 1994, as
determined for certain groups of subsidiaries by a formula based on accounts
receivable and inventory of such groups of borrowers, subject to International
Controls' ability to meet certain financial tests. (However, International
Controls, as a holding company, does not presently have any availability (other
than through its subsidiaries) under the New Credit Facility.)
Based upon its current level of operations and anticipated growth, the
Company believes that available cash flow, together with available borrowings
under the New Credit Facility, will be adequate to meet the Company's
anticipated requirements for working capital, capital expenditures, interest
payments and sinking fund payments. There can be no assurance, however, that the
Company's businesses will continue to generate cash flow at or above current
levels or otherwise in sufficient amounts to pay the principal and interest on
the Notes or to satisfy the Issuers' and International Controls' obligations to
repurchase the Notes in the event of a Change of Control.
The degree to which the Company is leveraged could have important
consequences to holders of the Notes, 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; (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 and will continue to be at variable rates of interest, which
could result in higher interest expenses 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.
RANKING OF THE NOTES; HOLDING COMPANY STRUCTURE
The Senior Notes will be joint and several senior obligations of the Issuers
and will rank PARI PASSU in right of payment with all other existing and future
senior indebtedness of the Issuers (including, without limitation, the New
Credit Facility) and senior in right of payment to all subordinated obligations
of the Issuers. After giving effect to the Refinancing, the Issuers would have
had approximately $48.4 million of indebtedness outstanding at March 31, 1994
ranking PARI PASSU in right of payment with the Senior Notes. The Senior
Subordinated Notes will be senior subordinated obligations of International
Controls and will be subordinated in right of payment to all existing and future
senior indebtedness of International Controls (including, without limitation,
the Senior Notes and the New Credit Facility). After giving effect to the
Refinancing, International Controls would have had $248.4 million of
indebtedness outstanding at March 31, 1994 ranking senior in right of payment to
the Senior Subordinated Notes. See "Description of New Credit Facility" and
"Description of Notes."
Since International Controls is a holding company, the Senior Subordinated
Notes will be effectively subordinated to all existing and future liabilities
(including trade payables and obligations under the New Credit Facility and the
Senior Notes) of International Controls' subsidiaries. All of the Company's
operations are conducted, substantially all of the tangible assets of the
Company are held by, and all of the Company's operating revenues are derived
from, operations of the subsidiaries. Therefore, International Controls' ability
to make interest and principal payments when due to holders of the Senior
13
<PAGE>
Subordinated Notes, or to repurchase the Senior Subordinated Notes in the event
of a Change of Control, is entirely dependent upon the receipt of sufficient
funds from its subsidiaries. International Controls' subsidiaries are separate
and distinct legal entities and have no obligations, contingent or otherwise, to
pay any amounts due pursuant to the Senior Subordinated Notes or to make any
funds available therefor, whether in the form of loans, dividends or otherwise.
Under the New Credit Facility, subsidiaries of International Controls are
generally permitted to pay dividends or make other distributions or loans to
International Controls in order to make scheduled principal and interest
payments on the Notes (but not any accelerated payments, including if
International Controls is required to repurchase Notes upon a Change of Control
or, under certain circumstances, after the sale of assets as described under
"Description of Notes -- Certain Covenants"); PROVIDED, HOWEVER, that no such
dividends or other distributions or loans will be permitted (i) if a payment
default is continuing under the New Credit Facility or a change in control (as
defined in the New Credit Facility) or certain events of insolvency occur, or
(ii) upon the occurrence of a default under the New Credit Facility (other than
a default described in (i) above) until the earlier of (a) the 179th day
following delivery of notice of such occurrence to International Controls or (b)
the curing or waiving of such other default. Since International Controls is the
sole obligor under the Senior Subordinated Notes, this prohibition would prevent
International Controls from receiving cash from its subsidiaries required to
make interest and principal payments on the Senior Subordinated Notes.
Notwithstanding the foregoing, the holders of the Notes are not restricted under
the terms of the Indentures from accelerating the Indebtedness thereunder upon
the happening of an event of default under the Indentures. Since the Issuers are
co-obligors under the Senior Notes, this prohibition will not have a similar
effect on holders of the Senior Notes with respect to the Issuers.
LIMITATIONS ON SECURITY FOR THE SENIOR NOTES
The Issuers' obligations to pay the principal of, premium, if any, and
interest on the Senior Notes will be secured by a first priority security
interest in the following collateral (the "Collateral"): (a) the Pledged Stock,
together with all dividends, interests, cash, instruments and other property and
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any of the foregoing and any account, instrument
or security in which any of the foregoing is deposited or invested, including
any earnings thereon; (b) all equipment and fixtures (together with all
improvements and additions thereto and replacements thereof) now owned or
hereafter acquired by the Issuers and their respective subsidiaries and used in
connection with, as the case may be, the Issuers' trailer manufacturing
operations, automotive products operations and vehicular operations (including
all vehicles in Motors' taxicab fleet); (c) the assets in the Collateral Account
(as hereinafter defined); (d) 1,350 taxi medallions associated with Motors'
vehicular operations (which is the maximum number currently permitted under
applicable law; the remaining taxi medallions will be subject to a negative
pledge); (e) interests, now owned and hereafter acquired, in real properties
consisting of the facilities associated with the Issuers' trailer manufacturing
operations located in Savannah, Georgia, Brazil, Indiana and Wayne, Nebraska
(together with all additions, improvements and accessions thereto) (the "Real
Property Collateral"); (f) certain patents, trademarks and other intellectual
property of the Issuers; (g) to the extent applicable, all proceeds and products
of any and all of the foregoing Collateral; and (h) all books and records
relating to any of the foregoing Collateral. The security interests in the
Pledged Stock (clause (a)) and the patents, trademarks and other intellectual
property (clause(f)) and the proceeds and products therefrom (including the
portion of assets in the Collateral Account (clause (c)) which are part of the
Shared Collateral (as defined herein)) will be secured on an equal and ratable
basis with the security interest granted to the lenders under the New Credit
Facility. However, the Senior Notes will not be secured by the inventory,
accounts receivable and certain other assets of the Issuers and the proceeds
therefrom (which assets will secure the Issuers' obligations under the New
Credit Facility).
The Issuers will be permitted under certain circumstances to release
Collateral from the lien of the Collateral Documents (as defined herein),
subject to the satisfaction of certain requirements set forth in the Collateral
Documents. See "Description of Notes -- Possession, Use and Release of
Collateral."
14
<PAGE>
The net carrying amount on the Company's books of the Collateral (including
Shared Collateral other than the Pledged Stock) as of March 31, 1994 was
approximately $115.0 million. (The Company carries the value of its taxi
medallions on its books at zero.) While the Company has obtained appraisals of
certain of the Collateral, appraisals have not been performed for all assets
constituting Collateral. Neither the Senior Note Trustee nor the Collateral
Agent (as defined herein) has obtained appraisals or made any investigations of
the Collateral. The ability of the holders of the Senior Notes to foreclose on
the Collateral will be subject to the terms of the Collateral Documents and to
certain limitations arising under applicable bankruptcy and insolvency laws.
There can be no assurance that the proceeds of any sale of Collateral would be
sufficient to satisfy payments due on the Senior Notes. If such proceeds were
insufficient to pay all amounts due on the Senior Notes, then holders of the
Senior Notes (to the extent not paid from the proceeds of the sale of the
Collateral) would only have an unsecured claim against any remaining
unencumbered assets of the Issuers. As a result, there is a risk that holders of
the Senior Notes will receive substantially less than their investment upon any
liquidation of the Issuers. See "-- Environmental Matters," "Description of
Notes -- Security for the Senior Notes" and "-- Certain Bankruptcy Limitations."
COMPETITION
Two of the Company's primary businesses, 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. 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.
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. Sales of new truck trailers have historically been subject to
cyclical variations based both on general economic conditions and a five to
seven-year replacement cycle. The poor economic conditions in the United States
in 1990 and 1991 had an adverse effect on industry-wide demand for new truck
trailers, causing industry shipments of new truck trailers to fall to their
lowest level since 1983. Although sales have rebounded from these low levels,
there can be no assurance that such growth will continue.
GOVERNMENT REGULATIONS OF TRUCK TRAILERS
The federal government regulates 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 Great Dane's customers and may adversely affect the financial
condition of the Company.
RELIANCE ON MAJOR CUSTOMERS
Great Dane has entered the 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. J.B. Hunt
accounted for approximately 13% of Great Dane's revenues for the year ended
December 31, 1993.
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 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
15
<PAGE>
segment of the Company's business may be materially adversely affected by the
price reductions required or requested by GM or by decisions by GM to utilize
its own facilities to manufacture these products. Although GM provides 13 week
forecasts of its purchasing requirements, changes in its production may result
in changes to these requirements. In addition, although the Company is
attempting to diversify its customer base, there can be no assurance that the
Company will be able to reduce its reliance on GM in the foreseeable future.
CONTROL OF THE COMPANY
David R. Markin owns 32.5% of the common stock of International Controls and
each of three other individuals owns 22.5% of the Common Stock (before giving
effect to the exercise of the Warrants). Therefore, Mr. Markin, together with
any one of the three other stockholders, or the other three stockholders acting
together, effectively has control of the Company and would have sufficient
voting power to determine the outcome of any corporate transaction or other
matter requiring stockholder approval.
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 of potentially harmful aspects of its operations on the
environment. From time to time, the Company has incurred expenses to improve its
facilities in accordance with applicable laws. Great Dane has changed its
manufacturing process to comply with new regulations controlling the emission of
chlorofluorocarbons.
International Controls also remains obligated to indemnify purchasers of
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.
Real property pledged as security to a lender, such as a holder of the
Senior Notes, may be subject to known and unforeseen environmental risks. Under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, a secured lender may be held liable, in limited circumstances,
for the costs of remediating or preventing releases or threatened releases of
hazardous substances at mortgaged property. There may be similar risks to
secured lenders under various state laws and common law theories. In this
regard, the Senior Note Trustee or the holders of the Senior Notes would need to
evaluate the impact of these potential liabilities before determining to
foreclose on mortgaged properties securing the Senior Notes and exercising other
available remedies. In addition, the Senior Note Trustee may decline to
foreclose upon the mortgaged property or exercise remedies available to the
extent that it does not receive indemnification to its satisfaction which may
include indemnification from the holders of the Senior Notes. See "Description
of Notes -- Security for the Senior Notes."
IMPACT OF CITY REGULATION AND EXPIRATION OF ANNUAL LIMIT ON NEW MEDALLION
ISSUANCE
The City of Chicago ("Chicago") regulates Yellow Cab's operations through
rates of fare, maintenance, lease rates, insurance and inspection requirements,
as well as through taxes, license fees and other means. Chicago has recently
given 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
16
<PAGE>
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 -- Vehicular
Operations -- Regulatory Issues."
FRAUDULENT CONVEYANCE RISK
The incurrence by the Issuers of indebtedness under the Notes, and, in the
case of the Senior Notes, the granting of any security interest as security
therefor, may be subject to review under federal and state fraudulent conveyance
laws if a bankruptcy, reorganization or rehabilitation case or similar
proceeding is commenced or a lawsuit is commenced by or on behalf of unpaid
creditors of the Issuers or International Controls, as the case may be. Under
these laws, if a court were to find that, at the time the Notes were issued or
the security interests were granted under the Senior Note Indenture, (a) an
Issuer incurred such indebtedness or issued the Notes with the intent of
hindering, delaying or defrauding current or future creditors or (b)(i) an
Issuer received less than reasonably equivalent value or fair consideration for
incurring such indebtedness or issuing the Notes, and (ii) an Issuer (A) was
insolvent or was rendered insolvent by reason of the incurrence of such
indebtedness or the issuance of the Notes, (B) was engaged, or about to engage,
in a business or transaction for which its assets constituted unreasonably small
capital, (C) intended to incur, or believed that it would incur, debts beyond
its ability to pay as such debts matured (as all of the foregoing terms are
defined in or interpreted under relevant fraudulent conveyance laws) or (D) was
a defendant in an action for money damages or had a judgment for money damages
docketed against it (if, in either case, after final judgment the judgment is
unsatisfied), such court could avoid or subordinate the Notes to presently
existing and future indebtedness of the Issuers and take other action
detrimental to the holders of the Notes, including, under certain circumstances,
invalidating the Notes.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the law of the jurisdiction which is being applied in any
such proceeding. Generally, however, an Issuer would be considered insolvent if,
at the time it incurred the indebtedness under the New Credit Facility or
incurred the indebtedness constituting the Notes either (i) the fair market
value (or fair saleable value) of its assets is less than the amount required to
pay the probable liability on its total existing debts and liabilities
(including contingent liabilities) as they become absolute and matured or (ii)
it is incurring debt beyond its ability to pay as such debt matures. The Issuers
believe that they are receiving fair consideration for their incurrence of
indebtedness under the New Credit Facility and their issuance of the Notes and
that they will not be rendered insolvent thereby.
POTENTIAL LACK OF FUNDING FOR CHANGE OF CONTROL OFFER
In the event of a Change of Control, the Issuers in the case of the Senior
Notes and International Controls in the case of the Senior Subordinated Notes
will be required, subject to certain conditions, to offer to purchase all
outstanding Notes at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest to the date of repurchase. After
giving effect to the Refinancing, the Issuers may not have sufficient funds
available to purchase all of the outstanding Notes were they to be tendered in
response to an offer made as a result of a Change of Control. In addition, the
Issuers' ability to repurchase the Notes upon the occurrence of a Change of
Control will be restricted by the New Credit Facility. Further, rights of the
holders of the Senior Subordinated Notes upon the occurrence of a Change of
Control will be subordinate to the rights of the holders of the Senior Notes.
See "Description of Notes -- Certain Covenants -- Purchase of Notes Upon a
Change of Control."
DIVIDEND POLICY
International Controls 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. Furthermore, International Controls' ability to pay
dividends is limited by the Indentures and prohibited by the New Credit
Facility.
17
<PAGE>
CERTAIN ISSUES RELATING TO ORIGINAL ISSUE DISCOUNT
The Senior Subordinated Notes will be issued with original issue discount
for federal income tax purposes. For purposes of computing original issue
discount, the Senior Subordinated Notes and the Warrants will be treated as a
Unit and the issue price of the Unit will be allocated between the Senior
Subordinated Notes and the Warrants. As a result, purchasers of Senior
Subordinated Notes will be required to recognize such original issue discount as
ordinary income in advance of the receipt of the cash payments to which such
income is attributable. See "Certain Federal Income Tax Consequences" for a more
detailed discussion of the federal income tax consequences to the purchasers of
the Units.
If a bankruptcy case is commenced by or against International Controls under
Title 11 of the United States Code, as amended (the "Bankruptcy Code"), the
claim of a holder of Senior Subordinated Notes with respect to the principal
amount thereof may be limited to an amount equal to the sum of (i) the portion
of the original issue price of the Units allocable to the Senior Subordinated
Notes ($ per $1,000 Unit purchase price) and (ii) that portion of the
original issue discount that is not deemed to constitute "unmatured interest"
for purposes of the Bankruptcy Code. "Unmatured interest" means that portion of
the original issue discount that was not amortized as of the date of the
bankruptcy filing. The amortized amount determined by a bankruptcy court may not
be the same amount previously included in income by the holder for federal
income tax purposes.
ABSENCE OF PUBLIC MARKET
The Securities constitute new issues of securities with no established
trading market. In addition, the Common Stock into which the Warrants are
exercisable are presently held by four individuals. The New York Stock Exchange
has approved the listing of the Senior Notes, subject to the satisfaction of
certain listing requirements. After the Separation Date, International Controls
intends to apply to list the Senior Subordinated Notes on the New York Stock
Exchange. There can be no assurance that the Notes will be listed. The Company
does not intend to list the Warrants or the Common Stock underlying the Warrants
(the "Warrant Shares") on any securities exchange or to seek inclusion thereof
through the National Association of Securities Dealers Automated Quotation
System. No assurance can be given that any trading market for the Securities or
the Warrant Shares will develop or, if any such market does develop, as to the
liquidity of the Securities or the Warrant Shares. If the Senior Notes or the
Units are traded after their initial issuance, they may trade at a discount from
their initial offering price depending upon prevailing interest rates, the
market for similar securities, the performance of the Company and other factors.
The Underwriters have informed the Company that they intend to make a market in
the Senior Notes and in the Units until the Separation Date, and in the Notes
and the Warrants thereafter. However, the Underwriters are not obligated to do
so, and any such market making may be discontinued at any time without notice.
Therefore, no assurance can be given as to whether an active trading market will
develop or be maintained. In addition, the Senior Subordinated Notes and the
Warrants will not be separately transferable until the Separation Date and the
Warrants are not exercisable until the occurrence of any Exercise Event. See
"Description of Warrants" and "Underwriting."
POTENTIAL COMMON STOCK OFFERING
It is the present intention of International Controls, subject to various
factors including prevailing market conditions, to effect an Initial Public
Offering of its Common Stock within the next twelve months. There can be no
assurance if or when any such offering will be consummated. Any such offering
will be made only by means of a prospectus pursuant to a registration statement
filed with the Securities and Exchange Commission. If the offering is
consummated, the net proceeds to International Controls up to $40 million would
be required to be applied to the redemption of the Senior Notes and the Warrants
would become exercisable.
18
<PAGE>
PROPOSED REFINANCING
The Company is pursuing the Refinancing in order (a) to increase its
liquidity through (i) reduced amortization and (ii) the removal of certain
restrictions on the use of Company cash providing for more flexible and
efficient cash management, and (b) to simplify its corporate structure, thereby
enhancing its ability to obtain future financing. The Refinancing includes the
following primary components: the Offering, the Initial Borrowing, the 12 3/4%
Debenture Redemption, the 14 1/2% Debenture Redemption, the Existing Note
Redemption, the Minority Interest Redemption, the repayment of subsidiary
indebtedness and the liquidation of Checker L.P., all as described below.
SOURCES AND USES OF FUNDS
The estimated sources and uses of funds which would have been required to
consummate the Refinancing as of March 31, 1994 are as follows:
<TABLE>
<S> <C>
SOURCES OF FUNDS:
(IN THOUSANDS)
Senior Note Offering........................ $ 200,000
Unit Offering............................... 100,000
New Credit Facility......................... 48,375
Company Cash................................ 22,216
-----------
Total....................................... $ 370,591
-----------
-----------
USES OF FUNDS:
(IN THOUSANDS)
Retire Subsidiary Debt...................... $ 85,988
Redemption of 12 3/4% Debentures(1)......... 136,238
Redemption of 14 1/2% Debentures(1)......... 61,347
Existing Note Redemption.................... 30,000
Minority Interest Redemption................ 37,000
Pay Accrued Interest........................ 6,018
Transaction Fees and Expenses............... 14,000
-----------
Total....................................... $ 370,591
-----------
-----------
<FN>
- --------------
(1) Excludes interest which will accrue until the expiration of the requisite
30-day notice periods, and which will be funded through internal cash flow
and/or additional borrowings under the New Credit Facility (as defined
herein).
</TABLE>
NEW CREDIT FACILITY AND REPAYMENT OF SUBSIDIARY INDEBTEDNESS
The New Credit Facility provides for a revolving credit facility of up to
$95.0 million. The Company intends to use approximately $48.4 million of the New
Credit Facility together with a portion of the proceeds of the Offering and
Company cash to retire the following indebtedness of International Controls'
subsidiaries (all interest rates and principal amounts are as of March 31,
1994), in each case together with accrued but unpaid interest to the date of the
Initial Borrowing: (a) a term loan maturing in March 1995 with an interest rate
of 7.5%, in the principal amount of approximately $20.4 million; (b) a revolving
loan due in March 1995 with an interest rate of 7.5%, in the principal amount of
approximately $16.9 million; (c) a term loan maturing in July 1996 with an
interest rate of 7.25%, in the principal amount of $5.0 million; (d) a term loan
maturing in April 2008 with an interest rate of 5.0%, in the principal amount of
approximately $10.8 million; (e) a line of credit loan due in September 1994
with an interest rate of 7.0%, in the principal amount of $5.0 million; (f) a
term loan due in September 1997 with an interest rate of 7.25%, in the principal
amount of approximately $21.0 million; and (g) miscellaneous indebtedness in the
aggregate amount of approximately $6.9 million. For a description of certain
terms of the New Credit Facility, see "Description of New Credit Facility." All
amounts set forth above assume that the Refinancing had taken place on March 31,
1994.
THE OFFERING AND THE HOLDING COMPANY REDEMPTIONS
The net proceeds to the Issuers from the Offering are estimated to be
approximately $ million after deducting expenses relating to the Offering.
Such net proceeds are intended to be used to redeem the 12 3/4% Debentures (for
which an annual $18.0 million sinking fund payment would otherwise be due
commencing in August 1997) pursuant to the 12 3/4% Debenture Redemption, the
14 1/2% Debentures pursuant to the 14 1/2% Debenture Redemption, the Existing
Notes pursuant to the Existing Note Redemption, the Minority Interest pursuant
to the Minority Interest Redemption and any balance of subsidiary indebtedness
not repaid from borrowings under the New Credit Facility or Company cash.
International Controls intends, simultaneously with the consummation of the
Offering, to issue notices of redemption
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<PAGE>
with respect to the 12 3/4% Debenture Redemption and the 14 1/2% Debenture
Redemption. The funds required for the redemption of the 12 3/4% Debentures and
the 14 1/2% Debentures will be held in escrow until the requisite 30-day notice
periods have expired (during which time interest will continue to accrue) and
payment can be made. Interest on the 12 3/4% Debentures and 14 1/2% Debentures
for such 30-day period is estimated to be approximately $1.3 million, net of
estimated interest earnings from the escrow account. The Existing Note
Redemption and the Minority Interest Redemption will be effected upon the
consummation of the Offering.
LIQUIDATION OF CHECKER L.P.
After consummation of the Minority Interest Redemption, Motors will own all
of the equity interests in Checker L.P. To simplify the corporate structure, and
because certain of the tax advantages that existed at the time Checker L.P. was
established no longer exist, Checker L.P. will be liquidated and its assets
distributed to Motors, which will immediately contribute these assets (except
for the capital stock of Country) to three newly-formed subsidiaries, CMC
Kalamazoo Inc., Yellow Cab Company and Chicago AutoWerks Inc., each of which is
an Issuer.
USE OF PROCEEDS
The net proceeds to be received by the Issuers from the sale of the
Securities are estimated to be approximately $ million after deducting an
estimated $ million in expenses estimated to be incurred in connection with the
Offering.
The Issuers intend to use the net proceeds of the Offering in the manner
specified in "Proposed Refinancing." See "Proposed Refinancing."
DIVIDENDS
International Controls has not, in recent years, paid dividends on the
Common Stock, and does not intend to pay dividends in the foreseeable future. As
a holding company, the ability of International Controls to pay dividends is
dependent upon the receipt of dividends or other payments from its subsidiaries.
The payment of dividends by International Controls is also limited by the
Indentures and prohibited by the New Credit Facility. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources," "Description of Notes" and "Description of New
Credit Facility." Any determination to pay dividends in the future will be at
the discretion of the Board of Directors of International Controls and will be
dependent upon the Company's results of operations, financial condition,
contractual restrictions, and other factors deemed relevant at that time by the
Board of Directors of International Controls.
20
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Company and its subsidiaries as of March 31, 1994, and as adjusted to give
effect to the Refinancing as described under "Proposed Refinancing" and "Use of
Proceeds." The table should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto appearing elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1994
-----------------------------
HISTORICAL AS ADJUSTED
----------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash.............................................. $ 32,608 $ 10,392
----------- ---------------
----------- ---------------
Short-Term Subsidiary Debt........................ $ 5,000 $ 0
----------- ---------------
Long-Term Debt (including current maturities):
New Credit Facility............................. 0 48,375
Subsidiary Debt (1)............................. 80,988 0
Existing Notes.................................. 30,000 0
Senior Notes offered hereby..................... 0 200,000
Senior Subordinated Notes offered hereby........ 0 100,000(2)
12 3/4% Senior Subordinated Debentures (net of
unamortized discount).......................... 121,261 0
14 1/2% Subordinated Discount Debentures (net of
unamortized discount).......................... 54,864 0
----------- ---------------
Total Long-Term Debt (including current
maturities).................................. 287,113 348,375
Minority Interest................................. 39,898 0(3)
Shareholders' Deficit:
Common Stock, par value $0.01................... 90 90
Additional paid-in capital (2).................. 14,910 14,910
Retained-earnings deficit....................... (29,831) (41,896)(4)
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.............................. (334) (334)
----------- ---------------
Total Shareholders' Deficit................... (143,538) (155,603)
----------- ---------------
Total Capitalization........................ $ 188,473 $ 192,772
----------- ---------------
----------- ---------------
<FN>
- --------------
(1) Includes $2.4 million outstanding on a term loan made to SCSM in November
1993, the proceeds of which were used by SCSM to purchase a press.
(2) The Senior Subordinated Notes are being sold as Units with the Warrants. The
fair value of the Warrants, which has not been determined, will be based on
final pricing and such fair value will be credited to additional paid-in
capital with a corresponding reduction in Senior Subordinated Notes.
(3) Reflects redemption of minority interest in Checker L.P. See "Business --
Legal Proceedings -- Executive Life Litigation."
(4) The charge to retained-earnings deficit results from an extraordinary charge
to earnings from:
</TABLE>
<TABLE>
<S> <C>
Write off debt discount on 12 3/4% Debentures............................ $ (10,779)
Write off debt discount on 14 1/2% Debentures............................ (6,483)
Premium paid on repurchase of 12 3/4% Debentures......................... (4,198)
Gain on retirement of minority interest.................................. 2,898
Tax effect of above adjustments.......................................... 6,497
---------
Charge to historical retained-earnings deficit........................... $ (12,065)
---------
---------
</TABLE>
21
<PAGE>
THE COMPANY
International Controls is a holding company that is engaged in four
principal lines of business. Great Dane manufactures a full line of truck
trailers for the over-the-road tractor trailer long and short haul markets and
containers and chassis for domestic intermodal shipping. Motors manufactures
sheet metal stampings for automotive components and subassemblies, primarily for
GM. Yellow Cab is currently the largest owner of taxicabs and provider of
taxi-related services in Chicago, Illinois. Country underwrites property and
casualty insurance, including taxicab insurance, workers' compensation and other
commercial and personal lines.
Prior to 1987, International Controls engaged in various engineering,
aerospace and manufacturing operations, including truck trailer manufacturing.
In 1987, International Controls was taken private in a leveraged buyout
transaction and initiated a plan of divestitures to reduce bank debt. In 1989,
with Great Dane as its only remaining business, International Controls acquired
Motors and immediately thereafter, the major shareholders of Motors obtained
control of International Controls through the Reverse Acquisition.
Simultaneously with the consummation of the Offering, the minority capital
account and any minority equity interest in Checker L.P. will be redeemed. See
"Proposed Refinancing -- The Offering and the Holding Company Redemptions" and
"-- Liquidation of Checker L.P.," "Use of Proceeds" and "Business -- Legal
Proceedings -- Executive Life Litigation."
International Controls was incorporated in 1959 under the laws of the State
of Florida. International Controls currently maintains its principal executive
offices at Checker L.P.'s facility at 2016 North Pitcher Street, Kalamazoo,
Michigan 49007 and its phone number is (616) 343-6121.
22
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents selected consolidated financial data derived
from the consolidated financial statements of International Controls Corp. and
subsidiaries for the five years ended December 31, 1993, which have been audited
by Ernst & Young, independent auditors. The selected consolidated financial data
for the three-month periods ended March 31, 1993 and 1994, were derived from the
consolidated financial statements of the Company, which reflect all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
such data. The operating results for the three months ended March 31, 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>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------------------ ---------------------
1989 1990 1991 1992 1993 1993 1994
--------- ------------ --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues............................... $ 738,387 $ 693,211 $ 555,266 $ 716,733 $ 909,326 $ 204,933 $ 271,680
Cost of Revenues....................... 624,138 584,680 480,543 610,870 778,805 175,631 230,835
--------- ------------ --------- --------- --------- --------- ---------
Gross Profit........................... 114,249 108,531 74,723 105,863 130,521 29,302 40,845
Selling, General and Administrative
Expense............................... 75,390 77,597 72,032 76,877 83,176 19,986 21,454
Plant Restructuring Costs.............. -- 7,500 -- -- -- -- --
--------- ------------ --------- --------- --------- --------- ---------
Income from Operations................. 38,859 23,434 2,691 28,986 47,345 9,316 19,391
Interest Expense (1)................... (57,879) (61,596) (47,425) (42,726) (41,614) (10,465) (10,044)
Interest Income........................ 15,494 14,696 11,634 8,895 7,396 2,018 1,660
Other Income (Expense)................. 4,704 (941) (1,078) (2,023) 3,494 991 604
Special Charge (2)..................... -- -- -- -- (7,500) -- --
--------- ------------ --------- --------- --------- --------- ---------
Income (Loss) Before Minority Equity,
Income Taxes, Extraordinary Items and
Accounting Changes.................... 1,178 (24,407) (34,178) (6,868) 9,121 1,860 11,611
Minority Equity........................ (2,424) (2,296) 1,931 -- -- -- --
Income Tax Benefit (Expense)........... (610) 6,429 5,241 (687) (5,757) (2,604) (5,225)
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) $ (47,370) $ 6,386
--------- ------------ --------- --------- --------- --------- ---------
--------- ------------ --------- --------- --------- --------- ---------
OTHER DATA:
Total Depreciation and Amortization
Expense (5)........................... $ 48,149 $ 49,791 $ 26,401 $ 26,506 $ 28,089 $ 6,747 $ 6,882
Capital Expenditures................... 20,513 21,564 16,457 17,549 20,006 7,843 6,903
EBITDA (6)............................. 80,200 61,940(7) 38,304 60,889 84,658 18,675 28,070
Ratio of EBITDA to Cash Interest
Expense (1)........................... 2.6x 1.7x -- 1.5x 2.1x 1.9x 2.9x
Ratio of Earnings to Fixed Charges
(8)................................... 1.0x -- -- -- 1.2x 1.2x 2.1x
</TABLE>
(CONTINUED ON FOLLOWING PAGE)
23
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1989 1990 1991 1992 1993 1993 1994
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working Capital........................ $ 68,829 $ 81,111 $ 48,559 $ 51,091 $ 51,136 $ 61,119 $ 30,339
Property, Plant and Equipment -- Net... 134,691 133,116 125,681 119,492 122,355 129,274 123,111
Total Assets........................... 536,084 537,677 481,305 493,763 517,336 514,779 527,158
Long-Term Debt (Including Current
Maturities)........................... 405,167 376,692 312,324 305,368 291,273 316,028 287,113
Shareholders' Deficit.................. (111,799) (104,745) (98,374) (106,296) (149,517) (153,355) (143,538)
<FN>
- ------------------
(1) Interest expense includes (dollars in thousands):
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1989 1990 1991 1992 1993 1993 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash interest expense.................. $ 30,873 $ 36,556 $ 46,081 $ 41,251 $ 39,948 $ 10,068 $ 9,577
Amortization of debt discount.......... 26,638 24,690 1,045 1,181 1,372 324 393
Amortization of debt expense........... 368 350 299 294 294 73 74
--------- --------- --------- --------- --------- --------- ---------
Total Interest Expense............... $ 57,879 $ 61,596 $ 47,425 $ 42,726 $ 41,614 $ 10,465 $ 10,044
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
<FN>
(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 gain or loss 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) Total depreciation and amortization expense includes (dollars in
thousands):
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1989 1990 1991 1992 1993 1993 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Depreciation and amortization.......... $ 18,186 $ 20,784 $ 20,931 $ 21,054 $ 23,295 $ 5,571 $ 5,631
Amortization of cost in excess of net
assets acquired....................... 1,252 1,250 1,250 1,250 1,250 312 313
Amortization of debt discount.......... 26,638 24,690 1,045 1,181 1,372 324 393
Amortization of debt expense........... 368 350 299 294 294 73 74
Other amortization..................... 1,705 2,717 2,876 2,727 1,878 467 471
--------- --------- --------- --------- --------- --------- ---------
Total Depreciation and
Amortization........................ $ 48,149 $ 49,791 $ 26,401 $ 26,506 $ 28,089 $ 6,747 $ 6,882
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
<FN>
(6) EBITDA represents income (loss) before minority equity, income taxes,
extraordinary items and accounting changes plus cash interest expense,
total depreciation and amortization expense and special charges. The
Company believes that EBITDA provides useful information regarding the
Company's ability to service its debt; however, EBITDA does not represent
cash flow from operations and should not be considered as a substitute for
net income, as an indicator of the Company's operating performance or for
cash flow as a measure of liquidity.
(7) After deducting $7,500 of plant restructuring costs.
(8) For purposes of calculating the ratio of earnings to fixed charges,
earnings consist of income before minority equity, income taxes,
extraordinary items, accounting changes and fixed charges. Fixed charges
consist of (i) cash interest expense, (ii) amortization of debt discount
and debt expense, and (iii) that portion of operating lease rental expense
which is representative of the interest factor (deemed by management to be
one-third of rental expense). The Company's earnings were insufficient to
cover fixed charges by (in thousands) $24,407, $34,178 and $6,868 for the
years ended December 31, 1990, 1991 and 1992, respectively.
</TABLE>
24
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
In January 1989, International Controls 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. ("Holding"), all of the outstanding common stock of International
Controls for $45 million. Holding was created solely for the purpose of
acquiring the stock of International Controls and was subsequently merged into
International Controls. Holding 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 International Controls, 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 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.
RECENT OPERATING RESULTS
____For the three months ended June 30, 1994, the Company's preliminary
financial information indicates that revenue increased 23.2% from $225.4 million
last year to $277.6 million, its operating profit increased 75.6% from $13.5
million last year to $23.7 million and its EBITDA increased 50.7% from $21.3
million last year (before giving effect to a special charge of $7.5 million) to
$32.1 million. These increases primarily reflect higher sales of truck trailers,
intermodal containers and chassis as well as automotive stamping parts. The
results of interim periods may not be indicative of results for the full year.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1994, COMPARED TO THREE MONTHS ENDED MARCH 31,
1993:
Revenues increased $66.7 million during the three months ended March 31,
1994, as compared to the same period of 1993. The higher revenues are
principally attributed to higher trailer segment revenues ($61.4 million),
primarily associated with a higher volume of sales of containers and chassis and
trailers. Automotive segment revenues increased $3.6 million during the three
months ended March 31, 1994, as compared to the same period in 1993. General
increases in volume to accommodate automotive customers' demands were the
principal reason for the revenue increases.
The Company's operating profit (gross profit less selling, general and
administrative expenses) increased $10.1 million in the 1994 period compared to
the 1993 period. This increase is attributed to an increase of trailer segment
operating profits ($9.2 million) which is principally due to higher sales of
Great Dane's product lines and improved margins, and an increase of automotive
segment operating profits ($0.9 million) principally due to higher sales.
Income tax expense is higher for financial statement purposes than would be
computed if the statutory rate were used because of state income taxes and 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.
25
<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 benefited 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
International Controls, together with three prior subsidiaries of International
Controls, 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 International Controls formerly conducted business operations.
On December 22, 1993, International Controls entered into a settlement with
Boeing, settling all claims asserted by Boeing in the lawsuit. Pursuant to the
settlement terms, International Controls will pay Boeing $12.5 million over the
course of five years, $5 million of which has been committed by certain
insurance carriers in the form of cash or irrevocable letters of credit.
Accordingly, the Company 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 International Controls and the
three former subsidiaries have been dismissed and Boeing has released and
indemnified International Controls with respect to certain claims.
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 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
26
<PAGE>
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 selling, general and administrative expenses ("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 $4.9 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.
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),
proceeds from borrowings and proceeds from the disposal of assets have provided
sufficient liquidity and capital resources for the Company to conduct its
operations.
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. During the quarter ended March 31, 1994, the Company adopted
the provisions of SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities."
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.
27
<PAGE>
Great Dane's debt agreement with certain banks matures in March 1995.
Accordingly, this debt is classified as a current liability at March 31, 1994.
Refinancing is anticipated to be accomplished prior to maturity and,
accordingly, it is not anticipated that working capital will be adversely
affected.
Purchases of property, plant and equipment have averaged approximately $18
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 are anticipated to
be approximately $26.0 million and are expected to be funded principally by cash
flow generated from operations.
During the fourth quarter of 1993, International Controls entered into a
settlement of the Boeing litigation (see "Business -- Legal Proceedings --
Boeing Litigation"). It is anticipated that the settlement ($12.5 million over
five years) will be paid by International Controls through recoveries from
insurance carriers, the sale of assets of certain of the subsidiaries, 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 is currently engaged in 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.
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.
28
<PAGE>
BUSINESS
GENERAL
International Controls is a holding company that is engaged in four
principal lines of business. Great Dane manufactures a full line of truck
trailers for the over-the-road tractor trailer long and short haul markets and
containers and chassis for intermodal shipping. Motors manufactures sheet metal
stampings for automotive components and subassemblies, primarily for GM. The
Company's Yellow Cab division is currently the largest owner of taxicabs and
provider of taxi-related services in Chicago, Illinois. Country underwrites
property and casualty insurance, including taxicab insurance, workers'
compensation and other commercial and personal lines.
TRAILER MANUFACTURING OPERATIONS
OVERVIEW
Great Dane, which generated approximately 78% of the Company's revenues and
62% of the Company's total segment operating profit for the year ended December
31, 1993, designs, manufactures and distributes a full line of both standard and
customized truck trailers (including dry freight vans, reefers and platform
trailers) and intermodal containers and chassis. In 1993, Great Dane was the
largest manufacturer of truck trailers in the United States with a 12.7% total
market share, including an estimated leading 37.9% share of the reefer market
and a 23.3% share of the intermodal container and chassis market. Great Dane
believes it offers the broadest line of products in the industry and emphasizes
the production of customized and proprietary products which generally have
higher margins than more standard products. Great Dane sells and services its
trailers primarily through a nationwide network of branches and independent
dealers to gain access to a diversified customer base.
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. The emphasis on
intermodal transportation is being led by J.B. Hunt, which is integrating rail
and truck support of goods for its end customers on what J.B. Hunt has informed
Great Dane it believes is a more cost-effective basis.
29
<PAGE>
BUSINESS STRATEGIES
During the past several years, Great Dane has undertaken a number of
strategic initiatives designed to improve its competitive position and
capitalize on the growing intermodal container and chassis market. Accordingly,
Great Dane reduced corporate overhead through management consolidation,
increased operating efficiencies and capacity through plant reconfigurations,
and initiated product cost reduction and new product development programs. Great
Dane also increased its manufacturing flexibility by adapting certain of its
assembly lines to be efficient in filling both large and small orders, and
expanded its distribution network domestically, as well as in Canada and Mexico,
in order to provide new outlets for its products and high margin parts and
services business.
Furthermore, during 1992, Great Dane entered the intermodal container and
chassis market as its engineering department, working in conjunction with J.B.
Hunt, one of the largest truckload carriers in the U.S., developed a unique line
of intermodal containers and matching ultra-lightweight chassis. Great Dane's
intermodal containers are designed for use on rail but may also be transported
over the road on chassis to and from rail yards. These products enable Great
Dane's customers to take advantage of new double stack intermodal shipping
methods, believed by J.B. Hunt to be the most economical method of hauling
freight over long and intermediate distances. In connection with an
approximately $121 million initial purchase order from J.B. Hunt for these new
intermodal products, the Company installed new assembly lines in three existing
factories and initiated production for the order during the first and second
quarters of 1993. In late 1993 and in 1994, Great Dane received additional
orders of approximately $48 million and $16 million, respectively, from J.B.
Hunt. Although J.B. Hunt's requirements for these containers and chassis will
level off, Great Dane believes that J.B. Hunt's success may lead other carriers
to replace some or all of their trailers with containers and chassis. Great Dane
believes that intermodal transportation, which has been expanding at an
approximately 10% compounded annual growth rate in the United States since 1988,
will provide a significant growth opportunity as carriers replace some or all of
their trailers with containers and chassis.
Great Dane's objectives are to increase its share of the truck trailer
market and capitalize on the growing intermodal market. To achieve these
objectives, Great Dane will continue to emphasize the development of high
quality innovative products and improve the efficiency of its assembly
operations. Great Dane is currently developing and testing a new line of
ultra-lightweight flatbeds, as well as developing a new floor for its reefers.
Great Dane is also presently adapting certain of its assembly lines to produce
either intermodal containers or truck trailers on the same line. In addition,
Great Dane plans to utilize its expanded distribution network and manufacturing
flexibility to broaden its customer base by increasing sales to large customers.
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>
PRODUCT TYPE GREAT DANE UNIT SALES INDUSTRY UNIT SALES GREAT DANE SHARE
- ------------------------------------------------- ---------------------- ------------------- ---------------------
<S> <C> <C> <C>
Vans............................................. 14,132 123,100 11.5%
Reefers.......................................... 8,034 21,200 37.9%
Platform Trailers................................ 1,767 16,200 10.9%
Intermodal Containers and Chassis................ 10,301 44,200 23.3%
</TABLE>
30
<PAGE>
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
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 aluminum plate van is considered a premium product and, due
to the current low price of aluminum, is a cost efficient alternative to the
sheet and post van.
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.
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
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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 4,700 intermodal containers and a total of 5,400 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.
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 GROSS
SALES 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 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 $134 million and $121 million,
respectively. 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
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<PAGE>
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, 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. Great Dane's Executive
Vice President of Sales oversees and coordinates the sales effort and is
assisted by five district managers. 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.
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.
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 is currently developing 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. 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 81%
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 is changing 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 does not
require a large quantity of any material classified as hazardous.
33
<PAGE>
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 CMC Kalamazoo and SCSM, Motors operates an automotive parts stamping
facility in Kalamazoo, Michigan and a larger, more modern facility, in South
Charleston, West Virginia, which was acquired in 1989. Motors, together with its
customers, develops, designs and manufactures a broad range of sheet metal
automotive components and subassemblies, including tailgates, fenders, doors,
hoods and roofs, primarily for sale to North American OEMs. These operations
generated approximately 14% of the Company's revenues and 29% of the Company's
total segment operating profit for the year ended December 31, 1993.
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
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.
Generally, the OEM selects a supplier to work in conjunction with the OEM's
design team to design and develop a component which will satisfy the OEM's
purchasing standards. OEMs also evaluate and rate suppliers using rigorous
programs which encompass quality, cost control, reliability of delivery, new
technology implementation and overall management leadership and structure. As a
result, new supplier policies have sharply reduced the number of component
suppliers.
Because of ever-increasing global competition, OEMs are continually
upgrading their supplier policies. The OEMs are requiring suppliers to meet ever
stricter standards of quality, overall cost reductions and increased support for
up-front design, engineering and project management. These requirements are
continually accelerating the trend toward consolidation of the OEMs' supplier
base.
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 8,000 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 940 dies. SCSM currently utilizes between 55% and 65% of its
production capacity in terms of equipment load. 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
34
<PAGE>
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: Suburban, Blazer, S-10 Blazer, Crew Cab, M Van (Astro and
Safari), full-size G Van, CK Truck and J Car (Cavalier). 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 two years and is expecting to be GM's supplier of
the roof module for the four-door version. The automotive segment also supplies
parts for GM's services organization.
Management has attempted to broaden its customer base. The effect of that
effort is evidenced by the expansion of the customer base to include, among
others, Freightliner Corp. and Saturn Corporation. In addition, the automotive
segment recently signed a contract with Mercedes-Benz to produce parts for its
new sports utility vehicle for which production is expected to begin in 1996 for
the 1997 model year. Mercedes-Benz is providing the funding necessary for the
tooling to produce these parts.
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.
VEHICULAR OPERATIONS
OVERVIEW
The vehicular operations generated approximately 5% of the Company's
revenues and 12% of the Company's total segment operating profit during the year
ended December 31, 1993. Yellow Cab is the largest taxicab fleet owner in
Chicago and as of March 31, 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 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-Insurance Operations."
Despite the name of the Yellow Cab "owner-operator program," taxi drivers
participating in the program do not take ownership of the vehicles, unless they
exercise their option to purchase the vehicle at the end of the initial lease
term and, even when the operators take ownership of the vehicle, Yellow
35
<PAGE>
Cab retains ownership of the medallion, which is then transferred to a new
vehicle. Nevertheless, owner-operators take responsibility for the maintenance
and storage of their vehicles and are responsible for compliance with all
Chicago and Yellow Cab regulations. Thus, Yellow Cab is relieved of these
maintenance and repair costs as well as the cost of housing and storing this
significant portion of its large fleet. As of March 31, 1994, approximately 65%
of the Company's medallions were leased under the owner-operator program.
The daily lease program allows drivers to lease a medallion and a vehicle
for 12 hours, 24 hours, or for a weekend. All leases must be paid in advance. As
Yellow Cab has increased its emphasis on the more profitable owner-operator
program, its daily lease program has been used largely as a source and training
operation for new owner-operators. Through a "new licensee introductory offer,"
those recipients of new chauffeurs' licenses who are at least 23 years old may
lease a vehicle and a medallion from Yellow Cab at reduced rates for the first
five days following their receipt of a license. Management believes that Yellow
Cab holds a greater than 75% share of the total "off-the-street" taxi leasing
market in Chicago.
THE MEDALLIONS
As of March 31, 1994, Yellow Cab owned approximately 2,370 of the roughly
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 total then-to-be outstanding. Under the Agreement, no person
other than Motors and its affiliated companies can own more than 25% of the
licenses in Chicago.
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 cab 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, a lower level
of 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
quarter of 1994, the Company sold 73 and 4 medallions, respectively, at an
average price of $38,000 each, a historical high. 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.
THE VEHICLE FLEET
Under Chicago regulations, no medallion holder may operate a vehicle older
than seven model years. Each year, Yellow Cab orders new vehicles to replace
those that are expected to be removed from service during the next year. Yellow
Cab has given increased emphasis to selling its older used cars during the past
several years. Recent efforts have included a program of increased advertising
and marketing, and the development of this segment of business beyond the
immediate region. At March 31, 1994, Yellow Cab owned approximately 2,370
vehicles at a net book value of $14.0 million (net of depreciation of $19.4
million).
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<PAGE>
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 bills the manufacturers directly.
Chicago AutoWerks serves the dispatching needs of Yellow Cab and
non-affiliated drivers, maintains the radios in their taxicabs and supplies
emergency radio services they require. Chicago AutoWerks also sells automotive
parts.
COMPETITION
Although Yellow Cab is the largest provider of taxicab related services in
Chicago, it faces competition from a number of other medallion owners who lease
medallions and vehicles to independent operators. The most significant of these
competitors are Flash Cab Company and American United Cab Association. Yellow
Cab management believes that each of these competitors owns approximately 150 to
200 medallions although each competitor operates under a variety of individual
cab service names and logos.
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-Insurance Operations." 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 March 31, 1994, eight
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 $2,650,000 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 requirements including vehicle maintenance, insurance and
inspections, among others. The City Council of Chicago has authority for setting
taxicab rates of fare. Effective January 18, 1994, rates of fare paid by
passengers increased by 10%. However, 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.
ENVIRONMENTAL ISSUES
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.
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INSURANCE OPERATIONS
Country generated approximately 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) during the year ended December 31, 1993. During 1993, 67% of
Country's total premium revenue was attributable to non-affiliated
property/casualty lines, primarily worker's compensation, commercial automobile
and commercial multiple peril. The remainder of Country's premium revenues was
attributable to affiliated taxi liability, collision and worker's compensation
insurance in the State of Illinois. Through its longstanding relationship with
Yellow Cab, Country has developed a comprehensive understanding of the
associated risks of taxicab insurance underwriting and presently is one of the
few voluntary providers of such insurance. Country's strategy is to expand its
non-affiliated personal and commercial/casualty property lines by entering new
markets including southern Illinois and the states surrounding Illinois while
maintaining its affiliated taxi liability and collision business. Country is
currently rated "A" by A.M. Best.
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.
During 1993, new management was brought into Country to review and manage
its lines of business with a view to dropping or reducing its exposure in
certain lines and expanding Country's operations within its geographic region.
Country intends to limit its exposure by not writing in excess of two-and-
one-half times the amount of its statutory surplus, which the Company believes
to be a conservative approach.
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
collision. Country is also applying for licenses in other states, such as
Wisconsin and Indiana. 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 December 31, 1993, the Company employed a total of approximately 5,055
people. 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....................................................... 3,265 546
Automotive Products Operations......................................................... 697 142
Vehicular Operations................................................................... 228 21
Insurance Operations................................................................... 8 148
</TABLE>
Approximately 295 employees in the Company's trailer manufacturing
operations, 286 in the Company's automotive products operations, and 63 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
38
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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
International Controls currently maintains its principal executive offices
at Checker L.P.'s facility in Kalamazoo, Michigan.
The location and general description of the principal properties owned or
leased by the Company are as follows:
<TABLE>
<CAPTION>
OWNED OR LEASED;
IF LEASED,
LOCATION TYPE OF FACILITY AREA/FACILITY SQUARE FOOTAGE EXPIRATION YEAR
- ----------------------------- ------------------------------- ----------------------------- ------------------
<S> <C> <C> <C>
TRAILER MANUFACTURING
OPERATIONS:
Savannah, Georgia............ Manufacturing Plant and Office 61 acres/455,000 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/179,000 sq. ft. Owned
14 Locations in 10 States.... Sales and Service Branches 98 acres/303,000 sq. ft. Owned
15 Locations in 10 States.... Sales and Service Branches 34 acres/218,000 sq. ft. Leased; 1994
to 2015
AUTOMOTIVE PRODUCTS OPERATIONS:
Kalamazoo, Michigan.......... Manufacturing Plant and Office 71 acres/750,000 sq. ft. Owned
South Charleston, Manufacturing Plant and Office 922,000 sq. ft. Leased; 2028
West Virginia...............
VEHICULAR OPERATIONS:
Chicago, Illinois (13 Garages, Parking Lots and 735,000 sq. ft. 11 Owned; 2 Leased
Locations).................. Offices
INSURANCE OPERATIONS:
Chicago, Illinois (3 Offices/Storage Facility 33,000 sq. ft. Leased; 1995 to
Locations).................. 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
39
<PAGE>
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, in his view, ELIC's status as a limited
partner had not been altered.
Motors, Checker L.P. and the Conservator have been in litigation for three
years, each 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. Pursuant to the settlement, the Company will redeem
ELIC's interest in Checker L.P. for $37.0 million, to be paid upon consummation
of the Offering. 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. The California
Court approved the settlement on May 26, 1994.
BOEING LITIGATION
On February 8, 1989, the Boeing Company ("Boeing") filed a lawsuit naming
International Controls, together with three prior subsidiaries of International
Controls, 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 International Controls formerly conducted business operations.
On December 22, 1993, International Controls entered into a settlement with
Boeing, settling all claims asserted by Boeing in the lawsuit. Pursuant to the
settlement terms, International Controls will pay Boeing $12.5 million over the
course of five years, at least $5 million of which is being provided by certain
insurance companies. In accordance with the settlement agreement, Boeing's
claims against International Controls and the three former subsidiaries have
been dismissed and Boeing has released and indemnified International Controls
with respect to certain claims. The Company established a reserve of $7.5
million in 1993 in connection with this matter.
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, International Controls 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. International
Controls and the purchaser have resolved their relative responsibilities for all
claims for cleanup and monitoring costs at the facility through April 1993 and
International Controls paid $350,000 in complete payment of all bills submitted
for work completed prior to that time. International Controls and the purchaser
are continuing to discuss their relative responsibilities for monitoring costs
after that time. International Controls does not believe that its obligations
will be material. The purchaser has also put International Controls on notice
40
<PAGE>
of certain other alleged environmental and other matters for which it intends to
seek indemnification as costs are incurred. International Controls does not
believe that its obligations, if any, to pay these claims will 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 March 31, 1994:
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------------------------------- ----------- --------------------------------------------
<S> <C> <C>
David R. Markin......................................... 63 President, Chief Executive Officer and
Director of International Controls
Allan R. Tessler........................................ 57 Chairman of the Board of International
Controls
Martin L. Solomon....................................... 57 Vice Chairman and Secretary of International
Controls
Wilmer J. Thomas, Jr.................................... 67 Vice Chairman of International Controls
Jay H. Harris........................................... 57 Executive Vice President and Chief Operating
Officer of International Controls
Marlan R. Smith......................................... 50 Treasurer of International Controls
Kevin J. Hanley......................................... 38 Controller of International Controls
Willard R. Hildebrand................................... 54 President and Chief Executive Officer of
Great Dane
Larry D. Temple......................................... 47 Group Vice President of Motors
Jeffrey M. Feldman...................................... 43 President of Yellow Cab
Christopher F. Hammond, III............................. 54 Executive Vice President -- Sales of Great
Dane
Thomas W. Horan......................................... 50 Senior Vice President -- Finance and
Secretary of Great Dane
Fred T. Mote............................................ 59 Senior Vice President -- Operations of Great
Dane
Victor L. Johnson, Jr................................... 76 Senior Vice President -- Legal of Great Dane
John T. Wise............................................ 48 President of SCSM
David Hannah............................................ 38 Treasurer of Great Dane
Robert Barnes........................................... 51 Vice President -- Manufacturing of Motors
</TABLE>
BIOGRAPHICAL INFORMATION
David R. Markin, President and Chief Executive Officer of International
Controls 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.
41
<PAGE>
Allan R. Tessler, Chairman of the Board of International Controls 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, and Allis-Chalmers Corporation, a
manufacturer of miscellaneous fabricated textile products ("Allis-Chalmers"),
and is Chief Executive Officer of IFG since 1987 and of Allis-Chalmers since
1994. Mr. Tessler serves on the Boards of Directors of Jackpot Enterprises,
Inc., an operator of gaming machines, and The Limited, Inc., a manufacturer and
retailer of apparel. 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 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 International Controls
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 International Controls since January
11, 1989, is a private investor. Mr. Thomas served as Treasurer of International
Controls from January 1989 to January 1994. Mr. Thomas serves on the Boards of
Directors of Moore Medical Corp., a pharmaceutical and surgical supply company,
Oak Hills Sportswear Corp., a clothing company, and RCL Capital Corp., a
development stage company whose business objective is to acquire an operating
business.
The executive officers of the International Controls and the other issuers,
in addition to Messrs. Markin, Tessler, Solomon and Thomas, are:
Jay H. Harris has been Executive Vice President and Chief Operating Officer
of International Controls for more than the past five years and a Vice President
of Motors since May 1991. Mr. Harris was a director of International Controls
from 1978 until January 11, 1989.
Marlan R. Smith has been Treasurer of International Controls since January
1994 and Vice President and Treasurer of Motors since March 1988. Prior to being
elected Treasurer of International Controls, he served as Assistant Treasurer
since January 1989.
Kevin J. Hanley has been Controller of International Controls 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.
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.
Jeffrey M. Feldman has been President of Yellow Cab since 1983 and Vice
President of Motors since January 1988.
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.
42
<PAGE>
David Hannah has been Treasurer/Controller of SCSM since 1987.
Christopher F. Hammond, III has been Executive Vice President -- Sales of
Great Dane since August 1990. Prior to being elected Executive Vice President --
Sales, Mr. Hammond served as Senior Vice President -- Sales of Great Dane since
January 1988.
Thomas W. Horan has been Senior Vice President -- Finance of Great Dane
since September 1989 and Secretary of Great Dane since June 1991. For more than
five years prior thereto, Mr. Horan served as Controller of International
Controls Corp.
Fred T. Mote has been Senior Vice President -- Operations of Great Dane
since April 1984.
Victor L. Johnson has been Senior Vice President -- Legal Affairs of Great
Dane since April 1994 and prior thereto as Senior Vice President -- Materials
and Planning of Great Dane since November 1979.
Robert Barnes has been Vice President -- Manufacturing of Motors since 1993
and Assistant Vice President -- Manufacturing Support Services prior thereto.
All directors of each Issuer hold office until the next annual meeting of
stockholders of such Issuer or until their successors are elected and qualified.
Each Issuer's officers are elected annually by their respective boards of
directors and hold office until their successors are qualified and chosen.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Each of Messrs. Markin, Solomon, Tessler and Thomas is an executive officer
of International Controls 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.
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
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, had outstanding principal and
accrued interest as of March 31, 1994 of approximately $423,000 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
43
<PAGE>
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 interest
payments of $704,795 in 1993, $733,356 in 1992 and $897,637 in 1991 pursuant to
the terms of the Existing Notes held by them (See Note G of the Notes to
Consolidated Financial Statements -- December 31, 1993).
COMPENSATION
The following table sets forth the 1993 annual compensation for the Chief
Executive Officers of the Issuers and the five highest paid executive officers
of each Issuer whose total annual salary and bonus expected $100,000, as well as
the total compensation paid to each individual for the Company's 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(12)
President, Chief Executive Officer and 1992 1,230,000 150,000 239,594(1) 2,182(12)
Director of International Controls 1991 1,230,000 0 258,072(1) 915(12)
Jay H. Harris, ............................ 1993 350,000 250,000 0 2,249(12)
Executive Vice President and 1992 326,016 125,000 0 2,182(12)
Chief Operating Officer of International 1991 302,032 50,000 0 915(12)
Controls
Jeffrey M. Feldman, ....................... 1993 210,000 150,000 85,008(2) 2,249(12)
President of Yellow Cab 1992 186,667 150,000 77,755(2) 2,182(12)
1991 138,906 150,000 53,328(2) 659(12)
Martin L. Solomon, ........................ 1993 0 0 400,000(3) 0
Vice Chairman and Secretary of 1992 0 0 400,000(3) 0
International Controls 1991 0 0 405,000(3) 0
Allan R. Tessler, ......................... 1993 0 0 400,000(3) 0
Chairman of the Board of International 1992 0 0 400,000(3) 0
Controls 1991 0 0 405,000(3) 0
Wilmer J. Thomas, Jr., .................... 1993 0 0 400,000(3) 0
Vice Chairman of International Controls 1992 0 0 400,000(3) 0
1991 0 0 405,000(3) 0
Willard R. Hildebrand,..................... 1993 203,500 150,000 7,304(4) 0
President of Great Dane 1992 100,175 105,000 4,133(4) 106,360
1991 31,108 -- 134(4) 0
Christopher F. Hammond, III,............... 1993 131,450 74,000 7,520(5) 0
Executive Vice President of Great Dane 1992 125,500 60,000 7,190(5) 0
1991 122,850 -- 5,772(5) 0
Thomas W. Horan............................ 1993 129,050 74,000 9,921(6) 0
Senior Vice President -- Finance and 1992 122,700 60,000 7,870(6) 0
Secretary of Great Dane 1991 119,600 -- 8,565(6) 0
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION COMPENSATION
- ------------------------------------------- --------- ------------- ----------- --------------- ---------------
Fred T. Moss............................... 1993 $ 128,150 $ 60,000 $ 9,202(7) $ 0
Senior Vice President -- Manufacturing of 1992 123,250 60,000 7,695(7) 0
Great Dane 1991 120,850 -- 8,108(7) 0
<S> <C> <C> <C> <C> <C>
Victor L. Johnson.......................... 1993 118,350 48,000 18,929(8) 0
Senior Vice President -- Legal Affairs of 1992 114,850 29,000 18,624(8) 0
Great Dane 1991 113,350 -- 18,386(8) 0
John Wise.................................. 1993 95,500 101,000 13,397(9) 797(12)
President of SCSM 1992 91,500 56,000 9,420(9) 720(12)
1991 87,500 1,682 5,790(9) 300(12)
David Hannah............................... 1993 69,413 56,000 6,550(10) 825
Treasurer of SCSM 1992 63,530 34,000 2,598(10) 727
1991 59,576 1,183 585(10) 300
Larry Temple............................... 1993 108,600 125,000 2,744(11) 2,248
Group Vice President of Motors 1992 108,600 60,000 2,761(11) 1,493
1991 84,600 7,500 2,771(11) 362
Marlan R. Smith............................ 1993 84,000 35,000 3,416 1,190
Vice President of Motors 1992 84,000 25,000 2,614 1,046
1991 84,000 3,500 2,519 360
<FN>
- --------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
(1) Other compensation
for Mr. Markin includes: 1993 1992 1991
-------- -------- --------
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
-------- -------- --------
-------- -------- --------
</TABLE>
<TABLE>
<S> <C> <C> <C>
(2) Other compensation
for Mr. Feldman includes: 1993 1992 1991
--------- --------- ---------
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
--------- --------- ---------
--------- --------- ---------
(3) Other compensation
for Mr. Smith includes: 1993 1992 1991
--------- --------- ---------
Car............................. $ 1,400 $ 1,283 $ 1,200
Life Insurance................ 2,016 1,331 1,319
--------- --------- ---------
$ 3,416 $ 2,614 $ 2,519
--------- --------- ---------
--------- --------- ---------
(4) Other compensation
for Mr. Hildebrand includes: 1993 1992 1991
--------- --------- ---------
Life Insurance $ 1,560 $ 806 $ 134
Club dues 3,430 2,400 --
Automobile 3,324 927 --
--------- --------- ---------
$ 7,304 $ 4,133 $ 134
--------- --------- ---------
--------- --------- ---------
</TABLE>
45
<PAGE>
<TABLE>
<S> <C> <C> <C>
(5) Other compensation
for Mr. Hammond includes: 1993 1992 1991
--------- --------- ---------
Life Insurance $ 961 $ 720 $ 720
Club Dues 3,820 3,730 3,310
Automobile 2,748 2,740 1,741
--------- --------- ---------
$ 7,529 $ 7,190 $ 5,771
--------- --------- ---------
--------- --------- ---------
</TABLE>
<TABLE>
<S> <C> <C> <C>
(6) Other compensation
for Mr. Horan includes: 1993 1992 1991
--------- --------- ---------
Life Insurance $ 936 $ 150 $ 150
Club Dues 3,430 3,180 2,940
Automobile 5,565 4,540 5,475
--------- --------- ---------
$ 9,921 $ 7,870 $ 8,565
--------- --------- ---------
--------- --------- ---------
</TABLE>
<TABLE>
<S> <C> <C> <C>
(7) Other compensation
for Mr. Mote includes: 1993 1992 1991
--------- --------- ---------
Life Insurance 1,948 1,530 1,530
Club Dues 860 840 840
Automobile 6,414 5,325 5,736
--------- --------- ---------
$ 9,222 $ 7,695 $ 8,106
--------- --------- ---------
--------- --------- ---------
(8) Other compensation
for Mr. Johnson includes: 1993 1992 1991
--------- --------- ---------
Life Insurance $ 10,560 $ 10,560 $ 10,560
Club Dues 3,420 3,180 3,000
Automobile 4,949 4,884 4,826
--------- --------- ---------
$ 18,929 $ 18,624 $ 18,386
--------- --------- ---------
--------- --------- ---------
(9) Other compensation
for Mr. Wise includes: 1993 1992 1991
--------- --------- ---------
Travel Allowance $ 4,800 $ 4,800 $ 4,800
Club Dues 1,562 1,537 505
Profit Sharing 6,550 2,596 --
Automobile 485 485 485
--------- --------- ---------
$ 13,397 $ 9,420 $ 5,790
--------- --------- ---------
--------- --------- ---------
(10) Other compensation
for Mr. Hannah includes: 1993 1992 1991
--------- --------- ---------
Club Dues $ -- $ -- $ 585
Profit Sharing 6,580 2,598 --
--------- --------- ---------
$ 6,550 $ 2,598 $ 585
--------- --------- ---------
--------- --------- ---------
(11) Other compensation
for Mr. Temple includes: 1993 1992 1991
--------- --------- ---------
Life insurance $ 1,344 $ 1,331 $ 1,319
Automobile 1,400 1,430 1,452
--------- --------- ---------
$ 2,744 $ 2,761 $ 2,771
--------- --------- ---------
--------- --------- ---------
(12) Consulting fees.
(13) Matching contributions under the Partnership 401(k) plan.
</TABLE>
46
<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 International Controls memorialized in writing their agreement, pursuant to
which Mr. Markin has been compensated by International Controls since January
11, 1989, on substantially the same terms as are set forth above.
International Controls 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 International Controls 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 International Controls. Upon the happening of certain events,
including a change in control (as defined therein) of International Controls 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. International Controls has agreed to
indemnify Mr. Harris for certain liabilities to the full extent allowed by law.
Motors has guaranteed International Controls' obligations.
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
47
<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 $275,000.
COMPENSATION PURSUANT TO PLANS
GREAT DANE PENSION PLAN
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, and the Employee
Retirement Income Security Act of 1974, as amended, with respect to the annual
amount of benefits provided by employer contributions.
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 the Company 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>
For those executive officers named above, the following are credited years
of service under the Retirement Plan and 1993 Salary Covered by the Retirement
Plan.
<TABLE>
<CAPTION>
EXPECTED CREDITED 1993 SALARY
CREDITED YEARS OF YEARS OF SERVICE COVERED BY
SERVICE AT 65 PENSION PLAN
------------------- ----------------- -------------
<S> <C> <C> <C>
Willard R. Hildebrand.............................................. 3 14 $ 235,840
Christopher F. Hammond III......................................... 30 30 207,600
Thomas W. Horan.................................................... 10 25 205,950
Fred T. Mote....................................................... 30 30 190,300
</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
48
<PAGE>
approximately $74,000 per year at age 65. Mr. Horan has an aggregate of 16 years
of benefit service under the Retirement Plan (10 years) and the amended and
Restated International Controls Corp. Pension Plan (6 years) and will receive
benefits of approximately $88,000 per year at age 65. Mr. Johnson elected to
start receiving benefits under the Retirement Plan at his normal retirement date
and is currently receiving benefits under the Retirement Plan of approximately
$25,000 per year.
PARTNERSHIP 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 the
Company.
Checker L.P. also maintains the Checker Motors Co., L.P. Excess Benefit
Retirement Plan (the "Excess Benefit Plan"). An employee of Checker L.P. will
become a participant in the 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 Internal Revenue Code
of 1986, as amended. The amount that the participant is entitled to receive
under the 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 Excess Benefit Plan. Considered compensation
under the Excess Benefit Plan is limited to $300,000.
Set forth below are the estimated annual benefits for participants in the
Pension Plan (including benefits payable under the 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) 10 20 30 40 45
- --------------------------------------------------- --------- --------- ----------- ----------- -----------
<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
Larry D. Temple................................. 22 40 233,600
</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.
49
<PAGE>
For those executive officers named above, the following table sets forth the
benefits payable pursuant to the Salary Plan:
<TABLE>
<CAPTION>
ANNUAL SURVIVOR
ANNUAL BENEFIT BENEFIT PAYABLE TOTAL
PAYABLE UPON TOTAL BENEFIT UPON DEATH PRIOR SURVIVORSHIP
ATTAINING AGE PAYABLE OVER TO ATTAINING AGE BENEFIT PAYABLE
65 THE 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
Larry D. Temple........................... 31,200 312,000 62,400 $ 187,200
</TABLE>
COMPENSATION OF DIRECTORS
The directors did not receive any fees for their services as directors in
1993. See "Compensation Committee Interlocks and Insider Participation."
50
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Jeffrey M. Feldman is the nephew of David R. Markin.
Checker L.P. has borrowed $2.5 million from Country, which loan is secured
by certain of Checker L.P.'s property.
See also "Compensation Committee Interlocks and Insider Participation."
OWNERSHIP OF COMMON STOCK
The Common Stock, which is the only class of stock of International
Controls, is owned as follows:
<TABLE>
<CAPTION>
NO. OF SHARES OF COMMON
STOCK OF RECORD AND PERCENT OF
NAME BENEFICIALLY OWNED CLASS
- ------------------------------ ----------------------- ----------
<S> <C> <C>
David R. Markin............... 2,936,927.5 32.5
Martin L. Solomon............. 2,033,257.5 22.5
Allan R. Tessler.............. 2,033,257.5 22.5
Wilmer J. Thomas, Jr.......... 2,033,257.5 22.5
-----
100.0%
-----
-----
</TABLE>
The address of each of the shareholders is c/o International Controls Corp.,
2016 North Pitcher Street, Kalamazoo, Michigan 49007.
DESCRIPTION OF NEW CREDIT FACILITY
GENERAL
The following is a summary of the anticipated material terms and conditions
of the New Credit Facility. This summary does not purport to be a complete
description of the New Credit Facility and is subject to the detailed provisions
of the Loan Agreement (the "Loan Agreement") and the various related documents
to be entered into in connection with the New Credit Facility. A draft copy of
the Loan Agreement will be filed as an exhibit to the Registration Statement of
which this Prospectus is a part. The completion of the Offering is subject to
the simultaneous consummation of the New Credit Facility.
Concurrently with the issuance of the Notes, International Controls and the
other Issuers (Motors, Checker L.P., SCSM, Yellow Cab Company, CMC Kalamazoo
Inc. and Chicago AutoWerks Inc. (collectively, the "Checker Borrowers") and
Great Dane, Great Dane Tennessee, Inc., Great Dane Nebraska, Inc. and Great Dane
Los Angeles, Inc. (collectively, the "Great Dane Borrowers" and, together with
International Controls and the Checker Borrowers, (the "Borrowers")), will enter
into the New Credit Facility. In connection with the New Credit Facility, NBD
Bank, N.A. ("NBD") has formed a syndicate of lenders (the "Lenders") for which
NBD will serve as agent ("Agent"). The New Credit Facility will consist of a
five-year revolving credit facility of up to an aggregate of $95 million
(including a provision for commercial letters of credit and up to $15 million
which can be utilized for standby letters of credit), subject to International
Controls' ability to meet certain financial tests. The obligations of the
Borrowers under the New Credit Facility will be secured by a lien on the
inventory, accounts receivable and intangible assets, including chattel paper,
instruments, documents and general intangibles (to the extent such intangible
assets are not related to the Shared Collateral or the Note Collateral). In
addition, the Borrowers will pledge to _____________________, as collateral
agent (the "Collateral Agent"), for the benefit of the holders of the Senior
Notes and the Lenders, on an equal and ratable basis, a security interest in the
Pledged Stock and a lien on certain patents, trademarks and other intellectual
property of the Borrowers, including the general intangibles related thereto.
Permissible levels of borrowing by International Controls, the Checker
Borrowers and the Great Dane Borrowers under the New Credit Facility will be
determined based on eligible inventory and
51
<PAGE>
eligible accounts receivable of International Controls, the Checker Borrowers
and the Great Dane Borrowers, respectively (collectively, "Borrowing Base
Requirements"). It is anticipated that the initial borrowing under the New
Credit Facility will be approximately $48.4 million (assuming that the
Refinancing had been consummated as of March 31, 1994) (However, International
Controls, as a holding company, does not presently have any availability (other
than through its subsidiaries) under the New Credit Facility.) All of the
initial borrowing under the New Credit Facility will be used by the Issuers to
repay a portion of the existing indebtedness of the Great Dane Borrowers and the
Checker Borrowers and to pay transaction fees and expenses. The Company
estimates that, upon consummation of the New Credit Facility, Borrowing Base
Requirements would permit additional borrowing of at least $32.2 million at
March 31, 1994, subject to the Company's ability to meet certain financial
tests.
INTEREST RATES; FEES
Until the later of (a) a date which is 180 days after the closing of the New
Credit Facility and (b) the date on which International Controls consummates a
public offering in which the net proceeds to International Controls is at least
$20 million (the "Adjustment Date"), amounts outstanding under the New Credit
Facility will bear interest at a rate per annum equal, at the option of the
Borrowers, to (i) 3.00% above the London Interbank Offered Rate of Interest
("LIBOR") or (ii) .50% plus the greater of (a) NBD's prime rate of interest and
(b) 1.00% above the Federal Funds Rate (the "Base Rate"). Thereafter, amounts
outstanding under the New Credit Facility will bear interest at a fluctuating
rate per annum equal, at the option of the Company, to LIBOR plus the Applicable
Margin or the Base Rate plus the Applicable Margin. The Applicable Margin will
be determined on the basis of the Company's ratio of EBIT to Interest Expense
(as both are defined in the Loan Agreement). The Applicable Margin will range
from 0% to .50% with respect to the Base Rate and from 2.00% to 2.75% with
respect to LIBOR.
Until the Adjustment Date, the Borrowers will pay an unused revolving credit
fee of .50% per annum of the average unused commitment under the New Credit
Facility. Thereafter such fee will range from .375% to .50% (depending upon the
Company's ratio of EBIT to Interest Expense) per annum. The Borrowers will pay
an agency fee as the Borrowers and the Agent may from time to time agree and a
closing fee of $ . If International Controls does not reduce its
indebtedness by at least $20 million on or before June 30, 1995, additional fees
will be payable until such time as its indebtedness is so reduced.
COLLATERAL
The obligations of the Borrowers under the New Credit Facility will be
secured by a lien on the inventory, accounts receivable and intangible assets,
including chattel paper, instruments, documents and general intangibles (to the
extent such intangible assets are not related to the Shared Collateral or the
Note Collateral. In addition, the collateral will include the Pledged Stock and
certain patents, trademarks and other intellectual property of the Borrowers,
all of which will be pledged on an equal and ratable basis with the pledge
securing the Senior Notes.
COVENANTS
Under the Loan Agreement, subsidiaries of International Controls will be
prohibited from paying dividends or making distributions or loans to
International Controls (i) if a payment default is continuing under the New
Credit Facility or a change in control (as defined in the Loan Agreement) or
certain events of insolvency occur, or (ii) upon the occurrence of a default
under the New Credit Facility (other than a default described in (i) above)
until the earlier of (a) the 179th day following delivery of notice of such
occurrence to International Controls or (b) the curing or waiving of such other
default. Since International Controls is the sole obligor under the Senior
Subordinated Notes, this prohibition would prevent International Controls from
receiving cash from its subsidiaries required to make interest and principal
payments on the Senior Subordinated Notes with respect to the Issuers.
Notwithstanding the foregoing, the holders of the Senior Subordinated Notes are
not restricted under the terms of the Indentures from accelerating the
Indebtedness thereunder upon the happening of an event of default under the
Indentures. Since the Issuers are co-obligors under the Senior Notes, this
prohibition will not have a similar
52
<PAGE>
effect on holders of the Senior Notes with respect to the Issuers. The Loan
Agreement will also contain certain other restrictive covenants, including
various reporting requirements and financial covenants requiring specified
levels of current assets to current liabilities and cash flow, specified fixed
charges and interest coverage ratios, and restrictions on the payment of
dividends and compensation by the Company to certain affiliates. Other
restrictive covenants will limit the incurrence of additional indebtedness, the
incurrence of liens, capital expenditures, certain investments, certain
affiliate transactions, the acquisition or disposition of assets outside of the
ordinary course of business and the use of proceeds from asset sales, in each
case with certain exceptions, or subject to the prior approval of the Lenders.
The Loan Agreement will also prohibit any optional payment, prepayment or
redemption of the Senior Notes and any subordinated debt, including the Senior
Subordinated Notes, with certain exceptions as well as distributions from the
Checker Borrowers or the Great Dane Borrower to International Controls to make
sinking fund payments or payments of interest or principal on the Senior Notes
(which payments are expected to be made directly by the Checker Borrowers and
the Great Dane Borrowers). After giving effect to the Refinancing, the Company
expects to be in compliance with the financial and other covenants described
above.
EVENTS OF DEFAULT
Events of default under the Loan Agreement will include (i) any failure by
the Company to pay when due amounts owing under the New Credit Facility, (ii)
any failure to meet certain covenants in the Loan Agreement (subject, in certain
circumstances, to materiality standards and cure periods), (iii) the breach of
any representations or warranties in the Loan Agreement (subject, in certain
circumstances, to materiality standards and cure periods), (iv) any failure to
pay amounts (in excess of certain levels) due under certain other agreements or
defaults that result in or permit the acceleration of certain other indebtedness
(including the Notes), (v) unsatisfied judgments in excess of certain amounts,
(vi) a change of control, (vii) certain events of bankruptcy, insolvency or
dissolution, (viii) any Default or Event of Default under the Senior Note
Indenture or the Senior Subordinated Note Indenture and (ix) any Change of
Control.
53
<PAGE>
DESCRIPTION OF UNITS
Each Unit offered hereby consists of $1,000 principal amount of the Senior
Subordinated Notes and one Warrant to purchase shares of Common Stock. The
Warrants and the Senior Subordinated Notes will not be separately transferable
until the Separation Date. Prior to separation, the Units will be physically
represented by the Senior Subordinated Notes bearing an endorsement representing
beneficial ownership of the related Warrants. Prior to separation, transfer of a
Senior Subordinated Note will also constitute transfer of a holder's beneficial
interest in the related Warrant. On the Separation Date, each Unit will be
deemed to separate into a Senior Subordinated Note and a Warrant and from and
after such time, each Senior Subordinated Note will represent beneficial
ownership of such Senior Subordinated Note only. On or as soon as practicable
after the Separation Date, the Warrant Agent will deliver to each holder of
Senior Subordinated Notes a Warrant certificate or certificates representing the
aggregate number of Warrants represented by such holder's Units immediately
prior to separation.
DESCRIPTION OF WARRANTS
The Warrants will be issued pursuant to a warrant agreement (the "Warrant
Agreement"), dated as of , 1994, between the Company and American
Stock Transfer & Trust Company, as warrant agent (the "Warrant Agent"), a copy
of which is attached as an exhibit to the Registration Statement. The following
summary of certain provisions of the Warrant Agreement does not purport to be
complete and is qualified in its entirety by reference to the Warrant Agreement,
including the definitions therein of certain terms. For purposes of this Section
of the Prospectus, the "Company" shall mean International Controls without its
subsidiaries.
GENERAL
Each Warrant will initially entitle the holder thereof to purchase
shares of Common Stock of the Company (the "Exercise Rate"), at an exercise
price of $.01 per share (the "Exercise Price"), which represent in the aggregate
7.5% of the outstanding Common Stock of International Controls on a fully
diluted basis as of the date of issuance of the Warrants. In the event that an
Initial Public Offering is not consummated on or prior to _________, 1995, the
Exercise Rate will be increased to ___ shares of Common Stock of International
Controls, which represent in the aggregate 10.0% of the outstanding Common Stock
of International Controls on a fully diluted basis as of the date of issuance of
the Warrants. Unless exercised, the Warrants will automatically expire on August
1, 2004.
The Warrants may be exercised on or after the Exercisability Date by
surrendering to the Company the Warrant certificates evidencing such Warrants,
if any, with the accompanying form of election to purchase, properly completed
and executed, together with payment of the Exercise Price. Payment of the
Exercise Price may be made in the form of cash or a certified or official bank
check payable to the order of the Company. Upon surrender of the Warrant
certificate and payment of the Exercise Price, the Warrant Agent will deliver or
cause to be delivered, to or upon the written order of such holder, stock
certificates representing the number of whole shares of Common Stock or other
securities or property to which such holder is entitled. If less than all of the
Warrants evidenced by a Warrant certificate are to be exercised, a new Warrant
certificate will be issued for the remaining number of Warrants. "Exercisability
Date" is defined in the Warrant Agreement as the date of occurrence of any
Exercise Event. "Exercise Event" is defined in the Warrant Agreement as February
1, 2004, or the earlier occurrence of (i) a Change of Control or (ii) an Initial
Public Offering. "Initial Public Offering" means an underwritten initial public
offering of Qualified Capital Stock (other than Preferred Stock) of the Company
(as such terms are defined in the Indentures) pursuant to a registration
statement that has been declared effective by the Commission pursuant to the
Securities Act which results in gross cash proceeds to the Company of not less
than $20 million.
No service charge will be made for any exercise, exchange or registration of
transfer of Warrant certificates, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
54
<PAGE>
No fractional shares of Common Stock will be issued upon exercise of the
Warrants. In lieu thereof, the Company will pay a cash adjustment. The holders
of the Warrants have no right to vote on matters submitted to the stockholders
of the Company and have no right to receive cash dividends (other than
extraordinary dividends). The holders of the Warrants are not entitled to share
in the assets of the Company in the event of the liquidation, dissolution or
winding up of the Company's affairs.
ADJUSTMENTS
In addition to the adjustments described above in the event of an Initial
Public Offering, the number of shares of Common Stock purchasable upon the
exercise of the Warrants will be subject to adjustment in certain events,
including: (i) the issuance by the Company of dividends (or other distributions)
on Common Stock payable in Common Stock or other shares of the Company's capital
stock; (ii) subdivisions, combinations and reclassifications of the Common
Stock; (iii) the issuance to all holders of Common Stock of rights, options or
warrants entitling them to subscribe for Common Stock or securities convertible
into, or exchangeable or exercisable for, Common Stock at an offering price (or
with an initial conversion, exchange or exercise price plus such offering price)
which is less than the current market price per share (as defined) of the Common
Stock; (iv) the distribution to all holders of Common Stock of any of the
Company's assets, debt securities or any rights or warrants to purchase
securities (excluding those rights and warrants referred to in clause (iii)
above); (v) the issuance of shares of Common Stock for a consideration per share
less than the current market price; and (vi) the issuance of securities
convertible into or exchangeable for shares of Common Stock for a conversion or
exchange price less than the current market price for a share of Common Stock.
In the event of a taxable distribution to holders of Common Stock which
results in an adjustment to the number of shares of Common Stock or other
consideration for which a Warrant may be exercised, the holders of the Warrants
may, in certain circumstances, be deemed to have received a distribution subject
to United States federal income tax as a dividend. See "Certain Federal Income
Tax Consequences."
No anti-dilution adjustment will be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the Exercise
Rate; PROVIDED, HOWEVER, that any adjustment which is not made will be carried
forward and taken into account in any subsequent adjustment.
In case of certain consolidations or mergers of the Company, or the sale of
all or substantially all of the assets of the Company to another corporation,
each Warrant shall thereafter be exercisable for the right to receive the kind
and amount of shares of stock or other securities or property to which such
holder would have been entitled as a result of such consolidation, merger or
sale had the Warrants been exercised immediately prior thereto.
AMENDMENT
From time to time, the Company and the Warrant Agent, without the consent of
the holders of the Warrants, may amend or supplement the Warrant Agreement for
certain purposes, including curing defects or inconsistencies or making any
change that does not materially adversely affect the rights of any holder. Any
amendment or supplement to the Warrant Agreement that has a material adverse
effect on the interests of the holders of the Warrants shall require the written
consent of the holders of a majority of the then outstanding Warrants. The
consent of each holder of the Warrants affected shall be required for any
amendment pursuant to which the Exercise Price would be increased or the number
of shares of Common Stock purchasable upon exercise of Warrants would be
decreased (other than pursuant to adjustments provided in the Warrant
Agreement.)
REPORTS
Whether or not the Company is subject to Section 13(a) or 15(d) of the
Exchange Act, the Company will, to the extent permitted under the Exchange Act,
file with the Commission the annual reports, quarterly reports and other
documents which the Company would have been or is required to file with the
Commission pursuant to such Section 13(a) or 15(d) if the Company were or is so
subject, such documents to be filed with the Commission on or prior to the
respective dates (the "Required Filing Dates") by which the Company would have
been or is required so to file such documents if the Company
55
<PAGE>
were or is so subject. The Company will also in any event (x)(i) within 15 days
of each Required Filing Date file with the Warrant Agent copies of the annual
reports, quarterly reports and other documents which the Company would have been
or is required to file with the Commission pursuant to Section 13(a) or 15(d) of
the Exchange Act if the Company were or is subject to such Section and (ii)
within the earlier of 30 days after the filing of such report or other document
with the Warrant Agent and 45 days of each such Required Filing Date transmit
such report or document by mail to all holders of the Warrants, as their names
and addresses appear in the security register, without cost to such holders and
(y) if filing such documents by the Company with the Commission is not permitted
under the Exchange Act, promptly upon written request supply copies of such
documents to any prospective holders of the Warrants at the Company's cost.
REGISTRATION RIGHTS
The holders of Warrants will be entitled, under certain specified
circumstances and subject to certain limitations, to require the Company to
register under the Securities Act the shares of Common Stock into which the
Warrants have been, or simultaneously with the registration will be, exercised
into Common Stock (the "Registrable Shares"). On or after 120 days following an
Initial Public Offering, the Company will be required to register the
Registrable Shares upon demand of the holders of Registrable Shares on not more
than two occasions so long as the amount of Registrable Shares to be registered
on each occasion has an aggregate fair market value (in the good faith opinion
of the Company) of $5.0 million or more. In addition, the Company will be
required to include the Registrable Shares in a registration of shares of Common
Stock initiated by the Company under the Securities Act (other than an Initial
Public Offering) in which the aggregate gross proceeds to the Company exceed
$20.0 million and any other registration of Common Stock initiated by the
Company under the Securities Act thereafter. In the event the aggregate number
of Registrable Shares requested to be included in any registration, together, in
the case of a registration initiated by the Company, with the shares of Common
Stock to be included in such registration, exceeds the number which in the
opinion of the managing underwriter can be sold in such offering without
materially affecting the offering price of such shares, the number of shares of
each requesting holder to be included in such registration will be reduced pro
rata based on the aggregate number of shares for which registration was
requested.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of International Controls consists of
shares of Common Stock, par value $.01 per share, of which 9,036,700
shares were outstanding on May 1, 1994. As of May 1, 1994, there were 4 holders
of record of the Common Stock. See "Ownership of Common Stock." Upon completion
of the Offering, shares will be issuable upon exercise of the Warrants. All
of the outstanding shares and shares issuable upon exercise of the Warrants will
be "restricted" shares as defined in Rule 144 promulgated under the Securities
Act. All current stockholders of International Controls have agreed not to
offer, sell, or otherwise dispose of any shares of Common Stock without the
prior written consent of the Underwriters for a period of 90 days after the date
of this Prospectus.
The following summary description of International Controls' capital stock
is qualified in its entirety by reference to the Certificate of Incorporation,
as amended, and By-Laws of International Controls, copies of which have been
filed with the Commission.
COMMON STOCK
Each holder of shares of Common Stock is entitled to one vote for each
outstanding share of Common Stock owned by him on each matter properly submitted
to the stockholders for their vote.
Except as may be limited by the terms and provisions of the Indentures and
the New Credit Facility, holders of Common Stock are entitled to any dividend
declared by the Board of Directors out of funds legally available for such
purpose. See "Risk Factors -- Dividend Policy" and "Dividends." Holders of
56
<PAGE>
Common Stock are entitled to receive on a pro rata basis all remaining assets of
International Controls available for distribution to the holders of Common Stock
in the event of the liquidation, dissolution, or winding up of International
Controls.
Holders of Common Stock have no preemptive or other subscription rights, and
there are no conversion rights or redemption or sinking fund provisions with
respect to such shares. All of the outstanding shares of Common Stock are, and
the shares of Common Stock issuable upon the exercise of the Warrants will be,
upon issuance and payment therefor, fully paid and nonassessable.
TRANSFER AGENT
The transfer agent for the Common Stock will be American Stock Transfer &
Trust Company, New York, New York.
DESCRIPTION OF NOTES
The Senior Notes offered hereby will be issued under an indenture to be
dated as of , 1994 (the "Senior Note Indenture") between
International Controls, Great Dane, Great Dane Trailers Tennessee, Inc., Great
Dane Trailers Nebraska, Inc., Great Dane Los Angeles, Inc., Motors, Checker
L.P., CMC Kalamazoo Inc., Yellow Cab Company, Chicago AutoWerks Inc. and SCSM
(collectively, the "Issuers") and First Fidelity Bank, National Association as
trustee (the "Senior Note Trustee"). The Senior Subordinated Notes will be
issued under an indenture to be dated as of , 1994 (the "Senior
Subordinated Note Indenture" and, together with the Senior Note Indenture, the
"Indentures") between International Controls and Marine Midland Bank, as trustee
(the "Senior Subordinated Note Trustee" and, together with the Senior Note
Trustee, the "Trustees"). Any reference to a "Trustee" means the Senior Note
Trustee or the Senior Subordinated Note Trustee as the context may require. Any
reference to an "Indenture" means the Senior Note Indenture or the Senior
Subordinated Note Indenture as the context may require. Any reference to the
"Issuers" means, in the case of the Senior Notes and the Senior Note Indenture,
all the Issuers, and in the case of the Senior Subordinated Notes and the Senior
Subordinated Note Indenture, International Controls, as the context may require.
References below in this Section of the Prospectus to the "Company" shall mean
International Controls without its subsidiaries. References to "(Section )"
mean the applicable Section of each Indenture.
Copies of the proposed forms of the Indentures have been filed as exhibits
to the Registration Statement of which this Prospectus is a part. The Indentures
are subject to and governed by the Trust Indenture Act. The following summary of
the material provisions of the Indentures does not purport to be complete, and
where reference is made to particular provisions of the Indentures, such
provisions, including the definitions of certain terms, are qualified in their
entirety by reference to all of the provisions of the Indentures and those terms
made a part of the Indentures by the Trust Indenture Act. For definitions of
certain capitalized terms used in the following summary, see "-- Certain
Definitions."
GENERAL
The Senior Notes will mature on November 1, 2001, will be limited to $200
million aggregate principal amount, and will be joint and several senior secured
obligations of the Issuers. See "-- Security," below. The Senior Subordinated
Notes will mature on August 1, 2004, will be limited to $100 million aggregate
principal amount, and will be senior subordinated obligations of the Company.
The Senior Notes will bear interest from , 1994 or from the most recent
interest payment date to which interest has been paid, payable semiannually on
May 1 and November 1, each year, commencing November 1, 1994, to the Person in
whose name the Senior Note (or any predecessor Senior Note) is registered at the
close of business on the or next preceding such interest
payment date. The Senior Subordinated Notes will bear interest from , 1994
or from the most recent interest payment date to which interest has been paid,
payable semiannually on February 1 and August 1, each year, commencing February
1, 1995, to the Person in whose name the Senior Subordinated Note (or any
predecessor Senior Subordinated Note) is registered at the close of business on
the or next preceding such interest payment date.
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes will be exchangeable and transferable at the office or agency of
the Issuers in The City of New York maintained for such purposes; PROVIDED,
HOWEVER, that payment of interest may be made at the option of the Issuers
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by check mailed to the Person entitled thereto as shown on the security
register. (Sections 301, 305, 1002) The Notes will be issued only in fully
registered form without coupons, in denominations of $1,000 and any integral
multiple thereof. (Section 302) No service charge will be made for any
registration of transfer, exchange or redemption of Notes, except in certain
circumstances for any tax or other governmental charge that may be imposed in
connection therewith. (Section 305)
RANKING
The Senior Notes will be joint and several senior secured obligations of the
Issuers and will rank PARI PASSU in right of payment with all other senior
Indebtedness of the Issuers and senior in right of payment to all subordinated
obligations of the Issuers. The Senior Subordinated Notes will be senior
subordinated obligations of the Company and will be subordinated in right of
payment to all Senior Indebtedness (including, without limitation, the Senior
Notes and the obligations under the New Credit Facility), PROVIDED, HOWEVER,
that the Senior Subordinated Notes will rank senior in right of payment to all
existing and future Indebtedness of the Company that is expressly subordinated
to Senior Indebtedness (as defined below) except for any future Indebtedness of
the Company which expressly provides that it is PARI PASSU with the Senior
Subordinated Notes (and, until redemption thereof, the 12 3/4% Debentures).
After giving effect to the sale of the Notes and the application of the
estimated net proceeds of the Refinancing, the Issuers would have had $48.4
million of Indebtedness ranking PARI PASSU in right of payment with the Senior
Notes and $248.4 million of Indebtedness ranking senior in right of payment to
the Senior Subordinated Notes at March 31, 1994.
As a result of the Company's holding company structure, the Company's
creditors, including the holders of the Senior Subordinated Notes, will
effectively be subordinated to all creditors of the Company's subsidiaries,
including, but not limited to, trade creditors, lenders under the New Credit
Facility and holders of the Senior Notes. All of the Company's operations are
conducted, substantially all of the tangible assets of the Company are held by,
and all of the Company's operating revenues are derived from, operations of its
subsidiaries. Therefore, the Company's ability to make interest and principal
payments when due to holders of the Senior Subordinated Notes, or to repurchase
the Senior Subordinated Notes in the event of a Change in Control, is entirely
dependent upon the receipt of sufficient funds from its subsidiaries. The
Company's subsidiaries are separate and distinct legal entities and have no
obligations, contingent or otherwise, to pay any amounts due pursuant to the
Senior Subordinated Notes or to make any funds available therefor, whether in
the form of loans, dividends or otherwise. In the event of the dissolution,
bankruptcy, liquidation or reorganization of the Company, the holders of the
Senior Subordinated Notes may not receive any payments with respect to the
Senior Subordinated Notes until after the payment in full of the claims of the
creditors of the Company's subsidiaries. After giving effect to the Refinancing,
the subsidiaries would have had total liabilities (including trade payables,
obligations under the New Credit Facility and the Senior Notes) of $541.5
million at March 31, 1994.
In addition, by reason of the subordination of the Senior Subordinated
Notes, in the event of liquidation or insolvency, holders of Senior Indebtedness
may recover more, ratably, than the holders of the Senior Subordinated Notes,
and funds which would be otherwise payable to the holders of the Senior
Subordinated Notes will be paid to the holders of the Senior Indebtedness in
full.
SENIOR NOTE INDENTURE SAVINGS CLAUSE
____The Senior Note Indenture provides that the obligations under the Senior
Notes or Senior Note Indenture of any Issuer (other than International Controls)
will be reduced to the extent necessary to prevent the obligations of such
Issuer under the Senior Note Indenture or the Senior Notes from violating or
becoming voidable under applicable law relating to fraudulant conveyance or
fraudulent transfer or similar laws affecting the rights of creditors generally.
SUBORDINATION OF SENIOR SUBORDINATED NOTES
The payment of the principal of, premium, if any, and interest on, the
Senior Subordinated Notes will be subordinated, as set forth in the Senior
Subordinated Indenture, in right of payment to the prior payment in full of all
Senior Indebtedness, in cash or cash equivalents or in any other form as
acceptable to holders of Senior Indebtedness.
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Upon the occurrence of any default in the payment of principal, premium, if
any, or interest on any Designated Senior Indebtedness, whether at maturity or
otherwise, no payment (other than payments previously made pursuant to the
provisions described under "-- Defeasance or Covenant Defeasance of Indentures")
or distribution of any assets of the Company of any kind or character (excluding
certain permitted issuances of equity or subordinated securities) shall be made
by the Company on account of the principal of, premium, if any, or interest on,
the Senior Subordinated Notes or any other Indenture Obligation under the Senior
Subordinated Note Indenture or on account of the purchase, redemption,
defeasance or other acquisition of or in respect of the Senior Subordinated
Notes unless and until such default has been cured, waived, or has ceased to
exist or such Designated Senior Indebtedness shall have been discharged or paid
in full, in cash or cash equivalents or in any other form as acceptable to the
holders of Senior Indebtedness.
Upon the occurrence of any default other than a payment default with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated (a "Non-payment Default"), and after any applicable grace period
and the receipt by the Senior Subordinated Indenture Trustee and the Company
from a representative of the holder or the holder of any Designated Senior
Indebtedness of a written notice of such default, no payment (other than
payments previously made pursuant to the provisions described under "--
Defeasance or Covenant Defeasance of Indentures") or distribution of any assets
of the Company of any kind or character (excluding certain permitted equity or
subordinated securities) may be made by the Company on account of any principal
of, premium, if any, or interest on, the Senior Subordinated Notes or any other
Indenture Obligation under the Senior Subordinated Note Indenture or on account
of the purchase, redemption, defeasance, or other acquisition of or in respect
of, the Senior Subordinated Notes for the period specified below (the "Payment
Blockage Period").
The Payment Blockage Period shall commence upon the receipt of notice of the
Non-payment Default by the Senior Subordinated Note Trustee and the Company from
a representative of the holder or the holder of any Designated Senior
Indebtedness and shall end on the earliest to occur of (i) 179 days after
receipt of such written notice by the Senior Subordinated Note Trustee (provided
such Designated Senior Indebtedness as to which notice was given shall not
theretofore have been accelerated), (ii) the date on which such Non-payment
Default is cured, waived or ceases to exist or on which such Designated Senior
Indebtedness is discharged or paid in full, in cash or cash equivalents or in
any other form as acceptable to the holders of such Designated Senior
Indebtedness, or (iii) the date on which such Payment Blockage Period shall have
been terminated by written notice to the Company or the Senior Subordinated Note
Trustee from the representatives of holders of Designated Senior Indebtedness or
the holder of any Designated Senior Indebtedness initiating such Payment
Blockage Period, after which, in the case of clause (i), (ii), or (iii), the
Company shall promptly resume making any and all required payments in respect of
the Senior Subordinated Notes, including any missed payments. In no event will a
Payment Blockage Period extend beyond 179 days from the date of the receipt by
the Senior Subordinated Note Trustee of the notice initiating such Payment
Blockage Period (such 179-day period referred to as the "Initial Blockage
Period"). Any number of notices of Non-payment Defaults may be given during the
Initial Blockage Period; PROVIDED that during any period of 365 consecutive days
only one such Payment Blockage Period may commence and the duration of such
period may not exceed 179 days. No Non-payment Default with respect to
Designated Senior Indebtedness that existed or was continuing on the date of the
commencement of any Payment Blockage Period will be, or can be, made the basis
for the commencement of a second Payment Blockage Period, whether or not within
a period of 365 consecutive days, unless such Non-payment Default has been cured
or waived for a period of not less than 90 consecutive days. (Section 1203 of
the Senior Subordinated Note Indenture only)
If the Company fails to make any payment on the Senior Subordinated Notes
when due or within any applicable grace period, whether or not on account of the
payment blockage provisions referred to above, such failure would constitute an
Event of Default under the Senior Subordinated Note Indenture and would enable
the holders of the Senior Subordinated Notes to accelerate the maturity thereof.
See "-- Events of Default."
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The Senior Subordinated Indenture will provide that in the event of (a) any
insolvency or bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding in connection therewith,
relative to the Company or to its assets or (b) any liquidation, dissolution or
other winding up of the Company whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy or (c) any assignment for the benefit of
creditors or any other marshalling of assets or liabilities of the Company, all
Senior Indebtedness must be paid in full, in cash or cash equivalents or in any
other form as acceptable to the holders of Senior Indebtedness, before any
payment or distribution (excluding distributions of certain permitted equity or
subordinated securities) is made on account of the principal of, premium, if
any, or interest on the Senior Subordinated Notes.
"Senior Indebtedness" under the Senior Subordinated Note Indenture means the
principal of, premium, if any, and interest (including interest accruing after
the filing of a petition initiating any proceeding under any state, federal or
foreign bankruptcy laws whether or not allowed as a claim in such proceeding) on
any Indebtedness of the Company (other than as otherwise provided in this
definition), whether outstanding on the date of the Senior Subordinated Note
Indenture or thereafter created, incurred or assumed, and whether at any time
owing, actually or contingent, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Senior Subordinated Notes. Without
limiting the generality of the foregoing, "Senior Indebtedness" shall include
the principal of, premium, if any, and interest (including interest accruing
after the filing of a petition initiating any proceeding under any state,
federal or foreign bankruptcy laws whether or not allowed as a claim in such
proceeding ) on all Indebtedness of the Company from time to time owed under the
New Credit Facility and the Senior Notes and the Senior Note Indenture,
PROVIDED, HOWEVER, that any Indebtedness under any refinancing, refunding, or
replacement of the New Credit Facility or the Senior Notes shall not constitute
Senior Indebtedness to the extent that the Indebtedness thereunder is by its
express terms subordinate in right of payment to any other Indebtedness of the
Company. Notwithstanding the foregoing, "Senior Indebtedness" shall not include
(i) Indebtedness evidenced by the Senior Subordinated Notes, (ii) Indebtedness
that is subordinate or junior in right of payment to any Indebtedness of the
Company, (iii) Indebtedness which when incurred, and without respect to any
election under Section 1111(b) of the Bankruptcy Law, is without recourse to the
Company, (iv) Indebtedness which is represented by Redeemable Capital Stock, (v)
any liability for foreign, federal, state, local or other taxes owed or owing by
the Company, (vi) Indebtedness of the Company to a Subsidiary or any other
Affiliate of the Company or any of such Affiliate's subsidiaries and (vii) that
portion of any Indebtedness which at the time of incurrence is issued in
violation of the provisions of the "Limitation on Indebtedness" covenant of the
Senior Subordinated Note Indenture.
"Designated Senior Indebtedness" under the Senior Subordinated Note
Indenture means (i) all Senior Indebtedness under the New Credit Facility, the
Senior Notes and the Senior Note Indenture and (ii) any other Senior
Indebtedness which, at the time of determination, has an aggregate principal
amount outstanding, together with any commitments to lend additional amounts, of
at least $40 million and is specifically designated in the instrument evidencing
such Senior Indebtedness or the agreement under which such Senior Indebtedness
arises as "Designated Senior Indebtedness" by the Company.
As of March 31, 1994, after giving effect to the sale of the Notes and the
application of the estimated net proceeds thereof, the aggregate amount of
Senior Indebtedness (all of which would constitute Designated Senior
Indebtedness) outstanding would have been approximately $248.4 million.
SECURITY FOR THE SENIOR NOTES
Pursuant to the Collateral Documents, the Issuers will pledge as collateral
to the Senior Note Trustee for the benefit of the holders of the Senior Notes a
security interest in certain of their real and personal property summarized
below, together with the proceeds therefrom and permanent additions and
accessions thereto and to the Collateral Agent for the benefit of the holders of
the Senior Notes and the Lenders under the New Credit Facility on an equal and
ratable basis a security interest in the Pledged Stock and on certain patents,
trademarks and other intellectual property of the Issuers.
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While the Company has obtained appraisals of certain of the Collateral,
appraisals have not been performed for all assets constituting Collateral. The
net carrying value on the Company's books of the Collateral (including Shared
Collateral other than the Pledged Stock) as of March 31, 1994 was approximately
$115.0 million. (The Company carries the taxi medallions on its books at zero.)
There can be no assurance that the proceeds of any sale of the Collateral in
whole or in part pursuant to the Senior Note Indenture and the Collateral
Documents following an Event of Default would be sufficient to satisfy payments
due on the Senior Notes. See "Risk Factors -- Security." In addition, the
ability of the holders of the Senior Notes to realize upon the Collateral may be
subject to certain bankruptcy law limitations in the event of a bankruptcy. See
"Certain Bankruptcy Limitations" below.
The collateral release provisions of the Senior Note Indenture permit the
release of items of Collateral which are the subject of an Asset Sale and in
other circumstances upon compliance with certain conditions. See "-- Possession,
Use and Release of Collateral." As described under "--Certain Covenants --
Limitation on Sale of Assets," the Net Cash Proceeds of such Asset Sales may be
required to be utilized to make an offer to purchase Senior Notes.
Pursuant to the Collateral Documents, the Issuers will pledge to the Senior
Note Trustee or, in the case of the Shared Collateral, the Collateral Agent, for
its benefit and the benefit of the holders of the Senior Notes, each of the
following assets: (a) the Pledged Stock together with all dividends, interests,
cash, instruments and other property and proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any of the
foregoing and any account, instrument or security in which any of the foregoing
is deposited or invested, including any earnings thereon; (b) all equipment and
fixtures (together with all improvements and additions thereto and replacements
thereof) now owned or hereafter acquired by the Issuers and their respective
Subsidiaries and used in connection with, as the case may be, the Issuers'
trailer manufacturing operations, automotive products operations and vehicular
operations (including all vehicles in Motors' taxicab fleet); (c) the assets in
the Collateral Account; (d) 1,350 taxi medallions associated with Motors'
vehicular operations (which is the maximum number currently permitted under
applicable law; the remaining taxi medallions will be subject to a negative
pledge); (e) interests, now owned and hereafter acquired, in real properties
consisting of the facilities associated with the Issuers' trailer manufacturing
operations located in Savannah, Georgia, Brazil, Indiana and Wayne, Nebraska
(together with all additions, improvements and accessions thereto) (the "Real
Property Collateral"); (f) certain patents, trademarks and other intellectual
property of the Issuers; (g) to the extent applicable, all proceeds and products
of any and all of the foregoing Collateral; and (h) all books and records
relating to any of the foregoing Collateral. The security interest in the
Pledged Stock (clause (a)) and the patents, trademarks and other intellectual
property (clause (f)) and the proceeds and products therefrom (including the
portion of assets in the Collateral Account (clause (c)) which are part of the
Shared Collateral) will be secured on an equal and ratable basis with the
security interest granted to the Lenders under the New Credit Facility.
Notwithstanding the foregoing, the Senior Notes will not be secured by the
inventory, accounts receivable and certain other assets and the proceeds
therefrom (which assets will secure the obligations under the New Credit
Facility).
The security interest in the Collateral will be a first priority interest,
subject only to Liens permitted pursuant to the Senior Note Indenture and the
Collateral Documents and the equal and ratable interests of the Lenders under
the New Credit Facility with respect to the Shared Collateral. Pursuant to the
Pledge, Security and Intercreditor Agreement relating to the Shared Collateral,
either the Lenders under the New Credit Facility or the Senior Note Trustee
shall have the right to direct the Collateral Agent to exercise remedies with
respect to the Shared Collateral.
The Senior Note Indenture and the Collateral Documents will provide that the
Net Cash Proceeds of all Asset Sales of assets constituting Collateral will be
promptly and without any commingling deposited in a Collateral Account held by
the Trustee in the case of any Collateral other than the Shared Collateral and
by the Collateral Agent in the case of the Shared Collateral and be subject to a
first priority perfected Lien in favor of the Senior Note Trustee in the case of
the amounts held by the Senior Note Trustee and on an equal and ratable basis
with the lenders under the New Credit Facility with respect to amounts held by
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the Collateral Agent. Amounts in the Collateral Account will be released in
accordance with the provisions of the Senior Note Indenture and the Collateral
Documents. See "-- Possession, Use and Release of Collateral." All or any part
of the cash held in the Collateral Account shall, if requested by the Issuers,
be invested by the Senior Note Trustee or the Collateral Agent in cash
equivalents; PROVIDED that all such cash equivalents shall continue to be
Collateral.
If an Event of Default occurs under the Senior Note Indenture and a
declaration of acceleration of the Senior Notes occurs as a result thereof, the
Senior Note Trustee and the Collateral Agent, on behalf of the holders of the
Senior Notes, in addition to any rights or remedies available to them under the
Senior Note Indenture, may take such action as they deem advisable to protect
and enforce their rights in the Collateral, including the institution of
foreclosure proceedings. The proceeds received by the Senior Note Trustee and
Collateral Agent from any foreclosure will be applied by the Senior Note Trustee
and Collateral Agent first to pay the expenses of such foreclosure and fees and
other amounts then payable to the Senior Note Trustee and Collateral Agent under
the Senior Note Indenture and the Collateral Documents, and thereafter to pay
all amounts owing to holders of the Senior Notes under the Senior Note
Indenture, the Senior Notes and the Collateral Documents and, in the case of the
Shared Collateral, also to the Lenders under the New Credit Facility under the
terms of the Pledge, Security and Intercreditor Agreement.
Real property pledged as security to a lender may be subject to known or
unforeseen environmental risks. The state of the law is currently unclear as to
whether and under what circumstances clean-up costs or the obligation to take
remedial actions could be imposed upon a secured lender. Under the laws of some
states and under the federal Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended ("CERCLA"), a lender may be liable as an
"owner or operator" for costs of addressing releases or threatened releases of
hazardous substances on a mortgaged property if such lender or its agents or
employees have participated in the management of the operations of the borrower,
even though the environmental damage or threat was caused by a prior owner or
other third party. Excluded from CERCLA's definition of "owner or operator,"
however, is a person "who, without participating in the management of the
facility, holds indicia of ownership primarily to protect his security
interest." This exemption for holders of a security interest such as a secured
lender, which is commonly referred to as the "security interest exemption,"
applies only when the lender acts in a way that is consistent with the
protection of its security interest in the contaminated facility or property.
Thus, if a lender's activities begin to encroach on the day-to-day management of
such facility or property, the lender faces potential liability as an "owner or
operator" under CERCLA. Similarly, when a lender forecloses and takes title to a
contaminated facility or property, unless the foreclosure, and any subsequent
disposition of the facility or property are primarily for the protection of the
security interest, the lender may incur CERCLA liability. In May 1990, the
United States Court of Appeals for the Eleventh Circuit in UNITED STATES V.
FLEET FACTORS CORP., construing CERCLA's security interest exemption, held that
a lender need not have involved itself in the day-to-day operations of the
facility or actually participated in decisions relating to the handling or
disposal of hazardous waste to be liable under CERCLA; rather, liability could
attach to a lender if its involvement with the management of the facility was
broad enough to support the inference that the lender had the capacity to
influence the borrower's treatment of hazardous waste. The United States
Environmental Protection Agency sought to curtail the effect of FLEET FACTORS by
issuing a final rule delineating the range of permissible actions that may be
undertaken by a holder of a contaminated facility without exceeding the bounds
of the security interest exemption. However, that rule was vacated on procedural
grounds by the United States Court of Appeals for the District of Columbia on
February 4, 1994, so that there is likely to be continued uncertainty in this
area. In this regard, the Senior Note Trustee or the holders of the Senior Notes
would need to evaluate the impact of these potential liabilities before
determining to foreclose on mortgaged properties securing the Senior Notes and
exercising other available remedies. In addition, the Senior Note Trustee may
decline to foreclose upon the mortgaged property or exercise remedies available
to the extent that it does not receive indemnification to its satisfaction which
may include indemnification from the holders of the Senior Notes.
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OPTIONAL REDEMPTION
The Senior Notes will be subject to redemption at any time on or after
, 1998, at the option of the Issuers, in whole or in part, on not less
than 30 nor more than 60 days' prior notice in amounts of $1,000 or an integral
multiple thereof at the following redemption prices (expressed as percentages of
the principal amount), if redeemed during the 12-month period beginning on
of the years indicated below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- --------- -----------------
<S> <C>
1998 %
1999 %
</TABLE>
and thereafter at 100% of the principal amount, in each case together with
accrued and unpaid interest, if any, to the redemption date (subject to the
right of holders of record on relevant record dates to receive interest due on
an interest payment date).
The Senior Subordinated Notes will be subject to redemption at any time on
or after , 1999, at the option of the Company, in whole or in part,
on not less than 30 nor more than 60 days' prior notice in amounts of $1,000 or
an integral multiple thereof at the following redemption prices (ex-pressed as
percentages of the principal amount), if redeemed during the 12-month period
beginning on of the years indicated below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- --------- -----------------
<S> <C>
1999 %
2000 %
</TABLE>
and thereafter at 100% of the principal amount, in each case together with
accrued and unpaid interest, if any, to the redemption date (subject to the
right of holders of record on relevant record dates to receive interest due on
an interest payment date).
SINKING FUND
The Senior Notes will be redeemable through the operation of a sinking fund
on ____________, 19__, and on _________ in each year thereafter, up to and
including 2000, on not less than 30 nor more than 60 days' notice, at a sinking
fund redemption price equal to 100% of the principal amount thereof together
with accrued and unpaid interest, if any, to the date of redemption (subject to
the right of holders of record on relevant record dates to receive interest due
on an interest payment date). Prior to ____ of each of the years 1995 to 2000,
inclusive, the Issuers will pay to the Senior Note Trustee, for a mandatory
sinking fund, cash sufficient to redeem on each such date Senior Notes in the
aggregate principal amount of $10 million, provided that Senior Notes reacquired
by the Issuers (but not Senior Notes redeemed) may be used, at the principal
amount thereof, to reduce the amount of any mandatory sinking fund payment in
the inverse order in which they become due. Cash payments for the sinking fund
are to be applied to redeem Senior Notes.
The Senior Subordinated Notes will not be entitled to the benefit of any
sinking fund.
SENIOR NOTE MANDATORY REDEMPTION
The Issuers will be required to apply up to $40 million of the aggregate net
proceeds to the Company of any Public Offering effected through ____________,
1999 to the redemption of the Senior Notes at a redemption price equal to ____%
of the principal amount of such Senior Notes, together with accrued and unpaid
interest, if any, to the date of redemption (subject to the right of holders of
record on relevant record dates to receive interest due on an interest payment
date). Notice of such redemption is required to be given by the Company to the
Trustee no later than five business days after the consummation of any such
Public Offering.
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ADDITIONAL OPTIONAL REDEMPTIONS
The Issuers, in the case of the Senior Notes, or International Controls, in
the case of the Senior Subordinated Notes, will have the option to apply the
aggregate net proceeds in excess of $40 million of any Public Offering effected
through ____________, 1997 to the redemption of (i) up to $20 million aggregate
principal amount of the Senior Notes and (ii) up to $30 million aggregate
principal amount of the Senior Subordinated Notes, at redemption prices equal to
____% of the principal amount of the Senior Notes and __% of the principal
amount of the Senior Subordinated Notes, as the case may be, in each case
together with any accrued and unpaid interest, if any, to the date of
redemption; PROVIDED that $110 million in aggregate principal amount of the
Senior Notes or $70 million in aggregate principal amount of the Senior
Subordinated Notes, as the case may be, remains outstanding immediately
following such redemption. Notice of any such optional redemption is required to
be given by the Company to the Trustee not later than 120 days after the
consummation of any such Public Offering.
Any redemptions (whether mandatory or optional) of the Senior Notes other
than sinking fund payments shall be applied first against the aggregate
principal amount of the Senior Notes which become due and payable at maturity
and thereafter against sinking fund payments in inverse order of payment.
If less than all of the Notes are to be redeemed in the case of any of the
foregoing redemptions, the applicable Trustee shall select the Notes or the
portion thereof to be redeemed pro rata, by lot or by any other method the
applicable Trustee shall deem fair and reasonable provided such method is
consistent with the rules of any national securities exchange upon which the
Senior Notes or Senior Subordinated Notes, as the case may be, are listed. (See
Sections 203, 1101, 1105 and 1107)
CERTAIN COVENANTS
The Indentures will contain, among others, the following covenants:
LIMITATION ON INDEBTEDNESS. The Company will not, and will not permit any
Subsidiary to, create, issue, assume, guarantee, or otherwise in any manner
become directly or indirectly liable for or with respect to or otherwise incur
(collectively, "incur") any Indebtedness (other than Permitted Indebtedness but
including any Acquired Indebtedness) unless (i) such Indebtedness is
Indebtedness of the Company, Indebtedness of all of the Issuers (on a joint and
several basis and not subordinated in right of payment to any other Indebtedness
of any of the Issuers), Permitted Subsidiary Indebtedness or Acquired
Indebtedness of a Subsidiary and (ii) at the time of such incurrence the
Consolidated Fixed Charge Coverage Ratio for the Company for the four full
fiscal quarters immediately preceding such incurrence reflected on the Company's
historical financial statements is at least equal to 2.0:1.0 (after giving PRO
FORMA effect to (a) the incurrence of such Indebtedness and (if applicable) the
application of the net proceeds therefrom, including to refinance other
Indebtedness, as if such Indebtedness was incurred, and the application of such
proceeds occurred, at the beginning of such four-quarter period; (b) the
incurrence, repayment or retirement of any other Indebtedness by the Company and
its Subsidiaries since the first day of such four-quarter period as if such
Indebtedness was incurred, repaid or retired at the beginning of such
four-quarter period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility shall be computed based upon
the average daily balance of such Indebtedness during such four-quarter period);
(c) in the case of Acquired Indebtedness, the related acquisition (as if such
acquisition had been consummated on the first day of such four-quarter period);
and (d) any acquisition or disposition by the Company and its Subsidiaries of
any company or any business or any assets out of the ordinary course of
business, whether by merger, stock purchase or sale, or asset purchase or sale,
or any related repayment of Indebtedness, in each case since the first day of
such four-quarter period, as if such acquisition or disposition had been
consummated on the first day of such four-quarter period). (Section 1008)
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LIMITATION ON RESTRICTED PAYMENTS. (a) The Company will not, and will not
permit any Subsidiary to, directly or indirectly:
(i) declare or pay any dividend on, or make any distribution to holders
of, the Company's Capital Stock (other than dividends or distributions
payable in shares of the Company's Qualified Capital Stock or in options,
warrants or other rights to acquire such Qualified Capital Stock);
(ii) purchase, redeem or otherwise acquire or retire for value, directly
or indirectly, any Capital Stock of the Company or any Capital Stock of any
Affiliate of the Company (other than Capital Stock of any Wholly Owned
Subsidiary or Capital Stock held by the Company or any Wholly Owned
Subsidiary) or options, warrants or other rights to acquire such Capital
Stock;
(iii) make any principal payment on, or repurchase, redeem, defease,
retire or otherwise acquire for value, prior to any scheduled principal
payment, any sinking fund payment or maturity, any Indebtedness of the
Company that is expressly subordinate in right of payment to the Senior
Notes or the Senior Subordinated Notes, as the case may be;
(iv) declare or pay any dividend or distribution on any Capital Stock of
any Subsidiary to any Person (other than with respect to any Capital Stock
held by the Company or any of its Wholly Owned Subsidiaries);
(v) incur, create or assume any guarantee of Indebtedness of any
Affiliate of the Company (other than a Wholly Owned Subsidiary of the
Company); or
(vi) make any Investment in any Person (other than any Permitted
Investments);
(all of the foregoing payments described in paragraphs (i) through (vi) above,
other than any such action that is a Permitted Payment (as defined below),
collectively are referred to as "Restricted Payments") unless at the time of and
after giving effect to the proposed Restricted Payment (the amount of any such
Restricted Payment, if other than cash, as determined by the Board of Directors
of the Company, whose determination shall be conclusive and evidenced by a board
resolution), (1) no Default or Event of Default shall have occurred and be
continuing and such Restricted Payment shall not be an event which is, or after
notice or lapse of time or both, would be, an "event of default" under the terms
of any Indebtedness of the Company or its Subsidiaries; (2) immediately before
and immediately after giving effect to such transaction on a PRO FORMA basis,
the Company could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under the provisions described under "-- Limitation on
Indebtedness"; and (3) the aggregate amount of all such Restricted Payments
(other than Permitted Payments) declared or made after the date of the
Indentures does not exceed the sum of:
(A) 50% of the aggregate cumulative Consolidated Net Income of the
Company accrued on a cumulative basis during the period beginning on the
first day of the Company's fiscal quarter commencing after the date of the
Indentures and ending on the last day of the Company's last fiscal quarter
ending prior to the date of the Restricted Payment (or, if such aggregate
cumulative Consolidated Net Income shall be a loss, minus 100% of such
loss);
(B) the aggregate Net Cash Proceeds received after the date of the
Indentures by the Company from the issuance or sale (other than to any of
its Subsidiaries) of its Qualified Capital Stock or any options, warrants or
rights to purchase such Qualified Capital Stock of the Company (except, in
each case, to the extent such proceeds are used to purchase, redeem or
otherwise retire Capital Stock or Indebtedness subordinate in right of
payment to the Senior Notes or the Senior Subordinated Notes, as the case
may be, as set forth below);
(C) the aggregate Net Cash Proceeds received after the date of the
Indentures by the Company (other than from any of its Subsidiaries) upon the
exercise of any options or warrants to purchase Qualified Capital Stock of
the Company; and
(D) the aggregate Net Cash Proceeds received after the date of the
Indentures by the Company from debt securities or Redeemable Capital Stock
that have been converted into or exchanged for
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Qualified Capital Stock of the Company to the extent such debt securities or
Redeemable Capital Stock are originally sold for cash plus the aggregate Net
Cash Proceeds received by the Company at the time of such conversion or
exchange.
(b) Notwithstanding the foregoing, and in the case of paragraphs (ii),
(iii), (iv), (v), (vi), (vii) and (viii) below, so long as there is no Default
or Event of Default continuing, the foregoing provisions shall not prohibit the
following actions (each of paragraphs (i) through (ix) being referred to as a
"Permitted Payment"):
(i) the payment of any dividend or distribution within 60 days after the
date of declaration thereof, if at such date of declaration such payment
would be permitted by the provisions of paragraph (a) of this Section and
such payment shall be deemed to have been paid on such date of declaration
for purposes of the calculation required by paragraph (a) of this Section;
(ii) the repurchase, redemption or other acquisition or retirement of
any shares of Capital Stock of the Company in exchange for (including any
such exchange pursuant to the exercise of a conversion right or privilege
which in connection therewith cash is paid in lieu of the issuance of
fractional shares or scrip), or out of the Net Cash Proceeds of, a
substantially concurrent issue and sale for cash (other than to a
Subsidiary) of other Qualified Capital Stock of the Company; PROVIDED that
the Net Cash Proceeds from the issuance of such shares of Qualified Capital
Stock are excluded from clause (3)(B) of paragraph (a) of this Section;
(iii) any repurchase, redemption, defeasance, retirement or acquisition
for value or payment of principal of any Indebtedness subordinate in right
of payment to the Senior Notes or the Senior Subordinated Notes, as the case
may be, in exchange for, or out of the net proceeds of, a substantially
concurrent issuance and sale for cash (other than to a Subsidiary) of any
Qualified Capital Stock of the Company; PROVIDED that the Net Cash Proceeds
from the issuance of such Qualified Capital Stock are excluded from clause
(3)(B) of paragraph (a) of this Section;
(iv) the repurchase, redemption, defeasance, retirement, refinancing,
acquisition for value or payment of principal of any Indebtedness
subordinate in right of payment to the Senior Notes or the Senior
Subordinated Notes, as the case may be (other than Redeemable Capital Stock)
(a "refinancing"), through the issuance of new Indebtedness subordinated to
the Senior Notes or the Senior Subordinated Notes, as the case may be, of
the Company and, in the case of the Senior Note Indenture, the Issuers;
PROVIDED that any such new Indebtedness (1) shall be in a principal amount
that does not exceed the principal amount so refinanced (or, if such old
Indebtedness provides for an amount less than the principal amount thereof
to be due and payable upon a declaration or acceleration thereof, then such
lesser amount as of the date of determination), plus the lesser of (I) the
stated amount of any premium or other payment required to be paid in
connection with such a refinancing pursuant to the terms of the Indebtedness
being refinanced or (II) the amount of premium or other payment actually
paid at such time to refinance the Indebtedness, plus, in either case, the
amount of expenses of the Company and, in the case of the Senior Note
Indenture, the Issuers; incurred in connection with such refinancing; (2)
has an Average Life to Stated Maturity greater than the remaining Average
Life to Stated Maturity of the Senior Notes or the Senior Subordinated
Notes, as the case may be; (3) has a Stated Maturity for its final scheduled
principal payment later than the Stated Maturity for the final scheduled
principal payment of the Senior Notes or the Senior Subordinated Notes, as
the case may be; and (4) such new Indebtedness is expressly subordinated in
right of payment to the Senior Notes or the Senior Subordinated Notes, as
the case may be, at least to the same extent as the Indebtedness to be
refinanced;
(v) the repurchase, redemption, defeasance, retirement, refinancing or
acquisition for value (collectively, a "repurchase") of all (but not less
than all) the 14 1/2% Debentures and the 12 3/4% Debentures, in each case,
outstanding on the date of the Indentures in accordance with the terms of
the respective instruments governing the terms of such respective
Indebtedness for an aggregate
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consideration not to exceed $ million (plus accrued and unpaid interest
through the date of repurchase) for all 14 1/2% Debentures repurchased and
$ million (plus accrued and unpaid interest through the date of
repurchase) for all 12 3/4% Debentures repurchased;
(vi) in the case of the Senior Note Indenture, the redemption of up to
$30 million aggregate principal amount of the Senior Subordinated Notes
issued pursuant to the Senior Subordinated Note Indenture from the net
proceeds of any Public Offering on or prior to _________, 1997, in excess of
$40 million at redemption prices not in excess of ____% of the principal
amount of the Senior Subordinated Notes, together with accrued and unpaid
interest, if any, to the date of redemption; PROVIDED that $70 million in
aggregate principal amount of the Senior Subordinated Notes remains
outstanding immediately following such redemption;
(vii) the repurchase of any Indebtedness which is subordinate in right of
payment to the Senior Notes or the Senior Subordinated Notes, as the case
may be, at a purchase price not greater than 100% of the principal amount of
such Indebtedness pursuant to a provision similar to the covenant described
under "-- Limitation on Sale of Assets"; PROVIDED, that prior to such
repurchase the Issuers have made the Senior Note Offer or the Company has
made the Senior Subordinated Offer, as the case may be, as described under
"-- Limitation on Sale of Assets" and have or has repurchased all Senior
Notes or Senior Subordinated Notes, as the case may be, validly tendered for
payment in connection with such Senior Note Offer or Senior Subordinated
Offer;
(viii) the repurchase of any Indebtedness which is subordinate in right of
payment to the Senior Notes or the Senior Subordinated Notes, as the case
may be, at a purchase price not greater than 101% of the principal amount of
such Indebtedness in the event of a Change of Control pursuant to a
provision similar to the covenant described under "-- Purchase of Notes Upon
a Change of Control"; PROVIDED, that prior to such repurchase the Issuers or
the Company, as the case may be, have or has made the Change of Control
Offer as described in "Purchase of Notes Upon a Change of Control" and have
or has repurchased all Senior Notes or Subordinated Notes, as the case may
be, validly tendered for payment in connection with such Change of Control
Offer; and
(ix) the payment by SCSM of any dividend or distribution on any of its
Capital Stock; PROVIDED that such payments are paid pro rata to all
shareholders and the aggregate amount of any such payments paid to
shareholders (other than the Company and its Wholly Owned Subsidiaries)
within any fiscal year does not exceed 10% of the Consolidated Net Income
(Loss) of SCSM for the previous fiscal year. (Section 1009)
LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Company will not, and will
not permit any Subsidiary to, directly and indirectly, make any loan, advance,
guarantee or capital contribution to, or for the benefit of, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or for the
benefit of, or purchase or lease any property or assets from, or enter into or
amend, or increase the payments by the Company or any of its Subsidiaries under
or otherwise alter the terms of, any contract, agreement or understanding with,
or for the benefit of, any Affiliate of the Company, including pay any
compensation to Affiliates of the Company that are officers or employees of the
Company (each, an "Affiliate Transaction") unless (i) such Affiliate Transaction
is in writing and on terms which are fair and reasonable to the Company or such
Subsidiary, as the case may be, and are at least as favorable to the Company or
such Subsidiary as the terms which could be obtained by the Company or such
Subsidiary, as the case may be, in a comparable transaction made on an
arm's-length basis with a Person who is not such an Affiliate of the Company,
(ii) with respect to any Affiliate Transaction involving aggregate payments in
excess of $2 million, the Company delivers an officer's certificate to the
Trustee certifying that such Affiliate Transaction complies with clause (i)
above and that either (A) such Affiliate Transaction has been approved by a
majority of the Disinterested Directors of the Board of Directors who shall have
determined in good faith that such Affiliate Transaction is on terms which are
fair and reasonable to the Company or such Subsidiary, as the case may be, and
are at least as favorable to the Company or such Subsidiary as the terms which
could be obtained by the Company or such Subsidiary, as the case may be, in a
comparable transaction made on an arm's-length basis with a Person who is not
such an Affiliate of
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the Company or (B) the Company has received an opinion from an Independent
Financial Adviser to the effect that such Affiliate Transaction is fair to the
Company or such Subsidiary, as the case may be, from a financial point of view,
and (iii) with respect to any Affiliate Transaction involving aggregate payments
in excess of $5 million, the Company delivers an officers' certificate to the
Trustee certifying that such Affiliate Transaction complies with clause (i)
above and both clauses (ii)(A) and (ii)(B) above; PROVIDED, HOWEVER, that
Affiliate Transactions shall not include (i) transactions between the Company
and any of its Wholly Owned Subsidiaries or among Wholly Owned Subsidiaries of
the Company (for this purpose a Wholly Owned Subsidiary shall include SCSM if
the Company, directly or indirectly, beneficially owns at least 90% of the
equity interest in SCSM and the remaining equity interest, if any, is
beneficially owned by Persons other than Affiliates of the Company), (ii) any
transaction with an officer or member of the Board of Directors of the Company
or any Subsidiary entered into in the ordinary course of business or (iii)
performance of any agreement or arrangement in existence (written or oral) on
the date of the Indentures in accordance with its terms as in effect on such
date. (Section 1010)
LIMITATION ON COMPENSATION. The Company will not, and will not permit any
Subsidiary to, directly or indirectly, pay to each of Martin L. Solomon, Allan
R. Tessler and Wilmer J. Thomas, Jr. aggregate compensation from the Company and
its Subsidiaries (i) from January 1, 1994 through August 31, 1994 in excess of
66 2/3% of the aggregate compensation which was paid in 1993 to each such person
by the Company and its Subsidiaries as disclosed in this Prospectus and (ii)
after August 31, 1994, more than $75,000 in any twelve month period thereafter.
The Company will not, and will not permit any Subsidiary to, directly or
indirectly, pay to David R. Markin aggregate consulting fees from the Company
and its Subsidiaries (i) from January 1, 1994 through August 31, 1994, in excess
of 66 2/3% of the aggregate consulting fees which he was paid in 1993 by the
Company and its Subsidiaries as disclosed in this Prospectus and (ii) after
August 31, 1994, more than $75,000 in any twelve-month period thereafter.
(Section 1019)
LIMITATION ON SALE OF ASSETS. (a) The Issuers will not, and will not permit
any Subsidiary to, directly or indirectly, consummate an Asset Sale unless (i)
with respect to an Asset Sale involving Collateral, 75% of the Net Cash Proceeds
therefrom are received in cash (except in the case of the disposition of
Collateral related to certain seizures or condemnations) and such Net Cash
Proceeds are deposited in the Collateral Account in accordance with the
Collateral Documents, (ii) with respect to an Asset Sale not involving
Collateral, at least 75% of the proceeds from such Asset Sale are received in
cash, (iii) the applicable Issuers or such Subsidiary receives consideration at
the time of such Asset Sale at least equal to the Fair Market Value of the
shares or assets sold (as determined by the Board of Directors of the applicable
Issuer and evidenced in a board resolution) and (iv) to the extent such Asset
Sale involves Collateral, such Asset Sale complies with the requirements
described under "-- Possession, Use and Release of Collateral."
(b) Subject to the provisions set forth under "-- Possession, Use and
Release of Collateral," the Company may within one year of the Asset Sale either
invest or enter into a legally binding agreement to invest the Net Cash Proceeds
in properties and assets that (as determined by the Board of Directors of the
Company, whose determination shall be conclusive and evidenced by a Board
Resolution) replace the properties and assets that were the subject of the Asset
Sale or in properties and assets that will be used in the businesses of the
Company or its Subsidiaries existing on the date of the Indentures or reasonably
related thereto. If any legally binding agreement to invest any Net Cash
Proceeds is terminated, then the Company may invest such Net Cash Proceeds,
prior to the end of such one-year period or six months from such termination,
whichever is later, in like properties and assets. To the extent that any
property or assets are acquired with the proceeds of an Asset Sale involving the
sale, transfer or other disposition of (i) Note Collateral, such property and
assets shall be subject to the Lien in favor of the Senior Note Trustee pursuant
to the Security Agreement or Mortgages, as the case may be, and shall thereafter
constitute Note Collateral and (ii) Shared Collateral, such property and assets
shall be subject to the Lien in favor of the Senior Note Trustee and the Lenders
under the New Credit Facility pursuant to the Pledge, Security and Intercreditor
Agreement and shall thereafter constitute Shared Collateral. The amount of such
Net Cash Proceeds not used or invested as set forth in this paragraph (or as
provided under "-- Possession, Use and Release of Collateral") constitutes
"Excess Proceeds."
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(c) When the aggregate amount of Excess Proceeds equals $10 million or more,
the Issuers in the case of the Senior Note Indenture and the Company in the case
of the Senior Subordinated Note Indenture shall apply the Excess Proceeds to the
repayment of the Senior Notes and any Pari Passu Indebtedness thereof required
to be repurchased under the instrument(s) governing such Pari Passu Indebtedness
as follows: (i) the Issuers shall make an offer to purchase (a "Senior Note
Offer") from all holders of the Senior Notes in accordance with the procedures
set forth in the Senior Note Indenture in the maximum principal amount
(expressed as a multiple of $1,000) of Senior Notes that may be purchased out of
an amount (the "Note Amount") equal to the product of such Excess Proceeds
multiplied by a fraction, the numerator of which is the outstanding principal
amount of the Senior Notes, and the denominator of which is the sum of the
outstanding principal amount of the Senior Notes and such Pari Passu
Indebtedness (subject to proration in the event such amount is less than the
aggregate Offered Price (as defined herein) of all Senior Notes tendered) and
(ii) to the extent required by such Pari Passu Indebtedness to pay down or
reduce permanently the principal amount of such Pari Passu Indebtedness, the
Issuers shall make an offer to purchase or otherwise repurchase or redeem Pari
Passu Indebtedness (a "Pari Passu Offer") out of an amount (the "Pari Passu Debt
Amount") equal to the excess of the Excess Proceeds over the Note Amount;
PROVIDED that in no event shall the Pari Passu Debt Amount exceed the principal
amount of such Pari Passu Indebtedness plus the amount of any premium required
to be paid to repurchase such Pari Passu Indebtedness. The Senior Note Offer
price shall be payable in cash in an amount equal to 100% of the principal
amount of the Senior Notes plus accrued and unpaid interest, if any, to the date
(the "Offer Date") such Senior Note Offer is consummated (the "Offered Price"),
in accordance with the procedures set forth in the Senior Note Indenture. To the
extent the aggregate amount of Excess Proceeds remaining after giving effect to
the Senior Note Offer and the related Pari Passu Offers (if any) equals $10
million or more, on the Business Day following the date of purchase under the
Senior Note Offer, the Company shall apply the then remaining Excess Proceeds to
the repayment of the Senior Subordinated Notes and any Pari Passu Indebtedness
thereof required to be repurchased under the instruments governing such Pari
Passu Indebtedness pursuant to an offer to purchase (the "Senior Subordinated
Offer"; together with the Senior Note Offer, the "Offers"; reference to an
"Offer" means a Senior Note Offer or a Senior Subordinated Offer as the context
may require) to the holders of the Senior Subordinated Notes and an offer to
purchase or other purchase or redemption of such Pari Passu Indebtedness on the
same terms as the Senior Note Offer and the Pari Passu Offers related thereto as
specified above. Upon completion of the purchase of all the Notes tendered
pursuant to the Offers referred to above or repurchase of the Pari Passu
Indebtedness pursuant to any related Pari Passu Offers, the amount of Excess
Proceeds shall be reset at zero. To the extent that the aggregate amount of
Notes tendered and repurchased and Pari Passu Indebtedness repurchased pursuant
to any Offers referred to above and any related Pari Passu Offers, respectively,
is less than the amount of Excess Proceeds (a "Deficiency"), the Company may use
such Deficiency, or portion thereof, for general corporate purposes.
(d) Whenever the Excess Proceeds received by the Company and its
Subsidiaries exceed $10 million and such Excess Proceeds are not proceeds from
the sale of Collateral, such Excess Proceeds shall, prior to the purchase of
Notes or any Pari Passu Indebtedness described in paragraph (c) above, be set
aside in a separate account pending (i) deposit with the depositary or a paying
agent or the applicable Trustee of the amount required to purchase the Notes or
the repurchase or redemption price of Pari Passu Indebtedness tendered in a
Senior Note Offer or Senior Subordinated Offer or a Pari Passu Offer, (ii)
delivery by the Issuers or the Company, as the case may be, of the Offered Price
to the holders of the Notes tendered in a Senior Note Offer or Senior
Subordinated Offer or Pari Passu Indebtedness tendered in a Pari Passu Offer and
(iii) application, as set forth above, of Excess Proceeds in the business of the
Company and its Subsidiaries; PROVIDED that in no event shall the Issuers or the
Company be required to set aside an amount in excess of the sum of the Note
Amount for the Senior Note Offer and the Note Amount for the Senior Subordinated
Offer and the Pari Passu Debt Amount for the Senior Note Offer and the Senior
Subordinated Offer. Such Excess Proceeds may be invested in Temporary Cash
Investments; PROVIDED that the maturity date of any such investment made after
the amount of Excess Proceeds exceeds $10 million shall not be later than the
Offer Date with respect to the Senior Note Offer (or if no
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Senior Note Offer is required, the Offer Date with respect to the Senior
Subordinated Note Offer). The Issuers in the case of the Senior Note Indenture
and the Company in the case of the Senior Subordinated Note Indenture shall be
entitled to any interest or dividends accrued, earned or paid on such Temporary
Cash Investments; PROVIDED that the Issuers or the Company, as the case may be,
shall not be entitled to such interest if an Event of Default has occurred and
is continuing.
(e) If the Issuers or the Company, as the case may be, becomes obligated to
make an Offer pursuant to clause (c) above, the Notes shall be purchased by the
Issuers or the Company, as the case may be, at the option of the holders
thereof, in whole or in part in integral multiples of $1,000, on a date that is
not earlier than 45 days and not later than 60 days from the date the notice of
the Senior Note Offer or Senior Subordinated Offer is given to holders, or such
later date as may be necessary for the Issuers or the Company, as the case may
be, to comply with the requirements under the Exchange Act, subject to proration
in the event the Note Amount is less than the aggregate Offered Price of all
Notes tendered.
(f) The Issuers shall comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other applicable securities
laws or regulations in connection with an Offer.
(g) The Company will not, and will not permit any Subsidiary to, create or
permit to exist or become effective any restriction (other than restrictions
existing under Indebtedness as in effect on the date of the Indentures as such
Indebtedness may be refinanced or replaced from time to time; PROVIDED that such
restrictions are not less favorable to the holders of Notes than those existing
on the date of the Indentures) that would materially impair the ability of the
Company to make an Offer to purchase the Notes or, if such Offer is made, to pay
for the Notes tendered for purchase.
(h) Notwithstanding the foregoing, the Issuers may, at their option, use any
or all of the Excess Proceeds that are not proceeds from the sale of Collateral
that would have otherwise been made available to purchase Senior Notes pursuant
to a Senior Note Offer to make payments in cash to the Senior Note Trustee to
satisfy sinking fund payments (in which case, the Issuers shall be deemed to
have made a Senior Note Offer for purposes of the Indentures provided that, if
less than all of such Excess Proceeds are used to satisfy sinking fund payments,
the remainder of such Excess Proceeds are made available to purchase Senior
Notes pursuant to a Senior Note Offer).
(i) In making payments constituting Excess Proceeds, the Company shall
first, utilize Excess Proceeds that are not proceeds from the sale of
Collateral, second, utilize Excess Proceeds that are proceeds from the sale of
Shared Collateral and third, utilize Excess Proceeds that are proceeds from the
sale of Note Collateral. (Section 1011)
LIMITATION ON LIENS. The Company will not, and will not permit any
Subsidiary to, directly or indirectly, create, incur, affirm or suffer to exist
any Lien (other than Permitted Liens) of any kind upon any of its property or
assets (including Capital Stock and any intercompany notes) or any income or
profits therefrom, except if the Notes (or a Guarantee, in the case of Liens of
a Guarantor) are directly secured equally and ratably with (or prior to in the
case of Liens with respect to Indebtedness subordinate in right of payment to
the Senior Notes or the Senior Subordinated Notes, as the case may be, or
Indebtedness of a Guarantor subordinated in right of payment to any Guarantee)
the obligation or liability secured by such Lien. (Section 1012)
LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS BY SUBSIDIARIES. (a)
The Company will not permit any Subsidiary, directly or indirectly, to
guarantee, assume or in any other manner become liable with respect to any
Indebtedness of the Company other than the Senior Notes, Indebtedness of an
Issuer under the New Credit Facility or Indebtedness of all the Issuers (on a
joint and several basis and not subordinated in right of payment to any other
Indebtedness of any of the Issuers) unless (i) such Subsidiary simultaneously
executes and delivers a supplemental indenture to each of the Indentures
providing for a guarantee of the Notes and if such Indebtedness is by its terms
expressly subordinated to the Senior Notes or the Senior Subordinated Notes, as
the case may be, any such assumption, guarantee or other liability of such
Subsidiary with respect to such Indebtedness shall be subordinated to such
Subsidiary's assumption, guarantee or other liability with respect to the Notes
to the same extent as such Indebtedness is subordinated to the Senior Notes or
the Senior Subordinated Notes, as the case may be,
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and (ii) such Subsidiary waives and will not in any manner whatsoever claim, or
take the benefit or advantage of, any rights of reimbursement, indemnity or
subrogation or any other rights against the Company or any other Subsidiary as a
result of any payment by such Subsidiary.
(b) Notwithstanding the foregoing, any Guarantee by a Subsidiary of the
Notes pursuant to the foregoing paragraph but not the provisions of "--
Limitation on Issuance and Sale of Capital Stock of Subsidiaries" shall provide
by its terms that it shall be automatically and unconditionally released and
discharged upon any sale, exchange or transfer, to any Person not an Affiliate
of the Company, of all of the Company's Capital Stock in, or all or
substantially all the assets of, such Subsidiary, which sale, exchange or
transfer is in compliance with the Indentures. (Section 1013)
PURCHASE OF NOTES UPON A CHANGE OF CONTROL. If a Change of Control shall
occur at any time, then each holder of Notes shall have the right to require
that the Issuers in the case of the Senior Note Indenture and the Company in the
case of the Senior Subordinated Note Indenture repurchase such holder's Notes in
whole or in part in integral multiples of $1,000, at a purchase price (the
"Change of Control Purchase Price") in cash in an amount equal to 101% of the
principal amount of such Notes, plus accrued and unpaid interest, if any, to the
date of purchase (the "Change of Control Purchase Date"), pursuant to the offer
described below (the "Change of Control Offer") and the other procedures set
forth in the Indentures.
Within 30 days following any Change of Control, the Issuers or the Company,
as the case may be, shall notify the Trustees thereof and give written notice of
such Change of Control to each holder of the Notes, by first-class mail, postage
prepaid, at his address appearing in the applicable security register, stating,
among other things: (a) the Change of Control Purchase Price and that the Change
of Control Purchase Date shall be a certain business day no earlier than 30 days
or later than 60 days from the date such notice is mailed, or such later date as
is necessary to comply with requirements under the Exchange Act; PROVIDED, that
--------
the Change of Control Purchase Date (as set forth in the Senior Subordinated
Note Indenture) established by the Company for the repurchase of the Senior
Subordinated Notes will be a date subsequent to the Change of Control Purchase
Date (as set forth in the Senior Note Indenture) established by the Issuers for
the repurchase of the Senior Notes; (b) that any Senior Note or Senior
Subordinated Note not tendered will continue to accrue interest; (c) that,
unless the Issuers or the Company, as the case may be, default in the payment of
the Change of Control Purchase Price, any Notes accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the Change of
Control Purchase Date; and (d) certain other procedures that a holder of Notes
must follow to accept a Change of Control Offer or to withdraw such acceptance.
(Section 1014)
The Senior Subordinated Note Indenture will provide that, prior to complying
with this provision, the Company shall either repay and discharge all
outstanding Senior Indebtedness (including the Senior Notes) or obtain the
requisite consents, if any, under all agreements governing the outstanding
Senior Indebtedness, or in the case of the Senior Notes, consummate a Change of
Control Offer, to permit the repurchase of Senior Subordinated Notes required by
this provision. Any failure to comply with this paragraph shall constitute a
default of a covenant for purposes of clause (iii) (c) of the first paragraph of
"-- Events of Default."
If a Change of Control Offer is made, there can be no assurance that the
Issuers or the Company, as the case may be, will have available funds sufficient
to pay the Change of Control Purchase Price for any or all of the Notes that
might be delivered by holders of the Notes seeking to accept the Change of
Control Offer and, accordingly, some or all of the holders of the Notes may not
receive the Change of Control Purchase Price for their Notes in the event of a
Change of Control. The failure of the Issuers or the Company, as the case may
be, to make or consummate the Change of Control Offer or pay the Change of
Control Purchase Price when due will give the Trustees and the holders of the
Notes the rights described under "-- Events of Default."
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The term "all or substantially all" as used in the definition of "Change of
Control" has not been interpreted under New York law (which is the governing law
of the Indentures) to represent a specific quantitative test. As a consequence,
in the event the holders of the Notes elected to exercise their rights under the
Indentures and the Issuers or the Company, as the case may be, elected to
contest such election, there could be no assurance as to how a court
interpreting New York law would interpret the phrase.
The existence of a holder's right to require the Issuers or the Company, as
the case may be, to repurchase such holder's Notes upon a Change of Control may
deter a third party from acquiring the Company in a transaction which
constitutes a Change of Control.
The provisions of the Indentures may not afford holders of the Notes the
right to require the Issuers or the Company, as the case may be, to repurchase
the Notes in the event of a highly leveraged transaction or certain transactions
with the Company's management or its affiliates, including a reorganization,
restructuring, merger or similar transaction (including, in certain
circumstances, an acquisition of the Company by their respective managements or
affiliates) involving the Company that may adversely affect holders of the
Notes, if such transaction is not a transaction defined as a Change of Control.
Reference is made to "Certain Definitions" for the definition of "Change of
Control." A transaction involving the Company's management or its affiliates, or
a transaction involving a recapitalization of the Company, may result in a
Change of Control if it is the type of transaction specified by such definition.
The Issuers or the Company, as the case may be, will comply with the
applicable tender offer rules, including Rule 14e-1 under the Exchange Act, and
any other applicable securities laws or regulations in connection with a Change
of Control Offer. (Section 1014)
LIMITATION ON ISSUANCE AND SALE OF CAPITAL STOCK OF SUBSIDIARIES. The
Company will not permit (a) any Subsidiary to issue any Capital Stock (other
than to the Company or any Wholly Owned Subsidiary) or (b) any Person (other
than the Company or a Wholly Owned Subsidiary) to acquire any Capital Stock of
any Subsidiary from the Company or any Wholly Owned Subsidiary except upon the
sale of all of the outstanding Capital Stock of such Subsidiary owned by the
Company or a Wholly Owned Subsidiary except in either case if (i)(a) in the case
of the Senior Notes, the Subsidiary whose Capital Stock is issued or sold is an
Issuer or (b) in the case of the Senior Notes, the Subsidiary whose Capital
Stock is issued or sold is not an Issuer or in the case of the Senior
Subordinated Notes, the Subsidiary whose Capital Stock is issued or sold
guarantees all obligations of the Issuers and the Company, as the case may be,
under the Indentures and the Notes by simultaneously executing and delivering a
supplemental indenture to each of the Indentures providing for such guarantee
(the terms of which guarantee, in the case of the guarantee of the obligations
under the Senior Note Indenture, shall rank no less than PARI PASSU in right of
payment with all Indebtedness of such Subsidiary Guarantor and in the case of
the guarantee of the obligations under the Senior Subordinated Note Indenture,
shall rank subordinate to the guarantee of Senior Indebtedness of the Subsidiary
(including the Senior Notes) and senior in right of payment to all Indebtedness
expressly subordinated to senior Indebtedness except for any future Indebtedness
of such Subsidiary Guarantor which expressly provides that it is PARI PASSU with
the senior subordinated Indebtedness of such Guarantor and PARI PASSU with such
Indebtedness of such Guarantor expressly provided to be PARI PASSU with the
senior subordinated Indebtedness) (provided that this clause (i) shall not be
applicable in the case of the issuance or acquisition of the Capital Stock of
American Country Insurance Company to the extent such guarantee is prohibited by
law), (ii) after giving effect to the sale or issuance of such Capital Stock,
the Company beneficially owns in excess of 50% of the outstanding Capital Stock
of such Subsidiary on a fully diluted basis and (iii) the Capital Stock is
issued or sold in an underwritten public offering pursuant to a registration
statement that has been declared effective by the Commission pursuant to the
Securities Act. (Section 1015)
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES. The Company will not, and will not permit any Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary to (a)
pay dividends or make any other distribution on its Capital Stock to the Company
or any other Subsidiary,
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(b) pay any Indebtedness owed to the Company or any Subsidiary, (c) make any
Investment in the Company or any other Subsidiary or (d) transfer any of its
properties or assets to the Company or any Subsidiary, except (i) any
encumbrance or restriction pursuant to an agreement in effect on the date of the
Indentures and listed on a schedule to each of the Indentures, (ii) any
encumbrance or restriction, with respect to a Subsidiary that is not a
Subsidiary of the Company on the date of the Indentures, in existence at the
time such Person becomes a Subsidiary of the Company and not incurred in
connection with, or in contemplation of, such Person becoming a Subsidiary,
(iii) any such encumbrance or restriction in the New Credit Facility as in
effect on the date of the Indentures and (iv) any encumbrance or restriction
existing under any agreement that extends, renews, refinances or replaces the
agreements containing the encumbrances or restrictions in the foregoing clauses
(i) and (ii), PROVIDED that the terms and conditions of any such encumbrances or
restrictions are not materially less favorable to the holders of the Notes than
those under or pursuant to the agreement evidencing the Indebtedness so
extended, renewed, refinanced or replaced. (Section 1016)
IMPAIRMENT OF SECURITY INTEREST. The Senior Note Indenture will provide
that the Company shall not, and shall not permit any Subsidiary to, take or
knowingly or negligently omit to take any action which action or omission might
or would have the result of affecting or impairing the security interest in
favor of the Senior Note Trustee on behalf of itself and the holders of the
Senior Notes, with respect to the Collateral, or, in the case of the Shared
Collateral, the Collateral Agent, on behalf of itself and the holders of the
Senior Notes and the Lenders under the New Credit Facility, and the Company
shall not, and shall not permit any Subsidiary to, grant to any Person (other
than the Senior Note Trustee, on behalf of itself and the holders of the Senior
Notes or, in the case of the Shared Collateral, the Collateral Agent, on behalf
of itself and the holders of the Senior Notes and the Lender under the New
Credit Facility) or permit or suffer to exist any interest whatsoever in the
Collateral other than Liens permitted by the Collateral Documents and the Senior
Note Indenture including the security interest in the Collateral securing the
New Credit Facility. For this purpose, the sale of the Collateral in accordance
with the terms of the Senior Note Indenture shall not be deemed to impair the
security interest of the Senior Note Trustee with respect to the Collateral or
be a grant of any interest in the Collateral. The Company will not, and will not
permit any of its Subsidiaries to, enter into any agreement or instrument that
by its terms expressly requires that the proceeds received from the sale of any
Collateral be applied to repay any Indebtedness of any Person other than in
accordance with "-- Possession, Use and Release of Collateral" and the
Collateral Documents. (Section 1017 of the Senior Note Indenture only)
LIMITATION ON SUBORDINATED INDEBTEDNESS. The Senior Subordinated Note
Indenture will provide that the Company will not incur, create, issue, assume,
guarantee, or otherwise become directly or indirectly liable with respect to any
Indebtedness that is contractually subordinate or junior in right of payment to
any Senior Debt and contractually senior in any respect in right of payment to
the Senior Subordinated Notes. (Section 1017 of the Senior Subordinated Note
Indenture only)
RELEASE OF BANK LIEN ON VEHICLES AND MEDALLIONS. The Issuers shall take or
cause to be taken all reasonably necessary action to cause the release of Liens
on, and in conjunction therewith, to enable the Senior Note Trustee on behalf of
itself and the holders of the Senior Notes to perfect its first priority
security interest in, the vehicles in Motors' taxicab fleet and 1,350
medallions, so that such release and perfection of the Lien may occur no later
than the 30th day following the date of the Senior Note Indenture (the "Release
Date"). Notwithstanding the foregoing, the Issuers shall not be deemed to have
breached this covenant in the event such release and perfection of the Lien does
not occur by Release Date if such failure to occur is attributable to the
actions (or the lack thereof) of the Senior Note Trustee and its agents and
employees or other Persons other than the Issuers or their Affiliates. In such
event, the Issuers shall take or cause to be taken all reasonably necessary
action to effect the aforementioned release and perfection of the Lien as soon
as possible after the Release Date. (Section 1020 of the Senior Note Indenture
Only)
PROVISION OF FINANCIAL STATEMENTS. Whether or not the Issuers (including
the Company) are subject to Section 13(a) or 15(d) of the Exchange Act, the
Issuers will, to the extent permitted under the Exchange Act, file with the
Commission the annual reports, quarterly reports and other documents
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which the Issuers would have been or are required to file with the Commission
pursuant to such Section 13(a) or 15(d) if the Issuers were or are so subject,
such documents to be filed with the Commission on or prior to the respective
dates (the "Required Filing Dates") by which the Issuers would have been or are
required so to file such documents if the Issuers were or are so subject. The
Issuers will also in any event (x)(i) within 15 days of each Required Filing
Date file with each of the Trustees copies of the annual reports, quarterly
reports and other documents which the Issuers would have been or are required to
file with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act
if the Issuers were or are subject to such Section and (ii) within the earlier
of 30 days after the filing of such report or other document with the Trustee
and 45 days of each such Required Filing Date transmit such report or document
by mail to all holders of Notes, as their names and addresses appear in the
applicable security register, without cost to such holders of Notes and (y) if
filing such documents by the Issuers with the Commission is not permitted under
the Exchange Act, promptly upon written request supply copies of such documents
to any prospective holder of Notes at the Issuers' cost. (Section 1018)
ADDITIONAL COVENANTS. The Indentures also contain covenants with respect to
the following matters: (i) payment of principal, premium and interest; (ii)
maintenance of an office or agency in The City of New York; (iii) arrangements
regarding the handling of money held in trust; (iv) maintenance of corporate
existence; (v) payment of taxes and other claims; (vi) maintenance of
properties; and (vii) maintenance of insurance.
CONSOLIDATION, MERGER, SALE OF ASSETS
No Issuer (including the Company) shall, in a single transaction or a series
of related transactions, consolidate with or merge with or into any other Person
or sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets to any Person or group of
affiliated Persons, or permit any of its Subsidiaries to enter into any such
transaction or transactions if such transaction or series of related
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties and
assets of any Issuer and its Subsidiaries on a Consolidated basis to any other
Person or group of affiliated Persons, unless: (i) at the time of and after
giving effect thereto either (a) such Issuer shall be the continuing corporation
or (b) the Person (if other than such Issuer) formed by such consolidation or
into which such Issuer is merged or the Person which acquires by sale,
assignment, conveyance, transfer, lease or disposition all or substantially all
of the properties and assets of such Issuer and its Subsidiaries on a
Consolidated basis (the "Surviving Entity") shall be a corporation duly
organized and validly existing under the laws of the United States of America,
any state thereof or the District of Columbia and such Person assumes by
supplemental indentures in form reasonably satisfactory to the Trustees, all the
obligations of such Issuer under the Notes and the Indentures, and the
Indentures shall remain in full force and effect; (ii) immediately before and
immediately after giving effect to such transaction on a PRO FORMA basis, no
Default or Event of Default shall have occurred and be continuing; (iii)
immediately after giving effect to such transaction on a PRO FORMA basis, the
Consolidated Net Worth of such Issuer (or the Surviving Entity if such Issuer is
not the continuing obligor under the Indentures) is equal to or greater than the
Consolidated Net Worth of such Issuer immediately prior to such transaction;
(iv) except in the case of a consolidation or merger solely involving the
Issuers, immediately before and immediately after giving effect to such
transaction on a PRO FORMA basis (on the assumption that the transaction
occurred on the first day of the four-quarter period immediately prior to the
consummation of such transaction with the appropriate adjustments with respect
to the transaction being included in such PRO FORMA calculation), the Company
(or the Surviving Entity if the Company is not the continuing obligor under the
Indentures) could incur $1.00 of additional Indebtedness under the provisions of
"-- Certain Covenants -- Limitation on Indebtedness" (other than Permitted
Indebtedness); (v) each Guarantor, if any, unless it is the other party to the
transactions described above, shall have by supplemental indentures confirmed
that its Guarantee shall apply to such Person's obligations under the Indentures
and the Notes after giving effect to such transaction; (vi) if any of the
property or assets of the Company or any of its Subsidiaries would thereupon
become subject to any Lien, the provisions of "-- Certain Covenants --
Limitation on Liens" are complied with; and (vii) such Issuer or the Surviving
Entity shall have delivered, or caused to be
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delivered, to the Trustees, in form and substance reasonably satisfactory to the
Trustees, an officers' certificate and an opinion of counsel, each to the effect
that such consolidation, merger, transfer, sale, assignment, lease or other
transaction and the supplemental indentures in respect thereto comply with the
provisions described herein and that all conditions precedent herein provided
for relating to such transaction have been complied with. (Section 801)
No Guarantor shall, and the Issuers will not permit a Guarantor to, in a
single transaction or series of related transactions, merge or consolidate with
or into any other corporation (other than the Company or any other Guarantor) or
other entity, or sell, assign, convey, transfer, lease or otherwise dispose of
all or substantially all of its properties and assets on a Consolidated basis to
any entity (other than the Company or any other Guarantor) unless: (i) at the
time of and after giving effect thereto, either (a) such Guarantor shall be the
continuing corporation or (b) the entity (if other than such Guarantor) formed
by such consolidation or into which such Guarantor is merged or the entity which
acquires by sale, assignment, conveyance, transfer, lease or disposition the
properties and assets of such Guarantor shall be a corporation duly organized
and validly existing under the laws of the United States, any state thereof or
the District of Columbia and shall expressly assume by supplemental indentures,
executed and delivered to the Trustees, in a form reasonably satisfactory to the
Trustees, all the obligations of such Guarantor under the Notes and the
Indentures; (ii) immediately before and immediately after giving effect to such
transaction on a PRO FORMA basis, no Default or Event of Default shall have
occurred and be continuing; and (iii) such Guarantor shall have delivered to the
Trustees, in form and substance reasonably satisfactory to the Trustees, an
officers' certificate and an opinion of counsel, each stating that such
consolidation, merger, sale, assignment, conveyance, transfer, lease or
disposition and such supplemental indentures comply with the Indentures, and
thereafter all obligations of the predecessor shall terminate. (Section 801)
In the event of any transaction described in and complying with the
conditions listed in the immediately preceding paragraphs in which any Issuer or
any Guarantor is not the continuing corporation, the successor Person formed or
remaining shall succeed to, and be substituted for, and may exercise every right
and power of, such Issuer or such Guarantor, as the case may be, and such Issuer
or such Guarantor, as the case may be, shall be discharged from all obligations
and covenants under the Indentures, the Notes or such Guarantee, as the case may
be; PROVIDED that in the case of a transfer by lease, the predecessor shall not
be released from the payment of principal and interest on the Notes or such
Guarantee, as the case may be. (Section 802)
EVENTS OF DEFAULT
An Event of Default will occur under either Indenture (except as provided
below) if:
(i) there shall be a default in the payment of any interest on any
Senior Note or Senior Subordinated Note, as the case may be, when it becomes
due and payable, and such default shall continue for a period of 30 days;
(ii) there shall be a default in the payment of the principal of (or
premium, if any, on) any Senior Note or Senior Subordinated Note, as the
case may be, when and as the same shall become due and payable (at maturity,
upon acceleration, optional or mandatory redemption, required repurchase or
otherwise);
(iii) (a) there shall be a default in the performance, or breach, of any
covenant or agreement of any Issuer or any Guarantor under the Senior Note
Indenture or the Senior Subordinated Note Indenture, as the case may be, or,
in the case of the Senior Notes, the Collateral Documents (other than a
default in the performance, or breach, of a covenant or agreement which is
specifically dealt with in paragraphs (i) or (ii) or in clauses (b), (c) and
(d) of this paragraph (iii)) and such default or breach shall continue for a
period of 60 days after written notice has been given, by certified mail,
(x) to the Issuers by the applicable Trustee or (y) to the Issuers and the
applicable Trustee by the holders of at least 25% in aggregate principal
amount of the outstanding Senior Notes or Senior Subordinated Notes, as the
case may be; (b) there shall be a default in the performance or breach of
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the provisions described in "-- Consolidation, Merger, Sale of Assets"; (c)
the Issuers shall have failed to make or consummate a Change of Control
Offer in accordance with the provisions of "-- Certain Covenants -- Purchase
of Notes Upon a Change of Control"; or (d) the Issuers shall have failed to
make or consummate a Senior Note Offer in the case of the Senior Notes or an
Offer in the case of the Senior Subordinated Notes in accordance with the
provisions of "-- Certain Covenants -- Limitation on Sale of Assets";
(iv) (a) in the case of the Senior Note Indenture, any default in the
payment of principal, premium, if any, or interest on any Indebtedness shall
have occurred under any agreements, indentures or instruments under which
the Company or any Subsidiary then has outstanding Indebtedness which
aggregate in excess of $5 million when the same shall become due and payable
and continuation of such default after any applicable grace period and, if
such Indebtedness has not already matured at its final maturity in
accordance with its terms, the holder of such Indebtedness shall have the
right to accelerate such Indebtedness or (b) in the case of either
Indenture, an event of default as defined in any of the agreements,
indentures or instruments described in clause (a) of this paragraph (iv)
shall have occurred and the Indebtedness thereunder, if not already matured
at its final maturity in accordance with its terms, shall have been
accelerated;
(v) one or more judgments, orders or decrees for the payment of money in
excess of $5 million, either individually or in the aggregate, shall be
entered against the Company or any Subsidiary or any of their respective
properties and shall not be discharged and either (a) enforcement
proceedings shall have been commenced upon such judgment, order or decree or
(b) there shall have been a period of 60 consecutive days during which a
stay of enforcement of such judgment or order, by reason of an appeal or
otherwise, shall not be in effect;
(vi) in the case of the Senior Note Indenture, any Collateral Document
shall for any reason cease to be, or be asserted in writing by any Issuer
not to be, in full force and effect and enforceable in accordance with its
terms, or any security interest purported to be created by any Collateral
Document, shall cease to be a valid and perfected first priority security
interest in any Collateral subject only to Permitted Liens or any
representation or warranty of the Issuers contained in the Collateral
Documents shall cease to be true and correct or the Issuers shall be in
default on any covenant contained in the Collateral Documents;
(vii) there shall have been the entry by a court of competent
jurisdiction of (a) a decree or order for relief in respect of any Issuer or
any Material Subsidiary in an involuntary case or proceeding under any
applicable Bankruptcy Law or (b) a decree or order adjudging any Issuer or
any Material Subsidiary bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment or composition of or in respect of any Issuer or any
Material Subsidiary under any applicable Federal or state law, or appointing
a custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of any Issuer or any Material Subsidiary or of any
substantial part of its property, or ordering the winding up or liquidation
of its affairs, and any such decree or order for relief shall continue to be
in effect, or any such other decree or order shall be unstayed and in
effect, for a period of 60 consecutive days;
(viii) (a) any Issuer or any Material Subsidiary commences a voluntary
case or proceeding under any applicable Bankruptcy Law or any other case or
proceeding to be adjudicated bankrupt or insolvent, (b) any Issuer or any
Material Subsidiary consents to the entry of a decree or order for relief in
respect of such Issuer or such Material Subsidiary in an involuntary case or
proceeding under any applicable Bankruptcy Law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, (c) any Issuer or
any Material Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state law, (d) any
Issuer or any Material Subsidiary (x) consents to the filing of such
petition or the appointment of, or taking possession by, a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official of
such Issuer or such Material Subsidiary or of any substantial part of its
property, (y) makes an
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assignment for the benefit of creditors or (z) admits in writing its
inability to pay its debts generally as they become due or (e) any Issuer or
any Material Subsidiary takes any corporate action in furtherance of any
such actions in this paragraph (viii); or
(ix) in the case of the Senior Note Indenture, any party secured by the
Collateral, other than the Senior Note Trustee or the Collateral Agent
acting at the direction of the Senior Note Trustee on behalf of itself or
the holders of the Senior Notes, commences proceedings, or gives notice that
it intends to commence proceedings, to foreclose upon any portion of the
Collateral or has exercised any right under applicable law or the Collateral
Documents (or any other mortgage, pledge or security documents) to take
ownership or effect the transfer of such Collateral in lieu of foreclosure;
or the Lenders under the New Credit Facility commence proceedings, or give
notice that they intend to commence proceedings, to foreclose upon any
material portion of the collateral securing the obligations thereunder or
have exercised any right under applicable law or security documents to take
ownership or effect the transfer of such collateral in lieu of foreclosure.
If an Event of Default (other than as specified in paragraphs (vii) and
(viii) of the prior paragraph) shall occur and be continuing, the applicable
Trustee or the holders of not less than 25% in aggregate principal amount of the
Senior Notes or the Senior Subordinated Notes, as the case may be, then
outstanding may declare by notice to the Issuers (or the Issuers and the
applicable Trustee if notice is given by the Holders) the Senior Notes or the
Senior Subordinated Notes, as the case may be, due and payable immediately at
their principal amount together with accrued and unpaid interest, if any, to the
date the Notes shall have become due and payable and thereupon the applicable
Trustee may, at its discretion, proceed to protect and enforce the rights of the
holders of Senior Notes or the Senior Subordinated Notes, as the case may be, by
appropriate judicial proceeding. If an Event of Default specified in paragraph
(vii) or (viii) of the prior paragraph occurs and is continuing, then all the
Senior Notes and the Senior Subordinated Notes shall IPSO FACTO become and be
immediately due and payable, in an amount equal to the principal amount of the
Senior Notes and the Senior Subordinated Notes together with accrued and unpaid
interest, if any, to the date the Senior Notes and the Senior Subordinated Notes
become due and payable, without any declaration or other act on the part of the
applicable Trustee or any holder.
After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the applicable Trustee, the
holders of at least a majority in aggregate principal amount of Senior Notes or
the Senior Subordinated Notes, as the case may be, outstanding, by written
notice to the Issuers and the applicable Trustee, may rescind and annul such
declaration and its consequences if (a) the Issuers have paid or deposited with
the applicable Trustee a sum sufficient to pay (i) all sums paid or advanced by
the applicable Trustee under the applicable Indenture and the reasonable
compensation, expenses, disbursements and advances of the applicable Trustee,
its agents and counsel, (ii) all overdue interest on all Senior Notes or the
Senior Subordinated Notes, as the case may be, (iii) the principal of and
premium, if any, on any Senior Notes or the Senior Subordinated Notes, as the
case may be, which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Senior Notes or the
Senior Subordinated Notes, as the case may be, and (iv) to the extent that
payment of such interest is lawful, interest upon overdue interest at the rate
borne by the Senior Notes or the Senior Subordinated Notes, as the case may be;
and (b) all Events of Default, other than the non-payment of principal of the
Senior Notes or the Senior Subordinated Notes, as the case may be, which have
become due solely by such declaration of acceleration, have been cured or
waived. (Section 502)
The holders of not less than a majority in aggregate principal amount of the
Senior Notes or the Senior Subordinated Notes, as the case may be, outstanding
may on behalf of the holders of all the Senior Notes or the Senior Subordinated
Notes, as the case may be, waive any past defaults under the applicable
Indenture and their consequences, except a default in the payment of the
principal of, premium, if any, or interest on any Senior Note or Senior
Subordinated Note, as the case may be, or in respect of a covenant
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or provision which under the applicable Indenture cannot be modified or amended
without the consent of the holder of each Senior Note or Senior Subordinated
Note, as the case may be, outstanding affected thereby. (Section 513)
The Issuers are also required to notify the applicable Trustee within five
business days of the occurrence of any Default. (Section 501)
The Trust Indenture Act contains limitations on the rights of the Trustees,
should either of them become a creditor of any Issuer or any Guarantor, to
obtain payment of claims in certain cases or to realize on certain property
received by them in respect of any such claims, as security or otherwise. The
Trustees are permitted to engage in such other transactions, PROVIDED that if
they acquire any conflicting interest they must eliminate such conflict upon the
occurrence of an Event of Default or else resign.
POSSESSION, USE AND RELEASE OF COLLATERAL
Upon compliance by the Issuers with the conditions set forth below in
respect of any Asset Sale, the Senior Note Trustee or, in the case of Shared
Collateral, the Collateral Agent will release the Released Interests (as
hereinafter defined) from the Lien of the Collateral Documents and reconvey the
Released Interests to the Issuers. (Section 1207 of the Senior Note Indenture
Only)
Other than with respect to Trust Moneys, which are subject to release from
the lien of the Collateral Documents as provided under "--Use of Trust Moneys"
below, the Issuers will have the right to obtain a release of items of
Collateral (the "Released Interests") subject to an Asset Sale upon compliance
with the condition precedent that the Issuers deliver to the Senior Note Trustee
or, in the case of the Shared Collateral, the Collateral Agent the following:
(a) A notice from the Issuers requesting the release of Released
Interests and attaching all the documents referred to below, (i) describing
with particularity the proposed Released Interests, (ii) specifying the fair
market value of such Released Interests on a date within 60 days of such
notice (the "Valuation Date"), (iii) certifying that the purchase price
received is not less than the fair market value of the Released Interests as
of the date of such release and, to the extent such fair market value is
determined by an Independent Financial Advisor, annexing such Independent
Financial Advisor's determination to such notice, (iv) stating that the
release of such Released Interests will not interfere with or impede the
Senior Note Trustee's or, in the case of Shared Collateral, the Collateral
Agent's ability to realize the value of the remaining Collateral and will
not impair the maintenance and operation of the remaining Collateral and (v)
accompanied by a counterpart of the instruments proposed to give effect to
the release fully executed and acknowledged (if applicable) by all parties
thereto other than the Senior Note Trustee or, in the case of the Shared
Collateral, the Collateral Agent;
(b) An officers' certificate of the Issuers certifying that (i) such
Asset Sale covers only the Released Interests and complies with the terms
and conditions of the Senior Note Indenture and the applicable Collateral
Documents with respect to Asset Sales, (ii) all Net Cash Proceeds from the
sale of any of the Released Interests will be applied in accordance with the
provisions of the Senior Note Indenture in respect of Asset Sales and in the
event that the Net Cash Proceeds for such Asset Sale are used to purchase
additional assets, specifying the assets intended to be so purchased, (iii)
no Default or Event of Default under the Senior Note Indenture is in effect
or continuing on the date of such certificate, the Valuation Date or the
date of such Asset Sale, (iv) the release of the Released Interests will not
result in a Default or Event of Default under the Senior Note Indenture and
(v) all conditions precedent in the Senior Note Indenture relating to the
release in question have been complied with;
(c) The Net Cash Proceeds and other non-cash consideration received from
the Asset Sale required to be delivered to the Senior Note Trustee or, in
the case of the Shared Collateral, the Collateral Agent pursuant to the
Senior Note Indenture and the Collateral Documents, and, if any property
other than cash is included in such consideration, such instruments of
conveyance, assignment and transfer, if any, as may be necessary, in the
opinion of counsel, to subject to the Lien of the Collateral Documents all
the right, title and interest of the Issuers in and to such property;
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(d) One or more opinions of counsel which, when considered collectively,
shall be substantially to the effect (i) that any obligation included in the
consideration for any Released Interest and to be received by the Senior
Note Trustee or, in the case of the Shared Collateral, the Collateral Agent
pursuant to paragraph (c) above is a valid and binding obligation
enforceable in accordance with its terms, subject to such customary
exceptions regarding equitable principles and creditors' rights generally as
shall be reasonably acceptable to the Senior Note Trustee or the Collateral
Agent and that the Collateral Documents are effective to create a valid and
perfected security interest in such obligation, subject to customary
exceptions, (ii) either (1) that such instruments of conveyance, assignment
and transfer as have been or are then delivered to the Senior Note Trustee
or, in the case of the Shared Collateral, the Collateral Agent are
sufficient to subject to the Lien of the Collateral Documents all the right,
title and interest of the Issuers in and to any property, other than cash or
Cash Equivalents, that is included in the consideration for the Released
Interests and to be received by the Senior Note Trustee or, in the case of
the Shared Collateral, the Collateral Agent pursuant to paragraph (c) above,
or (2) that no instruments of conveyance, assignment or transfer are
necessary for such purpose, (iii) that the Issuers have corporate or
partnership power to own all property included in the consideration for such
release, and (iv) that all conditions precedent provided in the Senior Note
Indenture and the Collateral Documents relating to the Asset Sale and such
release of the Released Interests have been complied with;
(e) If any Released Interest is only a portion of a discrete parcel of
Real Property, evidence that a title company shall have committed to issue
an endorsement to the title insurance policy relating to the affected
Mortgaged Property confirming that after such release, the Lien of the
applicable Mortgage continues unimpaired as a first priority perfected Lien
upon the remaining Mortgaged Property subject only to "Prior Liens" (as
defined in the applicable Mortgage); and
(f) All additional documentation, including Opinions of Counsel, if any,
required by the Section 314(d) of the Trust Indenture Act prior to the
release of Collateral by the Senior Note Trustee or, in the case of the
Shared Collateral, the Collateral Agent.
Any Net Cash Proceeds of an Asset Sale involving Collateral (other than
Shared Collateral) shall be deposited with the Senior Note Trustee or, in the
case of Shared Collateral, shall be deposited with the Collateral Agent, in each
case held in the Collateral Account in accordance with the terms of the Senior
Note Indenture and the Collateral Documents. The Company may withdraw such
proceeds from the Collateral Account (i) to purchase or otherwise acquire assets
as described in paragraph (b) of "Certain Covenants -- Limitations on Sale of
Assets," which assets shall thereafter become subject to the Lien of the
Collateral Documents as described therein, (ii) to purchase indebtedness
(including the Notes) in accordance with paragraph (c) of "Certain Covenants --
Limitation on Sale of Assets" or (iii) to the extent such proceeds are not so
utilized in connection with clause (ii) above due to a Deficiency, to utilize
such proceeds for general corporate purposes as described in paragraph (c) of
"Certain Covenants -- Limitation on Sale of Assets."
So long as no Event of Default shall have occurred and be continuing, the
Issuers may, without any release or consent by the Senior Note Trustee or the
Collateral Agent, sell or otherwise dispose of any machinery, equipment,
furniture, apparatus, tools or implements or other similar property which at
such time is subject to the Lien of the Collateral Documents, which may have
become worn out, obsolete or otherwise in need of replacement or repair, not
exceeding (A) individually $500,000, in fair market value, and (B) in the
aggregate in any twelve month period, $5,000,000, in fair market value.
USE OF TRUST MONEYS
All Trust Moneys shall be held by the Senior Note Trustee or, in the case of
the Shared Collateral, the Collateral Agent, as a part of the Collateral
securing the Senior Notes and, as long as no Event of Default shall have
occurred and be continuing, shall either (i) in the case of Trust Moneys
constituting Net Cash Proceeds from Asset Sales be released to the Issuers for
reinvestment in the business of the Company in accordance with "--Certain
Covenants -- Limitation on Sale of Assets" above and subject to receipt by the
Senior Note Trustee or, in the case of the Shared Collateral, the Collateral
Agent of certain documents
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set forth in the Senior Note Indenture or the Collateral Agent or (ii) in the
case of Trust Moneys constituting any Excess Proceeds, at the written direction
of the Issuers pursuant to an Offer, be applied by the Senior Note Trustee or
the Collateral Agent from time to time to the payment of the principal of,
premium, if any, and interest on any Senior Notes, at maturity or upon
redemption in each case in accordance with the terms of the Senior Note
Indenture and the Collateral Documents; PROVIDED, HOWEVER, that to the extent
that the Offer is not fully subscribed to by the Holders, the Issuers may obtain
a release of any unutilized portion of the Excess Proceeds from the Lien of the
Collateral Documents, subject to compliance with the terms of the Senior Note
Indenture. The Issuers may also withdraw Trust Moneys constituting the proceeds
of insurance upon any part of the Collateral or an award for any Collateral
taken by eminent domain to reimburse the Issuers for repair or replacement of
such Collateral, subject to certain conditions.
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURES
The Issuers may, at their option and at any time, elect to have the
obligations of the Issuers and any Guarantor discharged with respect to the
outstanding Senior Notes or Senior Subordinated Notes, as the case may be
("defeasance"). Such defeasance means that the Issuers and any Guarantor shall
be deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Senior Notes or Senior Subordinated Notes, as the case may be, and
the Collateral would be released from the Lien in favor of the holders of the
Senior Notes except for (i) the rights of holders of outstanding Senior Notes or
Senior Subordinated Notes, as the case may be, to receive payments in respect of
the principal of, premium, if any, and interest on such Senior Notes or Senior
Subordinated Notes, as the case may be, solely from the trust fund as described
below, when such payments are due, (ii) the Issuers' obligations with respect to
the Senior Notes or Senior Subordinated Notes, as the case may be, concerning
issuing temporary Senior Notes or temporary Senior Subordinated Notes, as the
case may be, registration of Senior Notes or Senior Subordinated Notes, as the
case may be, mutilated, destroyed, lost or stolen Senior Notes or Senior
Subordinated Notes, as the case may be, and the maintenance of an office or
agency for payment and money for security payments held in trust, (iii) the
rights, powers, trusts, duties and immunities of the applicable Trustee and (iv)
the defeasance provisions of the applicable Indenture. In addition, the Issuers
may, at their option and at any time, elect to have the obligations of the
Issuers and any Guarantor released with respect to certain covenants (PROVIDED
that the Issuers' obligations to pay interest, premium, if any, and principal on
the Senior Notes or Senior Subordinated Notes, as the case may be, under the
applicable Indenture shall remain in full force and effect as long as the Senior
Notes or Senior Subordinated Notes, as the case may be, are outstanding), that
are described in the applicable Indenture ("covenant defeasance") and any
omission to comply with such obligations shall not constitute a Default or an
Event of Default with respect to the Senior Notes or Senior Subordinated Notes,
as the case may be. In the event covenant defeasance occurs, certain events (not
including non-payment, enforceability of any Guarantee, bankruptcy and
insolvency events) described under "-- Events of Default" will no longer
constitute an Event of Default with respect to the Senior Notes or Senior
Subordinated Notes, as the case may be. (Sections 401, 402 and 403)
In order to exercise either defeasance or covenant defeasance, (i) the
Issuers must irrevocably deposit with the applicable Trustee, in trust, for the
benefit of the holders of the Senior Notes or Senior Subordinated Notes, as the
case may be, cash in United States dollars, U.S. Government Obligations (as
defined in the Indentures), or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay and discharge the principal of, premium, if any, and
interest on the outstanding Senior Notes or Senior Subordinated Notes, as the
case may be, on the Stated Maturity of such principal or installment of
principal (or on any date after ______________, 1998 in the case of the Senior
Notes and , 1999 in the case of the Senior Subordinated Notes (such
date being referred to as the applicable "Defeasance Redemption Date"), if when
exercising either defeasance or covenant defeasance, the Issuers have delivered
to the applicable Trustee an irrevocable notice to redeem all of the outstanding
Senior Notes or Senior Subordinated Notes, as the case may be, on the applicable
Defeasance Redemption Date); (ii) in the case of defeasance, the Issuers shall
have delivered to the applicable Trustee an opinion of independent counsel in
the
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United States stating that (A) the Issuers have received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the date of the
applicable Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such opinion will
confirm that, the holders of the outstanding Senior Notes or Senior Subordinated
Notes, as the case may be, will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such defeasance had not occurred; (iii) in the
case of covenant defeasance, the Issuers shall have delivered to the applicable
Trustee an opinion of independent counsel in the United States to the effect
that the holders of the outstanding Senior Notes or Senior Subordinated Notes,
as the case may be, will not recognize income, gain or loss for federal income
tax purposes as a result of such covenant defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such covenant defeasance had not occurred; (iv)
no Default or Event of Default shall have occurred and be continuing on the date
of such deposit or insofar as clause (vii) or (viii) under the first paragraph
under "-- Events of Default" is concerned, at any time during the period ending
on the 91st day after the date of deposit; (v) such defeasance or covenant
defeasance shall not cause the applicable Trustee to have a conflicting interest
with respect to any securities of any Issuer or any Guarantor; (vi) such
defeasance or covenant defeasance shall not result in a breach or violation of,
or constitute a Default under, the applicable Indenture or any other material
agreement or instrument to which any Issuer or any Guarantor is a party or by
which it is bound; (vii) the Issuers shall have delivered to the applicable
Trustee an opinion of independent counsel in the United States to the effect
that (A) the trust funds will not be subject to any rights of holders of
Indebtedness, including, without limitation, those arising under the applicable
Indenture and (B) after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally; (viii) the
Issuers shall have delivered to the applicable Trustee an officers' certificate
stating that the deposit was not made by the Issuers with the intent of
preferring the holders of the Senior Notes or Senior Subordinated Notes, as the
case may be, or any Guarantee over the other creditors of any Issuer or any
Guarantor with the intent of defeating, hindering, delaying or defrauding
creditors of the Company, any Guarantor or others; (ix) no event or condition
shall exist that would prevent the Company from making payments of the principal
of, premium, if any, and interest on the Senior Notes or Senior Subordinated
Notes, as the case may be, on the date of such deposit or at any time ending on
the 91st day after the date of such deposit; and (x) the Company shall have
delivered to the applicable Trustee an officers' certificate and an opinion of
independent counsel, each stating that all conditions precedent provided for
relating to either the defeasance or the covenant defeasance, as the case may
be, have been complied with. (Section 404)
CERTAIN BANKRUPTCY LIMITATIONS
The right of the Senior Note Trustee to repossess and dispose of the
Collateral upon the occurrence of an Event of Default is likely to be
significantly impaired by applicable Bankruptcy Law if a bankruptcy proceeding
were to be commenced by or against any Issuer prior to the Collateral Agent
having disposed of the Collateral. Under the Bankruptcy Law, a secured creditor
such as the Senior Note Trustee and, in the case of the Shared Collateral, the
Collateral Agent on behalf of the holders of the Senior Notes is prohibited from
repossessing its security from a debtor in a bankruptcy case, or from disposing
of security repossessed from such debtor, without bankruptcy court approval.
Moreover, the Bankruptcy Law permits the debtor to continue to retain and to use
collateral even though the debtor is in default under the applicable debt
instruments, provided that the secured creditor is given "adequate protection."
The meaning of the term "adequate protection" may vary according to
circumstances, but it is intended in general to protect the value of the secured
creditor's interest in the collateral and may include cash payments or the
granting of additional security, if and at such times as the court in its
discretion determines, for any diminution in the value of the collateral as a
result of the stay of repossession or disposition or any use of the collateral
by the debtor during the pendency of the bankruptcy case. In view of the lack of
a precise definition of the term "adequate protection" and the broad
discretionary powers of a bankruptcy court, it is impossible to predict how long
payments under the Senior Notes could be delayed following commencement of a
bankruptcy case, whether or when the
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Senior Note Trustee and, in the case of the Shared Collateral, the Collateral
Agent could repossess or dispose of the Collateral or whether or to what extent
holders of the Senior Notes would be compensated for any delay in payment or
loss of value of the Collateral through the requirement of "adequate
protection."
SATISFACTION AND DISCHARGE
Each Indenture will cease to be of further effect (except as to surviving
rights of registration of transfer or exchange of the Senior Notes or Senior
Subordinated Notes, as the case may be, as expressly provided for in the
applicable Indenture) as to all outstanding Senior Notes or Senior Subordinated
Notes, as the case may be, when (i) either (a) all the Senior Notes or Senior
Subordinated Notes, as the case may be, theretofore authenticated and delivered
(except lost, stolen or destroyed Senior Notes or Senior Subordinated Notes, as
the case may be, which have been replaced or paid and Senior Notes or Senior
Subordinated Notes, as the case may be, for whose payment funds have been
deposited in trust by the Issuers and thereafter repaid to the Issuers or
discharged from such trust) have been delivered to the applicable Trustee for
cancellation or (b) all Senior Notes or Senior Subordinated Notes, as the case
may be, not theretofore delivered to the applicable Trustee for cancellation (x)
have become due and payable, (y) will become due and payable at their Stated
Maturity within one year, or (z) are to be called for redemption within one year
under arrangements satisfactory to the applicable Trustee for the giving of
notice of redemption by the applicable Trustee in the name, and at the expense,
of the Issuers, and either any Issuer or any Guarantor has irrevocably deposited
or caused to be deposited with the applicable Trustee as trust funds in trust an
amount sufficient to pay and discharge the entire indebtedness on the Senior
Notes or Senior Subordinated Notes, as the case may be, not theretofore
delivered to the applicable Trustee for cancellation, including principal of,
premium, if any, and accrued interest on such Senior Notes or Senior
Subordinated Notes, as the case may be, at such Maturity; (ii) any Issuer or any
Guarantor have paid or caused to be paid all other sums payable under the
applicable Indenture by the Issuers and any Guarantor; and (iii) the Issuers and
any Guarantor have delivered to the applicable Trustee an officers' certificate
and an opinion of counsel in the United States each stating that all conditions
precedent under the applicable Indenture relating to the satisfaction and
discharge of the applicable Indenture have been complied with, and that such
satisfaction and discharge will not result in a breach or violation of, or
constitute a default under, the applicable Indenture or any other material
agreement or instrument to which any Issuer is a party or by which it is bound.
(Section 1301)
MODIFICATIONS AND AMENDMENTS
Modifications and amendments of the Indentures and, in the case of the
Senior Notes, the Collateral Documents may be made by the Issuers, any
Guarantor, if any, and the applicable Trustee with the consent of the holders of
not less than a majority in aggregate outstanding principal amount of the Senior
Notes or Senior Subordinated Notes, as the case may be; PROVIDED, HOWEVER, that
no such modification or amendment may, without the consent of the holder of each
outstanding Senior Note or Senior Subordinated Note, as the case may be,
affected thereby: (i) change the Stated Maturity of the principal of, or any
installment of interest on, any Senior Note or Senior Subordinated Note, as the
case may be, or waive a default in the payment of the principal of, or interest
on any Senior Note or Senior Subordinated Note, as the case may be, or reduce
the principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or change the coin or currency in which the
principal of any Senior Note or Senior Subordinated Note, as the case may be, or
any premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment after the Stated Maturity thereof;
(ii) amend, change or modify the obligation of the Issuers to make and
consummate a Change of Control Offer in the event of a Change of Control in
accordance with "-- Certain Covenants -- Purchase of Notes Upon a Change of
Control" or make and consummate an Offer in accordance with "-- Certain
Covenants -- Limitation on Sale of Assets", including, in each case, amending,
changing or modifying any of the definitions with respect thereto; (iii) reduce
the percentage in principal amount of outstanding Notes, the consent of whose
holders is required for any such supplemental indenture, or the consent of whose
holders is required for any waiver; (iv) modify any of the provisions relating
to supplemental indentures requiring the consent of holders or relating to the
waiver of past defaults or
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relating to the waiver of certain covenants, except to increase the percentage
of outstanding Notes required for such actions or to provide that certain other
provisions of such Indenture cannot be modified or waived without the consent of
the holder of each Senior Note or Senior Subordinated Note, as the case may be,
affected thereby; (v) except as otherwise permitted under "-- Consolidation,
Merger, Sale of Assets," consent to the assignment or transfer by any Issuer or
any Guarantor of any of its rights and obligations under the Indentures; (vi)
amend or modify any of the provisions of (1) in the case of the Senior Notes,
the Senior Note Indenture in any manner which subordinates the Senior Notes in
right of payment to other Indebtedness of the Issuers or which subordinates any
Guarantee of obligations under the Senior Note Indenture in right of payment to
other Indebtedness of such Guarantor, or (2) in the case of the Senior
Subordinated Notes, the Senior Subordinated Note Indenture relating to the
priority or right of payment of the Senior Subordinated Notes or any Guarantee
in a manner adverse to the holders of the Senior Subordinated Notes; and (vii)
in the case of the Senior Notes, consent to the release of any Collateral from
any Lien created by the Collateral Documents or permit the creation of any Lien
on the Collateral except in each case in accordance with the terms of the Senior
Note Indenture and the Collateral Documents. (Section 902)
The holders of a majority in aggregate principal amount of the Senior Notes
or Senior Subordinated Notes, as the case may be, outstanding may waive
compliance with certain restrictive covenants and provisions of the applicable
Indenture. (Section 1022 of the Senior Note Indenture and Section 1021 of the
Senior Subordinated Note Indenture)
GOVERNING LAW
The Indentures and the Notes will be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to the
conflicts of law principles thereof.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any Person or the
date the acquired Person becomes a Subsidiary.
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person (or any partner of such
Person) or (ii) any other Person that owns, directly or indirectly, 5% or more
of such specified Person's (or any partner of such Person's) equity ownership or
Voting Stock or any executive officer or director of either of such Persons. For
the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, by way of merger, consolidation or
sale and leaseback transaction) (collectively, a "transfer"), directly or
indirectly, in one or a series of related transactions, of (i) any Capital Stock
of any Subsidiary; (ii) all or substantially all of the properties and assets of
any division or line of business of the Company or its Subsidiaries; or (iii)
any other properties or assets of the Company or any Subsidiary, other than in
the ordinary course of business. For the purposes of this definition, the term
"Asset Sale" shall not include any transfer of properties and assets (1) that is
governed by the provisions described under "Consolidation, Merger, Sale of
Assets" or (2) that are of the Company to any Wholly Owned Subsidiary, or of any
Subsidiary to the Company or any Wholly Owned Subsidiary in accordance with the
terms of the Indentures.
"Average Life to Stated Maturity" means, as of the date of determination
with respect to any Indebtedness, the quotient obtained by dividing (i) the sum
of the products of (a) the number of years
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from the date of determination to the date or dates of each successive scheduled
principal payment of such Indebtedness multiplied by (b) the amount of each such
principal payment by (ii) the sum of all such principal payments.
"Bankruptcy Law" means Title 11 of the United States Code, as amended, or
any similar United States Federal or state law relating to bankruptcy,
insolvency, receivership, winding-up, liquidation, reorganization or relief of
debtors or any amendment to, succession to or change in any such law.
"Board of Directors" means the board of directors of any Issuer or any
Guarantor, as the case may be, or any duly authorized committee of such board.
"Borrowing Base" means the sum of (a) 60% of the inventory owned by the
Company or any Subsidiary and (b) 85% of the trade accounts receivable owned by
the Company or any Subsidiary (less any reserves relating to such receivables)
(in each case as recorded on the books and records of the Company on a
consolidated basis in accordance with GAAP).
"Capital Lease Obligation" of any Person means any obligation of such Person
and its subsidiaries on a Consolidated basis under any capital lease of real or
personal property which, in accordance with GAAP, has been recorded as a
capitalized lease obligation.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock.
"Change of Control" means the occurrence of any of the following events: (i)
(A) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act), other than the Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have beneficial ownership of all shares
that such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of
shares of Voting Stock representing the right to vote more than 45% of the
general voting power (the "Voting Power") under ordinary circumstances to elect
at least a majority of the board of directors, managers or trustees of the
Company (irrespective of whether or not at the time stock of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency) and (B) the Permitted Holders own less than 50% of the Voting
Power; (ii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election to such Board of Directors or
whose nomination for election by the stockholders of the Company, was approved
by a vote of 66 2/3% of the members of the Board of Directors of the Company
then still in office who were either members of the Board of Directors of the
Company at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute at least
two-thirds of such Board of Directors then in office; (iii) the Company
consolidates with or merges with or into any Person or conveys, transfers or
leases all or substantially all of its assets to any Person, or any corporation
consolidates with or into the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company is changed into
or exchanged for cash, securities or other property, other than any such
transaction (X) where the outstanding Voting Stock of the Company is not changed
or exchanged at all (except to the extent necessary to reflect a change in the
jurisdiction of incorporation of the Company) or (Y) where (A) the outstanding
Voting Stock of the Company is changed into or exchanged for (x) Voting Stock of
the surviving corporation or the Company which is not Redeemable Capital Stock
or (y) cash, securities and other property (other than Capital Stock of the
surviving corporation) in an amount which could be paid by the Company as a
Restricted Payment as described under "-- Certain Covenants -- Limitation on
Restricted Payments" (and such amount shall be treated as a Restricted Payment
subject to the provisions in the Indentures described under "Certain Covenants
- -- Limitation on Restricted Payments") and (B) no "person" or "group" other than
the Permitted Holders owns immediately after such transaction, directly or
indirectly, more than 45% of the total Voting Power of the surviving corporation
or the Permitted Holders own 50% or more of the total
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Voting Power of the surviving corporation; or (iv) the Company is liquidated or
dissolved or adopts a plan of liquidation or dissolution other than in a
transaction which complies with the provisions described under "--
Consolidation, Merger, Sale of Assets."
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means, collectively, all of the property and assets in which a
security interest is granted or are pledged pursuant to the Collateral
Documents.
"Collateral Account" means the collateral account or accounts established
pursuant to the Senior Note Indenture and the Collateral Documents.
"Collateral Agent" means the collateral agent under the Pledge, Security and
Intercreditor Agreement.
"Collateral Document" means, collectively, the Mortgages, the Security
Agreement, the Pledge, Security and Intercreditor Agreement and all security
agreements, mortgages, deeds of trust, pledges, collateral assignment or other
instruments evidencing or creating any security interest in favor of the Senior
Note Trustee or the Collateral Agent in all or any portion of the Collateral, in
each case, as amended, amended and restated, supplemented or otherwise modified
from time to time.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if, at any time after the
date of the Indentures such Commission is not existing and performing the duties
now assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.
"Consolidated Fixed Charge Coverage Ratio" of any Person means, for any
period, the ratio of (a) the sum of Consolidated Net Income, Consolidated
Interest Expense, Consolidated Income Tax Expense and Consolidated Non-Cash
Charges deducted in computing Consolidated Net Income (Loss), in each case for
such period, of such Person and its Consolidated Subsidiaries on a Consolidated
basis, all determined in accordance with GAAP to (b) the sum of (I) Consolidated
Interest Expense of such Person for such period and (II) the product of (x) all
cash dividends (including the payment of accreted or accumulated dividends) paid
on any Preferred Stock of such Person during such period times (y) a fraction,
the numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory income tax rate (but not
less than zero) of such Person, expressed as a decimal, in each case, on a
Consolidated basis and in accordance with GAAP; PROVIDED that (i) in making such
computation, the Consolidated Interest Expense attributable to interest on any
Indebtedness computed on a pro forma basis and (A) bearing a floating interest
rate shall be computed as if the rate in effect on the date of computation had
been the applicable rate for the entire period and (B) which was not outstanding
during the period for which the computation is being made but which bears, at
the option of the Company, a fixed or floating rate of interest, shall be
computed by applying, at the option of such Person, either the fixed or floating
rate, and (ii) in making such computation, the Consolidated Interest Expense of
such Person attributable to interest on any Indebtedness under a revolving
credit facility computed on a pro forma basis shall be computed based upon the
average daily balance of such Indebtedness during the applicable period.
"Consolidated Income Tax Expense" means for any period, as applied to any
Person, the provision for federal, state, local and foreign income taxes of such
Person and its Consolidated Subsidiaries for such period as determined in
accordance with GAAP.
"Consolidated Interest Expense" of any Person means, without duplication,
for any period, as applied to any Person, the sum of (a) the interest expense of
such Person and its Consolidated Subsidiaries for such period, on a Consolidated
basis, including, without limitation, (i) amortization of debt discount, (ii)
the net cost under Interest Rate Agreements (including amortization of
discounts), and (iii) the interest portion of any deferred payment obligation
plus (b) the interest expense attributable to Capital Lease Obligations paid,
accrued and/or scheduled to be paid or accrued by such Person during such period
in each case as determined in accordance with GAAP.
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"Consolidated Net Income (Loss)" of any Person means, for any period, the
Consolidated net income (loss) of such Person and its Consolidated Subsidiaries
for such period as determined in accordance with GAAP, adjusted, to the extent
included in calculating such Consolidated net income (or loss), by excluding,
without duplication, (i) all extraordinary gains and losses, (ii) the portion of
net income (or loss) of such Person and its Consolidated Subsidiaries allocable
to minority interests in unconsolidated Persons to the extent that cash
dividends or distributions have not actually been received by such Person or one
of its Consolidated Subsidiaries, (iii) net income (or loss) of any Person
combined with such Person or any of its Subsidiaries on a "pooling of interests"
basis attributable to any period prior to the date of combination, (iv) any gain
or loss, net of taxes, realized upon the termination of any employee pension
benefit plan, (v) aggregate net gains (less all fees and expenses relating
thereto) in respect of dispositions of assets other than in the ordinary course
of business, (vi) the net income of any Subsidiary to the extent that the
declaration of dividends or similar distributions by that Subsidiary of that
income is not at the time permitted, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulations applicable to that Subsidiary or its
stockholders and (vii) any gain arising from the acquisition of any securities,
or the extinguishment, under GAAP, of any Indebtedness of such Person.
"Consolidated Net Worth" means, with respect to any Person, the Consolidated
stockholders' equity (excluding Redeemable Capital Stock) of such Person and its
Subsidiaries, as determined in accordance with GAAP.
"Consolidated Non-Cash Charges" of any Person means, for any period, the
aggregate depreciation, amortization and other non-cash charges of such Person
and its Consolidated Subsidiaries for such period, as determined in accordance
with GAAP (excluding any non-cash charge which requires an accrual or reserve
for cash charges for any future period).
"Consolidation" means, with respect to any Person, the consolidation of the
accounts of such Person and each of its subsidiaries if and to the extent the
accounts of such Person and each of its subsidiaries would normally be
consolidated with those of such Person, all in accordance with GAAP. The term
"Consolidated" shall have a similar meaning.
"Default" means any event which is, or after notice or passage of any time
or both would be, an Event of Default.
"Disinterested Director" means, with respect to any transaction or series of
related transactions, a member of the Board of Directors who does not have any
material direct or indirect financial interest in or with respect to such
transaction or series of related transactions.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an informed
and willing seller under no compulsion to sell and an informed and willing
buyer.
"GAAP" means generally accepted accounting principles in the United States,
consistently applied, which are in effect on the date of the Indentures.
"Guarantee" means the guarantee by any Guarantor of the Indenture
Obligations.
"Guaranteed Debt" of any Person means, without duplication, all Indebtedness
of any other Person referred to in the definition of Indebtedness contained in
this Section guaranteed directly or indirectly in any manner by such Person, or
in effect guaranteed directly or indirectly by such Person through an agreement
(i) to pay or purchase such Indebtedness or to advance or supply funds for the
payment or purchase of such Indebtedness, (ii) to purchase, sell or lease (as
lessee or lessor) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Indebtedness or to assure
the holder of such Indebtedness against loss, (iii) to supply funds to, or in
any other manner invest in, the debtor (including any agreement to pay for
property or services without requiring that such property be received or such
services be rendered), (iv) to maintain working capital or equity capital of
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the debtor, or otherwise to maintain the net worth, solvency or other financial
condition of the debtor or (v) otherwise to assure a creditor against loss;
PROVIDED that the term "guarantee" shall not include endorsements for collection
or deposit, in either case in the ordinary course of business.
"Guarantor" means any guarantor of the Indenture Obligations.
"Indebtedness" means, with respect to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, excluding any trade payables and other accrued
current liabilities arising in the ordinary course of business, but including,
without limitation, all obligations, contingent or otherwise, of such Person in
connection with any letters of credit issued under letter of credit facilities,
acceptance facilities or other similar facilities and in connection with any
agreement to purchase, redeem, exchange, convert or otherwise acquire for value
any Capital Stock of such Person, or any warrants, rights or options to acquire
such Capital Stock, now or hereafter outstanding, (ii) all obligations of such
Person evidenced by bonds, notes, debentures or other similar instruments, (iii)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even if
the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), but
excluding trade payables arising in the ordinary course of business, (iv) all
obligations under Interest Rate Agreements of such Person (except for
obligations which have been included in the Consolidated Net Income of such
Person other than as Consolidated Interest Expense), (v) all Capital Lease
Obligations of such Person, (vi) all Indebtedness referred to in clauses (i)
through (v) above of other Persons and all dividends of other Persons, the
payment of which is secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien, upon or
with respect to property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, (vii) all Guaranteed Debt of such
Person, (viii) all Redeemable Capital Stock valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends, and (ix) any amendment, supplement, modification, deferral, renewal,
extension, refunding or refinancing of any Indebtedness of the types referred to
in clauses (i) through (viii) above. For purposes hereof, the "maximum fixed
repurchase price" of any Redeemable Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on
any date on which Indebtedness shall be required to be determined pursuant to
the applicable Indenture, and if such price is based upon, or measured by, the
Fair Market Value of such Redeemable Capital Stock, such fair market value to be
determined in good faith by the Board of Directors of such Person.
"Indenture Obligations" means the obligations of the Issuers and any other
obligor under either of the Indentures or under the Senior Notes or the Senior
Subordinated Notes, as the case may be, including any Guarantor, to pay
principal of, premium, if any, and interest when due and payable, and all other
amounts due or to become due under or in connection with either of the
Indentures, the Senior Notes or the Senior Subordinated Notes, as the case may
be, and the performance of all other obligations to the applicable Trustee and
the holders of the Senior Notes or the Senior Subordinated Notes, as the case
may be, under the applicable Indenture and the Senior Notes or the Senior
Subordinated Notes, as the case may be, according to the terms thereof.
"Independent Financial Advisor" means an accounting, appraisal, investment
banking or consulting firm of nationally recognized standing that is, in the
reasonable and good faith judgment of the Board of Directors of the Company,
qualified to perform the task for which such firm has been engaged and
disinterested and independent with respect to the Company and its Affiliates.
"Interest Rate Agreements" means one or more of the following agreements
which shall be entered into by one or more financial institutions: interest rate
protection agreements (including, without limitation, interest rate swaps, caps,
floors, collars and similar agreements) and/or other types of interest rate
hedging agreements from time to time.
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"Investment" means, with respect to any Person, directly or indirectly, any
advance, loan (including guarantees), or other extension of credit or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase, acquisition or ownership by such Person of any Capital Stock, bonds,
notes, debentures or other securities issued or owned by, any other Person and
all other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
security interest, hypothecation or other encumbrance upon or with respect to
any property of any kind, real or personal, movable or immovable, now owned or
hereafter acquired.
"Material Subsidiary" means any Subsidiary of the Company (a) revenues
attributable to which for the then most recently completed four fiscal quarters
constituted 2% or more of the Consolidated revenues of the Company or (b) the
assets of which at the end of the Company's most recently completed fiscal
quarter constituted 2% of the Consolidated assets of the Company at the end of
such period.
"Maturity" when used with respect to any Senior Note or Senior Subordinated
Note means the date on which the principal of such Senior Note or Senior
Subordinated Note becomes due and payable as therein provided or as provided in
the applicable Indenture, whether at Stated Maturity, the Offer Date or any
redemption date and whether by declaration of acceleration, Change of Control
Offer in respect of a Change of Control, Senior Note Offer or Senior
Subordinated Offer in respect of an Asset Sale, call for redemption or
otherwise.
"Mortgage" means each mortgage, deed of trust, or similar security
instrument which from time to time affects any property that secures the
Issuers' obligations in respect of the Senior Notes, as any such instrument may
be amended, amended and restated, supplemented or otherwise modified from time
to time.
"Mortgaged Property" shall have the meaning assigned to such term in each of
the Mortgages.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale by any Person,
the proceeds thereof in the form of cash or cash equivalents including payments
in respect of deferred payment obligations when received in the form of, or
stock or other assets when disposed for, cash or cash equivalents (except to the
extent that such obligations are financed or sold with recourse to the Company
or any Subsidiary) net of (i) brokerage commissions and other reasonable fees
and expenses (including fees and expenses of counsel and investment bankers)
related to such Asset Sale, (ii) provisions for all taxes payable as a result of
such Asset Sale, (iii) payments made to retire Indebtedness where payment of
such Indebtedness is secured by the assets or properties the subject of such
Asset Sale, (iv) amounts required to be paid to any Person (other than the
Company or any Subsidiary) owning a beneficial interest in the assets subject to
the Asset Sale and (v) appropriate amounts to be provided by the Company or any
Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against
any liabilities associated with such Asset Sale and retained by the Company or
any Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as reflected in an officers'
certificate delivered to the applicable Trustee and (b) with respect to any
issuance or sale of Capital Stock or options, warrants or rights to purchase
Capital Stock, or debt securities or Capital Stock that have been converted into
or exchanged for Capital Stock, as referred to under "-- Certain Covenants --
Limitation on Restricted Payments," the proceeds of such issuance or sale in the
form of cash or cash equivalents, net of attorney's fees, accountant's fees and
brokerage, consultation, underwriting and other fees and expenses actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"New Credit Facility" means the Loan Agreement, dated as of ,
1994, among International Controls Corp., Great Dane Trailers, Inc., Great Dane
Trailers Nebraska, Inc., Great Dane Trailers Tennessee, Inc., Great Dane Los
Angeles, Inc., Checker Motors Corporation, Checker Motors Co., L.P., South
Charleston Stamping & Manufacturing Company, Yellow Cab Company, Chicago
Autowerks Inc.,
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CMC Kalamazoo Inc., NBD Bank, N.A., as agent, and the lenders party thereto, as
such agreement may be amended, renewed, extended, substituted, refinanced,
restructured, replaced, supplemented or otherwise modified from time to time
(including, without limitation, any successive renewals, extensions,
substitutions, refinancings, restructurings, replacements, supplementations or
other modifications of the foregoing).
"Note Collateral" means, collectively, all of the property and assets that
are from time to time subject to a first priority Lien and security interest in
favor of the Senior Note Trustee for the benefit of the Senior Note holders
pursuant to the Mortgages and the Security Agreement.
"Pari Passu Indebtedness" means any Indebtedness of any Issuer that is PARI
PASSU in right of payment to the Senior Notes or the Senior Subordinated Notes,
as the case may be.
"Permitted Holders" means (i) David R. Markin, Martin L. Solomon, Allan R.
Tessler and Wilmer J. Thomas, Jr. or any one of them, (ii) any trusts created
for the benefit of the persons described in clause (i) or members of any such
person's immediate family; and (iii) in the event of the incompetence or death
of any of the persons described in clause (i), such person's estate, executor,
administrator, committee or other personal representatives or beneficiaries.
"Permitted Indebtedness" means the following:
(i) Indebtedness of the Company or any Subsidiary (including Indebtedness in
respect of which the Company and one or more Subsidiaries are co-obligors) under
the New Credit Facility in an aggregate principal amount not to exceed the
amount of the Borrowing Base calculated as of the date of incurrence of such
Indebtedness (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability thereunder); (ii) Indebtedness of the
Issuers pursuant to the Notes; (iii) Indebtedness of the Company or any
Subsidiary outstanding on the date of the Indentures and listed on a schedule
thereto; (iv) Indebtedness (a) of the Company owing to a Subsidiary or (b) of a
Wholly Owned Subsidiary owing to the Company or another Wholly Owned Subsidiary
(which for purposes of this clause (iv) shall include SCSM so long as the
Company beneficially owns, directly or indirectly, at least 90% of the
outstanding capital stock of SCSM); PROVIDED that any such Indebtedness is made
pursuant to an intercompany note in the form attached as an exhibit to the
Indentures and, in the case of Indebtedness of the Company owing to a
Subsidiary, is subordinated in right of payment from and after such time as the
Notes shall become due and payable (whether at Stated Maturity, upon
acceleration or otherwise) to the payment and performance of the Company's
obligations under the Notes; PROVIDED, FURTHER, that (x) any disposition, pledge
or transfer of any such Indebtedness to a Person (other than the Company or a
Wholly Owned Subsidiary) shall be deemed to be an incurrence of such
Indebtedness by the obligor not permitted by this clause (iv) and (y) any
transaction pursuant to which any Wholly Owned Subsidiary, which has
Indebtedness owing to the Company or any other Wholly Owned Subsidiary, ceases
to be a Wholly Owned Subsidiary shall be deemed to be the incurrence of
Indebtedness by the Company or such other Wholly Owned Subsidiary that is not
permitted by this clause (iv); (v) any renewals, extensions, substitutions,
refundings, refinancings or replacements (collectively, a "refinancing") of any
Indebtedness described in clauses (ii) and (iii) of this definition of
"Permitted Indebtedness," including any successive refinancings so long as the
aggregate principal amount of Indebtedness represented thereby is not increased
by such refinancing plus the lesser of (I) the stated amount of any premium or
other payment required to be paid in connection with such a refinancing pursuant
to the terms of the Indebtedness being refinanced or (II) the amount of premium
or other payment actually paid at such time to refinance the Indebtedness, plus,
in either case, the amount of expenses of the Issuers incurred in connection
with such refinancing and such refinancing does not reduce or advance the
Average Life to Stated Maturity or the Stated Maturity of such Indebtedness;
(vi) guarantees by the Company or any Subsidiary of a line of credit of Checker
Taxi Association, Inc. in an aggregate principal amount outstanding not to
exceed at any given time $1 million; (vii) guarantees of any Subsidiary made in
accordance with the provisions of "-- Certain Covenants -- Limitation on
Issuances of Guarantees of Indebtedness by Subsidiaries" or "-- Limitation on
Issuance and Sale of Capital Stock of Subsidiaries;" (viii) guarantees by
Subsidiaries of Indebtedness of third parties incurred in the ordinary course of
business consistent with
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past practice; PROVIDED that the aggregate liabilities or obligations of the
Subsidiaries thereunder do not exceed at any given time $15 million; (ix) earned
but unpaid compensation of present and future directors and executive officers
of either the Company or any of its Subsidiaries; and (x) Indebtedness of the
Company and any Subsidiary (including indebtedness in respect of which the
Company and one or more Subsidiaries are co-obligors) in addition to that
described in paragraphs (i) through (ix) of this definition of "Permitted
Indebtedness" in an aggregate principal amount outstanding not to exceed at any
given time $25 million.
"Permitted Investment" means (i) Investments in any Wholly Owned Subsidiary
or Investments by the Company or any Subsidiary in a Person, if as a result of
such Investment (a) such Person becomes a Wholly Owned Subsidiary or (b) such
Person is merged or consolidated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or any
Wholly Owned Subsidiary; (ii) Investments in the Notes; (iii) Indebtedness of
the Company or a Subsidiary described under clause (iv), (vi), (vii) or (viii)
of the definition of "Permitted Indebtedness"; (iv) Temporary Cash Investments;
(v) Investments in existence on the date of the Indentures; and (vi) Investments
by American Country Insurance Company or any other Subsidiary in the ordinary
course of the insurance business and in accordance with the statutes and
governmental regulations regulating its affairs in its domestic jurisdiction.
"Permitted Liens" means the following:
(i) any Lien existing, or provided for under arrangements existing, as of
the date of the Indentures; (ii) any Lien arising by reason of (1) any judgment,
decree or order of any court or other governmental authority, if appropriate
legal proceedings which may have been duly initiated for the review of such
judgment, decree or order shall not have been finally terminated or the period
within which such proceedings may be initiated shall not have expired; (2)
taxes, assessments or similar charges not yet delinquent or which are being
contested in good faith; (3) security for the payment of workers' compensation,
unemployment insurance, other social security benefits or other
insurance-related obligations (including but not limited to in respect of
deductibles, self-insured retention amounts and premiums and adjustments
thereto); (4) deposits or pledges in connection with bids, tenders, leases and
contracts (other than contracts for the payment of money); (5) zoning
restrictions, easements, licenses, reservations, provisions, covenants,
conditions, waivers, restrictions on the use of property or minor irregularities
of title (and with respect to leasehold interests, mortgages, obligations, liens
and other encumbrances incurred, created, assumed or permitted to exist and
arising by, through or under a landlord or owner of the leased property, with or
without consent of the lessee), rights of way, sewers, electric lines, telegraph
or telephone lines or other similar purposes, none of which materially impairs
the use of any parcel of property material to the operation of the business of
the Company and its Subsidiaries taken as a whole or the value of such property
for the purpose of such business; (6) deposits or pledges to secure public or
statutory obligations, progress payments, surety and appeal bonds or other
obligations of like nature incurred in the ordinary course of business; or (7)
operation of law in favor of landlords, mechanics, carriers, warehousemen,
materialmen, laborers, employees, suppliers or the like, incurred in the
ordinary course of business for sums which are not yet delinquent or are being
contested in good faith by negotiations or by appropriate proceedings which
suspend the collection thereof; (iii) any Lien securing Acquired Indebtedness
created prior to (and not created in connection with or in contemplation of) the
incurrence of such Indebtedness by the Company or any Subsidiary, which
Indebtedness is permitted under the provisions of "-- Certain Covenants --
Limitation on Indebtedness"; (iv) any Lien securing Indebtedness incurred under
the New Credit Facility; (v) any Lien on the Collateral securing Indebtedness
incurred under the Senior Notes and Senior Note Indenture and Liens expressly
permitted by the Collateral Documents; (vi) any Lien on assets or property not
constituting Collateral created by Subsidiaries to secure Indebtedness of such
Subsidiaries to the Company; (vii) any Lien securing Purchase Money Obligations
and Capital Lease Obligations incurred pursuant to the provisions of "-- Certain
Covenants -- Limitation on Indebtedness"; (viii) any Lien on assets or property
not constituting Collateral securing Indebtedness incurred pursuant to paragraph
(x) of the definition of Permitted Indebtedness; (ix) any Lien on assets or
property not constituting Collateral
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securing Permitted Subsidiary Indebtedness; (x) until released in accordance
with "Certain Covenants -- Release of Bank Lien on Vehicles," the Lien on
vehicles in Motors' taxicab fleet and on certain medallions associated therewith
existing on the date of this Indenture; and (xi) any extension, renewal,
refinancing or replacement, in whole or in part, of any Lien described in the
foregoing clauses (i), (iii) and (v) so long as (1) the amount of security is
not increased thereby, (2) the aggregate amount of Indebtedness or other
obligations secured by the Lien after such extension, renewal, refinancing or
replacement does not exceed the aggregate amount of the Indebtedness or other
obligations secured by the existing Lien prior to such extension, renewal,
refinancing or replacement plus an amount equal to the lesser of (a) the stated
premium required to be paid in connection with such an extension, renewal,
refinancing or replacement pursuant to the terms of the Indebtedness or (b) the
amount of any premium actually paid by the Issuers to accomplish such extension,
renewal, refinancing or replacement and (3) the Indebtedness secured by such
Lien (other than Permitted Indebtedness) is permitted under the provisions of
"-- Certain Covenants -- Limitation on Indebtedness."
"Permitted Subsidiary Indebtedness" means Indebtedness of the Subsidiaries
of the Company in the aggregate principal amount outstanding not to exceed $25
million at any given time under any agreement providing for subsidized financing
from any federal or state governmental agency.
"Person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivisions thereof.
"Pledge, Security and Intercreditor Agreement" means the pledge, security
and intercreditor agreement dated the date of the Senior Note Indenture among
the Company, the Senior Note Trustee, NBD Bank, N.A., as agent under the New
Credit Facility, and _____________________, as collateral agent, as amended,
amended and restated, supplemented or otherwise modified from time to time as
permitted thereby.
"Preferred Stock" means, with respect to any Person, any Capital Stock of
any class or classes (however designated) which is preferred as to the payment
of dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over Capital
Stock of any other class in such Person.
"Public Offering" means an underwritten public offering of Qualified Capital
Stock of the Company pursuant to a registration statement that has been declared
effective by the Commission pursuant to the Securities Act which results in cash
proceeds being received by the Company.
"Purchase Money Obligation" means any Indebtedness secured by a Lien on
assets related to the business of the Company or its Subsidiaries, and any
additions and accessions thereto, which are purchased by the Company or any
Subsidiary at any time after the Notes are issued; PROVIDED, that (i) the
security agreement or conditional sales or other title retention contract
pursuant to which the Lien on such assets is created (collectively, a "Purchase
Money Security Agreement") shall be entered into within 90 days after the
purchase or substantial completion of the construction of such assets and shall
at all times be confined solely to the assets so purchased or acquired, any
additions and accessions thereto and any proceeds therefrom, (ii) at no time
shall the aggregate principal amount of the outstanding Indebtedness secured
thereby be increased, except in connection with the purchase of additions and
accessions thereto and except in respect of fees and other obligations in
respect of such Indebtedness and (iii)(A) the aggregate outstanding principal
amount of Indebtedness secured thereby (determined on a per asset basis in the
case of any additions and accessions) shall not at the time such Purchase Money
Security Agreement is entered into exceed 100% of the purchase price to the
Company or any Subsidiary of the assets subject thereto or (B) the Indebtedness
secured thereby shall be with recourse solely to the assets so purchased or
acquired, any additions and accessions thereto and any proceeds therefrom.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.
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"Real Property" means any interest in any real property or any portion
thereof, whether owned in fee or leased or otherwise owned.
"Redeemable Capital Stock" means any Capital Stock that, either by its terms
or by the terms of any security into which it is convertible or exchangeable or
otherwise, is, or upon the happening of an event or passage of time would be,
required to be redeemed prior to any Stated Maturity of the principal of the
Notes or is redeemable at the option of the holder thereof at any time prior to
any such Stated Maturity, or is convertible into or exchangeable for debt
securities at any time prior to any such Stated Maturity at the option of the
holder thereof.
"Security Agreement" means the security agreement dated the date of the
Senior Note Indenture between the Company and the Senior Note Trustee as
amended, amended and restated, supplemented or otherwise modified from time to
time as permitted thereby.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Note Indenture" means the indenture, dated as of ,
1994, among the Issuers and First Fidelity Bank, National Association, as
trustee, as such agreement may be amended, renewed, extended, substituted,
refinanced, replaced, supplemented or otherwise modified from time to time
(including, without limitation, any successive renewals, extensions,
substitutions, refinancings, restructurings, replacements, supplementations or
other modifications of the foregoing).
"Senior Notes" means the % Senior Secured Notes due 2001 of the Issuers
issued pursuant to the Senior Note Indenture.
"Senior Subordinated Note Indenture" means the indenture, dated as of
, 1994, among the Company and Marine Midland Bank, as trustee, as
such agreement may be amended, renewed, extended, substituted, refinanced,
replaced, supplemented or otherwise modified from time to time (including,
without limitation, any successive renewals, extensions, substitutions,
refinancings, restructurings, replacements, supplementations or other
modifications of the foregoing).
"Senior Subordinated Notes" means the Company's % Senior Subordinated
Notes due 2004 issued pursuant to the Senior Subordinated Note Indenture.
"Shared Collateral" means, collectively, all of the property and assets
subject to a Lien and security interest in favor of the Senior Note Trustee and
the Lenders under the New Credit Facility on an equal and ratable basis pursuant
to the Pledge, Security and Intercreditor Agreement.
"Stated Maturity" when used with respect to any Indebtedness or any
installment of interest thereon, means the dates specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest, as the case may be, is due and payable.
"Subordinated Indebtedness" means Indebtedness of any of the Issuers
subordinated in right of payment to the Senior Notes.
"Subsidiary" means any Person a majority of the equity ownership or the
Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries.
"Temporary Cash Investments" means (i) any evidence of Indebtedness,
maturing not more than one year after the date of acquisition, issued by the
United States of America, or an instrumentality or agency thereof, and
guaranteed fully as to principal, premium, if any, and interest by the United
States of America, (ii) any certificate of deposit or money market deposit,
maturing not more than one year after the date of acquisition, issued by, or
time deposit of, a commercial banking institution that is a member of the
Federal Reserve System and that has combined capital and surplus and undivided
profits of not less than $250,000,000, whose debt has a rating, at the time as
of which any investment therein is made, of "P-1" (or higher) according to
Moody's Investors Service, Inc. ("Moody's") or any successor rating agency, or
"A-1" or higher according to Standard & Poor's Corporation ("S&P") or any
successor rating agency, (iii) commercial paper, maturing not more than 180 days
after the date of acquisition, issued by a
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corporation (other than an Affiliate or Subsidiary of the Company) organized and
existing under the laws of the United States of America with a rating, at the
time as of which any investment therein is made, of "P-1" (or higher) according
to Moody's or any successor rating agency or "A-1" (or higher) according to S&P
or any successor rating agency and (iv) any repurchase obligation with a term of
not more than 90 days for direct obligations of the United States of America
entered into with a bank meeting the qualifications described in clause (ii)
above.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Trust Moneys" means all cash or Cash Equivalents received by the Senior
Note Trustee or, in the case of Shared Collateral, the Collateral Agent: (a) in
exchange for the release of property from the Lien of any of the Collateral
Documents; (b) as compensation for or proceeds of the sale of all or any part of
the Collateral taken by eminent domain or purchased by, or sold pursuant to any
order of, a governmental authority or otherwise disposed of; (c) as proceeds of
insurance upon any, all or part of the Collateral (other than any liability
insurance proceeds payable to the Senior Note Trustee or the Collateral Agent
for any loss, liability or expense incurred by it); (d) pursuant to certain
provisions of the Mortgages; or (e) as proceeds of any other sale or other
disposition of all or any part of the Collateral by or on behalf of the Senior
Note Trustee or the Collateral Agent or any collection, recovery, receipt,
appropriation or other realization of or from all or any part of the Collateral
pursuant to the Collateral Documents or otherwise; or (f) for application under
the Senior Note Indenture as provided in the Senior Note Indenture or any
Collateral Document, or whose disposition is not otherwise specifically provided
for in the Senior Note Indenture or in any Collateral Document.
"Voting Stock" means stock of the class or classes pursuant to which the
holders thereof have in respect of a corporation, the general voting power under
ordinary circumstances to elect at least a majority of the board of directors,
managers or trustees of a corporation (irrespective of whether or not at the
time stock of any other class or classes shall have or might have voting power
by reason of the happening of any contingency).
"Wholly Owned Subsidiary" means a corporate Subsidiary all the outstanding
Capital Stock (other than directors' qualifying shares) or a partnership
Subsidiary all the equity interest of which are owned by the Company or another
Wholly Owned Subsidiary.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of the material federal income tax
consequences expected to result to holders from the purchase, ownership and
disposition of Senior Notes, Senior Subordinated Notes and Warrants. The summary
is based on current provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), applicable Treasury Regulations, judicial authority and
administrative rulings and practice. There can be no assurance that the Internal
Revenue Service (the "IRS") will not take a contrary view, and no ruling from
the IRS has been or will be sought. Legislative, judicial or administrative
changes or interpretations may be forthcoming that could alter or modify the
statements and conclusions set forth herein. Any such changes or interpretations
may or may not be retroactive and could affect the federal income tax
consequences to holders of Senior Notes, Senior Subordinated Notes or Warrants.
For purposes of this Section of the Prospectus, the "Company" shall mean
International Controls without its subsidiaries.
The following summary is for general information only. The tax treatment of
a holder of Senior Notes, Senior Subordinated Notes or Warrants may vary
depending on such holder's particular situation. This discussion does not
address the federal income tax consequences of the ownership of Senior Notes,
Senior Subordinated Notes or Warrants that are not held as capital assets within
the meaning of Section 1221 of the Code, nor does it discuss the effect of any
state, local or foreign tax law on the holder of Senior Notes, Senior
Subordinated Notes or Warrants. Certain holders (including, but not limited to,
insurance companies, tax-exempt organizations, financial institutions,
broker-dealers, foreign corporations and persons who are not citizens or
residents of the United States) may be subject to special rules not discussed
below. EACH PURCHASER SHOULD CONSULT HIS OR HER TAX ADVISOR AS TO THE
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PARTICULAR TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF SENIOR
NOTES, SENIOR SUBORDINATED NOTES OR WARRANTS, INCLUDING THE APPLICABILITY AND
EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
STATED INTEREST ON SENIOR NOTES AND SENIOR SUBORDINATED NOTES
Holders of Senior Notes and Senior Subordinated Notes will be required to
include stated interest in gross income for federal income tax purposes in
accordance with the holder's method of accounting for federal income tax
purposes. Holders using the accrual method of tax accounting must include stated
interest in income as it accrues and holders using the cash method of tax
accounting must include stated interest in income as it is actually or
constructively received by them.
ORIGINAL ISSUE DISCOUNT ON THE SENIOR SUBORDINATED NOTES
The Senior Subordinated Notes will be issued with original issue discount,
and each holder of Senior Subordinated Notes will be required to include in its
gross income original issue discount income as described below.
Original issue discount on each Senior Subordinated Note will equal the
excess of the stated redemption price at maturity of the Senior Subordinated
Note over its issue price. A holder of a Senior Subordinated Note issued with
original issue discount must include original issue discount in income as
ordinary interest income as the original issue discount accrues on the basis of
a constant yield to maturity, regardless of whether the holder uses the cash or
accrual method of tax accounting. Generally, original issue discount must be
included in income in advance of the receipt of cash representing such income.
In general, the "issue price" of a Senior Subordinated Note is determined by
allocating the "issue price" of the Unit to the Senior Subordinated Note and
Warrant comprising such Unit on the basis of the proportion which the fair
market value of each such element of the Unit bears to the sum of the fair
market value of both elements in the Unit. The "issue price" of a Unit is the
initial offering price to the public (excluding underwriters, placement agents
and wholesalers) at which a substantial amount of Units are first sold. The
Company has allocated $ and $ to be the issue price of a Senior
Subordinated Note and a Warrant, respectively, and this allocation is binding on
each holder of a Unit, other than a holder that explicitly discloses that its
allocation of the "issue price" of the Unit is different from the Company's
allocation. Such disclosure generally must be made on a statement attached to
such holder's timely filed federal income tax return for its taxable year that
includes the acquisition date of the Unit. However, the Company's allocation is
not binding on the IRS.
The stated redemption price at maturity of a Senior Subordinated Note will
equal the sum of all payments other than any "qualified stated interest"
payments. Qualified stated interest is stated interest that is unconditionally
payable in cash or in property (other than debt instruments of the issuer) at
least annually at a single fixed rate.
The holder of a Senior Subordinated Note issued with original issue discount
must include in gross income, for all days during its taxable year on which it
holds such Senior Subordinated Note, the sum of the "daily portions" of original
issue discount. The amount of original issue discount includible in income by a
holder will be computed by allocating to each day during a taxable year a pro
rata portion of the original issue discount that accrued during the relevant
accrual period. The accrual periods for a Senior Subordinated Note may be of any
length and may vary in length over the Senior Subordinated Note's term, provided
that each accrual period is no longer than one year and each scheduled payment
of principal or interest occurs either on the final day of an accrual period or
on the first day of an accrual period. The amount of original issue discount
that will accrue during an accrual period is the excess, if any, of (i) the
product of the "adjusted issue price" of the Senior Subordinated Note at the
beginning of the accrual period and its original yield to maturity (determined
on the basis of compounding at the end of each accrual period and properly
adjusted for the length of the particular accrual period) over (ii) the amount
of any qualified stated interest allocable to the accrual period. There are
special rules for determining the original issue discount allocable to an
accrual period where an interval between payments of qualified stated interest
contains more than one accrual period. The adjusted issue price of a
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Senior Subordinated Note at the beginning of any accrual period is the sum of
its issue price, plus prior accruals of original issue discount, reduced by the
total payments made with respect to such Senior Subordinated Note in all prior
periods, other than qualified stated interest payments.
The Company will make annual reports to the IRS and holders of the Senior
Subordinated Notes regarding the amount of original issue discount accrued on
the Senior Subordinated Notes during the year on the basis of accrual periods.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL INTEREST DISCOUNT
In general, a holder may elect to treat all interest on any Senior Note or
Senior Subordinated Note as original issue discount and calculate the amount
includible in gross income under the constant yield method described above. For
the purposes of this election, interest includes, among other items, stated
interest, original issue discount, market discount, and DE MINIMIS market
discount, as adjusted by any amortizable bond premium or acquisition premium.
The election is to be made for the taxable year in which the holder acquired the
Senior Note or Senior Subordinated Note and may not be revoked without the
consent of the IRS. As discussed below, this election may affect the tax
treatment of other debt instruments held by a holder. Therefore, holders should
consult with their own tax advisors about this election.
ACQUISITION PREMIUM
If a holder purchases a Senior Subordinated Note at an "acquisition
premium," the holder reduces the amount of original issue discount includible in
income in each taxable year by the portion of acquisition premium allocable to
that year. A Senior Subordinated Note is purchased at an acquisition premium if
immediately after the purchase, the purchaser's adjusted basis in the Senior
Subordinated Note is greater than the Senior Subordinated Note's adjusted issue
price but not greater than the sum of all amounts payable on the Senior
Subordinated Note after the purchase date, other than payments of qualified
stated interest. In general, the reduction in original issue discount includible
in income in a taxable year is determined by multiplying the daily portion of
original issue discount by a fraction the numerator of which is the excess of
the adjusted basis of the Senior Subordinated Note immediately after the
acquisition over the adjusted issue price of the Senior Subordinated Note and
the denominator of which is the excess of the sum of all amounts payable on the
Senior Subordinated Note after the purchase date, other than payments of
qualified stated interest, over its adjusted issue price. Rather than using the
above fraction, the holder, may, as discussed above, elect to treat all
interest, including for this purpose, acquisition premium, as original issue
discount.
MARKET DISCOUNT
If a Senior Note or a Senior Subordinated Note is acquired at a "market
discount," some or all of any gain realized on a sale or other disposition,
partial principal payment or payment at maturity, of the Senior Note or the
Senior Subordinated Note may be treated as ordinary income (generally, as
interest income), as described below. For this purpose, "market discount" is the
excess of (i) the stated redemption price at maturity of a Senior Note or the
adjusted issue price of a Senior Subordinated Note over (ii) the holder's tax
basis in the Senior Note or Senior Subordinated Note subject to a statutory DE
MINIMIS exception. Under the statutory DE MINIMIS exception, market discount
will be considered to be zero if it is less than 1/4 of 1% of the stated
redemption price at maturity of the Senior Note or the Senior Subordinated Note,
as the case may be, multiplied by the number of complete years to maturity of
the Note from the date the holder purchased it. Unless a holder has elected to
include the market discount in income as it accrues, any gain realized on any
subsequent disposition of the Senior Note or the Senior Subordinated Note (other
than in connection with certain nonrecognition transactions) or any partial
principal payment or payment at maturity with respect to the Senior Note or the
Senior Subordinated Note will be treated as ordinary income to the extent of the
market discount that is treated as having accrued during the period the Senior
Note or the Senior Subordinated Note was held. In addition, if the Senior Note
or the Senior Subordinated Note is disposed of in any transaction other than a
sale,
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exchange, or involuntary conversion (E.G., a gift), ordinary income will be
recognized to the extent of accrued market discount as if such Senior Note or
Senior Subordinated Note had been sold at its then fair market value.
The amount of market discount treated as having accrued will be determined
either (i) on a ratable basis by multiplying the market discount times a
fraction, the numerator of which is the number of days the Senior Note or the
Senior Subordinated Note was held by the holder and the denominator of which is
the total number of days after the date such holder acquired the Senior Note or
the Senior Subordinated Note up to and including the date of its maturity, or
(ii) if the holder so elects, on a constant interest rate method. A holder may
make this election with respect to any Senior Note or Senior Subordinated Note
and such election is irrevocable.
A holder of a Senior Note or a Senior Subordinated Note may elect to include
market discount in income currently, through the use of either the ratable
inclusion method or the elective constant interest rate method. If such an
election is made, a holder will not be required to recharacterize gain on the
disposition of, and certain payments in respect of, the Senior Note or the
Senior Subordinated Note to the extent of accrued market discount. Once made,
the election to include market discount in income currently applies to all
Senior Notes, Senior Subordinated Notes and other obligations of the holder that
are purchased at a market discount during the first taxable year for which the
election is made, and during all subsequent taxable years of the holder, unless
the IRS consents to a revocation of the election. If an election is made to
include market discount in income currently, the holder's basis for the Senior
Note or the Senior Subordinated Note will be increased by the market discount
thereon as it is included in income.
If a holder makes the election (discussed above) to treat as original issue
discount all interest on a debt instrument that has market discount, the holder
is deemed to have made the election to accrue currently market discount using a
constant interest rate method on all other debt instruments with market
discount. In addition, if the holder has previously made the election to accrue
market discount currently, the conformity requirements of that election are
satisfied for debt instruments with respect to which the holder elects to treat
all interest as original issue discount.
Unless a holder who acquires a Senior Note or a Senior Subordinated Note at
a market discount elects to include market discount in income currently, such
holder may be required to defer all or a portion of any interest expense that
may otherwise be deductible on any indebtedness incurred or maintained to
purchase or carry the Senior Note or the Senior Subordinated Note.
AMORTIZABLE BOND PREMIUM
If a holder purchases a Senior Note or a Senior Subordinated Note and,
immediately after the purchase, the adjusted basis of the Senior Note or the
Senior Subordinated Note exceeds the sum of all amounts payable on the Senior
Note or the Senior Subordinated Note after the purchase date, other than
qualified stated interest, the Senior Note or the Senior Subordinated Note has
"premium." A holder that purchases a Senior Subordinated Note at a premium is
not required to include original issue discount in income. A holder may elect to
amortize the premium over the remaining term of the Senior Note or the Senior
Subordinated Note (or, in certain circumstances, until an earlier call date).
In the case of a debt instrument that may be called at a premium prior to
maturity, an earlier call date of the debt instrument is treated as the maturity
date of the debt instrument and the amount of bond premium is determined by
treating the amount payable on such call date as the amount payable at maturity
if such a calculation produces a smaller amortizable bond premium than the
method described in the preceding paragraph. If the debt instrument is not
redeemed on such call date, the remaining bond premium may be amortized to a
later call date or to maturity under the rules set forth above. If a debt
instrument purchased at a premium is redeemed prior to its maturity, a purchaser
who has elected to amortize bond premium may deduct any remaining unamortized
bond premium as an ordinary loss in the taxable year of the redemption.
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If premium is amortized, except as provided in Treasury Regulations, the
amount of interest that must be included in the holder's income for each period
ending on an interest payment date or stated maturity, as the case may be, will
be reduced by the portion of premium allocable to the interest payment based on
the yield to maturity of the Senior Note or the Senior Subordinated Note under a
constant interest rate method. If such an election to amortize premium is not
made, a holder must include the full amount of each interest payment in income
in accordance with the holder's regular method of tax accounting and will
include the premium in its tax basis for the Senior Note or Senior Subordinated
Note for purposes of computing its gain or loss on the sale or other disposition
or payment of the principal amount of the Senior Note or the Senior Subordinated
Note.
An election to amortize premium would apply to amortizable premium on all
Senior Notes, Senior Subordinated Notes and other bonds the interest on which is
includible in the holder's gross income held at the beginning of the holder's
first taxable year to which the election applies or thereafter acquired, and may
be revoked only with the consent of the IRS. The election to treat all interest,
including for this purpose amortizable premium, as original issue discount is
deemed to be an election to amortize premium under Section 171(c) of the Code
for purposes of the conformity requirements of that section. In addition, if the
holder has already made an election to amortize premium, the conformity
requirements will be deemed satisfied with respect to any Senior Notes or Senior
Subordinated Notes for which the holder makes an election to treat all interest
as original issue discount.
DISPOSITION OF THE SENIOR NOTES AND SENIOR SUBORDINATED NOTES
In general, upon a disposition of a Senior Note or a Senior Subordinated
Note by sale, exchange, redemption or other taxable disposition, a holder will
recognize gain or loss equal to the difference between (i) the amount realized
on the disposition (other than amounts received attributable to accrued
interest) and (ii) the holder's tax basis in the Senior Note or the Senior
Subordinated Note. A holder's tax basis in a Senior Note or a Senior
Subordinated Note generally will equal the cost to the holder of the Senior Note
or the Senior Subordinated Note (net of accrued interest), which, in the case of
an initial holder of a Senior Subordinated Note, is the portion of the issue
price of a Unit allocated to the Senior Subordinated Note, increased by amounts
includible in income as original issue discount or market discount (if the
holder elects to include market discount in income on a current basis) and
reduced by any amortized premium and any payments other than payments of
qualified stated interest made on the Senior Note or the Senior Subordinated
Note.
Assuming that the Senior Note or the Senior Subordinated Note is held as a
capital asset, such gain or loss (except to the extent that the market discount
rules otherwise provide) will generally constitute capital gain or loss, and
will be long-term capital gain or loss if the holder has held the Senior Note or
the Senior Subordinated Note for longer than one year at the time of the
disposition.
EXERCISE, OWNERSHIP, DISPOSITION AND EXPIRATION OF WARRANTS
No gain or loss will be recognized by a holder of a Warrant on the purchase
of the Company's Common Stock for cash on the exercise of the Warrant (except
with respect to any cash paid in lieu of the issuance of fractional shares of
Common Stock). A holder's tax basis in the Warrant prior to exercise will be
added to the Exercise Price of the Warrant and will constitute the holder's tax
basis in the Company's Common Stock received on the exercise of the Warrant. The
holding period of the Company's Common Stock so received will not include the
time during which the holder held the Warrant.
Adjustments to the Exercise Rate of the Warrants, or a failure to make such
adjustments, pursuant to the terms of the Warrants may result in taxable
distributions to holders of Warrants or to holders of the Company's Common
Stock, respectively, under Section 305 of the Code to the extent of the
Company's current or accumulated earnings and profits, regardless of whether
there is a distribution of cash or property.
Assuming that the Common Stock would be held as a capital asset by a holder,
the redemption of a Warrant by the Company, the sale or other taxable
disposition of a Warrant by such holder other than to the Company and the
expiration of an unexercised Warrant, generally will be treated as a sale or
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exchange of a capital asset and any gain or loss recognized will generally be
capital gain or loss and will be long-term capital gain or loss if the holder
has held the Warrant for longer than one year at the time of the redemption,
disposition or expiration. In the case of a redemption, sale or other taxable
disposition of a Warrant, the amount of the gain or loss recognized will be
equal to the difference between the amount realized on the redemption, sale or
other taxable disposition and the holder's tax basis in the Warrant. In the case
of the expiration of an unexercised Warrant, the holder will recognize loss
equal to the holder's tax basis in the Warrant. As discussed above, an initial
holder's tax basis in a Warrant will be equal to the portion of the issue price
of the Unit allocated to the Warrant.
BACKUP WITHHOLDING
A holder of Senior Notes, Senior Subordinated Notes or Warrants may be
subject to backup withholding at the rate of 31% with respect to interest paid
on, original issue discount accrued on and gross proceeds of a sale or
redemption of Senior Notes, Senior Subordinated Notes or Warrants, unless (i)
the holder is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact or (ii) the holder provides a correct
taxpayer identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. A holder of a Senior Note, a Senior Subordinated Note or a
Warrant who does not provide the Issuers with his or her correct taxpayer
identification number may be subject to penalties imposed by the IRS.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH PURCHASER OF
SENIOR NOTES, SENIOR SUBORDINATED NOTES OR WARRANTS SHOULD CONSULT HIS OR HER
TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO HIM OR HER OF THE
ACQUISITION, OWNERSHIP AND DISPOSITION OF SENIOR NOTES, SENIOR SUBORDINATED
NOTES OR WARRANTS, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS.
UNDERWRITING
Subject to certain terms and conditions of the Underwriting Agreement, Alex.
Brown & Sons Incorporated and SPP Hambro & Co. (the "Underwriters") have agreed
to purchase from the Company the following respective principal amounts of
Senior Notes and Units:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT NUMBER OF
UNDERWRITERS OF SENIOR NOTES UNITS
- ----------------------------------------------------------------------- ----------------- -----------
<S> <C> <C>
Alex. Brown & Sons Incorporated........................................ $
SPP Hambro & Co........................................................
----------------- -----------
Total.............................................................. $ 200,000,000 100,000
----------------- -----------
----------------- -----------
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent.
The Underwriting Agreement also provides that the Company will indemnify the
Underwriters against certain liabilities and expenses, including liabilities
under the Securities Act, or will contribute to payments that the Underwriters
may be required to make in respect thereof. The nature of the Underwriters'
obligations is such that they are committed to purchase all of the Senior Notes
and Units if any Senior Notes and Units are purchased.
The Underwriters propose to offer the Senior Notes and Units directly to the
public initially at the public offering prices set forth on the cover page of
this Prospectus. After the initial public offering of the Senior Notes and
Units, the offering prices and other selling terms may be changed by the
Underwriters.
There is no existing trading market for the Securities and there can be no
assurance as to the liquidity of any market that may develop for the Securities.
The Underwriters have advised the Company that they currently intend to make a
market in the Senior Notes and the Units until the Separation Date and in the
Notes and Warrants thereafter. However, the Underwriters are not obligated to do
so, and any such market making may be discontinued at any time without notice.
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The Company has agreed not to issue, sell or offer any debt securities or
shares of Common Stock or securities convertible into Common Stock without the
prior consent of the Underwriters for a period of 90 days after the date of this
Prospectus.
NBD Bank, N.A. will receive a fee of $ from the Company for acting as the
Company's financial advisor in connection with the Offering.
LEGAL MATTERS
The validity of the Securities will be passed upon for the Company by Hutton
Ingram Yuzek Gainen Carroll & Bertolotti, New York, New York. Certain legal
matters will be passed upon for the Underwriters by Fried, Frank, Harris,
Shriver & Jacobson (a partnership including professional corporations), New
York, New York. As to certain matters concerning the laws of the States of
Florida, New Jersey, Georgia, Tennessee, West Virginia, Nebraska and Delaware,
Hutton Ingram Yuzek Gainen Carroll & Bertolotti and Fried, Frank, Harris,
Shriver & Jacobson will rely upon the opinions of Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A., Miami, Florida; McCarter & English, Newark, New
Jersey; Hunter, Maclean, Exley & Dunn, P.C., Savannah, Georgia; Tuke, Yopp &
Sweeney, Nashville, Tennessee; Bowles Rice McDavid Graff & Love, Charleston,
West Virginia; Rembolt Ludtke Parker & Berger, Lincoln, Nebraska; and Morris
Nichols Arsht & Tunnell, Wilmington, Delaware, respectively.
EXPERTS
The respective consolidated financial statements of International Controls
Corp., Great Dane Trailers, Inc. and Checker Motors Corporation (Issuer Group)
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, 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.
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INDEX TO FINANCIAL STATEMENTS
The following consolidated financial statements are submitted herewith:
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Index To Financial Statements Covered By Report Of Independent Auditors
Report of Independent Auditors........................................................................... F-3
Consolidated Balance Sheets as of December 31, 1992 and 1993............................................. F-4
Consolidated Statements of Shareholders' Deficit for the Years Ended December 31, 1991, 1992 and 1993.... F-5
Consolidated Statements of Operations for the Years Ended December 31, 1991, 1992
and 1993............................................................................................... F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 1991, 1992
and 1993............................................................................................... F-7
Notes to Consolidated Financial Statements -- December 31, 1993.......................................... F-8
Index to Financial Statements (Unaudited):
Consolidated Balance Sheets at March 31, 1994, and December 31, 1993..................................... F-26
Consolidated Statements of Operations for the Three Months Ended March 31, 1993, and March 31, 1994...... F-27
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1993, and March 31, 1994...... F-28
Notes to Consolidated Financial Statements -- March 31, 1994............................................. F-29
</TABLE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES--ISSUER GROUP
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Index To Financial Statements Covered By Report Of Independent Auditors
Report of Independent Auditors........................................................................... F-33
Consolidated Balance Sheets as of December 31, 1992 and 1993............................................. F-34
Consolidated Statements of Shareholders' Deficit for the Years Ended December 31, 1991, 1992 and 1993.... F-35
Consolidated Statements of Operations for the Years Ended December 31, 1991, 1992
and 1993............................................................................................... F-36
Consolidated Statements of Cash Flows for the Years Ended December 31, 1991, 1992
and 1993............................................................................................... F-37
Notes to Consolidated Financial Statements -- December 31, 1993.......................................... F-38
Index to Financial Statements (Unaudited):
Consolidated Balance Sheets at December 31, 1993 and March 31, 1994, and................................. F-55
Consolidated Statements of Operations for the Three Months Ended March 31, 1993, and March 31, 1994...... F-56
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1993, and March 31, 1994...... F-57
Notes to Consolidated Financial Statements -- March 31, 1994............................................. F-58
</TABLE>
F-1
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Index To Financial Statements Covered By Report Of Independent Auditors
Report of Independent Auditors........................................................................... F-63
Consolidated Balance Sheets as of December 31, 1992 and 1993............................................. F-64
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1991, 1992 and 1993..... F-65
Consolidated Statements of Operations for the Years Ended December 31, 1991, 1992
and 1993............................................................................................... F-66
Consolidated Statements of Cash Flows for the Years Ended December 31, 1991, 1992
and 1993............................................................................................... F-67
Notes to Consolidated Financial Statements -- December 31, 1993.......................................... F-68
Index to Financial Statements (Unaudited):
Consolidated Balance Sheets at December 31, 1993 and March 31, 1994...................................... F-78
Consolidated Statements of Operations for the Three Months Ended March 31, 1993, and March 31, 1994...... F-79
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1993, and March 31, 1994...... F-80
Notes to Consolidated Financial Statements -- March 31, 1994............................................. F-81
</TABLE>
F-2
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
International Controls Corp.
We have audited the accompanying consolidated balance sheets of
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
International Controls Corp. 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.
/s/ ERNST & YOUNG
Kalamazoo, Michigan
March 1, 1994
F-3
<PAGE>
INTERNATIONAL CONTROLS CORP. 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 and G):
Common stock, par value $0.01:
Authorized 15,000,000 shares
Outstanding 9,036,700 shares............................................ 90 90
Additional paid-in capital................................................ 14,910 14,910
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-4
<PAGE>
INTERNATIONAL CONTROLS CORP. 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.......... $ 90 $ 14,910 $ 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........ 90 14,910 14,600 399 (625) (127,748)
Unrealized depreciation on investment
in equity securities................ -- -- -- (367) -- --
Net loss............................. -- -- (7,555) -- -- --
--- ----------- ---------- ------- ------ ------------
BALANCES AT DECEMBER 31, 1992........ 90 14,910 7,045 32 (625) (127,748)
Unrealized appreciation on investment
in equity securities................ -- -- -- 41 -- --
Net loss............................. -- -- (43,262) -- -- --
--- ----------- ---------- ------- ------ ------------
BALANCES AT DECEMBER 31, 1993........ $ 90 $ 14,910 $ (36,217) $ 73 $ (625) $ (127,748)
--- ----------- ---------- ------- ------ ------------
--- ----------- ---------- ------- ------ ------------
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
INTERNATIONAL CONTROLS CORP. 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........ 9,037 9,037 9,037
------------ ------------ ------------
------------ ------------ ------------
INCOME (LOSS) PER SHARE:
Loss before extraordinary items and accounting changes................ $ (2.99) $ (0.84) $ 0.37
Extraordinary items (Note L).......................................... 3.45 -- --
Accounting changes (Notes I and K).................................... -- -- (5.16)
------------ ------------ ------------
NET INCOME (LOSS) PER SHARE......................................... $ 0.46 $ (0.84) $ (4.79)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
INTERNATIONAL CONTROLS CORP. 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-7
<PAGE>
INTERNATIONAL CONTROLS CORP. 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 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-8
<PAGE>
INTERNATIONAL CONTROLS CORP. 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-9
<PAGE>
INTERNATIONAL CONTROLS CORP. 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-10
<PAGE>
INTERNATIONAL CONTROLS CORP. 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-11
<PAGE>
INTERNATIONAL CONTROLS CORP. 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-12
<PAGE>
INTERNATIONAL CONTROLS CORP. 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-13
<PAGE>
INTERNATIONAL CONTROLS CORP. 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%.
In February 1994, 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. The proposed refinancing,
as described in the registration statement, involves the Company entering into a
credit facility consisting of a $60 million term loan and a revolving credit
facility which would provide up to $115 million, subject to the Company's
ability to meet certain financial tests (the term loan and the revolving credit
facility being known as the "New Credit Facility"). Additionally, the Company is
proposing to offer $265 million (adjusted from $225 million) of new Senior
Secured Notes (the "Senior Notes"). If the refinancing is successfully
completed, the proceeds from the new Credit Facility would be utilized to redeem
substantially all of the currently outstanding indebtedness of the Company's
subsidiaries and the proceeds from the offering of the Senior Notes would be
used to redeem parent company indebtedness and to redeem the Minority Interest
held by ELIC, in each case together with any accrued interest and transaction
fees and expenses. A successful completion of the refinancing, the terms of
which are still subject to change, is expected to help the Company achieve
increased liquidity from reduced principal debt amortization requirements, the
removal of certain restrictions on the use of cash from the Company's
subsidiaries and more flexible and efficient cash management at the holding
company level.
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
F-14
<PAGE>
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE H -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
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 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.
F-15
<PAGE>
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE H -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
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.
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>
F-16
<PAGE>
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE I -- RETIREMENT PLANS (CONTINUED)
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.
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 $3.29 per share, during 1993 to reflect the cumulative effect of
this change in accounting principle.
F-17
<PAGE>
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE I -- RETIREMENT PLANS (CONTINUED)
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 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.
F-18
<PAGE>
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
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 $1.87 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>
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>
F-19
<PAGE>
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
NOTE K -- INCOME TAXES (CONTINUED)
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.
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.
F-20
<PAGE>
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
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-21
<PAGE>
INTERNATIONAL CONTROLS CORP. 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-22
<PAGE>
INTERNATIONAL CONTROLS CORP. 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-23
<PAGE>
INTERNATIONAL CONTROLS CORP. 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.
F-24
<PAGE>
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
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 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......... $ (0.32) $ 0.01 $ (0.48) $ (0.05) $ (0.08) $ 0.15 $ (0.06) $ 0.36
Accounting
changes......... -- -- -- -- (5.16) -- -- --
Net income
(loss).......... (0.32) 0.01 (0.48) (0.05) (5.24) 0.15 (0.06) 0.36
</TABLE>
F-25
<PAGE>
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
MARCH 31,
DECEMBER 31, 1994
1993 (UNAUDITED)
-------------- ------------
<S> <C> <C>
Cash and cash equivalents.......................................................... $ 40,078 $ 32,608
Accounts receivable, less allowance for doubtful accounts of
$748 (1993) and $883 (1994)...................................................... 75,701 100,819
Inventories....................................................................... 94,112 86,060
Other current assets.............................................................. 11,823 13,344
-------------- ------------
TOTAL CURRENT ASSETS............................................................ 221,714 232,831
Property, plant and equipment, net................................................ 122,355 123,111
Insurance Subsidiary's investments................................................ 90,838 89,134
Insurance Subsidiary's reinsurance receivable..................................... 11,378 11,405
Cost in excess of net assets acquired, net of accumulated amortization of $6,252
(1993) $6,565 (1994)............................................................. 43,743 43,430
Trademark, net of accumulated amortization of
$1,750 (1993) $1,838 (1994)...................................................... 11,696 11,608
Other assets...................................................................... 15,612 15,639
-------------- ------------
TOTAL ASSETS...................................................................... $ 517,336 $ 527,158
-------------- ------------
-------------- ------------
</TABLE>
LIABILITIES AND SHAREHOLDERS' DEFICIT
<TABLE>
<S> <C> <C>
Accounts payable................................................... $ 77,876 $ 77,932
Notes payable...................................................... 5,000 5,000
Income taxes payable............................................... 7,726 12,466
Accrued compensation............................................... 15,838 16,435
Accrued interest................................................... 11,746 6,018
Other accrued liabilities.......................................... 38,071 37,647
Current portion of long-term debt.................................. 14,321 46,994
----------- -----------
TOTAL CURRENT LIABILITIES...................................... 170,578 202,492
Long-term debt, excluding current portion:
Shareholders................................................... 30,000 30,000
Other.......................................................... 246,952 210,119
----------- -----------
276,952 240,119
Insurance Subsidiary's unpaid losses and loss adjustment
expenses.......................................................... 71,179 72,077
Unearned insurance premiums........................................ 9,547 16,239
Deferred income taxes.............................................. 9,803 9,950
Postretirement benefits other than pensions........................ 49,609 50,012
Other noncurrent liabilities....................................... 39,053 39,909
Minority interest.................................................. 40,132 39,898
----------- -----------
TOTAL LIABILITIES.............................................. 666,853 670,696
Shareholders' deficit:
Common stock, par value $0.01:
Authorized 15,000,000 shares
Outstanding 9,036,700 shares................................... 90 90
Additional paid-in capital....................................... 14,910 14,910
Retained earnings deficit........................................ (36,217) (29,831)
Unrealized appreciation (depreciation) on Insurance Subsidiary's
investments in certain debt and equity securities -- Note E..... 73 (334)
Notes receivable from shareholders............................... (625) (625)
Amount paid in excess of Checker's net assets.................... (127,748) (127,748)
----------- -----------
TOTAL SHAREHOLDERS' DEFICIT.................................... (149,517) (143,538)
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT........................ $ 517,336 $ 527,158
----------- -----------
----------- -----------
</TABLE>
See notes to consolidated financial statements.
F-26
<PAGE>
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31,
--------------------------
1993 1994
------------ ------------
<S> <C> <C>
Revenues.............................................................................. $ 204,933 $ 271,680
Cost of revenues...................................................................... (175,631) (230,835)
------------ ------------
GROSS PROFIT.......................................................................... 29,302 40,845
Selling, general and administrative expense........................................... (19,986) (21,454)
Interest expense...................................................................... (10,465) (10,044)
Interest income....................................................................... 2,018 1,660
Other income, net..................................................................... 991 604
------------ ------------
Income before income taxes and accounting changes..................................... 1,860 11,611
Income tax expense.................................................................... (2,604) (5,225)
------------ ------------
INCOME (LOSS) BEFORE ACCOUNTING CHANGES............................................... (744) 6,386
Accounting changes, net of income taxes............................................... (46,626) --
------------ ------------
NET INCOME (LOSS)..................................................................... $ (47,370) $ 6,386
------------ ------------
------------ ------------
Weighted average number of shares used in per share computations...................... 9,037 9,037
------------ ------------
------------ ------------
Income (loss) per share:
Before accounting changes........................................................... $ (0.08) $ 0.71
Accounting changes.................................................................. (5.16) --
------------ ------------
NET INCOME (LOSS) PER SHARE........................................................... $ (5.24) $ 0.71
------------ ------------
------------ ------------
</TABLE>
See notes to consolidated financial statements.
F-27
<PAGE>
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1993 1994
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...................................................................... $ (47,370) $ 6,386
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Accounting changes................................................................... 46,626 --
Depreciation and amortization........................................................ 5,571 5,631
Deferred income tax benefit.......................................................... (1,834) (581)
Amortization of cost in excess of net assets acquired................................ 312 313
Amortization of debt discount........................................................ 324 393
Net (gain) loss on sale of property, plant and equipment............................. (18) --
Investment gains..................................................................... (103) (274)
Other noncash charges................................................................ 1,446 2,626
Changes in operating assets and liabilities:
Accounts receivable................................................................ (21,933) (25,281)
Inventories........................................................................ (7,084) 8,052
Insurance Subsidiary's reinsurance receivable...................................... 5,101 (27)
Other assets....................................................................... (3,477) (1,149)
Accounts payable................................................................... 8,533 56
Income taxes....................................................................... 1,523 5,840
Unpaid losses and loss adjustment expenses......................................... (4,898) 897
Unearned insurance premiums........................................................ 2,999 6,692
Postretirement benefits other than pension......................................... -- 403
Other liabilities.................................................................. (433) (7,791)
---------- ----------
NET CASH FLOW PROVIDED BY (USED IN) OPERATING ACTIVITIES................................. (14,715) 2,186
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment............................................. (7,843) (6,903)
Proceeds from disposal of property, plant and equipment and other productive assets.... 1,466 516
Purchase of investments available for sale............................................. -- (3,901)
Purchase of investments held to maturity............................................... (6,789) (20,493)
Proceeds from sale of investments available for sale................................... -- 346
Proceeds from maturities and redemption of investments held to maturity................ 13,845 25,423
Other.................................................................................. 54 143
---------- ----------
NET CASH FLOW PROVIDED BY (USED IN) INVESTING ACTIVITIES................................. 733 (4,869)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings............................................................... 15,091 --
Repayments of borrowings............................................................... (4,755) (4,553)
Return of limited partner's capital.................................................... (217) (234)
---------- ----------
NET CASH FLOW PROVIDED BY (USED IN) FINANCING ACTIVITIES................................. 10,119 (4,787)
---------- ----------
DECREASE IN CASH AND CASH EQUIVALENTS.................................................... (3,863) (7,470)
Beginning cash and cash equivalents...................................................... 42,199 40,078
---------- ----------
ENDING CASH AND CASH EQUIVALENTS......................................................... $ 38,336 $ 32,608
---------- ----------
---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-28
<PAGE>
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1994
(UNAUDITED)
NOTE A -- BASIS OF PRESENTATION
The accompanying consolidated financial statements of International Controls
Corp. and Subsidiaries (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
three months ended March 31, 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 B -- PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of International
Controls Corp. and its subsidiaries, including a wholly-owned trailer leasing
company, Checker Motors Co., L.P. ("Partnership") and the Partnership's
wholly-owned subsidiaries, including American Country Insurance Company
("Insurance Subsidiary").
NOTE C -- INVENTORIES
Inventories are summarized below (dollars in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1993 1994
-------------- -----------
<S> <C> <C>
Raw materials and supplies.................................... $ 53,105 $ 53,457
Work-in-process............................................... 10,956 12,619
Finished goods................................................ 30,051 19,984
-------------- -----------
$ 94,112 $ 86,060
-------------- -----------
-------------- -----------
</TABLE>
NOTE D -- 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.
NOTE E -- 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 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.
Insurance company management evaluated the investment portfolio and, based
on the Insurance Subsidiary's ability and intent, has classified securities
between the held-to-maturity and available-for-sale categories. Held-to-maturity
securities are stated at amortized cost. Debt securities not classified as held-
to-maturity and marketable equity securities are classified as
available-for-sale. Available-for-sale securities are stated at fair value, with
the unrealized gains and losses, net of tax, reported as a separate component of
shareholders' deficit.
F-29
<PAGE>
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31,1994
(UNAUDITED)
NOTE E -- ACCOUNTING CHANGES (CONTINUED)
Following is a summary of held-to-maturity and available-for-sale securities
as of March 31, 1994:
<TABLE>
<CAPTION>
HELD-TO-MATURITY
----------------------------------------------------
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury securities and obligations of U.S. Government
corporations and agencies..................................... $ 4,297 $ 154 $ 35 $ 4,416
Obligations of states and political sub-divisions.............. 11,338 144 178 11,304
Mortgage-backed securities..................................... 3,659 28 35 3,652
Corporate and other debt securities............................ 25,178 592 381 25,389
--------- ----- ----- -----------
Total held to maturity....................................... $ 44,472 $ 918 $ 629 $ 44,761
--------- ----- ----- -----------
--------- ----- ----- -----------
</TABLE>
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE
------------------------------------------------
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Obligations of states and political sub-divisions.............. $ 10,287 $ 29 $ 279 $ 10,037
Corporate and other debt securities............................ 19,253 1,023 499 19,777
--------- ----------- ----------- -----------
Total debt securities........................................ 29,540 1,052 778 29,814
Equity securities.............................................. 15,773 371 1,296 14,848
--------- ----------- ----------- -----------
Total available for sale..................................... $ 45,313 $ 1,423 $ 2,074 $ 44,662
--------- ----------- ----------- -----------
--------- ----------- ----------- -----------
</TABLE>
F-30
<PAGE>
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31,1994
(UNAUDITED)
NOTE E -- ACCOUNTING CHANGES (CONTINUED)
The amortized cost and estimated market value of debt and marketable equity
securities at March 31, 1994, 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>
HELD-TO-MATURITY
----------------------
ESTIMATED
COST FAIR VALUE
--------- -----------
<S> <C> <C>
Due in one year or less............................................ $ 5,448 $ 5,508
Due after one year through five years.............................. 24,904 25,178
Due after five years through ten years............................. 8,032 8,062
Due after ten years................................................ 2,429 2,360
--------- -----------
40,813 41,108
Mortgage-backed securities......................................... 3,659 3,653
--------- -----------
$ 44,472 $ 44,761
--------- -----------
--------- -----------
</TABLE>
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE
----------------------
ESTIMATED
COST FAIR VALUE
--------- -----------
<S> <C> <C>
Due in one year or less............................................ $ 550 $ 577
Due after one year through five years.............................. 645 673
Due after five years through ten years............................. 15,381 15,432
Due after ten years................................................ 12,964 13,132
--------- -----------
29,540 29,814
Equity securities.................................................. 15,773 14,848
--------- -----------
$ 45,313 $ 44,662
--------- -----------
--------- -----------
</TABLE>
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
method.
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 $3.29 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 $1.87 per share, during the quarter ended March 31, 1993, to reflect
the cumulative effect of this change in accounting principle.
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 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.
F-31
<PAGE>
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31,1994
(UNAUDITED)
NOTE F -- 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. 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.
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 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, subject to completion of the
refinancing described under the caption, "Item 2 -- Management's Discussion and
Analysis of Financial Condition and Results of Operations." The letter agreement
has been submitted to the Court for approval.
F-32
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Checker Motors Corporation
We have audited the accompanying consolidated balance sheets of Checker
Motors Corporation (a wholly-owned subsidiary of International Controls Corp.)
and subsidiaries (Issuer Group) as of December 31, 1993 and 1992, and the
related consolidated statements of operations, stockholders's 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 Corporation'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
Checker Motors Corporation and subsidiaries (Issuer Group) 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 E and G to the consolidated financial statements, in
1993, the Corporation changed its methods of accounting for postretirement
benefits other than pensions and income taxes.
March 1, 1994, except for Note A
as to which the date is July 26, 1994
F-33
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
December 31,
--------------------
1992 1993
--------- ---------
<S> <C> <C>
Current Assets
Cash and cash equivalents................................................. $ 29,549 $ 31,580
Accounts receivable....................................................... 9,957 10,334
Current portion of notes receivable....................................... 511 180
Inventories -- Note C..................................................... 9,152 10,600
Other current assets...................................................... 2,394 2,580
--------- ---------
Total Current Assets.................................................... 51,563 55,274
Other Assets
Notes receivable, excluding current portion............................... 288 66
Other..................................................................... 6,303 4,473
--------- ---------
6,591 4,539
Amount Due From Parent...................................................... 240 363
Property, Plant and Equipment -- Note D
Land...................................................................... 1,355 1,355
Buildings and improvements................................................ 5,725 5,989
Machinery and equipment................................................... 69,686 75,528
Vehicles held for lease................................................... 34,196 30,054
--------- ---------
110,962 112,926
Less allowances for depreciation, including $20,141 related to vehicles
held
for lease (1993 -- $19,448).............................................. 45,937 51,281
--------- ---------
65,025 61,645
--------- ---------
Total Assets............................................................ $ 123,419 $ 121,821
--------- ---------
--------- ---------
</TABLE>
LIABILITIES AND STOCKHOLDER'S DEFICIT
<TABLE>
<S> <C> <C>
Current Liabilities
Notes payable to bank -- Note D........................................... $ 5,000 $ 5,000
Accounts payable.......................................................... 9,853 12,823
Income taxes -- Note G.................................................... 744 744
Accrued compensation...................................................... 4,884 6,021
Accrued interest.......................................................... 99 191
Other accrued liabilities................................................. 6,695 8,072
Current portion of long-term debt......................................... 8,568 9,412
--------- ---------
Total Current Liabilities............................................... 35,843 42,263
Long-Term Debt, excluding current portion -- Note D....................... 45,730 38,776
Other Liabilities
Reserves for self-insurance............................................... 4,398 3,490
Accrued pension costs -- Note E........................................... 4,432 4,160
Deferred compensation 1,865 1,948
Postretirement benefits other than pension -- Note E...................... -- 17,403
Deferred taxes............................................................ 806 3,457
--------- ---------
11,501 30,458
Minority Interest -- Notes F and H.......................................... 41,026 40,132
Stockholder's Deficit -- Notes A and D
Common stock, $1 par value:
Authorized -- 1,000 shares
Outstanding -- 1,000 shares............................................. 1 1
Additional paid-in capital................................................ 1,624 1,624
Retained earnings (deficit)............................................... 4,903 (15,779)
Receivable from Parent -- Note L.......................................... (16,584) (15,029)
Notes receivable -- Note J................................................ (625) (625)
--------- ---------
(10,681) (29,808)
--------- ---------
Commitments and Contingencies -- Note H
Total Liabilities and Stockholder's Deficit................................. $ 123,419 $ 121,821
--------- ---------
--------- ---------
</TABLE>
See notes to consolidated financial statements.
F-34
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT
(dollars in thousands)
<TABLE>
<CAPTION>
Receivable
Additional Retained from Notes
Common Paid-In Earnings Parent-- Receivable
Stock Capital (Deficit) Note J --Note J
------------- ----------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balances at January 1, 1991................ $ 1 $ 1,624 $ 9,588 $ 581 $ (625)
Net income................................. 1,086
Distribution in excess of net equity....... (13,139) 13,139
Cash to Parent............................. (22,100)
Charges by Parent -- net................... 8,380
--- ----------- --------- ----------- ------
Balances at December 31, 1991.............. 1 1,624 (2,465) -- (625)
Net income................................. 7,368
Cash to Parent............................. (21,250)
Charges by Parent -- net................... 4,666
--- ----------- --------- ----------- ------
Balances at December 31, 1992.............. 1 1,624 4,903 (16,584) (625)
Net loss................................... (4,098)
Distribution in excess of net equity....... (16,584) 16,584
Cash to Parent............................. (19,674)
Charges by Parent -- net................... 4,645
--- ----------- --------- ----------- ------
Balances at December 31, 1993.............. $ 1 $ 1,624 $ (15,779) $ (15,029) $ (625)
--- ----------- --------- ----------- ------
--- ----------- --------- ----------- ------
</TABLE>
See notes to consolidated financial statements.
F-35
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1991 1992 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net sales -- Note I................................................ $ 84,401 $ 112,631 $ 127,925
Revenue from vehicular operations, including rental income of
$39,946 (1992 -- $37,382; 1993 -- $38,360)........................ 43,527 40,580 42,103
Interest income.................................................... 1,605 748 902
Other income, net.................................................. 2,177 194 5,083
---------- ---------- ----------
131,710 154,153 176,013
Costs and expenses:
Cost of sales.................................................... 82,612 95,585 105,444
Expenses of vehicular operations................................. 30,801 30,119 30,904
Selling, general and administrative.............................. 12,357 10,901 12,867
Interest......................................................... 7,346 6,736 6,587
133,116 143,341 155,802
---------- ---------- ----------
Income (Loss) Before Minority Equity, Income Taxes and Accounting
Changes........................................................... (1,406) 10,812 20,211
Minority equity -- Note F.......................................... 1,931 -- --
---------- ---------- ----------
Income Before Income Taxes and Accounting Changes.................. 525 10,812 20,211
Income Taxes -- Note G:
Current.......................................................... 447 2,809 4,644
Deferred (credit)................................................ (1,008) 635 2,228
---------- ---------- ----------
(561) 3,444 6,872
---------- ---------- ----------
Income Before Accounting Changes................................... 1,086 7,368 13,339
Accounting changes, net of income taxes -- Notes E and G........... -- -- (17,437)
---------- ---------- ----------
NET INCOME (LOSS).................................................. $ 1,086 $ 7,368 $ (4,098)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-36
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December31,
-------------------------------
1991 1992 1993
--------- --------- ---------
<S> <C> <C> <C>
Operating Activities
Net income (loss)................................................. $ 1,086 $ 7,368 $ (4,098)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Accounting changes -- -- 17,437
Depreciation.................................................... 14,606 14,247 14,521
Amortization.................................................... 842 893 800
Loss on sale of property, plant and equipment................... 240 13 30
Provision for deferred income taxes (credit).................... (1,008) 635 2,228
Decrease in minority equity..................................... (1,995) -- --
Changes in operating assets and liabilities:
Accounts receivable........................................... (1,588) (2,204) (380)
Inventories................................................... (299) 1,156 (1,448)
Unbilled tooling charges...................................... 35,181 -- --
Other assets.................................................. 5,049 2,664 3,907
Accounts payable.............................................. (5,247) (2,272) 2,960
Accrued compensation.......................................... 514 701 1,137
Postretirement benefits other than pensions................... -- -- 1,185
Other liabilities............................................. (6,934) 760 (420)
--------- --------- ---------
Net Cash Provided by Operating Activities........................... 40,447 23,961 37,859
Investing Activities
Purchases of property, plant and equipment........................ (11,371) (12,300) (12,641)
Proceeds from sale of property, plant and equipment............... 2,572 1,406 1,470
Proceeds from sales of investments................................ 1,570 -- --
Amount due from (to) Parent....................................... (389) (16,714) 1,432
--------- --------- ---------
Net Cash Used in Investing Activities............................... (7,618) (27,608) (9,739)
Financing Activities
Proceeds from borrowings 1,500 28,500 --
Principal payments on borrowings.................................. (5,066) (24,368) (8,610)
Distributions in excess of net equity............................. (13,139) -- (16,584)
Return of limited partner's capital............................... (821) (1,035) (895)
--------- --------- ---------
Net Cash Provided by (Used In) Financing Activities................. (17,526) 3,097 (26,089)
--------- --------- ---------
Increase (Decrease) in Cash and Cash Equivalents.................... 15,303 (550) 2,031
Cash and cash equivalents at beginning of year...................... 14,796 30,099 29,549
--------- --------- ---------
Cash and Cash Equivalents at End of Year............................ $ 30,099 $ 29,549 $ 31,580
--------- --------- ---------
--------- --------- ---------
</TABLE>
See notes to consolidated financial statements.
F-37
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
NOTE A -- ORGANIZATION
Checker Motors Corporation (the "Corporation") is a wholly-owned subsidiary
of International Controls Corp. ("ICC"). The Corporation is the general partner
of Checker Motors Co., L.P. (the "Partnership"), a Delaware limited partnership,
of which Executive Life Insurance Company of California ("ELIC") and Checker
Holding Corp. III ("Holding III"), a wholly-owned subsidiary of the Corporation,
are the limited partners (see Notes F and H). The Corporation's other
subsidiary, South Charleston Stamping & Manufacturing Company ("SCSM") is a
90%-owned subsidiary.
In accordance with the proposed offering by ICC of new Senior Secured Notes,
Senior Subordinated Notes and Warrants, and a New Credit Facility consisting of
a revolving credit facility, the Corporation and its subsidiaries (which, for
this purpose, includes a partnership controlled by the Corporation), except for
American Country Insurance Company, a wholly-owned regulated property and
casualty insurance company of the Partnership, and its subsidiary ("Insurance
Subsidiary"), will become co-issuers for the Senior Secured Notes of the
proposed refinancing. Accordingly, the accompanying financial statements include
the Corporation and its subsidiaries that will become co-issuers for the Senior
Secured Notes, collectively the "Issuer Group," as defined under the terms of
the proposed indenture.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of the Corporation, SCSM, Holding III, the Partnership and the
Partnership's wholly-owned subsidiaries, except the Insurance Subsidiary, after
elimination of all significant intercompany accounts and transactions.
CASH EQUIVALENTS: The Corporation considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents.
The cash equivalents carrying amount reported in the balance sheet approximates
its fair value.
INVENTORIES: Certain inventories are valued at the lower of Last-In,
First-Out (LIFO) cost or market, with the balance at the lower of First-In,
First-Out (FIFO) cost or market.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at
cost. Plant and equipment, other than vehicles, are depreciated principally by
the straight-line method. Vehicles held for lease are depreciated by the
sum-of-the-years digits method. Depreciation is based upon the estimated useful
lives of the various classes of plant and equipment.
RENTAL INCOME: Rental income from vehicle leases is recognized as earned.
Vehicles are generally leased on a daily or weekly basis to unaffiliated
operators.
RETIREMENT PLANS: Subsidiaries sponsor several defined benefit and defined
contribution retirement plans and participate in a multiemployer pension plan,
which plans cover all employees. Benefits under the plans are generally related
to an employee's length of service, wages and benefits and, where applicable,
contributions. The costs of these plans are determined on the basis of actuarial
cost methods or stipulated contribution rates for hours worked or employee
contributions. The funding policy is generally to contribute amounts required to
maintain funding standards in accordance with the Employee Retirement Income
Security Act.
MINORITY INTEREST: Minority interest represents ELIC's allocable share of
SCSM's and the Partnership's net assets (see Note F).
INCOME TAXES: Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes (see Note G).
F-38
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE C -- INVENTORIES
Inventories are classified as follows at December 31 (dollars in thousands):
<TABLE>
<CAPTION>
1992 1993
--------- ---------
<S> <C> <C>
Finished products.............................................................. $ 2,459 $ 2,110
Work-in-process................................................................ 1,647 2,104
Raw material................................................................... 5,046 6,386
--------- ---------
$ 9,152 $ 10,600
--------- ---------
--------- ---------
</TABLE>
Inventories aggregating $3.3 million and $4.1 million at December 31, 1992
and 1993, respectively, are stated at cost determined by the LIFO method. If the
FIFO method had been used for all inventories, the amounts reported would have
been $0.9 million higher at December 31, 1992 and 1993.
NOTE D -- BORROWINGS
Long-term debt consists of the following obligations at December 31 (dollars
in thousands):
<TABLE>
<CAPTION>
1992 1993
--------- ---------
<S> <C> <C>
Partnership term loan payable to bank......................................... $ 28,500 $ 22,500
Equipment term loan payable to bank........................................... 7,300 5,500
Term loan payable to bank..................................................... -- 2,500
Economic development term loan................................................ 11,389 10,909
Equipment term loan payable to
Economic Development Authority.............................................. 1,566 1,355
SCSM promissory note.......................................................... 3,043 2,924
Partnership promissory note................................................... 2,500 2,500
--------- ---------
54,298 48,188
Less current portion.......................................................... 8,568 9,412
--------- ---------
$ 45,730 $ 38,776
--------- ---------
--------- ---------
</TABLE>
During September 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 Partnership 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 1.25% which payments commenced December 31, 1992. The
term loan is secured by substantially all of the Partnership's assets.
The equipment term loan payable to a bank requires quarterly payments of
$0.5 million plus interest at the bank's prime rate (6% at December 31, 1993)
plus 1.25%. The obligation is secured by certain machinery and equipment with a
net carrying amount of $6.5 million at December 31, 1993.
During November 1993, SCSM entered into a secured term loan agreement with a
bank pursuant to which the bank provided a $2.5 million term loan. The proceeds
of the term loan were used to finance the acquisition of and is fully secured by
certain equipment. The term loan requires quarterly payments of $0.13 million
plus interest at the bank's prime rate (6% at December 31, 1993) plus 1.25%
which payments commence in January 1994.
In connection with the Partnership term loan, equipment term loan payable to
a bank, and the term loan payable to a bank, the Corporation is required to
comply with certain financial covenants and the agreements limit additional
loans to the Corporation.
F-39
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE D -- BORROWINGS (Continued)
The economic development term loan is payable by SCSM to the West Virginia
Economic Development Authority and requires monthly payments of $0.1 million
including interest at 5.0% with the unpaid balance due in 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 equipment term loan payable to the Economic Development Authority by
SCSM is secured by machinery and equipment and requires monthly payments of
$0.03 million, including interest at 6.875%. The obligation is secured by
certain machinery and equipment with a net carrying amount of $1.4 million at
December 31, 1993.
The SCSM promissory note is payable to Volkswagen of America and is secured
by machinery and equipment and requires monthly payments of $0.03 million,
including interest at 5.0%. 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 Partnership promissory note is payable to the Insurance Subsidiary and
is secured by a mortgage on real estate. Interest is payable quarterly at an
annual interest rate of 8 1/2% on the outstanding balance. The entire principal
balance is due in October 1999.
Required principal payments on borrowings for the four years following 1994
are $9.5 million in 1995, $9.1 million in 1996, $6.0 million in 1997 and $1.6
million in 1998.
SCSM maintains a $7.5 million line of credit with a bank ($5 million
utilized at December 31, 1993) which bears interest at the bank's base lending
rate (6% at December 31, 1993) plus 1% and is secured by SCSM's accounts
receivable and inventory.
The Partnership has a $5 million line of credit with a bank. Borrowings
under the line ($0 at December 31, 1993) bears interest at the bank's prime rate
(6% at December 31, 1993) plus 1%.
Interest paid totaled $7.4 million in 1991, $7.8 million in 1992 and $6.5
million in 1993.
The carrying amounts of the Corporation's borrowings approximates its fair
value.
F-40
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE E -- RETIREMENT PLANS
The following table sets forth the funded status of the defined benefit
plans and amounts recognized in the consolidated balance sheets at December 31
(dollars in thousands):
<TABLE>
<CAPTION>
1992 1993
---------- ----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation................................................... $ 22,647 $ 22,960
---------- ----------
---------- ----------
Accumulated benefit obligation.............................................. $ 23,446 $ 23,770
---------- ----------
---------- ----------
Projected benefit obligation................................................ $ (24,246) $ (24,693)
Plan assets at fair value (primarily guaranteed investment contracts with
insurance companies)....................................................... 17,827 18,300
---------- ----------
Projected excess plan liabilities........................................... (6,419) (6,393)
Unrecognized prior service cost............................................. 1,078 1,210
Unrecognized net gain....................................................... (1,138) (1,101)
Unrecognized net obligation at transition................................... 2,048 1,819
Minimum liability........................................................... (1,722) (1,450)
---------- ----------
Pension liability recognized in the balance sheets.......................... (6,153) (5,915)
Less noncurrent portion..................................................... 4,432 4,160
---------- ----------
Current Pension Liability................................................... $ (1,721) $ (1,755)
---------- ----------
---------- ----------
</TABLE>
Pension expense for defined benefit plans includes the following components
(dollars in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1991 1992 1993
--------- --------- ---------
<S> <C> <C> <C>
Service costs--benefits earned (normal cost)................. $ 544 $ 484 $ 497
Interest cost on projected benefit obligation................ 1,810 1,874 1,910
Actual return on plan assets................................. (1,452) (1,551) (1,592)
Net amortization and deferral................................ 364 291 311
Curtailment loss............................................. 456 -- --
--------- --------- ---------
Net Periodic Pension Cost.................................... $ 1,722 $ 1,098 $ 1,126
--------- --------- ---------
--------- --------- ---------
</TABLE>
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 Partnership's defined benefit plans was substantially reduced during 1991
resulting in a curtailment loss of $0.5 million.
Assumptions used in accounting for defined benefit plans were as follows for
all three years:
<TABLE>
<S> <C>
Discount rate................................................... 8 1/4%
Rate of increase in compensation levels, if applicable.......... 4%
9% -
Expected long-term rate of return on assets..................... 9 1/2%
</TABLE>
Unrecognized prior service costs and unrecognized net gains and losses are
being amortized straight-line over 15 years.
Relative positions and undertakings in multiemployer pension plans are not
presently determinable.
Expense related to defined contribution plans totaled $0.4 million in 1991,
$0.5 million in 1992, and $0.7 million in 1993.
F-41
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE E -- RETIREMENT PLANS (Continued)
The Partnership provides postretirement health care and life insurance
benefits to eligible retired employees. The Partnership's policy is to fund the
cost of medical benefits as paid. Prior to 1993, the Partnership recognized
expense in the year the benefits were provided. The amount charged to expense
for these benefits was approximately $0.4 million in 1991 and $0.5 million in
1992. In 1993, the Partnership 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. A
charge of $11.2 million (net of taxes of $5.8 million) was recorded during 1993
to reflect the cumulative effect of this change in accounting principle.
The following table sets forth the plans' funded status reconciled with
amounts recognized in the Corporation's consolidated balance sheet at December
31, 1993 (in thousands):
<TABLE>
<S> <C>
Accumulated postretirement obligation: Retirees........................ $ (8,297)
Fully eligible active plan participants (2,160)
Other active plan participants......................................... (4,110)
---------
(14,567)
Unrecognized net gain.................................................. (162)
Unrecognized prior service cost benefit................................ (3,432)
---------
Accrued postretirement benefit liability recorded in balance sheet..... (18,161)
Less noncurrent portion................................................ 17,403
---------
Current portion of postretirement benefit liability.................... $ (758)
---------
---------
</TABLE>
Net periodic postretirement benefit cost for the year ended December 31,
1993, includes the following components (in thousands):
<TABLE>
<S> <C>
Service cost............................................................. $357
Interest cost............................................................ 1,337
---------
$1,694
---------
---------
</TABLE>
The health care cost trend rate ranges from 13.6% down to 5.5% 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 $3.0 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 $1.1
million as compared to 1992.
NOTE F -- MINORITY EQUITY
The Corporation, as general partner of the Partnership, has an income
allocation agreement with the limited partners. Net income has generally been
allocated to the partners as follows:
During the initial period (commencing with the date of formation of the
Partnership, March 5, 1986, and terminating on the earlier to occur of December
31, 1990, or the date at which ELIC's excess capital account, as defined, shall
equal at least $40 million) net income was generally allocated 90% to ELIC and
10% to the General Partner.
F-42
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE F -- MINORITY EQUITY (Continued)
During 1988, the $40 million threshold was achieved and net income was,
thereafter, allocated 90% to the General Partner and 10% to ELIC as provided by
the Partnership Agreement.
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 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 was
calculated accordingly (the "GAAP Capital Account Amount"). The Partnership
Agreement, however, provides for allocations of 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, the minority equity includes a $2.3 million credit representing
the adjustment 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 is being paid out in level
quarterly installments, including interest at 7% per annum, through the year
2013 (see Note H).
On June 24, 1991, Holding III was formed and in exchange for issuing its
stock to and becoming a wholly-owned subsidiary of the Corporation, Holding III
was allocated a 1% Limited Partner interest in the Partnership. The amended
Partnership Agreement now provides that net income is allocated 99% to the
General Partner and 1% to the Limited Partner, Holding III.
The Partnership Agreement requires that a distribution for federal, state
and local income taxes of the General and Limited Partners be accrued based on
each partner's distributive share of Partnership earnings.
Through April 10, 1991, distributions to ELIC were also accrued to provide
for the payment, as funds were available, of the principal component of ELIC's
excess capital account in quarterly installments of constant blended payments
(with interest computed at 7% per annum) over 25 years. Effective April 11,
1991, distributions to ELIC were accrued to provide for the payment, as funds
were available, of the principal component of ELIC's Final Capital Account in
quarterly installments of constant blended payments (with interest computed at
7% per annum) through the year 2013. Cash of $20.4 million and $19.9 million was
distributed during 1992 and 1993, respectively, to the General Partner.
Distributions of $6.0 million were accrued to the General Partner during 1990.
Cash of $0.9 million during 1991, $1.2 million during 1992, and $1.1 million
during 1993 was distributed to the Limited Partners. Additional distributions of
$1.3 million are accrued to the Limited Partners at December 31, 1993.
NOTE G -- INCOME TAXES
Effective January 1, 1993, the Corporation adopted the provisions of
Statement of Financial Accounting Standard No. 109, "Accounting for Income
Taxes" ("FAS No. 109"). As permitted under the new rules, prior year financial
statements have not been restated. The Corporation recorded a charge of $6.2
million during 1993 to reflect the cumulative effect of the change in accounting
principle.
F-43
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE G -- INCOME TAXES (Continued)
Under the provisions of FAS No. 109, deferred income taxes reflect the net
tax effect of temporary differences between the carrying amount of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Corporation'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............................................. $ 12,035
Other..................................................................... 781
---------
12,816
Deferred tax assets:
Other postretirement benefits............................................. 6,172
Pensions.................................................................. 1,620
Reserves.................................................................. 2,567
---------
10,359
Valuation allowance....................................................... 1,000
9,359
---------
Net deferred tax liabilities.............................................. $ 3,457
---------
---------
</TABLE>
The Corporation's taxable income, except for taxable income of the Insurance
Subsidiary, is included in the consolidated federal income tax return of ICC.
For financial reporting purposes, federal income tax expense is provided by the
Corporation as if it was filing a separate income tax return.
Amounts paid to ICC for the Corporation's income tax expense on a separate
return basis amounted to $0.4 million in 1991, $2.8 million in 1992 and $4.6
million in 1993.
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....................... $ 1,981 $ 1,134
Inventory reserves................................................................ -- (232)
Partnership allocation............................................................ (719) (1,034)
Alternative minimum tax........................................................... (2,393) 772
Other............................................................................. 123 (5)
--------- ---------
Deferred tax (benefit) expense.................................................... $ (1,008) $ 635
--------- ---------
--------- ---------
</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............................................ $ (478) $ 3,748 $ 7,074
Increase (decrease) in taxes resulting from: Partnership differences............... (51) 6 (11)
Nontaxable dividend income......................................................... -- (237) (735)
Other.............................................................................. (32) (73) 544
--------- --------- ---------
Actual tax (benefit) expense....................................................... $ (561) $ 3,444 $ 6,872
</TABLE>
F-44
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE H -- COMMITMENTS AND CONTINGENCIES
On March 4, 1992, the Corporation 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, the Corporation, the Partnership and Checker
Holding Corp. III, a limited partner of the Partnership. The amendment alleges
that the action by the Corporation 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. The Partnership has been
in litigation on these issues for almost three years with each party seeking,
among 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 and 1992 would have been reported at $3.3
million and $0.7 million less, respectively, and net loss for 1993 would have
been reported at $0.7 million less than the amounts reported (see Note F).
The Corporation and its subsidiaries are also involved in various other
legal actions in the normal course of business. None of the various legal
actions are expected to have a material effect on the consolidated financial
statements.
The Corporation and its subsidiaries lease real estate and equipment.
Certain leases are renewable and provide for monthly rentals, real estate taxes
and other operating expenses. Rental expense under operating leases was
approximately $1.2 million in 1991, $1.1 million in 1992, and $1.3 million in
1993. Minimum rental obligations for all noncancellable operating leases at
December 31, 1993 are as follows: $1.4 million in 1994, $1.4 million in 1995,
$1.4 million in 1996, $1.3 million in 1997, $1.3 million in 1998 and $13.3
million thereafter.
NOTE I -- INDUSTRY SEGMENT INFORMATION
The Corporation and its obligor subsidiaries operate in two principal
segments:
AUTOMOTIVE PRODUCTS SEGMENT _--__Manufacturing metal stampings and
assemblies and coordination of related tooling production for motor vehicle
manufacturers.
VEHICULAR OPERATIONS SEGMENT _--__Leasing taxicabs.
Automotive product net sales to a major customer amounted to approximately
$80.3 million in 1991, $109.1 million in 1992, and $121.5 million in 1993
(including 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). ICC charges the Corporation a fee for general and administrative
costs. Amounts charged totaled $0.7 million in 1991, 1992 and 1993.
F-45
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE I -- INDUSTRY SEGMENT INFORMATION -- (Continued)
<TABLE>
<CAPTION>
Automotive Vehicular
Products Operations Eliminations Consolidated
----------- ----------- ------------- -------------
(dollars in thousands)
<S> <C> <C> <C> <C>
1991
Revenues:
Outside customers................................... $ 84,401 $ 43,527 $ -- $ 127,928
Intersegment sales.................................. 5 3,635 (3,640) --
----------- ----------- ------------- -------------
$ 84,406 $ 47,162 $ (3,640) $ 127,928
----------- ----------- ------------- -------------
----------- ----------- ------------- -------------
Operating profit (loss)............................... $ (4,237) $ 7,139 $ 2,902
Corporate expenses.................................... (744)
Interest income:
Corporate........................................... 1,605
Interest expense...................................... (7,346)
Other income, net..................................... 2,177
Minority equity....................................... 1,931
-------------
Income before income taxes............................ $ 525
-------------
-------------
Identifiable assets................................... $ 67,258 $ 28,357 $ 95,615
Partnership assets.................................... 32,384
Corporate assets...................................... (132)
-------------
Total assets at December 31, 1991..................... $ 127,867
-------------
-------------
Depreciation.......................................... $ 4,237 $ 10,369 $ 14,606
Capital expenditures.................................. 1,190 10,181 11,371
</TABLE>
F-46
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE I -- INDUSTRY SEGMENT INFORMATION (Continued)
<TABLE>
<CAPTION>
Automotive Vehicular
Products Operations Eliminations Consolidated
----------- ----------- ------------- -------------
(dollars in thousands)
<S> <C> <C> <C> <C>
1992
Revenues:
Outside customers................................... $ 112,631 $ 40,580 $ -- $ 153,211
Intersegment sales.................................. 1 4,043 (4,044) --
----------- ----------- ------------- -------------
$ 112,632 $ 44,623 $ (4,044) $ 153,211
----------- ----------- ------------- -------------
----------- ----------- ------------- -------------
Operating profit...................................... $ 11,623 $ 5,727 $ 17,350
Corporate expenses.................................... (744)
Interest income:
Corporate........................................... 748
Interest expense...................................... (6,736)
Other income, net..................................... 194
-------------
Income before income taxes............................ $ 10,812
-------------
-------------
Identifiable assets................................... $ 66,561 $ 25,516 $ 92,077
Partnership assets.................................... 31,458
Corporate assets...................................... (116)
-------------
Total assets at December 31, 1992..................... $ 123,419
-------------
-------------
Depreciation.......................................... $ 4,148 $ 10,099 $ 14,247
Capital expenditures.................................. 1,889 10,411 12,300
</TABLE>
F-47
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE I -- INDUSTRY SEGMENT INFORMATION (Continued)
<TABLE>
<CAPTION>
Automotive Vehicular
Products Operations Eliminations Consolidated
----------- ----------- ------------- -------------
(dollars in thousands)
<S> <C> <C> <C> <C>
1993
Revenues:
Outside customers................................... $ 127,925 $ 42,103 $ -- $ 170,028
Intersegment sales.................................. -- 4,346 (4,346) --
----------- ----------- ------------- -------------
$ 127,925 $ 46,449 $ (4,346) $ 170,028
----------- ----------- ------------- -------------
----------- ----------- ------------- -------------
Operating profit (loss)............................... $ 15,307 $ 6,250 $ 21,557
Corporate expenses.................................... (744)
Interest income:
Corporate........................................... 902
Interest expense...................................... (6,587)
Other income, net..................................... 5,083
-------------
Income before income taxes and accounting changes..... $ 20,211
-------------
-------------
Identifiable assets................................... $ 67,937 $ 20,493 $ 88,430
Partnership assets.................................... 33,644
Corporate assets...................................... (253)
-------------
Total assets at December 31, 1993..................... $ 121,821
-------------
-------------
Depreciation.......................................... $ 4,990 $ 9,531 $ 14,521
Capital expenditures.................................. 4,728 7,913 12,641
</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.
F-48
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE J_--_RELATED PARTY TRANSACTIONS
The Corporation's various operations purchase workers compensation, general
liability and property and casualty insurance from the Insurance Subsidiary.
Insurance expense for policies purchased by the Corporation totaled $12.7
million in 1991, $13.2 million in 1992 and $13.4 million in 1993. The Insurance
Subsidiary also declared dividends of $1.0 million and $3.0 million in 1992 and
1993, payable to Checker Motors Corporation. These dividends are included in
other income. No dividend was declared by the Insurance Subsidiary in 1991.
An officer of a subsidiary is the owner of a taxicab association established
in 1988 in the City of Chicago to which both affiliated and unaffiliated taxi
drivers may be members 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
of the Partnership's 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, the Corporation and the Partnership have
guaranteed certain of the association's obligations totaling $0.7 million.
Each of the Corporation's directors provides consulting services to the
Corporation or its subsidiaries. Annual expenses incurred relating to these
consulting services totaled $0.8 million.
The notes receivable of $0.6 million are for common stock purchased in March
1986 by the former stockholders of the Corporation. The notes are noninterest
bearing and have no fixed repayment schedule.
Subsequent to year end, the Corporation distributed $15.0 million to ICC and
the receivable from parent was discharged. Accordingly, the receivable from
parent has been classified as a reduction in stockholder's equity in the balance
sheet.
F-49
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE K -- SELECTED QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
1992 Quarter Ended 1993 Quarter Ended
----------------------------------------------------- ----------------------
March 31 June 30 September 30 December 31 March 31 June 30
----------- --------- -------------- ------------- ----------- ---------
(dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Revenues....................................... $ 38,775 $ 40,050 $ 34,609 $ 39,777 $ 44,947 $ 44,583
Gross Profit................................... 7,860 8,628 4,437 6,582 8,603 10,148
Income (loss) before accounting changes........ 3,861 3,096 (750) 1,161 5,583 3,117
Accounting changes............................. -- -- -- -- (17,437) --
Net income (loss).............................. 3,861 3,096 (750) 1,161 (11,854) 3,117
Income (loss) per share:
Income (loss) before
accounting changes.......................... $ 3,861 $ 3,096 $ (750) $ 1,161 $ 5,583 $ 3,117
Accounting changes........................... -- -- -- -- (17,437) --
Net income (loss)............................ 3,861 3,096 (750) 1,161 (11,854) 3,117
<CAPTION>
September 30 December 31
-------------- -------------
<S> <C> <C>
Revenues....................................... $ 37,258 $ 43,240
Gross Profit................................... 6,611 8,318
Income (loss) before accounting changes........ 1,256 3,383
Accounting changes............................. -- --
Net income (loss).............................. 1,256 3,383
Income (loss) per share:
Income (loss) before
accounting changes.......................... $ 1,256 $ 3,383
Accounting changes........................... -- --
Net income (loss)............................ 1,256 3,383
</TABLE>
F-50
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE L -- SUMMARY OF ISSUER AND NON-ISSUER GROUPS -- (Continued)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1992 December 31, 1993
------------------------------------------------------ --------------------------
Consolidated Non-Issuer Issuer Consolidated Non-Issuer
Checker Group Eliminations Group Checker Group
------------- ----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Total current assets....................... $ 68,500 $ 16,928 $ (10) $ 51,563 $ 70,582 $ 15,487
Amount due from parent..................... 240 -- -- 240 363 --
Property, plant and equipment, net......... 66,641 1,615 -- 65,025 62,866 1,221
Insurance Subsidiary investments........... 84,616 84,616 -- -- 90,838 90,838
Deferred income taxes...................... 2,558 -- (2,558) -- -- --
Other assets............................... 26,068 21,977 2,500 6,591 18,100 16,061
------------- ----------- ------------- ----------- ------------- -----------
Total Assets................................. $ 248,623 $ 125,136 $ (68) $ 123,419 $ 242,749 $ 123,607
------------- ----------- ------------- ----------- ------------- -----------
------------- ----------- ------------- ----------- ------------- -----------
LIABILITIES AND STOCKHOLDER'S DEFICIT:
Total current liabilities.................. $ 39,702 $ 3,849 $ (10) $ 35,843 $ 46,744 $ 4,660
Long-term debt, excluding current
portion................................... 43,230 -- 2,500 45,730 36,276 --
Insurance Subsidiary's unpaid losses and
loss adjustment expenses.................. 75,780 75,780 -- -- 71,179 71,179
------------- ----------- ------------- ----------- ------------- -----------
Other liabilities.......................... 66,773 11,688 (2,558) 52,527 83,639 13,049
------------- ----------- ------------- ----------- ------------- -----------
Total liabilities.......................... 225,485 91,317 (68) 134,100 237,838 88,888
------------- ----------- ------------- ----------- ------------- -----------
Total stockholder's deficit................ 23,138 33,819 -- (10,681) 4,911 34,719
Total Liabilities and Stockholder's
Deficit..................................... $ 248,623 $ 125,136 $ (68) $ 123,419 $ 242,749 $ 123,607
------------- ----------- ------------- ----------- ------------- -----------
------------- ----------- ------------- ----------- ------------- -----------
<CAPTION>
Issuer
Eliminations Group
------------- -----------
<S> <C> <C>
ASSETS
Total current assets....................... $ 179 $ 55,274
Amount due from parent..................... -- 363
Property, plant and equipment, net......... -- 61,645
Insurance Subsidiary investments........... -- --
Deferred income taxes...................... -- --
Other assets............................... 2,500 4,539
------------- -----------
Total Assets................................. $ 2,679 $ 121,821
------------- -----------
------------- -----------
LIABILITIES AND STOCKHOLDER'S DEFICIT:
Total current liabilities.................. $ 179 $ 42,263
Long-term debt, excluding current
portion................................... 2,500 38,776
Insurance Subsidiary's unpaid losses and
loss adjustment expenses.................. -- --
------------- -----------
Other liabilities.......................... -- 70,590
------------- -----------
Total liabilities.......................... 2,679 151,629
------------- -----------
Total stockholder's deficit................ -- (29,808)
Total Liabilities and Stockholder's
Deficit..................................... $ 2,679 $ 121,821
------------- -----------
------------- -----------
</TABLE>
F-51
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE L -- SUMMARY OF ISSUER AND NON-ISSUER GROUPS
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
December 31, 1991
------------------------------------------------------
Consolidated Non-Issuer Issuer
Checker Group Eliminations Group
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Revenues................................................. $ 155,070 $ 39,877 $ 12,735 $ 127,928
Cost of revenues......................................... (134,206) (33,528) (12,735) (113,413)
Gross Profit............................................. 20,864 6,349 -- 14,515
------------- ----------- ------------- -----------
SG&A expense............................................. (21,842) (9,485) -- (12,357)
Interest expense......................................... (7,346) -- -- (7,346)
Interest income.......................................... 8,522 6,917 -- 1,605
Other income (expense) net............................... 1,723 (454) -- 2,177
Minority equity in Partnership earnings.................. 1,931 -- -- 1,931
Income before income taxes............................... 3,852 3,327 -- 525
Income tax expense....................................... (236) (797) -- 561
Net Income............................................... $ 3,616 $ 2,530 $ -- $ 1,086
------------- ----------- ------------- -----------
------------- ----------- ------------- -----------
<CAPTION>
December 31, 1992
------------------------------------------------------
Consolidated Non-Issuer Issuer
Checker Group Eliminations Group
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Revenues................................................. $ 180,397 $ 40,346 $ 13,160 $ 153,211
Cost of revenues......................................... (144,909) (32,365) (13,160) (125,704)
Gross Profit............................................. 35,488 7,981 -- 27,507
SG&A expense............................................. (20,704) (9,803) -- (10,901)
Interest expense......................................... (6,736) -- -- (6,736)
Interest income.......................................... 7,281 6,533 -- 748
Other income (expense) net............................... 928 1,734 1,000 194
------------- ----------- ------------- -----------
Income before income taxes............................... 16,257 6,445 1,000 10,812
Income tax expense....................................... (5,429) (1,985) -- (3,444)
------------- ----------- ------------- -----------
Net Income............................................... $ 10,828 $ 4,460 $ 1,000 $ 7,368
------------- ----------- ------------- -----------
------------- ----------- ------------- -----------
</TABLE>
F-52
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE L -- SUMMARY OF ISSUER AND NON-ISSUER GROUPS (Continued)
CONSOLIDATED STATEMENTS OF OPERATIONS -- (Continued)
<TABLE>
<CAPTION>
December 31, 1993
------------------------------------------------------
Consolidated Non-Issuer Issuer
Checker Group Eliminations Group
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Revenues................................................. $ 197,464 $ 40,836 $ 13,400 $ 170,028
Cost of revenues......................................... (155,766) (32,818) (13,400) (136,348)
------------- ----------- ------------- -----------
Gross Profit............................................. 41,698 8,018 -- 33,680
SG&A expense............................................. (23,097) (10,230) -- (12,867)
Interest expense......................................... (6,587) -- -- (6,587)
Interest income.......................................... 6,779 5,877 -- 902
Other income (expense) net............................... 3,980 1,897 3,000 5,083
------------- ----------- ------------- -----------
Income before income taxes and accounting changes........ 22,773 5,562 3,000 20,211
Income tax expense....................................... (8,369) (1,497) -- (6,872)
------------- ----------- ------------- -----------
Income before accounting changes......................... 14,404 4,065 3,000 13,339
Accounting changes, net of income taxes.................. (17,643) (206) -- (17,437)
------------- ----------- ------------- -----------
Net Income (Loss)........................................ $ (3,239) $ 3,859 $ 3,000 $ (4,098)
------------- ----------- ------------- -----------
------------- ----------- ------------- -----------
</TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
December 31, 1991
------------------------------------------------------
Consolidated Non-Issuer Issuer
Checker Group Eliminations Group
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Cash flow from operating activities:
Net income............................................. $ 3,616 $ 2,530 $ -- $ 1,086
Adjustments to reconcile net income to net cash
provided by operating activities...................... 13,397 (818) -- 14,215
Changes in operating assets and liabilities............ 29,044 6,398 2,500 25,146
Net cash flow provided by operating activities........... 46,057 8,110 2,500 40,447
Net cash flow used in investing activities............... (11,315) (3,697) -- (7,618)
Net cash flow used in financing activities............... (15,026) -- (2,500) (17,526)
------------- ----------- ------------- -----------
Increase in cash and cash equivalents.................... 19,716 4,413 -- 15,303
Beginning cash and cash equivalents...................... 15,777 981 -- 14,796
------------- ----------- ------------- -----------
Ending Cash and Cash Equivalents......................... $ 35,493 $ 5,394 $ -- $ 30,099
------------- ----------- ------------- -----------
------------- ----------- ------------- -----------
</TABLE>
F-53
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE L -- SUMMARY OF ISSUER AND NON-ISSUER GROUPS (Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS -- (Continued)
<TABLE>
<CAPTION>
December 31, 1992
------------------------------------------------------
Consolidated Non-Issuer Issuer
Checker Group Eliminations Group
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Cash flow from operating activities:
Net income............................................. $ 10,828 $ 4,460 $ 1,000 $ 7,368
Adjustments to reconcile net income to net cash
provided by operating activities...................... 14,580 (1,208) -- 15,788
Changes in operating assets and liabilities............ 3,950 5,645 2,500 805
------------- ----------- ------------- -----------
Net cash flow provided by operating activities........... 29,358 8,897 3,500 23,961
Net cash flow used in investing activities............... (33,714) (6,106) -- (27,608)
Net cash flow provided by (used in) financing
activities.............................................. 5,597 (1,000) (3,500) 3,097
------------- ----------- ------------- -----------
Increase (decrease) in cash and cash equivalents......... 1,241 1,791 -- (550)
Beginning cash and cash equivalents...................... 35,493 5,394 -- 30,099
------------- ----------- ------------- -----------
Ending Cash and Cash Equivalents......................... $ 36,734 $ 7,185 $ -- $ 29,549
------------- ----------- ------------- -----------
------------- ----------- ------------- -----------
<CAPTION>
December 31, 1993
------------------------------------------------------
Consolidated Non-Issuer Issuer
Checker Group Eliminations Group
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Cash flow from operating activities:
Net income (loss)...................................... $ (3,239) $ 3,859 $ 3,000 $ (4,098)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities...................... 34,772 (244) -- 35,016
Changes in operating assets and liabilities.............. 8,576 4,139 2,504 6,941
------------- ----------- ------------- -----------
Net cash flow provided by operating activities........... 40,109 7,754 5,504 37,859
Net cash flow used in investing activities............... (14,937) (5,202) (4) (9,739)
Net cash flow used in financing activities............... (23,589) (3,000) (5,500) (26,089)
------------- ----------- ------------- -----------
Increase (decrease) in cash and cash equivalents......... 1,583 (448) -- 2,031
Beginning cash and cash equivalents...................... 36,734 7,185 -- 29,549
------------- ----------- ------------- -----------
Ending Cash and Cash Equivalents......................... $ 38,317 $ 6,737 $ -- $ 31,580
</TABLE>
F-54
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share and per share amounts)
(unaudited)
<TABLE>
<CAPTION>
December 31, March 31,
1993 1994
-------------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents............................................................ $ 31,580 $ 424,339
Accounts receivable.................................................................. 10,334 15,082
Inventories.......................................................................... 10,600 10,464
Other current assets................................................................. 2,760 5,689
-------------- -----------
Total current assets............................................................. 55,274 55,574
Property, plant and equipment, net................................................... 61,645 62,311
Amount due from Parent............................................................... 363 6,766
Other assets......................................................................... 4,539 4,193
-------------- -----------
Total Assets......................................................................... $ 121,821 $ 128,844
-------------- -----------
-------------- -----------
LIABILITIES AND STOCKHOLDER'S DEFICIT:
Notes payable........................................................................ $ 5,000 $ 5,000
Accounts payable..................................................................... 12,823 15,777
Income taxes payable................................................................. 744 1,687
Accrued compensation................................................................. 6,021 5,700
Accrued interest..................................................................... 191 178
Other accrued liabilities............................................................ 8,072 8,014
Current portion of long-term debt.................................................... 9,412 9,424
-------------- -----------
Total current liabilities........................................................ 42,263 45,780
Long-term debt, excluding current portion............................................ 38,776 36,413
Deferred income taxes................................................................ 3,457 3,261
Postretirement benefits other than pensions.......................................... 17,403 17,465
Other noncurrent liabilities......................................................... 9,598 9,144
Minority interest.................................................................... 40,132 39,898
-------------- -----------
Total liabilities................................................................ 151,629 151,961
Stockholder's deficit:
Common stock, par value $1.00:
Authorized 1,000 shares
Outstanding 1,000 shares......................................................... 1 1
Additional paid-in capital........................................................... 1,624 1,624
Retained earnings deficit............................................................ (15,779) (24,117)
Receivable from Parent............................................................... (15,029) --
Notes receivable..................................................................... (625) (625)
-------------- -----------
Total stockholder's deficit...................................................... (29,808) (23,117)
-------------- -----------
Total Liabilities and Stockholder's Deficit.......................................... $ 121,821 $ 128,844
-------------- -----------
-------------- -----------
</TABLE>
See notes to consolidated financial statements.
F-55
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March
31,
--------------------------
1993 1994
------------ ------------
<S> <C> <C>
Revenues.............................................................................. $ 44,947 $ 48,771
Cost of revenues...................................................................... (36,344) (38,478)
------------ ------------
Gross profit.......................................................................... 8,603 10,293
Selling, general and administrative expense........................................... (2,976) (3,752)
Interest expense...................................................................... (1,751) (1,571)
Interest income....................................................................... 330 147
Other income, net..................................................................... 3,087 3,749
------------ ------------
Income before income taxes and accounting changes..................................... 7,293 8,866
Income tax expense.................................................................... (1,711) (2,175)
------------ ------------
Income before accounting changes...................................................... 5,582 6,691
Accounting changes, net of income taxes............................................... (17,437) --
------------ ------------
Net income (loss)..................................................................... $ (11,855) $ 6,691
</TABLE>
See notes to consolidated financial statements.
F-56
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1993 1994
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)...................................................................... $ (11,855) $ 6,691
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Accounting changes................................................................... 17,437 --
Depreciation and amortization........................................................ 3,782 3,766
Deferred income tax benefit.......................................................... (106) (196)
Net (gain) loss on sale of property, plant and equipment............................. 13 (61)
Changes in operating assets and liabilities:
Accounts receivable................................................................ (2,973) (4,748)
Inventories........................................................................ (550) 136
Other assets....................................................................... (1,973) (2,782)
Accounts payable................................................................... 3,627 2,953
Income taxes....................................................................... -- 943
Postretirement benefits other than pension......................................... -- 62
Other liabilities.................................................................. 1,676 (846)
---------- ----------
Net cash flow provided by operating activities........................................... 9,078 5,918
Cash flows from investing activities:
Purchases of property, plant and equipment............................................. (4,424) (4,536)
Proceeds from disposal of property, plant and equipment................................ 837 364
Amount due from (to) Parent............................................................ 15,798 8,626
---------- ----------
Net cash flow provided by investing activities........................................... 12,211 4,454
Cash flows from financing activities:
Repayments of borrowings............................................................... (1,987) (2,350)
Distributions in excess of net equity.................................................. (16,584) (15,029)
Return of limited partner's capital...................................................... (217) (234)
---------- ----------
Net cash flow used in financing activities............................................... (18,788) (17,613)
---------- ----------
Increase (decrease) in cash and cash equivalents......................................... 2,501 (7,241)
Beginning cash and cash equivalents...................................................... 29,549 31,580
---------- ----------
Ending cash and cash equivalents......................................................... $ 32,050 $ 24,339
---------- ----------
---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-57
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
March 31, 1994
(unaudited)
Note A -- BASIS OF PRESENTATION
The accompanying consolidated financial statements of Checker Motors
Corporation and subsidiaries (the "Corporation") 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 three months ended March 31, 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 Corporation's audited consolidated
financial statements and footnotes thereto for the year ended December 31, 1993.
Note B -- PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Checker Motors
Corporation and its subsidiaries that will become co-issuers under the terms of
an indenture in connection with a proposed refinancing. Accordingly, the
accounts of American Country Insurance Company, a wholly-owned regulated
property and casualty insurance subsidiary of the Corporation, and its
subsidiary, have been excluded from the consolidated financial statements as
they will not be co-issuers under the terms of the proposed refinancing.
Note C -- INVENTORIES
Inventories are summarized below (dollars in thousands):
<TABLE>
<CAPTION>
December 31, March 31,
1993 1994
-------------- -----------
<S> <C> <C>
Finished goods................................................ $ 2,110 $ 5,693
Work-in-process............................................... 2,104 2,516
Raw materials and supplies.................................... 6,386 2,255
-------------- -----------
$ 10,600 $ 10,464
-------------- -----------
-------------- -----------
</TABLE>
Note D -- INCOME TAXES
The Corporation's estimated effective tax rate differs from the statutory
rate because of 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.
Note E -- ACCOUNTING CHANGES
Effective January 1, 1994, the Corporation 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 method.
Effective January 1, 1993, the Corporation adopted the provisions of SFAS
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." The Corporation recorded a charge of $11.2 million (net of taxes of
$5.8 million) during the quarter ended March 31, 1993, to reflect the cumulative
effect of this change in accounting principle.
F-58
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
March 31, 1994
(unaudited)
Note E -- ACCOUNTING CHANGES (Continued)
Effective January 1, 1993, the Corporation adopted the provisions of SFAS
No. 109, "Accounting for Income Taxes." The Corporation recorded a charge of
$6.2 million during the quarter ended March 31, 1993, to reflect the cumulative
effect of this change in accounting principle.
Note F -- CONTINGENCIES
On March 4, 1992, the Corporation 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, the Corporation, the Partnership and Checker Holding Corp. III
("Holding III"), a limited partner of the Partnership. The amendment alleges
that the action by the Corporation 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
Corporation and the Conservator entered into a letter agreement pursuant to
which the Corporation agreed to purchase ELIC's interest in the Partnership for
$37 million. The letter agreement has been submitted to the Court for approval.
F-59
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES--ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
March 31, 1994
NOTE G_--_SUMMARY OF ISSUER AND NON-ISSUER GROUPS
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1993 March 31, 1994 (Unaudited)
------------------------------------------------------- ---------------------------
Consolidated Non-Issuer Issuer Consolidated Non-Issuer
Checker Group Eliminations Group Checker Group
------------- ------------ ------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Total current assets.................... $ 70,582 $ 15,487 $ 179 $ 55,274 $ 73,097 $ 19,183
Amount due from parent.................. 363 -- -- 363 6,766 --
Property, plant and equipment, net...... 62,866 1,221 -- 61,645 63,503 1,192
Insurance Subsidiary investments........ 90,838 90,838 -- -- 89,134 89,134
Deferred income taxes................... -- -- -- -- 252 --
Other assets............................ 18,100 16,061 2,500 4,539 19,150 17,457
------------- ------------ ------------- ----------- ------------- ------------
Total Assets.............................. $ 242,749 $ 123,607 $ 2,679 $ 121,821 $ 251,902 $ 126,966
------------- ------------ ------------- ----------- ------------- ------------
------------- ------------ ------------- ----------- ------------- ------------
LIABILITIES AND STOCKHOLDER'S DEFICIT:
Total current liabilities............... $ 46,741 $ 4,660 $ 179 $ 42,263 $ 47,682 $ 3,562
Long-term debt, excluding current
portion................................ 36,276 -- 2,500 38,776 33,913 --
Insurance Subsidiary's unpaid losses and
loss adjustment expenses............... 71,179 71,179 -- -- 72,078 72,078
Other liabilities....................... 83,639 13,049 -- 70,590 89,105 19,085
------------- ------------ ------------- ----------- ------------- ------------
Total liabilities....................... 237,838 88,888 2,679 151,629 242,778 94,725
Total stockholder's deficit............. 4,911 34,719 -- (29,808) 9,124 32,241
------------- ------------ ------------- ----------- ------------- ------------
Total Liabilities and Stockholder's
Deficit.................................. $ 242,749 $ 123,607 $ 2,679 $ 121,821 $ 251,902 $ 126,966
------------- ------------ ------------- ----------- ------------- ------------
------------- ------------ ------------- ----------- ------------- ------------
<CAPTION>
Issuer
Eliminations Group
------------- -----------
<S> <C> <C>
ASSETS
Total current assets.................... $ 1,660 $ 55,574
Amount due from parent.................. -- 6,766
Property, plant and equipment, net...... -- 62,311
Insurance Subsidiary investments........ -- --
Deferred income taxes................... (252 ) --
Other assets............................ 2,500 4,193
------------- -----------
Total Assets.............................. $ 3,908 $ 128,844
------------- -----------
------------- -----------
LIABILITIES AND STOCKHOLDER'S DEFICIT:
Total current liabilities............... $ 1,660 $ 45,780
Long-term debt, excluding current
portion................................ 2,500 36,413
Insurance Subsidiary's unpaid losses and
loss adjustment expenses............... -- --
Other liabilities....................... (252 ) 69,768
------------- -----------
Total liabilities....................... 3,908 151,961
Total stockholder's deficit............. -- (23,117)
------------- -----------
Total Liabilities and Stockholder's
Deficit.................................. $ 3,908 $ 128,844
------------- -----------
------------- -----------
</TABLE>
F-60
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES--ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
March 31, 1994
NOTE G -- SUMMARY OF ISSUER AND NON-ISSUER GROUPS (Continued)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Quarter Ended March 31, 1993
-------------------------------------------------------
Consolidated Non-Issuer Issuer
Checker Group Eliminations Group
------------- ------------ ------------- -----------
<S> <C> <C> <C> <C>
Revenues................................................ $ 51,310 $ 9,601 $ 3,238 $ 44,947
Cost of Revenues........................................ (40,741) (7,635) (3,238) (36,344)
------------- ------------ ------------- -----------
Gross profit............................................ 10,569 1,966 -- 8,603
SG&A Expense............................................ (5,457) (2,481) -- (2,976)
Interest Expense........................................ (1,751 ) -- -- (1,751)
Interest Income......................................... 1,929 1,599 -- 330
Other income, net....................................... 310 223 3,000 3,087
------------- ------------ ------------- -----------
Income before income taxes and accounting changes....... 5,600 1,307 3,000 7,293
Income tax expense...................................... (2,161 ) (450 ) -- (1,711)
------------- ------------ ------------- -----------
Income before accounting changes........................ 3,439 857 3,000 5,582
Accounting changes, net of income taxes................. (17,643 ) (206 ) -- (17,437)
------------- ------------ ------------- -----------
Net Income (Loss)....................................... $ (14,204 ) $ 651 $ 3,000 $ (11,855)
------------- ------------ ------------- -----------
------------- ------------ ------------- -----------
<CAPTION>
Quarter Ended March 31, 1994 (Unaudited)
-------------------------------------------------------
Consolidated Non-Issuer Issuer
Checker Group Eliminations Group
------------- ------------ ------------- -----------
<S> <C> <C> <C> <C>
Revenues................................................ $ 56,630 $ 10,969 $ 3,110 $ 48,771
Cost of Revenues........................................ (44,476) (9,108) (3,110) (38,478)
------------- ------------ ------------- -----------
Gross profit............................................ 12,154 1,861 -- 10,293
SG&A Expense............................................ (6,377 ) (2,625 ) -- (3,752)
Interest Expense........................................ (1,571 ) -- -- (1,571)
Interest Income......................................... 1,787 1,640 -- 147
Other income, net....................................... 1,007 258 3,000 3,749
------------- ------------ ------------- -----------
Income before income taxes.............................. 7,000 1,134 3,000 8,866
Income tax expense...................................... (2,380 ) (205 ) -- (2,175)
------------- ------------ ------------- -----------
Net Income.............................................. $ 4,620 $ 929 $ 3,000 $ 6,691
------------- ------------ ------------- -----------
------------- ------------ ------------- -----------
</TABLE>
F-61
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES--ISSUER GROUP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
March 31, 1994
NOTE G -- SUMMARY OF ISSUER AND NON-ISSUER GROUPS (Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Quarter Ended March 31, 1993
------------------------------------------------------
Consolidated Non-Issuer Issuer
Checker Group Eliminations Group
------------- ------------ ------------- ----------
<S> <C> <C> <C> <C>
Cash flow from operating activities:
Net income (loss)..................................... $ (14,202) $ 653 $ 3,000 $ (11,855)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities........... 21,502 376 -- 21,126
Changes in operating assets and liabilities........... (1,605) (1,412) -- (193)
------------- ------------ ------------- ----------
Net cash flow provided by (used in) operating
activities............................................. 5,695 (383 ) 3,000 9,078
Net cash flow provided by investing activities.......... 13,249 1,038 -- 12,211
Net cash flow used in financing activities.............. (18,788 ) (3,000 ) (3,000 ) (18,788)
------------- ------------ ------------- ----------
Increase (decrease) in cash and cash equivalents........ 156 (2,345 ) -- 2,501
Beginning cash and cash equivalents..................... 36,734 7,185 -- 29,549
------------- ------------ ------------- ----------
Ending Cash and Cash Equivalents........................ $ 36,890 $ 4,840 $ -- $ 32,050
------------- ------------ ------------- ----------
------------- ------------ ------------- ----------
<CAPTION>
Quarter Ended March 31, 1994
------------------------------------------------------
Consolidated Non-Issuer Issuer
Checker Group Eliminations Group
------------- ------------ ------------- ----------
<S> <C> <C> <C> <C>
Cash flow from operating activities:
Net income............................................ $ 4,621 $ 930 $ 3,000 $ 6,691
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities........... 3,385 (124) -- 3,509
Changes in operating assets and liabilities........... (5,424 ) (1,142 ) -- (4,282)
------------- ------------ ------------- ----------
Net cash flow provided by (used in) operating
activities............................................. 2,582 (336 ) 3,000 5,918
Net cash flow provided by investing activities.......... 5,765 1,311 -- 4,454
Net cash flow used in financing activities.............. (17,613 ) (3,000 ) (3,000 ) (17,613)
------------- ------------ ------------- ----------
Decrease in cash and cash equivalents................... (9,266 ) (2,025 ) -- (7,241)
Beginning cash and cash equivalents..................... 38,317 6,737 -- 31,580
------------- ------------ ------------- ----------
Ending Cash and Cash Equivalents........................ $ 29,051 $ 4,712 $ -- $ 24,339
------------- ------------ ------------- ----------
------------- ------------ ------------- ----------
</TABLE>
F-62
<PAGE>
Report of Independent Auditors
Board of Directors
Great Dane Trailers, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Great Dane
Trailers, Inc. and subsidiaries (a wholly-owned subsidiary of International
Controls Corp.) as of December 31, 1992 and 1993, and the related consolidated
statements of operations, shareholder's equity 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 Trailers, Inc. and subsidiaries at December 31, 1992 and 1993, 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 the notes to the consolidated financial statements, in 1993
the Company changed its methods of accounting for income taxes and
postretirement benefits other than pensions.
Atlanta, Georgia
March 1, 1994
F-63
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of International Controls Corp.)
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
December 31,
------------------------
1992 1993
----------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents............................................................. $ 513 $ 285
Accounts receivable, less allowance for doubtful accounts of $618 and $700............ 44,029 56,205
Current portion of finance lease receivables (Note D)................................. 2,352 764
Inventories (Note C).................................................................. 62,709 83,512
Deferred tax benefits (Note J)........................................................ 4,567 1,466
Other current assets.................................................................. 832 1,023
----------- -----------
Total current assets................................................................ 115,002 143,255
Property, plant and equipment, net (Note E)........................................... 52,851 59,490
Noncurrent finance lease receivables (Note D)......................................... 2,863 575
Cost in excess of net assets acquired, net of accumulated amortization of $5,000 and
$6,250............................................................................... 44,993 43,743
Trademark, net of accumulated amortization of $1,400 and $1,750....................... 12,046 11,696
Other assets.......................................................................... 2,710 1,078
Total assets........................................................................ $ 230,465 $ 259,837
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDER'S EQUITY
Accounts payable...................................................................... $ 43,209 $ 61,061
Current portion of long-term debt (Note F)............................................ 7,184 4,910
Accrued compensation.................................................................. 8,548 9,542
Accrued insurance (Note G)............................................................ 6,234 6,920
Income taxes payable (Note J)......................................................... 1,362 2,888
Other accrued liabilities............................................................. 11,824 13,279
Total current liabilities............................................................. 78,361 98,600
----------- -----------
Long-term debt, excluding current portion (Note F).................................... 42,026 34,944
Deferred income taxes (Note J)........................................................ -- 12,272
Postretirement benefits (Note I)...................................................... -- 17,443
Other noncurrent liabilities.......................................................... 11,456 11,357
SHAREHOLDER'S EQUITY (NOTE K)
Common stock, No par value:
Authorized 200 shares; issued 100 shares.............................................. 1,212 1,212
Paid-in capital....................................................................... 100,429 95,016
Receivable from Parent................................................................ (5,413) (1,245)
Retained earnings (deficit)........................................................... 2,394 (9,762)
----------- -----------
Total shareholder's equity.......................................................... 98,622 85,221
----------- -----------
Total liabilities and shareholder's equity.......................................... $ 230,465 $ 259,837
----------- -----------
----------- -----------
</TABLE>
See notes to consolidated financial statements.
F-64
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of International Controls Corp.)
(dollars in thousands)
<TABLE>
<CAPTION>
Retained
Common Paid-in Receivable Earnings
Stock Capital from Parent (Deficit)
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Balances at January 1, 1991.................................... $ 1,212 $ 174,729 $ (28,841) $ 1,014
Cash to Parent................................................. (50,125)
Charges by Parent (Note K)..................................... 4,682
Net Loss....................................................... (3,056)
----------- ----------- ----------- ----------
Balances at December 31, 1991.................................. 1,212 174,729 (74,284) (2,042)
Dividend (Note K).............................................. (74,300) 74,300
Cash to Parent................................................. (12,000)
Charges by Parent (Note K)..................................... 6,571
Net Income..................................................... 4,436
----------- ----------- ----------- ----------
Balances at December 31, 1992.................................. 1,212 100,429 (5,413) 2,394
Dividend (Note K).............................................. (5,413) 5,413
Cash to Parent................................................. (16,000)
Charges by Parent (Note K)..................................... 14,755
Net Loss....................................................... (12,156)
----------- ----------- ----------- ----------
Balances at December 31, 1993.................................. $ 1,212 $ 95,016 $ (1,245) $ (9,762)
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
</TABLE>
See notes to consolidated financial statements.
F-65
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of International Controls Corp.)
(dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1991 1992 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenues................................................................... $ 400,196 $ 536,336 $ 711,862
Cost of revenues........................................................... 346,337 465,961 623,040
----------- ----------- -----------
GROSS PROFIT 53,859 70,375 88,822
Selling, general and administrative expenses............................... 46,800 52,785 56,441
Interest expense........................................................... 8,061 5,852 4,811
Other expense, net......................................................... 546 1,238 62
----------- ----------- -----------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES..... (1,548) 10,500 27,508
Income taxes (Note J)...................................................... 1,508 6,064 12,536
----------- ----------- -----------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES...................... (3,056) 4,436 14,972
Cumulative effect of accounting changes:
Postretirement benefits (net of income taxes of $5,925) (Note I)......... -- -- (9,260)
Income taxes (Note J).................................................... -- -- (17,868)
----------- ----------- -----------
NET INCOME (LOSS) $ (3,056) $ 4,436 $ (12,156)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to consolidated financial statements.
F-66
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of International Controls Corp.)
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)......................................................... $ (3,056) $ 4,436 $ (12,156)
Adjustments to reconcile net income (loss) to net cash flow provided by
operating activities:
Cumulative effect of accounting changes................................. -- -- 27,128
Depreciation............................................................ 5,910 6,303 8,280
Amortization of cost in excess of net assets acquired................... 1,250 1,250 1,250
Other amortization and non cash charges................................. 2,035 1,900 1,329
Deferred Federal income taxes........................................... 991 (574) (5,913)
Provision for losses on receivables and warranty claims................. 1,477 3,799 5,614
Collections of finance lease receivables................................ 7,330 5,131 4,408
Changes in operating assets and liabilities:
Accounts receivables.................................................... 10,091 (12,316) (12,560)
Finance lease receivable................................................ (117) -- --
Inventories............................................................. (485) (8,976) (20,803)
Other assets............................................................ 238 219 (374)
Accounts payable........................................................ 3,889 10,232 17,852
Income taxes............................................................ 531 831 1,364
Other liabilities....................................................... (5,911) 7,135 925
Items charged by Parent:
Federal income taxes.................................................... 229 5,555 14,755
Other direct charges.................................................... 3,593 (686) --
---------- ---------- ----------
Net cash flow provided by operating activities.............................. 27,995 24,239 31,099
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment................................ (3,208) (4,996) (7,265)
Collection of letter of credit deposit.................................... 471 6,719 --
Proceeds from disposal of property, plant and equipment................... 98 930 1,125
Other..................................................................... 752 438 169
---------- ---------- ----------
Net cash flow provided by (used in) investing activities.................... (1,887) 3,091 (5,971)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowing................................................... 16,530 1,090 --
Principal payments on debt................................................ (11,358) (16,499) (9,356)
Increase in receivable from Parent........................................ (50,125) (12,000) (16,000)
---------- ---------- ----------
Net cash flow used in financing activities.................................. (44,953) (27,409) (25,356)
---------- ---------- ----------
Decrease in cash and cash equivalents..................................... (18,845) (79) (228)
Beginning cash and cash equivalents....................................... 19,437 592 513
---------- ---------- ----------
ENDING CASH AND CASH EQUIVALENTS............................................ $ 592 $ 513 $ 285
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-67
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of International Controls Corp.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
NOTE A_--_ORGANIZATION AND BUSINESS
Great Dane Trailers, Inc. ("Company") is a wholly-owned subsidiary of
International Controls Corp. ("Parent"). The Company is engaged in the
manufacture and distribution of highway truck trailers and intermodal containers
and chassis to common carriers, supermarket chains, leasing companies, and
independent carriers. The consolidated financial statements include the accounts
of the Company and its subsidiaries after elimination of all significant
intercompany accounts and transactions.
NOTE B_--_SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH EQUIVALENTS:__The Company considers all highly liquid investments with
a maturity of three months or less, when purchased, to be cash equivalents.
CONCENTRATION OF CREDIT RISK:__The Company performs periodic credit
evaluations of its customers' financial condition and generally does not require
collateral. Payment is generally due within 30 days from delivery. Credit losses
have been consistent with management's expectations.
INVENTORY VALUATION:__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 AND DEPRECIATION:__Property, plant and
equipment are carried at cost. Depreciation is provided based on the assets
estimated useful lives, principally on 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:__The cost of intangible assets, principally cost in
excess of net assets acquired and trademark, are being amortized on the
straight-line basis over a period of 40 years. Expenses incurred in connection
with the issuance of debt are capitalized and amortized as interest expense over
the life of the loan.
REVENUE RECOGNITION:__Revenue from the sale of products that the Company
manufactures in response to customer's orders is recorded when such products are
complete 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.
MAJOR CUSTOMER:__Sales to J.B. Hunt comprised 13.0% of revenues in 1993. No
other customer accounted for 10% or more of consolidated revenue.
INCOME TAXES:__Effective January 1, 1993, the Company changed its method of
accounting for income taxes from the deferred method under Accounting Principles
Board Statement No. 11 to the liability method by adopting Statement of
Financial Accounting Standards No. 109 ("FAS 109"). FAS 109 requires that
deferred tax liabilities and assets be established based on the difference
between the financial statement and income tax basis of assets and liabilities
using existing tax rates. Financial statements for periods prior to 1993 have
not been restated for the effects of adoption of FAS 109. The effect on prior
years of adopting FAS 109 has been reported as the cumulative effect of an
accounting change.
POSTRETIREMENT BENEFITS:__Effective January 1, 1993, the Company adopted
Statement of Financial Accounting Standards No. 106 ("FAS 106"), a method of
accounting for postretirement benefits by
F-68
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of International Controls Corp.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE B_--_SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
accrual of the costs of such benefits during the periods employees provide
service to the Company. The Company previously accounted for such costs as
expense when incurred. The effect on prior years, representing that portion of
future retiree benefit costs related to past service of both active and retired
employees at the date of adoption, has been reported as the cumulative effect of
an accounting change and such prior years have not been restated.
EARNINGS PER SHARE:__The Company is a wholly-owned subsidiary of
International Controls Corp. Earnings per share information is not presented
because it is not meaningful.
RECLASSIFICATIONS:__Certain 1991 and 1992 amounts have been reclassified to
conform to the 1993 presentation.
NOTE C_--_INVENTORIES
Inventories are summarized below (dollars in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------
1992 1993
--------- ---------
<S> <C> <C>
Raw materials................................................................. $ 38,959 $ 46,719
Work-in-process............................................................... 7,156 8,852
Finished Goods................................................................ 16,594 27,941
--------- ---------
$ 62,709 $ 83,512
--------- ---------
--------- ---------
</TABLE>
If the FIFO method had been used for those inventories costed by the LIFO
method, inventories would not have been significantly different.
NOTE D_--_TRAILER LEASING OPERATIONS
The Company, through a wholly-owned leasing subsidiary, leases trailers
under operating and sales type financing 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 receivables.......................................... (679) (159)
--------- ---------
5,215 1,339
Less amounts reflected as current............................................... (2,352) (764)
--------- ---------
Noncurrent portion.............................................................. $ 2,863 $ 575
--------- ---------
--------- ---------
</TABLE>
Minimum finance lease payments are receivable as follows (dollars in
thousands): $1,014 in 1994, $314 in 1995, and $350 in 1996.
The terms of the Company's trailer operating leases vary generally from
month to month up to 7 years. At December 31, 1993, the Company had no long-term
noncancellable operating leases.
F-69
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of International Controls Corp.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE D_--_TRAILER LEASING OPERATIONS (Continued)
Trailers subject to operating leases are included in transportation
equipment in the consolidated balance sheets. The cost and accumulated
depreciation of such trailers are as follows (dollars in thousands): $1,485 and
$565, respectively, at December 31, 1992 and $499 and $239, respectively, at
December 31, 1993.
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.......................................................... $ 38,649 $ 46,418
Transportation equipment.................................................... 3,196 2,776
Machinery, equipment, furniture and fixtures................................ 33,908 47,026
---------- ----------
75,753 96,220
Less accumulated depreciation and amortization.............................. (22,902) (36,730)
---------- ----------
$ 52,851 $ 59,490
---------- ----------
---------- ----------
</TABLE>
NOTE F_--_LONG-TERM DEBT
Long-term debt is summarized below (dollars in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------
1992 1993
--------- ---------
<S> <C> <C>
Term loan..................................................................... $ 26,167 $ 21,511
Revolving line of credit...................................................... 17,620 17,132
Installment notes............................................................. 5,079 979
Other debt.................................................................... 344 232
--------- ---------
49,210 39,854
Less current portion.......................................................... (7,184) (4,910)
--------- ---------
$ 42,026 $ 34,944
--------- ---------
--------- ---------
</TABLE>
In March 1990, the Company entered into a 5-year loan and security agreement
("Agreement") with certain banks. The Agreement made available to the Company a
5-year term loan of $33 million and a revolving credit line up to a maximum of
$47 million. In 1993, the maximum revolving line of credit was increased to $65
million and a $2.8 million capital expenditure term loan commitment was
approved. The amount available under the revolving credit line is based upon the
amount of the Company's eligible trade accounts receivable and inventory as
defined in the Agreement and is reduced by outstanding Letters of Credit.
The term loan is repayable in equal monthly installments of approximately
$342 thousand plus interest with the remaining balance due in March, 1995. The
term loan and revolving credit line require an interest rate of 1.5% above the
agent bank's prime interest rate (6% at December 31, 1993). Borrowing under the
credit agreement is secured by substantially all of the Company's assets.
The Agreement requires the Company, among other things, to maintain certain
financial covenants, and limits (i) cash transfers by the Company to its Parent
(ii) additions to fixed assets, (iii) sale of assets, and (iv) additional
borrowing. Any material adverse change in the Company's or its Parent's assets,
liabilities, financial condition or results of operations would constitute a
default under the Agreement.
F-70
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of International Controls Corp.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE F_--_LONG-TERM DEBT (Continued)
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 rates averaging approximately 10.9% at December 31, 1993 and
are payable in varying monthly installments through 1995.
The fair value of the Company's long-term debt is estimated using discounted
cash flow analyses, based upon current market rates for similar types of
borrowing arrangements. Based on these analyses, the fair value of the Company's
long-term debt does not significantly differ from its carrying value.
Interest paid totaled $8.3 million in 1991, $5.9 million in 1992 and $4.8
million in 1993.
Maturities of long-term debt are as follows (dollars in thousands): $4,910
in 1994 and $34,944 in 1995.
NOTE G_--_COMMITMENTS AND CONTINGENCIES
The Company has entered into an operating agreement with the purchaser of
its previously wholly-owned finance Company, Great Dane Finance Company
("Finance"). Under the terms of the agreement, the purchaser is given the
opportunity to finance certain sales of the Company. The Company is liable to
the purchaser for 50% of losses, subject to certain maximums, incurred in
connection with the financing. At December 31, 1993, $121.3 million was subject
to this arrangement. These receivables are also collateralized by a security
interest in the trailers originally sold by the Company. In connection with the
sale of Finance, the Company has guaranteed the full realization of $4.8 million
of receivables at December 31, 1993. A loss reserve of $3.1 million for losses
that may be incurred on the ultimate realization of the operating agreement and
guaranteed receivables is included in other accrued liabilities at December 31,
1993.
The operating agreement also requires that the Company, among other things,
(i) not finance the sale of its products through September 8, 1996 and (ii)
maintain a minimum net worth as defined in the agreement. Failure to comply with
these requirements of the agreement would result in the Company having to repay
the purchaser varying amounts. The amounts vary from $7 million through
September 8, 1994 and reduce to $5 million during the year ending September 8,
1996. At December 31, 1993, the Company was in compliance with the terms of the
operating agreement.
Under the Company's insurance programs, coverage is obtained for
catastrophic exposures as well as those risks required to be insured by law or
contract. It is the policy of the Company to retain a significant portion of
certain expected losses related primarily to product and vehicle liability,
workers' compensation, health care benefits, long term disability and
comprehensive general liability.
Provisions for losses expected under these programs are recorded based upon
estimates of the aggregate liability for claims incurred. Such estimates utilize
certain actuarial assumptions followed in the insurance industry. At December
31, 1993, the Company provided standby letters of credit aggregating
approximately $7.6 million in connection with certain insurance programs.
The Company leases certain 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 $1.7 million in 1991, $2.0 million in
1992 and $2.1 million in 1993. Minimum rental obligations for all noncancellable
operating leases at December 31, 1993 are as follows (dollars in thousands):
$818 in 1994, $624 in 1995, $524 in 1996, $405 in 1997, $246 in 1998 and $425
thereafter.
F-71
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of International Controls Corp.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE H_--_RETIREMENT PLANS
The Company has defined benefit pension plans applicable to substantially
all employees including, prior to 1992, certain employees of the Parent.
Employees' benefits are based on years of service and the employees' final
average earnings, as defined by the plans. The contributions to the plans
administered by the Company are based on computations by independent actuarial
consultants.
The Company's general funding policy is to contribute the minimum amounts
required to maintain funding standards in accordance with the Employee
Retirement Income Security Act.
In connection with the restructuring of the Savannah manufacturing facility,
the Company provided an enhanced early retirement window for certain displaced
workers. In accordance with Financial Accounting Standards Board Statement No.
88, the estimated cost of this early retirement window was provided for in the
1990 financial statements and the cost was revised as all factors became known.
Net periodic pension costs include the following components (dollars in
thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1991 1992 1993
--------- --------- ---------
<S> <C> <C> <C>
Service cost-benefit earned (normal cost)................................ $ 982 $ 989 $ 1,255
Interest on projected benefit obligation................................. 1,594 1,691 2,068
Return on investments.................................................... (1,309) (1,167) (1,275)
Net amortization and deferral............................................ (42) (162) 17
--------- --------- ---------
1,225 1,351 2,065
Net amount provided for early retirement incentive program............... 631 380 --
--------- --------- ---------
Net periodic pension cost................................................ $ 1,856 $ 1,731 $ 2,065
--------- --------- ---------
--------- --------- ---------
</TABLE>
Gains and losses and prior service cost are amortized over seven years.
Other assumptions used in the accounting for the defined benefit plans were as
follows:
<TABLE>
<CAPTION>
1991 1992 1993
--------- --------- ---------
<S> <C> <C> <C>
Discount rate.............................................................. 9.00% 8.50% 7.50%
Rate of increase in compensation levels.................................... 5.00% 5.00% 4.25%
Long-term rate of return on assets......................................... 5-9% 5-9% 5-9%
</TABLE>
F-72
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of International Controls Corp.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE H_--_RETIREMENT PLANS (Continued)
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 obligation................................................................ $ 14,534 $ 18,885
--------- ---------
--------- ---------
Accumulated benefit obligation........................................................... $ 16,057 $ 20,961
--------- ---------
--------- ---------
Plan assets (principally guaranteed investment contracts with insurance companies)....... $ 15,364 $ 18,874
Projected benefit obligation............................................................. 22,525 29,875
--------- ---------
Projected benefit obligation in excess of plan assets.................................... (7,161) (11,001)
Unrecognized prior service cost.......................................................... (115) (93)
Unrecognized net loss.................................................................... 2,184 7,278
--------- ---------
Pension liability recognized in the financial statements................................. $ (5,092) $ (3,816)
--------- ---------
--------- ---------
</TABLE>
NOTE NOTE I_--_OTHER POSTRETIREMENT BENEFIT PLANS
The Company provides unfunded postretirement medical benefits under a
defined benefit plan, but with defined dollar limitations of the Company's
contributions. In 1986, the Company discontinued providing postretirement life
insurance benefits and medical benefits that supplement medicare for retired
employees and their dependents. Accordingly, the group of active employees who
are eligible to participate in the medical plan is restricted to "plan-vested"
employees. In 1990, in connection with the restructuring of the Savannah
manufacturing facilities, the Company provided for the post retirement medical
costs for certain eligible employees.
The Company also offers a prescription drug program, medical and dental
plans, and two life insurance plans to a limited group of retirees and their
dependents. The Company's postretirement medical plans include the following
cost sharing provisions: (i) the Company's increase in employer contributions
per retiree per year for health, prescription drugs and dental expense will be
limited to 6% per year, using 1992 as the base year, (ii) the Company's overall
average contribution per employee per year for health and prescription drug
expenses will be limited to $6,000 per beneficiary who is ineligible for
Medicare and $3,000 per beneficiary who is eligible for Medicare.
If the Company's average costs rise above the established limits, the
difference will be passed on to covered retirees in the form of increased
contributions.
The Company's adoption of FAS 106 effective January 1, 1993 changed the
method of accounting for such postretirement benefits. The benefits are now
accrued over the period the employees provide services to the Company. Prior to
the change, costs were charged to expense as incurred. The Company immediately
recognized the transition obligation of adopting FAS 106. The effect on years
prior to 1993, representing that portion of unrecognized future retiree benefit
costs related to past service of both active and retired employees has been
reported as the cumulative effect of an accounting change and prior periods have
not been restated. The cumulative effect of adopting FAS 106 as of January 1,
1993 was to decrease net income by approximately $9.3 million (net of income
taxes of $5.9 million). Postretirement benefit costs were approximately $.5
million in 1991, $.7 million in 1992 and $1.6 in 1993
F-73
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of International Controls Corp.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1993
NOTE NOTE I_--_OTHER POSTRETIREMENT BENEFIT PLANS (Continued)
(compared to $.7 million under the previous method of accounting). The following
table presents the plan's funded status reconciled with amounts recognized in
the Company's balance sheet at December 31, 1993 (dollars in thousands):
<TABLE>
<S> <C>
Accumulated postretirement benefit obligation:
Retirees........................................................................ $ 10,243
Other active plan participants.................................................. 6,307
Fully eligible active plan participants......................................... 2,639
---------
Accumulated postretirement benefit obligation..................................... 19,189
Unrecognized net loss............................................................. (746)
---------
Accrued postretirement benefit obligation......................................... $ 18,443
---------
---------
</TABLE>
Net periodic postretirement benefit cost for 1993 includes the following
components (dollars in thousands):
<TABLE>
<S> <C>
Service cost attributed to service during the year................................. $ 259
Interest cost on accumulated postretirement benefit obligation..................... 1,360
---------
Net periodic postretirement benefit cost........................................... $ 1,619
---------
---------
</TABLE>
Actuarial assumptions used in determining 1993 cost and the accumulated
postretirement benefit obligation includes a discount rate of 7.5%.
F-74
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDARIES
(A Wholly-Owned Subsidary of International Controls Corp.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
Note J -- INCOME TAXES
Effective January 1, 1993, the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by FAS
109. The cumulative effect of this adoption was a decrease in net income of
$17.9 million. Application of FAS 109 decreased 1993 pretax 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. As permitted
under the new rules, prior years' financial statements have not been restated.
The results of operations of the Company and its subsidiaries are included
in consolidated Federal income tax returns filed by the Parent. Provision for
income taxes for the Company is computed principally as if the Company filed a
separate return. Certain tax adjustments were made in consolidation by the
Parent and were not allocated to the Company because they resulted from tax
consequences of transactions not related to the Company's operation. Such
adjustments, if allocated to the Company would have had the effect of reducing
the Company's tax basis in its fixed assets by $20.6 million at December 31,
1992. These adjustments were pushed down to the Company in 1993 in connection
with the adoption of FAS 109.
Deferred income taxes reflect the tax effects of differences between the
carrying amounts of assets and liabilities for financial reporting and income
tax purposes. Significant components of the Company's deferred tax liabilities
and assets as of December 31, 1993 are as follows (in thousands):
<TABLE>
<S> <C>
Deferred tax liabilities:
Inventory....................................................... $ 3,241
Fixed assets.................................................... 18,636
Trademarks...................................................... 4,756
Finance lease receivable........................................ 517
---------
Total deferred tax liabilities.................................... 27,150
Deferred tax assets:
Other postretirement benefits................................... 7,530
Warranty reserve................................................ 2,973
Insurance reserves.............................................. 1,937
Bad debt reserve................................................ 1,599
Pension......................................................... 1,264
Vacation reserves............................................... 1,002
Other........................................................... 40
---------
Total deferred tax assets......................................... 16,345
---------
Net deferred tax liability........................................ $ 10,805
---------
---------
</TABLE>
F-75
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDARIES
(A Wholly-Owned Subsidary of International Controls Corp.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
Note J -- INCOME TAXES (Continued)
The components of income tax expense are as follows (dollars in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1991 1992 1993
--------- --------- ---------
<S> <C> <C> <C>
Current taxes:
Federal....................................................... $ 220 $ 5,411 $ 14,755
State......................................................... 297 1,227 3,694
--------- --------- ---------
517 6,638 18,449
Deferred (benefit) expense.................................... 991 (574) (5,913)
--------- --------- ---------
Income tax expense............................................ $ 1,508 $ 6,064 $ 12,536
--------- --------- ---------
--------- --------- ---------
</TABLE>
The components of the deferred tax expense (benefit), computed under the
deferred method, are as follows (dollars in thousands):
<TABLE>
<CAPTION>
Year Ended December
31,
1991 1992
--------- ---------
<S> <C> <C>
Tax depreciation in excess of book depreciation............................. $ 233 $ 249
Accrued compensation........................................................ (253) (622)
Plant restructuring reserve................................................. 972 (9)
Inventory reserves.......................................................... 15 (273)
Other reserves.............................................................. 24 81
--------- ---------
Deferred tax (benefit) expense.............................................. $ 991 $ (574)
--------- ---------
--------- ---------
</TABLE>
Tax expense differs from the amount computed by applying the Federal income
tax rate to income before income taxes. The reasons for these differences are as
follows (dollars in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
1991 1992 1993
--------- --------- ---------
<S> <C> <C> <C>
Computed expected tax expense (benefit)....................... $ (526) $ 3,570 $ 9,628
Increase in taxes resulting from: State income taxes, net of
Federal income tax benefit................................... 196 805 1,658
Appraisal depreciation........................................ 1,033 1,024 -
Amortization of goodwill...................................... 544 544 438
Other......................................................... 261 121 812
--------- --------- ---------
Actual tax expense............................................ $ 1,508 $ 6,064 $ 12,536
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company received a $.4 million refund of state income taxes in 1991 and
paid state income taxes of $.2 million in 1992 and $2.3 million in 1993.
F-76
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDARIES
(A Wholly-Owned Subsidary of International Controls Corp.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
Note K -- RELATED PARTY TRANSACTIONS
The Parent provides management and various administrative services to the
Company. The significant administrative functions performed by the Parent on
behalf of the Company are as follows:
INSURANCE ADMINISTRATION: The Company's liability and certain workers'
compensation insurance programs are included with the Parent's insurance policy.
Prior to April 1992, the Parent charged the Company for its allocated insurance
expense. Effective April 1992, the Company has been making payments directly to
the insurance companies and maintains separate insurance reserves.
TAX ADMINISTRATION: The Company's results are included in the Parent's
consolidated Federal income tax returns.
The Parent charged the Company for the Company's portion of the above items
as follows (dollars in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1991 1992 1993
--------- --------- ---------
<S> <C> <C> <C>
Insurance and other..................................................... $ 3,593 $ (686) $ --
Federal income taxes.................................................... 1,089 7,257 14,755
</TABLE>
The reimbursement for Federal income taxes represents the current Federal
liability for the Company determined principally on a separate return basis.
DIVIDEND: In March 1992 and 1993, the Company declared a $74.3 and $5.4
million dividend, respectively, to the Parent and reduced its receivable due
from the Parent.
Note L -- SELECTED QUARTERLY DATA (UNAUDITED)
(dollars in thousands)
<TABLE>
<CAPTION>
1992 Quarter Ended
-------------------------------------------------------
March 31 June 30 September 30 December 31
----------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Revenues...................................... $ 120,503 $ 138,073 $ 136,111 $ 141,649
Gross profit.................................. 15,125 17,570 18,336 19,344
Net income.................................... 230 1,009 962 2,235
</TABLE>
<TABLE>
<CAPTION>
1993 Quarter Ended
-------------------------------------------------------
March 31 June 30 September 30 December 31
----------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Revenues...................................... $ 153,623 $ 173,779 $ 186,685 $ 197,775
Gross profit.................................. 18,729 22,040 22,625 25,428
Income before accounting change............... 2,708 4,081 3,618 4,565
Net income (loss)............................. (24,420) 4,081 3,618 4,565
</TABLE>
F-77
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of International Controls Corp.)
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS:
<TABLE>
<CAPTION>
December March 31,
31, 1993 1994
----------- -----------
(unaudited)
<S> <C> <C>
Cash and cash equivalents.......................................... $ 285 $ 286
Accounts receivable, less allowance for doubtful accounts.......... 56,205 72,331
Current portion of finance lease receivables....................... 764 526
Inventories........................................................ 83,512 75,596
Deferred tax benefit............................................... 1,466 2,391
Other current assets............................................... 1,023 1,004
----------- -----------
Total current assets........................................... 143,255 152,134
Property, plant and equipment, net................................. 59,490 59,608
Noncurrent finance lease receivables............................... 575 --
Cost in excess of net assets acquired, net of accumulated
amortization...................................................... 43,743 43,430
Trademark, net of accumulated amortization......................... 11,696 12,340
Other assets....................................................... 1,078 --
----------- -----------
Total assets................................................... $ 259,837 $ 267,512
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDER'S EQUITY:
Accounts payable................................................... $ 61,061 $ 60,492
Current portion of long-term debt.................................. 4,910 37,570
Accrued compensation............................................... 9,542 10,400
Accrued insurance.................................................. 6,920 7,824
Income taxes payable............................................... 2,888 2,618
Other accrued liabilities.......................................... 13,279 14,613
----------- -----------
Total current liabilities...................................... 98,600 133,517
Long-term debt, excluding current portion.......................... 34,944 82
Deferred income taxes.............................................. 12,272 11,180
Postretirement benefits............................................ 17,443 17,853
Other noncurrent liabilities....................................... 11,357 13,218
SHAREHOLDER'S EQUITY
Common stock, No par value:
Authorized 200 shares; issued 100 shares......................... 1,212 1,212
Paid-in capital.................................................... 95,016 95,016
Receivable from Parent............................................. (1,245) (2,000)
Retained deficit................................................... (9,762) (2,566)
----------- -----------
Total shareholder's equity..................................... 85,221 91,662
----------- -----------
Total liabilities and shareholder's equity..................... $ 259,837 $ 267,512
----------- -----------
----------- -----------
</TABLE>
See notes to consolidated financial statements.
F-78
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of International Controls Corp.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1993 1994
----------- -----------
<S> <C> <C>
Revenues................................................................................ $ 153,623 $ 215,050
Cost of revenues........................................................................ 134,894 186,359
----------- -----------
GROSS PROFIT............................................................................ 18,729 28,691
Selling, general and administrative expenses............................................ 13,585 14,391
Interest expense........................................................................ 1,182 902
Other expense (income), net............................................................. (708) 579
----------- -----------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES.................. 4,670 12,819
Income taxes............................................................................ 1,962 5,623
----------- -----------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES................................... 2,708 7,196
Cumulative effect of accounting changes:
Postretirement benefits (net of income taxes of $5,925)............................... (9,260) --
Income taxes.......................................................................... (17,868) --
----------- -----------
NET INCOME (LOSS)....................................................................... $ (24,420) $ 7,196
----------- -----------
----------- -----------
</TABLE>
See notes to consolidated financial statements.
F-79
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of International Controls Corp.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1993 1994
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)....................................................................... $ (24,420) $ 7,196
Adjustments to reconcile net income (loss) to net cash flow provided by (used in)
operating activities:
Cumulative effect of accounting changes............................................... 27,128 --
Depreciation.......................................................................... 1,869 1,971
Amortization of cost in excess of net assets acquired................................. 579 584
Other amortization and other non cash charges......................................... 41 62
Deferred Federal income taxes......................................................... (1,600) (2,017)
Provision for losses on receivables and warranty claims............................... 907 2,155
Collections of finance lease receivables.............................................. 1,318 813
Changes in operating assets and liabilities:
Accounts receivable................................................................. (16,909) (16,289)
Finance lease receivables........................................................... 58 --
Inventories......................................................................... (6,535) 7,916
Other assets........................................................................ (1,156) 39
Accounts payable.................................................................... 6,919 (569)
Income taxes........................................................................ 448 830
Other liabilities................................................................... 2,714 2,275
Items charged by Parent:
Federal income taxes................................................................ 2,925 6,245
---------- ---------
Net cash flow provided by (used in) operating activities.................................. (5,714) 11,211
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment.............................................. (3,401) (2,303)
Proceeds from disposal of property, plant and equipment................................. 629 152
Other................................................................................... 54 143
---------- ---------
Net cash flow used in investing activities................................................ (2,718) (2,008)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowing................................................................. 15,091 --
Principal payments on debt.............................................................. (2,768) (2,202)
Increase in receivable from Parent...................................................... (4,000) (7,000)
---------- ---------
Net cash flow provided by (used in) financing activities.................................. 8,323 (9,202)
---------- ---------
(Increase) decrease in cash and cash equivalents........................................ (109) 1
Beginning cash and cash equivalents..................................................... 513 285
---------- ---------
ENDING CASH AND CASH EQUIVALENTS.......................................................... $ 404 $ 286
---------- ---------
---------- ---------
</TABLE>
See notes to consolidated financial statements.
F-80
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A Wholly-Owned Subsidiary of International Controls Corp.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
March 31, 1994
(unaudited)
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Great Dane
Trailers, Inc. and Subsidiaries (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 three months ended March 31, 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.
NOTE B--INVENTORIES
Inventories are summarized below (dollars in thousands):
<TABLE>
<CAPTION>
December 31, March 31,
1993 1994
-------------- -----------
<S> <C> <C>
Raw materials and supplies....................................... $ 46,719 $ 47,764
Work-in-process.................................................. 8,852 10,103
Finished goods................................................... 27,941 17,729
-------------- -----------
$ 83,512 $ 75,596
-------------- -----------
-------------- -----------
</TABLE>
NOTE C--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.
NOTE D--ACCOUNTING CHANGES
Effective January 1, 1993, the Company adopted the provisions of FAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
The Company recorded a charge of $9.3 million (net of taxes of $5.9 million),
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 FAS No.
109, "Accounting for Income Taxes." The Company recorded a charge of $17.9
million, during the quarter ended March 31, 1993, to reflect the cumulative
effect of this change in accounting principle.
F-81
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE ISSUERS
OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE ISSUERS SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.......................... 2
Prospectus Summary............................. 3
Risk Factors................................... 13
Proposed Refinancing........................... 19
Use of Proceeds................................ 20
Dividends...................................... 20
Capitalization................................. 21
The Company.................................... 22
Selected Consolidated Financial Data........... 23
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 25
Business....................................... 29
Management..................................... 41
Certain Relationships and Related
Transactions.................................. 48
Ownership of Common Stock...................... 48
Description of New Credit Facility............. 48
Description of Units........................... 51
Description of Warrants........................ 51
Description of Capital Stock................... 53
Description of Notes........................... 54
Certain Federal Income Tax
Consequences.................................. 89
Underwriting................................... 94
Legal Matters.................................. 95
Experts........................................ 95
Index to Financial Statements.................. F-1
</TABLE>
$300,000,000
INTERNATIONAL
CONTROLS CORP.
$200,000,000 % First Priority
Senior Secured Notes due 2001
100,000 Units Consisting of
$100,000,000 % Senior
Subordinated Notes due 2004
and
Warrants to Purchase Shares of Common Stock
-------------
PROSPECTUS
-------------
ALEX. BROWN & SONS
INCORPORATED
SPP HAMBRO & CO.
, 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration Fee.................................................. $ 103,449
NASD Filing Fee................................................... 30,500
Listing Fees...................................................... 8,250
Legal Fees and Expenses*.......................................... **
Blue Sky Fees and Expenses........................................ 11,500
Accounting Fees and Expenses*..................................... **
Printing*......................................................... **
Trustees' Fees and Expenses*...................................... **
Rating Agency Fees*............................................... **
Transfer Agent Fees*.............................................. **
Miscellaneous..................................................... **
---------
Total......................................................... $ **
---------
---------
<FN>
- --------------
* Estimated
** To be completed by amendment
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
INTERNATIONAL CONTROLS CORP.
____International Controls is a Florida corporation. Section 607.0850 of the
Florida Business Corporation Act (the "Florida Act") provides that a Florida
corporation has the power to indemnify its officers and directors in certain
circumstances.
STATE STATUTE
Subsection (1) of Section 607.0850 of the Florida Act empowers a
corporation to indemnify any director or officer, or former director or
officer, who was or is a party to any proceeding (other than an action by or
in the right of the corporation), by reason of the fact that he was a
director or officer of the corporation, against liability incurred in
connection with such action, suit or proceeding provided that such director
or officer acted in good faith in a manner reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, provided that such director or officer
had no cause to believe his conduct was unlawful.
Subsection (2) of Section 607.0850 empowers a corporation to indemnify
any director or officer, or former director or officer who was or is a party
to any proceeding by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of
the capacities set forth above, against certain expenses paid in settlement
of such action or suit provided that such director or officer acted in good
faith and in a manner reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be
made in respect of any claim, issue or matter as to which such director or
officer shall have been adjudged to be liable to the corporation, and only
to the extent that the court in which such action was brought shall
determine that despite the adjudication of liability such director or
officer is fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper.
Section 607.0850 further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action,
suit or proceeding referred to in subsections (1) and (2) or in the defense
of any claim, issue or matter therein, he shall be indemnified against
expenses actually and reasonably incurred by him in connection therewith;
that indemnification provided for by Section 607.0850 shall not be deemed
exclusive of any other rights to which the indemnified party may be
entitled; and that the corporation shall have the power to purchase and
maintain insurance on behalf of
II-1
<PAGE>
a director or officer of the corporation against any liability asserted
against him or incurred by him in any such capacity or arising out of his
status as such whether or not the corporation would have the power to
indemnify him against such liability under Section 607.0850.
INTERNATIONAL CONTROLS--BYLAWS AND/OR CERTIFICATE OF INCORPORATION
Article V of the By-Laws of International Controls provides for
indemnification of the officers and directors of International Controls as
follows:
"Section 1. The corporation shall indemnify any person made a party or
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding:
(a) Whether civil, criminal, administrative, or investigative, other
than one by or in the right of the corporation to procure a judgment in
its favor, brought to impose a liability or penalty on such person for an
act alleged to have been committed by such person in his capacity of
director, officer, employee or agent of the corporation, or of any other
corporation, partnership, joint venture, trust or other enterprise which
he served as such at the request of the corporation, against judgments,
fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees, actually and necessarily incurred as a result of such
action, suit or proceeding, or any appeal therein, if such person acted
in good faith in the reasonable belief that such action was in the best
interests of the corporation, and in criminal actions or proceedings,
without reasonable ground for belief that such action was unlawful. The
termination of any such action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not in itself create a presumption that any such
director or officer did not act in good faith in the reasonable belief
that such action was in the best interests of the corporation or that he
had reasonable grounds for belief that such action was unlawful.
(b) By or in the right of the corporation to procure a judgment in
its favor by reason of his being or having been a director, officer,
employee, or agent of the corporation, or of any other corporation,
partnership, joint venture, trust or other enterprise which he served as
such at the request of the corporation, against the reasonable expenses,
including attorneys' fees, actually and necessarily incurred by him in
connection with the defense or settlement of such action, or in
connection with an appeal therein, if such person acted in good faith in
the reasonable belief that such action was in the best interests of the
corporation. Such person shall not be entitled to indemnification in
relation to matters as to which such person has been adjudged to have
been guilty of negligence or misconduct in the performance of his duty to
the corporation unless and only to the extent that the court,
administrative agency, or investigative body before which such action,
suit or proceeding is held shall determine upon application that despite
the adjudication of liability but in view of all circumstances of the
case, such person is fairly and reasonably entitled to indemnification
for such expense which such tribunal shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in paragraph (a) or (b), or in
any defense of any claim, issue or matter therein, he shall be
indemnified against the reasonable expenses, including attorney's fees,
actually and necessarily incurred by him in connection therewith.
(d) In order for indemnification to be made under paragraph (a) or
(b), a determination must first be made that indemnification of the
director, officer, employee or agent is proper in the circumstances
because such person has met the applicable standard of conduct set forth
in paragraph (a) or (b), unless indemnification is ordered by the
tribunal before which such action, suit or proceeding is held. Such
determination shall be made either (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to
such action, suit or proceeding, or (2) by the stockholders who were not
parties to such action, suit or proceeding.
Section 2. The corporation shall pay expenses incurred in defending any
action, suit or proceeding in advance of the final disposition of such
action, suit or proceeding as authorized in the manner
II-2
<PAGE>
provided in paragraph (d) of Section 1 of this Article upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to
repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the corporation as authorized in Sections 1
through 4 of this Article.
Section 3. The corporation shall indemnify any person, if the
requirements of Sections 1 and 2 of this Article are met, without affecting
any other rights to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in such person's official capacity and as to action in
another capacity while holding such office, and shall continue as to a
person who has ceased to be director, officer, employee or agent of the
corporation and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 4. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not the
corporation is obligated to indemnify him against such liability under the
provisions of Section 1 of this Article.
GREAT DANE TRAILERS, INC.
GREAT DANE TRAILERS NEBRASKA, INC
GREAT DANE TRAILERS TENNESSEE, INC.
GREAT DANE LOS ANGELES, INC.
STATE STATUTES
Great Dane and Great Dane L.A. are Georgia corporations. Part 5 of the
Georgia Business Corporation Code (the "Georgia Code") provides that a Georgia
corporation has the power to indemnify its officers and directors in certain
circumstances.
Section 14-2-851 of the Georgia Code provides that:
(a) A corporation may indemnify or obligate itself to indemnify an
individual made a party to a proceeding because he is or was a director
against liability incurred in the proceeding if he acted in a manner he
believed in good faith to be in or not opposed to the best interest of
the corporation and, in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for
a purpose he believed in good faith to be in the interests of the
participants in and beneficiaries of the plan is conduct that satisfies
the requirement of section 14-2-851(a).
(c) The termination of a proceeding by judgment, order, settlement,
or conviction, or upon a plea of nolo contendere or its equivalent is
not, of itself, determinative that the director did not meeting the
standard of conduct set forth in section 14-2-851(a).
(d) A corporation may not indemnify a director under section
14-2-851:
(1) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
(2) In connection with any other proceeding in which he was
adjudged liable on the basis that personal benefit was
improperly received by him.
(e) Indemnification permitted under this section 14-2-851 in
connection with a proceeding by or in the right of the corporation is
limited to reasonable expenses incurred in connection with the
proceeding.
Sections 14-2-852 and 14-2-855 of the Georgia Code provide that to the
extent that a director, officer, employee or agent has been successful, on the
merits or otherwise, in the defense of any proceeding to which
II-3
<PAGE>
he was a party, or in defense of any claim, issue, or matter therein, because he
is or was a director of the corporation, the corporation shall indemnify the
director against reasonable expenses incurred by him in connection therewith.
Great Dane Nebraska is a Nebraska corporation. Section 21-2001 of the
Nebraska Business Corporation Act (the "Nebraska Act") provides that a Nebraska
corporation has the power to indemnify its officers and directors in certain
circumstances.
Subsection (15)(a) of Section 21-2004 of the Nebraska Act empowers a
corporation to indemnify any director or officer, or former director or
officer, who was or is a party to any proceeding (other than an action by or
in the right of the corporation), by reason of the fact that he was a
director or officer of the corporation, against liability incurred in
connection with such action, suit or proceeding provided that such director
or officer acted in good faith in a manner reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, provided that such director or officer had
no cause to believe his conduct was unlawful.
Subsection (15)(b) of Section 21-2004 of the Nebraska Act empowers a
corporation to indemnify any director or officer, or former director or
officer who was or is a party to any proceeding by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that
such person acted in any of the capacities set forth above, against certain
expenses paid in settlement of such action or suit provided that such
director or officer acted in good faith and in a manner reasonably believed
to be in or not opposed to the best interests of the corporation, except that
no indemnification may be made in respect of any claim, issue or matter as to
which such director or officer shall have been adjudged to be liable to the
corporation, and only to the extent that the court in which such action was
brought shall determine that despite the adjudication of liability such
director or officer is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
Section 21-2004 of the Nebraska Act further provides that to the extent a
director or officer of a corporation has been successful in the defense of
any action, suit or proceeding referred to in subsections (15)(a) and (15)(b)
or in the defense of any claim, issue or matter therein, he shall be
indemnified against expenses actually and reasonably incurred by him in
connection therewith; that indemnification provided for by Section 21-2004
shall not be deemed exclusive of any other rights to which the indemnified
party may be entitled; and that the corporation shall have the power to
purchase and maintain insurance on behalf of a director or officer of the
corporation against any liability asserted against him or incurred by him in
any such capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liability
under Section 21-2004.
Great Dane Tennessee is a Tennessee corporation. Part 5 of the Tennessee
Business Corporation Act (the "Tennessee Act") provides that a Tennessee
corporation has the power to indemnify its officers and directors in certain
circumstances.
Section 48-18-502 of the Tennessee Act provides that:
(a) A corporation may indemnify that an individual made a party to a
proceeding because he is or was a director against liability incurred in
the proceeding if:
(1) He conducted himself in good faith; and
(2) He reasonably believed:
A. In the case of conduct in his official capacity with the
corporation, that his conduct was in its best interest; and
B. In all other cases, that his conduct was at least not opposed to
its best interest; and
3. In the case of any criminal proceeding, he had no reasonable cause
to believe his conduct was unlawful.
II-4
<PAGE>
(b) A director's conduct with respect to an employee benefit plan for a
purpose he reasonably believed to be in the interests of the participants
in and beneficiaries to the plan in conduct that satisfied the
requirement of subdivision (a)(2)(B).
(c) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not,
or itself, determinative that the director did not meet the standard of
conduct described in this section.
(d) A corporation may not indemnify a director under this section:
(1) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
(2) In connection with any other proceeding charging improper personal
benefit to him, whether or not involving action in his official
capacity, in which he was adjudged liable on the basis that personal
benefit was improperly received by him.
Sections 48-18-503 and 48-18-507 of the Tennessee Act provide that a
corporation shall indemnify a director, officer, employee or agent who was
wholly successful, on the merits or otherwise, in the defense of any proceeding
to which he was a party because he is or was a director of the corporation
against reasonably expenses incurred by him in connection with the proceeding.
GREAT DANE, GREAT DANE NEBRASKA, INC., GREAT DANE TENNESSEE, INC., GREAT DANE
LOS ANGELES -- BYLAWS AND/OR CERTIFICATES OF INCORPORATION
Article Seven of the bylaws of Great Dane, and Article Eight of the bylaws
of Great Dane Nebraska, Inc., Great Dane Tennessee, Inc., and Great Dane Los
Angeles (differences noted with brackets) provide indemnification as follows:
"7.1 [8.1]_(a)_Under the circumstances prescribed in section 7.2[8.2]
hereof, the corporation shall indemnify and hold harmless any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation), by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption that the person did not act in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had reasonable cause
to believe that his conduct was unlawful.
(b)_Under the circumstances prescribed in section 7.2[8.2]
hereof, the corporation shall indemnify and hold harmless any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure
a judgment in its favor by reason of the fact he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation; except that
no indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation, unless and only to the extent that the court in which such
action or suit was brought shall
II-5
<PAGE>
determine upon application that, despite the adjudication of liability, but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall
deem proper.
7.2 [8.2]_To the extent that a director, officer, employee or agent of
the corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in section 7.1 [8.1] hereof, or
in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith. Except as provided in the preceding
sentence and except as may be ordered by a court, any indemnification under
section 7.1 [8.1] hereof shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in section 7.1 [8.1]
hereof. Such a determination shall be made (1) by the Board of Directors by
a majority vote of a quorum consisting of directors who were not parties to
such action, suit or proceeding, or (2) by independent legal counsel
employed by the corporation, in a written opinion, if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, or (3) by the affirmative vote of a majority of the shares entitled
to vote thereon.
7.3 [8.3]_Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the Board of
Directors generally or as to a specific case or as to a specific person or
persons (designated by name, title or class of persons), upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to
repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in this Article
Seven.
7.4 [8.4]_The provisions for indemnification and advancement of expenses
provided by this Article Seven[Eight] shall not be deemed exclusive of any
other rights, in respect of indemnification or otherwise, to which those
seeking indemnification may be entitled under any bylaw, agreement, either
specifically or in general terms, resolution, or approved by the affirmative
vote of the holders of a majority of the shares entitled to vote thereon
taken at a meeting the notice of which specified that such bylaw, resolution
or agreement would be placed before the shareholders, both as to action by a
director, officer, employee or agent in his official capacity and as to
action in another capacity while holding such office or position, except
that no such other rights, in respect to indemnification or otherwise, may
be provided or granted with respect to the liability of any director,
officer, employee or agent for (a) any appropriation, in violation of his
duties, of any business opportunity of the corporation; (b) acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (c) liabilities of a director imposed by section
14-2-832 of the Georgia Business Corporation Code; or (d) any transaction
from which the director, officer, employee or agent derived an improper
personal benefit.
7.5 [8.5] (a) The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this Article
Seven[Eight].
(b) If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the
shareholders or by an insurance carrier pursuant to insurance maintained
by the corporation, the corporation shall, not later than the next annual
meeting of shareholders unless such meeting is held within three months
from the date of such payment, and, in any event within 15 months from
the date of such payment, send by first class mail (or if the corporation
shall have at the time more than 500 shareholders entitled to vote, by
such other means as may be authorized by the Georgia Business Corporation
Code for notices of meetings of
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<PAGE>
shareholders), to its shareholders of record at the time entitled to vote
for the election of directors a statement specifying the persons paid,
the amounts paid, and the nature and status at the time of such payment
of the litigation or threatened litigation.
7.6 [8.6] As a condition to any such right of indemnification, or to
receive advancement of expenses, the corporation may require that it be
permitted to participate in the defense of any such action or proceeding
through legal counsel designated by the corporation and at the expense of
the corporation.
7.7 [8.7] The rights to indemnification and advancement of expenses
provided in this Article Seven[Eight] shall continue notwithstanding that a
person who would otherwise have been entitled to indemnification or
advancement of expenses hereunder shall have ceased to be a director,
officer, employee or agent, and shall inure to the benefit of the heirs,
executors and administrators of such persons."
SOUTH CHARLESTON STAMPING & MANUFACTURING COMPANY
STATE STATUTE
SCSM is a West Virginia corporation. Section 31-1-9 of the West Virginia
Corporation Act (the "West Virginia Act") provides that a West Virginia
corporation has the power to indemnify its officers and directors in certain
circumstances.
Subsection (a) of Section 31-1-9 of the West Virginia Act empowers a
corporation to indemnify any director or officer, or former director or
officer, who was or is a party to any proceeding (other than an action by or
in the right of the corporation), by reason of the fact that he was a
director or officer of the corporation, against liability incurred in
connection with such action, suit or proceeding provided that such director
or officer acted in good faith in a manner reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, provided that such director or officer
had no cause to believe his conduct was unlawful.
Subsection (b) of Section 31-1-9 of the West Virginia Act empowers a
corporation to indemnify any director or officer, or former director or
officer who was or is a party to any proceeding by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that
such person acted in any of the capacities set forth above, against certain
expenses paid in settlement of such action or suit provided that such
director or officer acted in good faith and in a manner reasonably believed
to be in or not opposed to the best interests of the corporation, except
that no indemnification may be made in respect of any claim, issue or matter
as to which such director or officer shall have been adjudged to be liable
to the corporation, and only to the extent that the court in which such
action was brought shall determine that despite the adjudication of
liability such director or officer is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section 31-1-9 of the West Virginia Act further provides that to the
extent a director or officer of a corporation has been successful in the
defense of any action, suit or proceeding referred to in subsections (a) and
(b) or in the defense of any claim, issue or matter therein, he shall be
indemnified against expenses actually and reasonably incurred by him in
connection therewith; that indemnification provided for by Section 31-1-9
shall not be deemed exclusive of any other rights to which the indemnified
party may be entitled; and that the corporation shall have the power to
purchase and maintain insurance on behalf of a director or officer of the
corporation against any liability asserted against him or incurred by him in
any such capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liability
under Section 31-1-9.
SCSM -- BYLAWS AND/OR CERTIFICATE OF INCORPORATION
Article IX, Section 3 of the bylaws of SCSM provides for the indemnification
of directors and officers as follows:
"SECTION 3 -- INDEMNIFICATION OF DIRECTORS AND OFFICERS
II-7
<PAGE>
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines,
taxes and penalties and interest thereon, and amounts paid in settlement
actually and reasonably incurred by him in connection with such action or
proceeding if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, that such person did
not have reasonable cause to believe that his conduct was unlawful.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or proceeding by or in the right of the corporation to procure judgment in
its favor by reason of the fact that he is or was a director, officer, or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, or agent of another corporation,
partnership, joint venture trust or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue or matter,
including, but not limited to, taxes or any interest or penalties thereon, as
to which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only
to the extent that the court in which such action or proceeding was brought
shall determine upon application that, despite the adjudication of liability
but in view of all circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such court shall
deem proper.
To the extent that a director, officer, or agent of a corporation has been
successful on the merits or otherwise in defense of any action or proceeding
heretofore referred to or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith.
Any indemnification provided for herein shall be made by the corporation only
as authorized in the specific case upon a determination that indemnification
of the director, officer, or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth. Such determination
shall be made (1) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action or proceeding, or
(2) if such a quorum is not obtainable, or even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.
Expenses (including attorneys' fees) incurred in defending a civil or
criminal action or proceeding may be paid by the corporation in advance of
the final disposition of such action or proceeding as authorized in the
manner herein provided, upon receipt of an undertaking by or on behalf of the
director, officer, or agent to repay such amount unless it shall ultimately
be determined that he is entitled to be indemnified by the corporation as
authorized in this section.
The indemnification provided for herein shall not be deemed exclusive of any
other rights to which any stockholder or member may be entitled under any
bylaws, agreement, vote of stockholders, members of disinterested directors
or otherwise, both as to action in his official capacity and as to a person
who has ceased to be a director, officer, or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person."
CHECKER MOTORS CORPORATION
STATE STATUTE
Motors is a New Jersey corporation. Section 14A:3-5 of the New Jersey
Business Corporation Act (the "New Jersey Act") provides that a New Jersey
Corporation has the power to indemnify its officers and directors in certain
circumstances.
II-8
<PAGE>
Subsection (2) of Section 14A:3-5 provides that any corporation
organized for any purpose under
any general or special law of the State of New Jersey shall have the power
to indemnify a corporate agent against his expenses and liabilities in
connection with any proceeding involving the corporate agent by reason of
his being or having been such a corporate agent, other than a proceeding by
or in the right of the corporation, if (a) such corporate agent acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation; and (b) with respect to any criminal
proceeding, such corporate agent had no reasonable cause to believe his
conduct was unlawful. The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent,
shall not of itself create a presumption that such corporate agent did not
meeting the applicable standards of conduct set forth in paragraph
14A:3-5(2)(a) and 14A:3-5(2)(b).
Subsection (3) of 14A:3-5 provides that any corporation organized for
any purpose under any general or special law of the State of New Jersey
shall have the power to indemnify a corporate agent against his expenses in
connection with any proceeding by or in the right of the corporation to
procure a judgment in its favor which involves the corporate agent by reason
for his being or having been such corporate agent, if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation. However, in such proceeding no indemnification
shall be provided in respect of any claim, issue or matter as to which such
corporate agent shall have been adjudged to be liable to the corporation,
unless and only to the extent that the Superior Court or the court in which
such proceeding was brought shall determine upon application that despite
the adjudication of liability, but in new of all circumstances of the case,
such corporate agent is fairly and reasonably entitled to indemnity such
expenses as the Superior Court or such other court shall deem proper.
Subsection (4) 14A:3-5 provides that any corporation organized for any
purpose under any general or special law of New Jersey shall indemnify a
corporate agent against expenses to the extent that such corporate agent has
been successful on the merits or otherwise in any proceeding referred to in
subsections 14A:3-5(2) and 14A:3-5(3) or in defense of any claim, issue or
matter therein.
CMC KALAMAZOO INC.
YELLOW CAB COMPANY
CHICAGO AUTOWERKS INC.
STATE STATUTES
CMC Kalamazoo, Yellow Cab and AutoWerks are Delaware corporations. Section
145 of the Delaware General Corporation Law (the "Delaware Code") provides that
a Delaware corporation has the power to indemnify its officers and directors in
certain circumstances.
Subsection (a) of Section 145 of the Delaware Code empowers a
corporation to indemnify any director or officer, or former director or
officer, who was or is a party to any proceeding (other than an action by or
in the right of the corporation), by reason of the fact that he was a
director or officer of the corporation, against liability incurred in
connection with such action, suit or proceeding provided that such director
or officer acted in good faith in a manner reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, provided that such director or officer
had no cause to believe his conduct was unlawful.
Subsection (b) of Section 145 the Delaware Code empowers a corporation
to indemnify any director or officer, or former director or officer who was
or is a party to any proceeding by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that such person acted
in any of the capacities set forth above, against certain expenses paid in
settlement of such action or suit provided that such director or officer
acted in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification may be made in respect of any claim, issue or matter as to
which such director or officer shall have been adjudged to be liable to the
corporation, and only to the extent that the court in which such action was
brought shall determine that despite the adjudication of liability such
director or officer is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
II-9
<PAGE>
Section 145 of the Delaware Code further provides that to the extent a
director or officer of a corporation has been successful in the defense of
any action, suit or proceeding referred to in subsections (a) and (b) or in
the defense of any claim, issue or matter therein, he shall be indemnified
against expenses actually and reasonably incurred by him in connection
therewith; that indemnification provided for by Section 145 shall not be
deemed exclusive of any other rights to which the indemnified party may be
entitled; and that the corporation shall have the power to purchase and
maintain insurance on behalf of a director or officer of the corporation
against any liability asserted against him or incurred by him in any such
capacity or arising out of his status as such whether or not the corporation
would have the power to indemnify him against such liability under Section
145.
BYLAWS AND/OR CERTIFICATES OF INCORPORATION
Articles Eighth and Ninth of the Certificates of Incorporation of CMC
Kalamazoo Inc., Yellow Cab Company, and Chicago AutoWerks Inc. provide
indemnification as follows:
"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,
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.
NINTH. No director of the Corporation shall be liable to the Corporation
or any of its stockholders for monetary damages for breach of fiduciary duty
as a director, provided that this provision does not eliminate the liability
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 Corporation, 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."
II-10
<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, of the Company
or its subsidiaries (other than liabilities arising from gross negligence or
willful misconduct) to the full extent permitted by law.
Reference is made to Section 7 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 Registrants who sign the Registration Statement by
the Underwriters against certain liabilities, including those arising under the
Securities Act, in certain circumstances.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
None.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement among Alex. Brown & Sons Incorporated, SPP Hambro & Co.,
International Controls, Great Dane, Great Dane Nebraska, Inc., Great Dane Tennessee, Inc., Great
Dane Los Angeles, Inc., Motors, Checker L.P., SCSM, Yellow Cab Company, Chicago AutoWerks Inc. and
CMC Kalamazoo Inc. (the "Registrants") with respect to the % Senior Secured Notes due 2001 of
the Registrants and the Units consisting of the % Senior Subordinated Notes due 2004 of the
Registrants and Warrants to purchase common stock of the Registrant.
3.1 Restated Articles of Incorporation of International Controls.
3.2 By-Laws of International Controls as effective May 13, 1991 (incorporated herein by reference to
Exhibit 3.3 of the Registrant's Annual Report of Form 10-K for the year ended December 31, 1992
(the 1992 10-K)).
3.3 Articles of Incorporation of Great Dane.**
3.4 Bylaws of Great Dane.**
3.5 Articles of Incorporation of Great Dane Trailers Nebraska, Inc.**
3.6 Bylaws of Great Dane Trailers Nebraska, Inc.**
3.7 Certificate of Incorporation of Great Dane Trailers Tennessee, Inc.**
3.8 Bylaws of Great Dane Trailers Tennessee, Inc.**
3.9 Articles of Incorporation of Great Dane Los Angeles, Inc.**
3.10 Bylaws of Great Dane Los Angeles, Inc.**
3.11 Certificate of Incorporation of Motors.**
3.12 Bylaws of Motors.**
3.13 Articles of Incorporation of SCSM.**
3.14 Bylaws of SCSM.**
3.15 Certificate of Incorporation of Yellow Cab Company.**
3.16 Bylaws of Yellow Cab Company.**
3.17 Certificate of Incorporation of CMC Kalamazoo Inc.**
3.18 Bylaws of CMC Kalamazoo Inc.**
3.19 Certificate of Incorporation of AutoWerks Inc.**
3.20 Bylaws of Chicago AutoWerks Inc.**
4.1 Form of Indenture between International Controls and First Fidelity Bank, National Association
("First Fidelity"), New Jersey, as Trustee, relating to the 12 3/4% Senior
</TABLE>
II-11
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------------
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).
<C> <S>
4.2 Form of Indenture between International Controls and Midlantic National Bank, 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).
4.3 Form of Indenture between the Issuers and First Fidelity Bank, National Association, as Trustee,
relating to the % Senior Secured Notes due 2001.*
4.4 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")).
4.5 Form of Indenture between International Controls and Marine Midland Bank, as Trustee, relating to
the % Senior Subordinated Notes due 2004.*
4.6 Form of Warrant Agreement between International Controls and American Stock Transfer & Trust
Company.
5.1 Opinion of Hutton Ingram Yuzek Gainen Carroll & Bertolotti regarding the legality of certain 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 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 Amended and Restated Employment Agreement Between Checker and
David R. Markin (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").
</TABLE>
II-12
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------------
<C> <S>
10.10 Loan and Guaranty Agreement, dated September 17, 1992, by and among Checker L.P., Motors, SCSM and
NBD Bank, N.A. (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")).
10.11 First Amendment, dated as of November 1, 1993, to Loan and Guaranty Agreement.
10.12 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).
10.13 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).
10.14 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).
10.15 Third Amendment, dated as of November 1, 1993, to the Credit Agreement.
10.16 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).
10.17 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).
10.18 Lease, dated December 1, 1988, between SCSM and Park Corporation (incorporated herein by reference
to Exhibit 10.25 to the 1989 10-K).
10.19 Loan and Security Agreement dated as of March 21, 1990, by and among Great Dane, Great Dane Trailers
Indiana, Inc., Great Dane Trailers Nebraska, Inc., Great Dane Trailers Tennessee, 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).
10.20 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).
10.21 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).
10.22 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).
10.23 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).
10.24 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).
10.25 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).
10.26 Seventh Amendment, dated as of July 10, 1992, to the Security Pacific Agreement (incorporated herein
by reference to the June 1992 10-Q).
10.27 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).
10.28 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).
10.29 Tenth Amendment, dated as of November 1, 1993, to the Security Pacific Agreement.
</TABLE>
II-13
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------------
<C> <S>
10.30 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).
10.31 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).
10.32 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).
10.33 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).
10.34 Employment Agreement, dated as of January 1, 1994 between International Controls and David R.
Markin.
10.35 Eleventh Amendment, dated as of March 11, 1994, to the Security Pacific Agreement (incorporated
herein by reference to Exhibit 10.1 to the International Controls' Quarterly Report on Form 10-Q
for the quarter ended March 31, 1994).
10.36 Employment Agreement dated as of November 4, 1991, between Great Dane and Willard R. Hildebrand.
10.37 Form of Escrow Deposit Agreement between the Issuers and First Fidelity, dated as of ,
1994.*
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
International Controls.
10.39 Form of Loan Agreement, dated as of , 1994, by and among the International Controls,
Great Dane, Motors, Checker L.P., SCSM, Great Dane Trailers Nebraska, Inc., Great Dane Trailers
Tennessee, Inc., Great Dane Los Angeles, Inc., Yellow Cab Company, Chicago AutoWerks Inc., CMC
Kalamazoo Inc., NBD Bank, N.A., as agent, and the lenders named therein.*
10.40 Form of Pledge, Security and Intercreditor Agreement, dated as of , 1994, entered into by
International Controls, the Senior Note Trustee and NBD Bank, N.A., as agent, and , as collateral
agent, for the benefit of the lenders named therein.*
10.41 Form of Security Agreement entered into by the Issuers in favor of the Senior Note Trustee, for the
benefit of the Senior Note Holders.
10.42 Form of Agreement.
10.43 Form of Security Agreement entered into by the Issuers in favor of as agent, for the
benefit of the lenders named therein.
10.44 Amendment to Harris Employment Agreement dated April 6, 1994, effective as of July 1, 1992**
12.1 Statements regarding computation of ratios.**
21.1 Subsidiaries of Registrant.
23.1 Consent of Ernst & Young**
23.2 Consent of Hutton Ingram Yuzek Gainen Carroll & Bertolotti -- see Exhibit 5.1.
24.1 Power of Attorney.**
25.1 Statement of eligibility of Trustee for the Senior Notes.
25.2 Statement of eligibility of Trustee for the Senior Subordinated Notes.
28.1 Schedule P of Annual Statements provided by Country to Illinois Regulatory Authorities.
</TABLE>
II-14
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- ----------------------------------------------------------------------------------------------------
<C> <S>
<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 -- International Controls Corp.................................. 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>
<TABLE>
<C> <C> <S> <C>
Report of Independent Auditors -- Checker Motor Corporation -- Issuer Group.................... S-15
Schedule II -- ..................................................................... S-16
Schedule IV -- ..................................................................... S-17
Schedule V -- ..................................................................... S-18
Schedule VI -- ..................................................................... S-19
Schedule VIII -- ..................................................................... S-20
Schedule IX -- ..................................................................... S-21
Report of Independent Auditors -- Great Dane Trailers, Inc. and Subsidiaries................... S-23
Schedule VIII -- Valuation and Qualifying Accounts.................................... S-23
Schedule X -- Supplemental Income Statement Information............................ S-24
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned Issuers hereby undertake 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 Issuers pursuant to the foregoing provisions, or
otherwise, the Issuers have 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 Issuers of expenses incurred or paid by a
director, officer or controlling person of the Issuers 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 Issuers 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
II-15
<PAGE>
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-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, on July 28, 1994.
INTERNATIONAL CONTROLS CORP.
By: /s/_David R. Markin
------------------------------------
David R. Markin, President and Chief
Executive Officer
Executed in City of Kalamazoo, State
of Michigan
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
INTERNATIONAL CONTROLS CORP.:
<TABLE>
<C> <S> <C>
/s/Allan R. Chairman of the Board July 28,
Tessler 1994
- -------------------------------------------
Allan R. Tessler
/s/David R. Markin President, Chief Executive July 28,
- ------------------------------------------- Officer and Director 1994
David R. Markin
/s/Jay H. Harris Executive Vice President and July 28,
- ------------------------------------------- Chief Operating Officer 1994
Jay H. Harris
/s/Marlan R. Smith Treasurer (Principal Financial July 28,
- ------------------------------------------- Officer and Principal 1994
Marlan R. Smith Accounting Officer)
/s/Martin L. Solomon Vice Chairman of the Board and July 28,
- ------------------------------------------- Secretary 1994
Martin L. Solomon
/s/Wilmer J. Thomas, Jr. Vice Chairman of the Board July 28,
- ------------------------------------------- 1994
Wilmer J. Thomas, Jr.
</TABLE>
II-17
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on their behalf by the undersigned, thereunto duly authorized, on July 28, 1994.
SOUTH CHARLESTON STAMPING &
MANUFACTURING COMPANY
By: /s/_John T. Wise
------------------------------------
John T. Wise, President
Executed in Stutgart, Germany
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
SOUTH CHARLESTON STAMPING & MANUFACTURING COMPANY:
/s/Allan R. Director July 28,
Tessler 1994
- -------------------------------------------
Allan R. Tessler
/s/David R. Markin Director July 28,
- ------------------------------------------- 1994
David R. Markin
/s/Martin L. Solomon Director July 28,
- ------------------------------------------- 1994
Martin L. Solomon
/s/Wilmer J. Thomas, Jr. Director July 28,
- ------------------------------------------- 1994
Wilmer J. Thomas, Jr.
/s/ John T. Wise President July 28,
- ------------------------------------------- 1994
John T. Wise
/s/David M. Hannah Treasurer (Principal Financial July 28,
- ------------------------------------------- Officer and Principal 1994
David M. Hannah Accounting Officer)
/s/Jay H. Harris Director July 28,
- ------------------------------------------- 1994
Jay H. Harris
</TABLE>
II-18
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, on July 28, 1994.
CHECKER MOTORS CORPORATION
By: /s/_David R. Markin
------------------------------------
David R. Markin, President and Chief
Executive Officer
Executed in City of Kalamazoo, State
of Michigan
CHECKER MOTORS CO., L.P.
Checker Motors Corporation, its
General Partner
By: /s/_David R. Markin
------------------------------------
David R. Markin, President
Executed in City of Kalamazoo, State
of Michigan
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
CHECKER MOTORS CORPORATION,
on its own behalf and as general partner of
CHECKER MOTORS CO., L.P.
/s/Allan R. Chairman of the Board July 28,
Tessler 1994
- -------------------------------------------
Allan R. Tessler
/s/David R. Markin President, Chief Executive July 28,
- ------------------------------------------- Officer and Director 1994
David R. Markin
/s/Marlan R. Smith Vice President, Treasurer July 28,
- ------------------------------------------- (Principal Financial Officer 1994
Marlan R. Smith and Principal Accounting
Officer)
/s/Martin L. Solomon Director July 28,
- ------------------------------------------- 1994
Martin L. Solomon
/s/Wilmer J. Thomas, Jr. Director July 28,
- ------------------------------------------- 1994
Wilmer J. Thomas, Jr.
</TABLE>
II-19
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on their behalf by the undersigned, thereunto duly authorized, on July 28, 1994.
GREAT DANE TRAILERS, INC.
By:_____/s/_Willard R. Hildebrand_____
Willard R. Hildebrand, President
Executed in City of Savannah, State of
Georgia
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
GREAT DANE TRAILERS, INC.:
/s/Allan R. Director July 28,
Tessler 1994
- -------------------------------------------
Allan R. Tessler
/s/David R. Markin Chairman of the Board July 28,
- ------------------------------------------- 1994
David R. Markin
/s/Martin L. Solomon Director July 28,
- ------------------------------------------- 1994
Martin L. Solomon
/s/Wilmer J. Thomas, Jr. Director July 28,
- ------------------------------------------- 1994
Wilmer J. Thomas, Jr.
/s/Willard R. Hildebrand President and Chief Executive July 28,
- ------------------------------------------- Officer 1994
Willard R. Hildebrand
/s/Thomas W. Horan Senior Vice President, July 28,
- ------------------------------------------- Secretary, Treasurer, 1994
Thomas W. Horan (Principal Financial Officer
and Principal Accounting
Officer)
</TABLE>
II-20
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on their behalf by the undersigned, thereunto duly authorized, on July 28, 1994.
GREAT DANE TRAILERS NEBRASKA, INC.
By:_____/s/_Willard R. Hildebrand_____
Willard R. Hildebrand, President
Executed in City of Savannah, State of
Georgia
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
GREAT DANE TRAILERS NEBRASKA, INC.:
/s/David R. Markin Chairman of the Board July 28,
- ------------------------------------------- 1994
David R. Markin
/s/Willard R. Hildebrand Director, President and Chief July 28,
- ------------------------------------------- Executive Officer 1994
Willard R. Hildebrand
/s/Fred T. Mote Director July 28,
- ------------------------------------------- 1994
Fred T. Mote
/s/Thomas W. Horan Director, Senior Vice President July 28,
- ------------------------------------------- -- Finance, Secretary & 1994
Thomas W. Horan Treasurer, (Principal Financial
Officer and Principal
Accounting Officer)
/s/C.F. Hammond, III Director July 28,
- ------------------------------------------- 1994
C.F. Hammond, III
</TABLE>
II-21
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on their behalf by the undersigned, thereunto duly authorized, on July 28, 1994.
GREAT DANE TRAILERS TENNESSEE, INC.
By:_____/s/_Willard R. Hildebrand_____
Willard R. Hildebrand, President
Executed in City of Savannah, State of
Georgia
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
GREAT DANE TRAILERS TENNESSEE, INC.:
/s/David R. Markin Chairman of the Board July 28,
- ------------------------------------------- 1994
David R. Markin
/s/Willard R. Hildebrand Director, President and Chief July 28,
- ------------------------------------------- Executive Officer 1994
Willard R. Hildebrand
/s/Fred T. Mote Director July 28,
- ------------------------------------------- 1994
Fred T. Mote
/s/Thomas W. Horan Director, Senior Vice President, July 28,
- ------------------------------------------- Secretary & Treasurer, 1994
Thomas W. Horan (Principal Financial Officer
and Principal Accounting
Officer)
/s/C.F. Hammond, III Director July 28,
- ------------------------------------------- 1994
C.F. Hammond, III
</TABLE>
II-22
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on their behalf by the undersigned, thereunto duly authorized, on July 28, 1994.
GREAT DANE LOS ANGELES, INC.
By:_____/s/ Willard R. Hildebrand_____
Willard R. Hildebrand, President
Executed in City of Savannah, State of
Georgia
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
GREAT DANE LOS ANGELES, INC.
/s/ David R. Markin Chairman of the Board July 28,
- ------------------------------------------- 1994
David R. Markin
/s/ Willard R. Director, President and Chief July 28,
Hildebrand Executive Officer 1994
- -------------------------------------------
Willard R. Hildebrand
/s/Thomas W. Horan Director, Secretary & Treasurer July 28,
- ------------------------------------------- (Principal Financial Officer 1994
Thomas W. Horan and Principal Accounting
Officer)
/s/ C.F. Hammond, III Director July 28,
- ------------------------------------------- 1994
C.F. Hammond, III
</TABLE>
II-23
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, on July 28, 1994.
CMC KALAMAZOO INC.
By:________/s/ David R. Markin________
David R. Markin, Chairman of the
Board
Executed in City of Kalamazoo, State
of Michigan
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
CMC KALAMAZOO INC.:
/s/ Allan R. Vice President and Director July 28,
Tessler 1994
- -------------------------------------------
Allan R. Tessler
/s/ David R. Markin Chairman of the Board, President July 28,
- ------------------------------------------- and Chief Executive Officer 1994
David R. Markin
/s/ Marting L. Solomon Director July 28,
- ------------------------------------------- 1994
Martin L. Solomon
/s/ Wilmer J. Thomas, Director July 28,
Jr. 1994
- -------------------------------------------
Wilmer J. Thomas, Jr.
/s/ Marlan R. Smith Treasurer (Principal Financial July 28,
- ------------------------------------------- Officer and Principal 1994
Marlan R. Smith Accounting Officer)
</TABLE>
II-24
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, on July 28, 1994.
CHICAGO AUTOWERKS INC.
By: /s/ David R. Markin
------------------------------------
David R. Markin, Chairman of the Board
Executed in City of Kalamazoo, State
of Michigan
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
CHICAGO AUTOWERKS INC.:
/s/ Allan R. Director July 28,
Tessler 1994
- -------------------------------------------
Allan R. Tessler
/s/ David R. Markin Chairman of the Board and Chief July 28,
- ------------------------------------------- Executive Officer 1994
David R. Markin
/s/ Martin L. Solomon Director July 28,
- ------------------------------------------- 1994
Martin L. Solomon
/s/ Wilmer J. Thomas, Director July 28,
Jr. 1994
- -------------------------------------------
Wilmer J. Thomas, Jr.
/s/ Bryan Blazak Treasurer (Principal Financial July 28,
- ------------------------------------------- Officer and Principal 1994
Bryan Blazak Accounting Officer)
/s/ Jeffrey President July 28,
Feldman 1994
- -------------------------------------------
Jeffrey Feldman
</TABLE>
II-25
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 3 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, on July 28, 1994.
YELLOW CAB COMPANY
By: /s/ David R. Markin
------------------------------------
David R. Markin, Chairman of the Board
Executed in City of Kalamazoo, State
of Michigan
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
YELLOW CAB COMPANY:
/s/ Allan R. Director July 28,
Tessler 1994
- -------------------------------------------
Allan R. Tessler
/s/ David R. Markin Chairman of the Board and Chief July 28,
- ------------------------------------------- Executive Officer 1994
David R. Markin
Martin L. Solomon Director July 28,
- ------------------------------------------- 1994
Martin L. Solomon
/s/ Wilmer J. Thomas, Director July 28,
Jr. 1994
- -------------------------------------------
Wilmer J. Thomas, Jr.
/s/ Edward F. Kukulski, Treasurer and Vice President July 28,
Jr. (Principal Financial Officer 1994
- ------------------------------------------- and Principal Accounting
Edward F. Kukulski, Jr. Officer)
/s/ Jeffrey President July 28,
Feldman 1994
- -------------------------------------------
Jeffrey Feldman
</TABLE>
II-26
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES
COVERED BY REPORTS OF INDEPENDENT AUDITORS
<TABLE>
<C> <C> <S> <C>
Report of Independent Auditors -- International Controls Corp.................................. 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>
<TABLE>
<C> <C> <S> <C>
Report of Independent Auditors -- Checker Motor Corporation -- Issuer Group.................... S-15
Schedule II -- ..................................................................... S-16
Schedule IV -- ..................................................................... S-17
Schedule V -- ..................................................................... S-18
Schedule VI -- ..................................................................... S-19
Schedule VIII -- ..................................................................... S-20
Schedule IX -- ..................................................................... S-21
Report of Independent Auditors -- Great Dane Trailers, Inc. and Subsidiaries................... S-23
Schedule VIII -- Valuation and Qualifying Accounts............................................. S-23
Schedule X -- Supplementary Income Statement Information....................................... S-24
</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>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
International Controls Corp.
We have audited the consolidated financial statements of 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 (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.
/s/ ERNST & YOUNG
Kalamazoo, Michigan
March 1, 1994
S-2
<PAGE>
INTERNATIONAL CONTROLS CORP. 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
SECURITY
NUMBER OF ISSUES AND EACH
SHARES OR MARKET OTHER SECURITY
UNITS -- VALUE OF ISSUE CARRIED
PRINCIPAL EACH ISSUE 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>
INTERNATIONAL CONTROLS CORP. 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
SECURITY
NUMBER OF ISSUES AND EACH
SHARES OR MARKET OTHER SECURITY
UNITS -- VALUE OF ISSUE CARRIED
PRINCIPAL EACH ISSUE 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>
INTERNATIONAL CONTROLS CORP. 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
SECURITY
NUMBER OF ISSUES AND EACH
SHARES OR MARKET OTHER SECURITY
UNITS -- VALUE OF ISSUE CARRIED
PRINCIPAL EACH ISSUE 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........................... $ 92,062 $ 94,853 $ 90,838
----------- ----------- -------
----------- ----------- -------
</TABLE>
S-5
<PAGE>
INTERNATIONAL CONTROLS CORP. 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>
INTERNATIONAL CONTROLS CORP.
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..................................................................... 90 90
Paid-in capital.................................................................. 14,910 14,910
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>
INTERNATIONAL CONTROLS CORP.
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>
INTERNATIONAL CONTROLS CORP.
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>
INTERNATIONAL CONTROLS CORP. 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>
INTERNATIONAL CONTROLS CORP. 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>
INTERNATIONAL CONTROLS CORP. 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
END OF AVERAGE DURING THE DURING THE THE
CATEGORY OF AGGREGATE SHORT-TERM 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>
INTERNATIONAL CONTROLS CORP. 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>
INTERNATIONAL CONTROLS CORP. 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, NET
AFFILIATION WITH ACQUISITION ADJUSTMENT DEDUCTED IN UNEARNED EARNED 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 S
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>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Checker Motors Corporation
We have audited the consolidated financial statements of Checker Motors
Corporation (a wholly-owned subsidiary of International Controls Corp.) and
subsidiaries (Issuer Group) 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 A as to which the date is
July 26, 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
Corporation'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.
/s/_ERNST & YOUNG
Kalamazoo, Michigan
March 1, 1994, except for Note A
as to which the date is July 26, 1994
S-15
<PAGE>
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
(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 (1) (2)
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED WRITTEN 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
International Controls Corp.(1)... (581) 22,100 0 (21,519) 0 0
----------- ----------- --- ----------- ----- -------------
$ 44 $ 22,100 $ 0 $ (21,519) $ 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
International Controls Corp.(1)... 0 21,250 0 (4,666) 0 16,584
----------- ----------- --- ----------- ----- -------------
$ 625 $ 21,648 $ 0 $ (4,666) $ 398 $ 17,209
----------- ----------- --- ----------- ----- -------------
----------- ----------- --- ----------- ----- -------------
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
International Controls
Corp.(1,3)....................... 16,584 19,674 0 (21,229) 0 15,029
----------- ----------- --- ----------- ----- -------------
$ 17,607 $ 19,698 $ 0 $ (21,229) $ 422 $ 15,654
----------- ----------- --- ----------- ----- -------------
----------- ----------- --- ----------- ----- -------------
<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.
(3) Subsequent to year end, the Corporation distributed $15.0 million to ICC and
the receivable from parent was discharged.
</TABLE>
S-16
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
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
- ---------------------------- ----------- --------- ----------- --------- --------- -----------
INDEBTEDNESS OF INDEBTEDNESS TO
---------------------------------------------- ----------------------
BALANCE
BALANCE AT BALANCE AT
NAME OF PERSON BEGINNING ADDITIONS DEDUCTIONS AT END BEGINNING ADDITIONS
- ---------------------------- ----------- --------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Year Ended December 31, 1991
American Country Insurance
Company.................. $ -- $ -- $ -- $ -- $ -- $ 2,500
----------- --------- ----------- --------- --------- -----------
----------- --------- ----------- --------- --------- -----------
Year Ended December 31, 1992
American Country Insurance
Company.................. $ -- $ -- $ -- $ -- $ 2,500 $ --
----------- --------- ----------- --------- --------- -----------
----------- --------- ----------- --------- --------- -----------
Year Ended December 31, 1993
American Country Insurance
Company.................. $ -- $ -- $ -- $ -- $ 2,500 $ --
----------- --------- ----------- --------- --------- -----------
----------- --------- ----------- --------- --------- -----------
<CAPTION>
COL. A COL. H COL. I
- ---------------------------- -------- ---------
BALANCE
NAME OF PERSON DEDUCTIONS AT END
- ---------------------------- -------- ---------
<S> <C> <C>
Year Ended December 31, 1991
American Country Insurance
Company.................. $ -- $ 2,500
-------- ---------
-------- ---------
Year Ended December 31, 1992
American Country Insurance
Company.................. $ -- $ 2,500
-------- ---------
-------- ---------
Year Ended December 31, 1993
American Country Insurance
Company.................. $ -- $ 2,500
-------- ---------
-------- ---------
<FN>
- --------------
NOTE: The above amount relates to an amount loaned as part of a mortgage loan
dated December 17, 1991 as described in Note D of the notes to
consolidated financial statements.
</TABLE>
S-17
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
- -------------------------------------------------- --------- --------- ----------- ------------- ----------
BALANCE
AT OTHER CHANGES BALANCE AT
BEGINNING ADDITIONS ADD/DEDUCT END OF
OF PERIOD AT COST RETIREMENTS DESCRIBE PERIOD
--------- --------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1991:
Land and buildings.............................. $ 5,586 $ 560 $ (31) $ 419 $ 6,534
Transportation equipment........................ 35,644 9,079 (12,383) 11 32,351
Machinery, equipment, furniture and fixtures.... 67,674 1,732 (1,337) (433) 67,636
--------- --------- ----------- ----- ----------
$ 108,904 $11,371 $(13,751) $ (3) $ 106,521
--------- --------- ----------- ----- ----------
--------- --------- ----------- ----- ----------
YEAR ENDED DECEMBER 31, 1992:
Land and buildings.............................. $ 6,534 $ 546 $ -- -$- $ 7,080
Transportation equipment........................ 32,351 9,273 (7,428) -- 34,196
Machinery, equipment, furniture and fixtures.... 67,636 2,481 (431) -- 69,686
--------- --------- ----------- ----- ----------
$ 106,521 $12,300 $ (7,859) -$- $ 110,962
--------- --------- ----------- ----- ----------
--------- --------- ----------- ----- ----------
YEAR ENDED DECEMBER 31, 1993:
Land and buildings.............................. $ 7,080 $ 264 $ -- -$- $ 7,344
Transportation equipment........................ 34,196 6,232 (10,400) 26 30,054
Machinery, equipment, furniture and fixtures.... 69,686 6,145 (280) (23) 75,528
--------- --------- ----------- ----- ----------
$ 110,962 $12,641 $(10,680) $ 3 $ 112,926
--------- --------- ----------- ----- ----------
--------- --------- ----------- ----- ----------
</TABLE>
S-18
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
COL. A COL. B COL. C COL. D COL. E COL. F
- ----------------------------------- ----------- ------------- ----------- --------------- ---------
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO OTHER CHANGES BALANCE
BEGINNING COST ADD/DEDUCT AT END
OF PERIOD AND EXPENSE RETIREMENTS DESCRIBE OF PERIOD
----------- ------------- ----------- --------------- ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1991:
Land and buildings............... $ 1,663 $ 474 $ -- $ (2) $ 2,135
Transportation equipment......... 18,552 9,063 (10,219) 13 17,409
Machinery, equipment, furniture
and fixtures.................... 14,249 5,069 (739) 6 18,585
----------- ------------- ----------- --- ---------
$ 34,464 $ 14,606 $ (10,958) $ 17 $ 38,129
----------- ------------- ----------- --- ---------
----------- ------------- ----------- --- ---------
YEAR ENDED DECEMBER 31, 1992:
Land and buildings............... $ 2,135 $ 507 $ -- $ -- $ 2,642
Transportation equipment......... 17,409 8,796 (6,065) 1 20,141
Machinery, equipment, furniture
and fixtures.................... 18,585 4,944 (375) -- 23,154
----------- ------------- ----------- --- ---------
$ 38,129 $ 14,247 $ (6,440) $ 1 $ 45,937
----------- ------------- ----------- --- ---------
----------- ------------- ----------- --- ---------
YEAR ENDED DECEMBER 31, 1993:
Land and buildings............... $ 2,642 $ 541 $ -- $ -- $ 3,183
Transportation equipment......... 20,141 8,191 (8,905) 21 19,448
Machinery, equipment, furniture
and fixtures.................... 23,154 5,789 (272) (21) 28,650
----------- ------------- ----------- --- ---------
$ 45,937 $ 14,521 $ (9,177) $ -- $ 51,281
----------- ------------- ----------- --- ---------
----------- ------------- ----------- --- ---------
</TABLE>
S-19
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
- --------------------------------------- ------------------- ------------------------ ------------- ---------------
<S> <C> <C> <C> <C> <C>
ADDITIONS CHARGED TO:
------------------------
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING COST AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS(1) PERIOD
- --------------------------------------- ------------------- ----------- ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1991:
Deducted from assets:
Allowance for doubtful accounts --
trade............................. $ 5 $ -- $ -- $ -- $ 5
------ ----------- ----------- ------------- ------
------ ----------- ----------- ------------- ------
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 $ 5 $ -- $ -- $ -- $ 5
------ ----------- ----------- ------------- ------
------ ----------- ----------- ------------- ------
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............................. $ 5 $ 111 $ -- $ (68) $ 48
------ ----------- ----------- ------------- ------
------ ----------- ----------- ------------- ------
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-20
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
SCHEDULE IX -- SHORT-TERM BORROWINGS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
- -------------------------------------- ----------- ------------- ----------- ----------- -------------
MAXIMUM AVERAGE WEIGHTED
AMOUNT AMOUNT AVERAGE
BALANCE AT WEIGHTED OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AGGREGATE SHORT-TERM END OF AVERAGE DURING THE DURING THE DURING 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-21
<PAGE>
CHECKER MOTORS CORPORATION AND SUBSIDIARIES -- ISSUER GROUP
SCHEDULE X -- SUPPLEMENTAL INCOME STATEMENT INFORMATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN B
-------------------------------------------
CHARGED TO CONTINUING OPERATIONS' COST
AND EXPENSES
-------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
COLUMN A 1991 1992 1993
- ---------------------------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Maintenance and repairs............................................... $ 4,495 $ 3,192 $ 3,835
------ ------ ------
------ ------ ------
Depreciation and amortization of intangible assets, pre-operating
costs and similar deferrals (1)...................................... $ -- $ -- $ --
------ ------ ------
------ ------ ------
Taxes other than payroll and income taxes (1)......................... $ 1,374 $ 1,404 $ 2,070
------ ------ ------
------ ------ ------
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-22
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Great Dane Trailers, Inc. and Subsidiaries
We have audited the consolidated financial statements of Great Dane
Trailers, Inc. and subsidiaries (a wholly-owned subsidiary of International
Controls Corp.) 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 (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 herein.
/s/__ERNST & YOUNG
Atlanta, Georgia
March 1, 1994
S-23
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A WHOLLY-OWNED SUBSIDIARY OF INTERNATIONAL CONTROLS CORP.)
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
- ------------------------------------------------------------ ---------- -------- -------- ------------- ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1991:
Deducted from assets:
Allowance for doubtful accounts:
trade................................................... $803 $210 $(412) $601
finance lease receivables............................... $842 $ (7) $ 292 $(183) $944
YEAR ENDED DECEMBER 31, 1992:
Deducted from assets:
Allowance for doubtful accounts:
trade................................................... $601 $183 $(166) $618
finance lease receivables............................... $944 $ 52 $(317) $679
YEAR ENDED DECEMBER 31, 1993:
Deducted from assets:
Allowance for doubtful accounts:
trade................................................... $618 $123 $ 258 $(299) $700
finance lease receivables............................... $679 $ 52 $(584) $ 12 $159
<FN>
- --------------
(1) Utilization of reserves.
</TABLE>
S-24
<PAGE>
GREAT DANE TRAILERS, INC. AND SUBSIDIARIES
(A WHOLLY-OWNED SUBSIDIARY OF INTERNATIONAL CONTROLS CORP.)
SCHEDULE X -- SUPPLEMENTAL INCOME STATEMENT INFORMATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B
- --------------------------------------------- -------------------------------------------------
CHARGED TO COST AND EXPENSES
-------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1991 1992 1993
--------------- --------------- ---------------
<S> <C> <C> <C>
Maintenance and repairs...................... $ 4,986 $ 6,690 $ 11,746
------ ------ -------
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-25
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- ----------- ---------------------------------------------------------------------------------- ---------
<C> <S> <C>
1.1 Form of Underwriting Agreement among Alex. Brown & Sons Incorporated, SPP Hambro &
Co., International Controls, Great Dane, Great Dane Nebraska, Inc., Great Dane
Tennessee, Inc., Great Dane Los Angeles, Inc., Motors, Checker L.P., SCSM, Yellow
Cab Company, Chicago AutoWerks Inc. and CMC Kalamazoo Inc. (the "Registrants")
with respect to the % Senior Secured Notes due 2001 of the Registrants and the
Units consisting of the % Senior Subordinated Notes due 2004 of the
Registrants and Warrants to purchase common stock of the Registrant.
3.1 Restated Articles of Incorporation of International Controls.
3.2 By-Laws of International Controls as effective May 13, 1991 (incorporated herein
by reference to Exhibit 3.3 of the Registrant's Annual Report of Form 10-K for
the year ended December 31, 1992 (the 1992 10-K)).
3.3 Articles of Incorporation of Great Dane.**
3.4 Bylaws of Great Dane.**
3.5 Articles of Incorporation of Great Dane Trailers Nebraska, Inc.**
3.6 Bylaws of Great Dane Trailers Nebraska, Inc.**
3.7 Certificate of Incorporation of Great Dane Trailers Tennessee, Inc.**
3.8 Bylaws of Great Dane Trailers Tennessee, Inc.**
3.9 Articles of Incorporation of Great Dane Los Angeles, Inc.**
3.10 Bylaws of Great Dane Los Angeles, Inc.**
3.11 Certificate of Incorporation of Motors.**
3.12 Bylaws of Motors.**
3.13 Articles of Incorporation of SCSM.**
3.14 Bylaws of SCSM.**
3.15 Certificate of Incorporation of Yellow Cab Company.**
3.16 Bylaws of Yellow Cab Company.**
3.17 Certificate of Incorporation of CMC Kalamazoo Inc.**
3.18 Bylaws of CMC Kalamazoo Inc.**
3.19 Certificate of Incorporation of AutoWerks Inc.**
3.20 Bylaws of Chicago AutoWerks Inc.**
4.1 Form of Indenture between International Controls and First Fidelity Bank, National
Association ("First Fidelity"), New Jersey, as Trustee, relating to 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 Form of Indenture between International Controls and Midlantic National Bank, 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).
4.3 Form of Indenture between the Issuers and First Fidelity Bank, National
Association, as Trustee, relating to the % Senior Secured Notes due 2001.*
4.4 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")).
4.5 Form of Indenture between International Controls and Marine Midland Bank, as
Trustee, relating to the % Senior Subordinated Notes due 2004.*
4.6 Form of Warrant Agreement between International Controls and American Stock
Transfer & Trust Company.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- ----------- ---------------------------------------------------------------------------------- ---------
<C> <S> <C>
5.1 Opinion of Hutton Ingram Yuzek Gainen Carroll & Bertolotti regarding the legality
of certain 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
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 Amended and Restated Employment Agreement
Between Checker and David R. Markin (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 Loan and Guaranty Agreement, dated September 17, 1992, by and among Checker L.P.,
Motors, SCSM and NBD Bank, N.A. (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")).
10.11 First Amendment, dated as of November 1, 1993, to Loan and Guaranty Agreement.
10.12 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).
10.13 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).
10.14 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).
10.15 Third Amendment, dated as of November 1, 1993, to the Credit Agreement.
10.16 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).
10.17 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).
10.18 Lease, dated December 1, 1988, between SCSM and Park Corporation (incorporated
herein by reference to Exhibit 10.25 to the 1989 10-K).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- ----------- ---------------------------------------------------------------------------------- ---------
<C> <S> <C>
10.19 Loan and Security Agreement dated as of March 21, 1990, by and among Great
Dane, Great Dane Trailers Indiana, Inc., Great Dane Trailers Nebraska,
Inc., Great Dane Trailers Tennessee, 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).
10.20 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).
10.21 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).
10.22 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).
10.23 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).
10.24 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).
10.25 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).
10.26 Seventh Amendment, dated as of July 10, 1992, to the Security Pacific
Agreement (incorporated herein by reference to the June 1992 10-Q).
10.27 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).
10.28 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).
10.29 Tenth Amendment, dated as of November 1, 1993, to the Security Pacific
Agreement.
10.30 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).
10.31 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).
10.32 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).
10.33 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).
10.34 Employment Agreement, dated as of January 1, 1994 between International
Controls and David R. Markin.
10.35 Eleventh Amendment, dated as of March 11, 1994, to the Security Pacific
Agreement (incorporated herein by reference to Exhibit 10.1 to the
International Controls' Quarterly Report on Form 10-Q for the quarter
ended March 31, 1994).
10.36 Employment Agreement dated as of November 4, 1991, between Great Dane and
Willard R. Hildebrand.
10.37 Form of Escrow Deposit Agreement between the Issuers and First Fidelity,
dated as of , 1994.*
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 International
Controls.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
- ----------- ---------------------------------------------------------------------------------- ---------
<C> <S> <C>
10.39 Form of Loan Agreement, dated as of , 1994, by and among the
International Controls, Great Dane, Motors, Checker L.P., SCSM, Great
Dane Trailers Nebraska, Inc., Great Dane Trailers Tennessee, Inc., Great
Dane Los Angeles, Inc., Yellow Cab Company, Chicago AutoWorks Inc., CMC
Kalamazoo Inc., NBD Bank, N.A., as agent, and the lenders named therein.*
10.40 Form of Pledge, Security and Intercreditor Agreement, dated as of
, 1994, entered into by International Controls, the Senior Note
Trustee and NBD Bank, N.A., as agent, and , as collateral agent, for the
benefit of the lenders named therein.*
10.41 Form of Security Agreement entered into by the Issuers in favor of the
Senior Note Trustee, for the benefit of the Senior Note Holders.
10.42 Form of Agreement.
10.43 Form of Security Agreement entered into by the Issuers in favor of
as agent, for the benefit of the lenders named therein.
10.44 Amendment to Harris Employment Agreement dated April 6, 1994, effective as
of July 1, 1992**
12.1 Statements regarding computation of ratios.**
21.1 Subsidiaries of Registrant.
23.1 Consent of Ernst & Young**
23.2 Consent of Hutton Ingram Yuzek Gainen Carroll & Bertolotti -- see Exhibit
5.1.
24.1 Power of Attorney.**
25.1 Statement of eligibility of Trustee for the Senior Notes.
25.2 Statement of eligibility of Trustee for the Senior Subordinated Notes.
28.1 Schedule P of Annual Statements provided by Country to Illinois Regulatory
Authorities.
<FN>
- --------------
* To be filed by amendment
** Filed herewith
</TABLE>
<PAGE>
APPENDIX A
EXPLANATION OF CORPORATE STRUCTURE CHART
The following is an explanation of the corporate structure chart
which appears on page 6 of the Prospectus. The purpose of the chart is to
illustrate the basic corporate structure of the Company and its subsidiaries.
That chart shows the following:
Checker Motors Corporation and Great Dane Trailers, Inc. are
100%-owned subsidiaries of International Controls Corp.
Great Dane Trailer, Nebraska, Inc., Great Dane Trailers Tennessee,
Inc., and Great Dane Los Angeles, Inc., are 100%-owned subsidiaries of
Great Dane. South Charleston Stamping & Manufacturing Company is 90%-owned by
Motors and 10%-owned by Executive Life Insurance Company.
Yellow Cab Company, Chicago AutoWerks Inc., CMC Kalamazoo Inc. and
American Country Insurance Company are 100%-owned subsidiaries of Motors.
<PAGE>
ARTICLES OF MERGER
OF
GREAT DANE TRAILERS INDIANA, INC., a Delaware corporation
INTO
GREAT DANE TRAILERS, INC., a Georgia corporation
The undersigned corporations, pursuant to the provisions of Title
14, Section 14-2-1107 of the Official Code of Georgia Annotated, as amended,
thereby execute the following Articles of Merger.
ARTICLE ONE
The names of the corporations proposing to merge and the names of
the States under the laws of which such corporations are organized are as
follows:
NAME OF CORPORATION STATE OF INCORPORATION
- ------------------- ----------------------
Great Dane Trailers Indiana, Inc. Delaware
Great Dane Trailers, Inc. Georgia
ARTICLE TWO
The laws of Delaware, the State under which such foreign corporation
is organized, permit such merger.
ARTICLE THREE
The name of the surviving corporation shall be GREAT DANE TRAILERS,
INC. (the "Surviving Corporation"), and it shall be governed by the laws of the
State of Georgia.
ARTICLE FOUR
The Plan of Merger attached hereto and made a part hereof as Exhibit
A was approved by the Board of Directors of the Surviving Corporation in the
manner prescribed by the Official Code of Georgia Annotated and was approved by
the
<PAGE>
undersigned foreign corporation (the "Merging Corporation"), in the manner
prescribed by the laws of the State of Delaware.
ARTICLE FIVE
The Plan of Merger was duly adopted by the joint written consent of
all of the members of the Board of Directors and the sole shareholder of the
Merging Corporation on the 19th day of March, 1990, and by the written consent
of all of the members of the Board of Directors of the Surviving Corporation,
without approval of its sole shareholder, on the 19th day of March, 1990.
ARTICLE SIX
All provisions of the laws of the State of Georgia and the State of
Delaware, applicable to the proposed merger, have been complied with.
ARTICLE SEVEN
The merger shall be effective on the 30 day of March, 1990, at
9:00 A.M.
IN WITNESS WHEREOF, each of the undersigned corporations has caused
these Articles of Merger to be executed in its name by its President and
attested to by its Secretary, on this 19 day of March, 1990.
GREAT DANE TRAILERS INDIANA, INC.
By: /s/ Fred T. Mote
------------------------------
Fred T. Mote, President
[CORPORATE SEAL]
Attest:/s/ Daniel J. O'Connor,
--------------------------
Daniel J. O'Connor,
Secretary
<PAGE>
GREAT DANE TRAILERS, INC.
BY: /s/ Harvey Granger, Jr.
----------------------------
Harvey Granger, Jr.
President
[CORPORATE SEAL]
Attest: /s/ Daniel J. O'Conner
----------------------
Daniel J. O'Connor,
Secretary
<PAGE>
EXHIBIT A
STATE OF GEORGIA )
)
COUNTY OF CHATHAM )
PLAN OF MERGER
THIS PLAN OF MERGER (this "Plan") is made and entered into this
19th day of March, 1990, by and among GREAT DANE TRAILERS INDIANA, INC., a
Delaware corporation ("Great Dane Trailers Indiana") and GREAT DANE TRAILERS,
INC., a Georgia corporation ("Great Dane Trailers" or "Survivor Corporation");
(Great Dane Trailers Indiana is hereinafter sometimes called the "Subsidiary
Corporation.")
W I T N E S S E T H:
WHEREAS, Great Dane Trailers is the record owner of all of the
issued and outstanding shares of the capital stock of the Subsidiary
Corporation; and
WHEREAS, the directors of Great Dane Trailers and the directors of
the Subsidiary Corporation have determined that it is in the best interests of
Great Dane Trailers and the Subsidiary Corporation that the Subsidiary
Corporation be merged into Great Dane Trailers.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, provisions and covenants contained
<PAGE>
herein, Great Dane Trailers and the Subsidiary Corporation agree as follows:
1. The Subsidiary Corporation shall be merged into Great Dane
Trailers at the effective date (as hereinafter defined) and thereafter shall be
and exist as a single corporation under the applicable provisions of the laws of
the State of Georgia and the laws of the State of Delaware, and the parties
hereto adopt and agree to the following terms and conditions relating to the
merger and the mode of carrying the same into effect, by the transfer to Great
Dane Trailers of all of the assets of the Subsidiary Corporation, subject to all
of the liabilities and obligations of the Subsidiary Corporation including the
Industrial Revenue Bonds Series A and B issued in 1985 in the name of Timpte
Industries Project and subsequently transferred to and assumed by the Subsidiary
Corporation on October 18, 1988, with simultaneous guarantee by Great Dane
Trailers on such date (the "Bond Issue"), all of which liabilities and
obligations Great Dane Trailers shall assume, in complete cancellation of all of
the issued and outstanding stock of the Subsidiary Corporation:
(a) The merger is conditioned upon the directors of Great Dane
Trailers and of the Subsidiary Corporation agreeing to adopt this Plan, in
accordance with the applicable provisions
<PAGE>
of the laws of the State of Georgia and the laws of the State of Delaware.
(b) Upon adoption of this Plan and the obtaining of directors'
approval as provided in paragraph (a) above, Articles of Merger shall be filed
and recorded in accordance with the laws of the State of Georgia and the laws of
the State of Delaware. The merger shall be effective on March 30, 1990, at 9:00
A.M., which date is hereinafter referred to as the "Effective Date."
(c) On the Effective Date, the separate existence of the
Subsidiary Corporation shall cease, and the Subsidiary Corporation shall be
merged into Great Dane Trailers which, as the Survivor Corporation, shall
possess all of the rights, privileges, powers and franchises, of a public as
well as of a private nature, and be subject to all of the restrictions,
disabilities and duties of the Subsidiary Corporation; and all and singular, the
rights, privileges, powers and franchises of the Subsidiary Corporation, and all
property, real, personal and mixed and all debts due to the Subsidiary
Corporation on whatever account, and all other things in action belonging to
such Subsidiary Corporation, shall be vested in the Survivor Corporation; and
all property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectually the property of the Survivor
Corporation as same was of the Subsidiary Corporation, and the title to any real
<PAGE>
estate vested by deed or otherwise, under the pertinent state laws or any other
jurisdiction, and of the Subsidiary Corporation, shall not revert or be in any
way impaired; but all rights of creditors including the bondholders of the Bond
Issue, and all liens upon any property of the Subsidiary Corporation shall be
preserved unimpaired, and all debts, liabilities and duties of the Subsidiary
Corporation shall thenceforth attach to the Survivor Corporation and may be
enforced against it to the same extent as if such debts, liabilities and duties
had been incurred or contracted by it. At any time, or from time to time, after
the Effective Date, the last acting officers of the Subsidiary Corporation and
the corresponding officers of the Survivor Corporation, may, in the name of the
Subsidiary Corporation, execute and deliver all such proper deeds, assignments
and other instruments and take or cause to be taken all such further or other
action as the Survivor Corporation may deem necessary or desirable in order to
vest, perfect or confirm in the Survivor Corporation title to and possession of
all of the Subsidiary Corporation's property, rights, privileges, powers,
franchises, immunities and interests and otherwise to carry out the purposes of
this Plan.
2. The name of the Survivor Corporation from and after the Effective
Date shall be GREAT DANE TRAILERS, INC.
<PAGE>
3. (a) The Articles of Incorporation of Great Dane Trailers as in
effect on the date hereof shall from and after the Effective Date be and
continue to be the Articles of Incorporation of the Survivor Corporation until
changed or amended as provided by law.
(b) The Bylaws of Great Dane Trailers as in effect on the date
hereof shall from and after the Effective Date be and continue to be the Bylaws
of the Survivor Corporation until amended as provided therein.
4. The number, names and addresses of the directors and officers
of the Surviving Corporation, who shall hold office until their successors are
elected and shall qualify, according to the Bylaws of the Survivor Corporation,
are:
DIRECTORS: David R. Markin
---------- 2016 N. Pitcher St.
Kalamazoo, MI 49007
Allan R. Tessler
2016 N. Pitcher St.
Kalamazoo, MI 49007
Martin L. Solomon
2016 N. Pitcher St.
Kalamazoo, MI 49007
Wilmer J. Thomas, Jr.
2016 N. Pitcher St.
Kalamazoo, MI 49007
OFFICERS: Harvey Granger, Jr., President
--------- P. O. Box 67
East Lathrop Avenue
Savannah, GA 31402
<PAGE>
H. T. Skipper, Jr., Executive Vice
President
P.O. Box 67
East Lathrop Avenue
Savannah, GA 31402
Allan R. Tessler, Vice President
P. O. Box 67
East Lathrop Avenue
Savannah, GA 31402
Daniel J. O'Connor, Secretary
P.O. Box 67
East Lathrop Avenue
Savannah, GA 31402.
5. The number of shares of authorized capital stock of the
Survivor Corporation is 200 shares of common stock of no par value, of which 100
shares are issued and outstanding.
6. The capital stock of the Subsidiary Corporation shall be
completely canceled, and that of Great Dane Trailers shall be unaffected by the
merger.
7. The Subsidiary Corporation agrees that its business enterprise
and related activities shall continue after the Effective Date of the merger.
In this respect, the assets owned by the Subsidiary Corporation prior to the
merger shall be owned by the Survivor Corporation after the merger, and there
shall be no sale or other disposition of such assets or termination of business
activities in respect of such merger or thereafter, except in the ordinary
course of business, and as set forth in the following paragraph no. 8.
<PAGE>
8. Those certain assets and properties owned by the Subsidiary
Corporation commonly known as the assets and properties of the Wayne, Nebraska
manufacturing plant, formerly Timpte Industries, after being transferred to and
assumed by the Survivor Corporation as a result of this merger, will immediately
be transferred to Great Dane Trailers Nebraska, Inc., a wholly-owned subsidiary
of the Survivor Corporation and such transfer will be subject to all liabilities
and obligations on those certain assets and properties, all as contemplated by
Section 351, 368(a)(1)(A) and 368(a)(2)(C) of the Internal Revenue Code of 1986,
as amended, and the regulations promulgated thereunder; and Great Dane Trailers
Nebraska, Inc., shall become responsible for and pay when due, all the
liabilities and obligations of the Survivor Corporation to which those certain
assets and properties are subject, including but not limited to the Bond Issue,
which liabilities and obligations will remain in effect upon the completion of
such transfer, but in no event shall Great Dane Trailers become removed as a
primary obligor on all such liabilities and obligations.
9. (a) This Plan may be terminated and the proposed merger
abandoned at any time before the Effective Date, whether before or after
approval by the directors of Great Dane Trailers or of the Subsidiary
Corporation, if the Board of Directors of Great Dane Trailers or of the
Subsidiary Corporation duly adopts a resolution abandoning same.
<PAGE>
(b) For the convenience of the parties hereto and to facilitate
the filing of this Plan, any number of counterparts hereof may be executed, and
each such counterpart shall be deemed to be an original instrument.
IN WITNESS WHEREOF, GREAT DANE TRAILERS INDIANA, INC., AND GREAT
DANE TRAILERS, INC., have caused this PLAN OF MERGER to be executed by their
respective duly authorized officers and their respective corporate seals to be
affixed hereto, on the date first above written.
GREAT DANE TRAILERS INDIANA, INC.
By: /s/ Fred T. Mote
------------------------------
Fred T. Mote, President
[CORPORATE SEAL]
Attest:/s/ Daniel J. O'Conner,
--------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE TRAILERS, INC.
BY: /s/ Harvey Granger, Jr.
--------------------------
Harvey Granger, Jr.
President
[CORPORATE SEAL]
Attest: /s/ Daniel J. O'Conner
------------------------
Daniel J. O'Connor,
Secretary
<PAGE>
STATE OF GEORGIA )
)
COUNTY OF CHATHAM )
CERTIFICATE AS TO PUBLICATION
THIS is to certify that (i) the undersigned is the duly elected and
acting Secretary of Great Dane Trailers, Inc., and (ii) pursuant to O.C.G.A,
Section 14-2-1105.1(a), a request for publication of a notice of intent to file
the Articles of Merger of Great Dane Trailers, Inc., and payment therefor, have
been made as required by O.C.G.A. Section 14-2-1105.1(b).
WITNESS my hand and seal, this 26 day of March, 1990.
/s/ Daniel J. O'Connor (L.S.)
-----------------------------
Daniel J. O'Connor, Secretary
Great Dane Trailers, Inc.
<PAGE>
ARTICLES OF MERGER
OF
GREAT DANE TRAILER SALES, INC., a Delaware corporation
GREAT DANE ATLANTA, INC., a Delaware Corporation
GREAT DANE BIRMINGHAM, INC., a Delaware corporation
GREAT DANE CHARLOTTE, INC., a Delaware corporation
GREAT DANE COLUMBUS, INC., an Ohio corporation
GREAT DANE HOUSTON, INC., a Texas corporation
GREAT DANE INDIANAPOLIS, INC., a Delaware corporation
GREAT DANE JACKSONVILLE, INC. a Delaware corporation
GREAT DANE KNOXVILLE, INC., a Tennessee corporation
GREAT DANE LANCASTER, INC., a Delaware corporation
GREAT DANE MEMPHIS, INC., a Tennessee corporation
GREAT DANE MIAMI, INC., a Delaware corporation
GREAT DANE NASHVILLE, INC., a Tennessee corporation
GREAT DANE ORLANDO, INC., a Florida corporation
GREAT DANE RICHMOND, INC., a Virginia corporation
GREAT DANE SPRINGDALE, INC., an Arkansas corporation
GREAT DANE TAMPA, INC., a Delaware corporation
INTO
GREAT DANE TRAILERS, INC., a Georgia corporation
The undersigned corporations, pursuant to the provisions of Title
14, Section 14-2-217 of the Official Code of Georgia Annotated, as amended,
thereby execute the following Articles of Merger.
ARTICLE ONE
The names of the corporations proposing to merge and the names of
the States under the laws of which such corporations are organized are as
follows:
NAME OF CORPORATION STATE OF INCORPORATION
- ------------------- ----------------------
Great Dane Trailer Sales, Inc. Delaware
Great Dane Atlanta, Inc. Delaware
Great Dane Birmingham, Inc. Delaware
Great Dane Charlotte, Inc. Delaware
Great Dane Columbus, Inc. Ohio
Great Dane Houston, Inc. Texas
Great Dane Indianapolis, Inc. Delaware
Great Dane Jacksonville, Inc. Delaware
Great Dane Knoxville, Inc. Tennessee
Great Dane Lancaster, Inc. Delaware
Great Dane Memphis, Inc. Tennessee
Great Dane Miami, Inc. Delaware
<PAGE>
Great Dane Nashville, Inc. Tennessee
Great Dane Orlando, Inc. Florida
Great Dane Richmond, Inc. Virginia
Great Dane Springdale, Inc. Arkansas
Great Dane Tampa, Inc. Delaware
Great Dane Trailers, Inc. Georgia
ARTICLE TWO
The laws of Delaware, Ohio, Texas, Tennessee, Florida, Virginia and
Arkansas, the States under which such foreign corporations are organized, permit
such merger.
ARTICLE THREE
The name of the surviving corporation shall be GREAT DANE TRAILERS,
INC. (the "Surviving Corporation"), and it shall be governed by the laws of the
State of Georgia.
ARTICLE FOUR
The Plan of Merger attached hereto and made a part hereof was
approved by the Board of Directors of the Surviving Corporation in the manner
prescribed by the Official Code of Georgia Annotated and was approved by each of
the undersigned foreign corporations (the "Merging Corporations"), in the manner
prescribed by the laws of the States under which each such Merging Corporation
is organized.
ARTICLE FIVE
The Plan of Merger was duly adopted by the written consent of the
sole shareholder of each of the Merging Corporations on the 30th day of May,
1989, and by the unanimous written consent of the Board of Directors of the
Surviving Corporation, without approval of its sole shareholder, on the 30th day
of May, 1989.
ARTICLE SIX
All provisions of the laws of the State of Georgia and the States of
Delaware, Ohio, Texas, Tennessee, Florida, Virginia and Arkansas, applicable to
the proposed merger, have been complied with.
<PAGE>
ARTICLE SEVEN
The merger shall be effective on the 1st day of July, 1989, at
12:00 A.M.
IN WITNESS WHEREOF, each of the undersigned corporations has caused
these Articles of Merger to be executed in its name by its President or
Executive Vice President and attested to by its Secretary, on this 21st
day of JUNE, 1989.
GREAT DANE TRAILER SALES, INC.
By: /s/ Henry T. Skipper, Jr.
----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE ATLANTA, INC.
By: /s/ Henry T. Skipper, Jr.
----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE BIRMINGHAM, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE CHARLOTTE, INC.
By: /s/ Henry T. Skipper, Jr.
----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
<PAGE>
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE COLUMBUS, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE HOUSTON, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE INDIANAPOLIS, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE JACKSONVILLE, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
<PAGE>
GREAT DANE KNOXVILLE, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE LANCASTER, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE MEMPHIS, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE MIAMI, INC.
By: /s/ Henry T. Skipper, Jr.
----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
<PAGE>
GREAT DANE NASHVILLE, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE ORLANDO, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE RICHMOND, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE SPRINGDALE, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
<PAGE>
GREAT DANE TAMPA, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE TRAILERS, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
<PAGE>
STATE OF GEORGIA )
)
COUNTY OF CHATHAM )
PLAN OF MERGER
THIS PLAN OF MERGER (this "Plan") is made and entered into this 21
day of June, 1989, by and among GREAT DANE TRAILER SALES, INC., a Delaware
corporation ("Great Dane Trailer Sales"); GREAT DANE ATLANTA, INC., a Delaware
corporation ("Great Dane Atlanta"); GREAT DANE BIRMINGHAM, INC., a Delaware
corporation ("Great Dane Birmingham"); GREAT DANE CHARLOTTE, INC., a Delaware
corporation ("Great Dane Charlotte"); GREAT DANE COLUMBUS, INC., an Ohio
corporation ("Great Dane Columbus"); GREAT DANE HOUSTON, INC., a Texas
corporation ("Great Dane Houston"); GREAT DANE INDIANAPOLIS, INC., a Delaware
corporation ("Great Dane Indianapolis"); GREAT DANE JACKSONVILLE, INC., a
Delaware corporation ("Great Dane Jacksonville"); GREAT DANE KNOXVILLE, INC., a
Tennessee corporation ("Great Dane Knoxville"); GREAT DANE LANCASTER, INC., a
Delaware corporation ("Great Dane Lancaster"); GREAT DANE MEMPHIS, INC., a
Tennessee corporation ("Great Dane Memphis"); GREAT DANE MIAMI, INC., a Delaware
corporation ("Great Dane Miami"); GREAT DANE NASHVILLE, INC., a Tennessee
corporation ("Great Dane Nashville"); GREAT DANE ORLANDO, INC., a Florida
corporation ("Great Dane Orlando") GREAT DANE RICHMOND, INC., a Virginia
corporation ("Great Dane Richmond"); GREAT DANE SPRINGDALE, INC., an Arkansas
corporation ("Great
<PAGE>
Dane Springdale"); GREAT DANE TAMPA, INC., a Delaware corporation ("Great Dane
Tampa"); AND GREAT DANE TRAILERS, INC., a Georgia corporation ("Great Dane
Trailers" or "Survivor Corporation"); (Great Dane Trailer Sales, Great Dane
Atlanta, Great Dane Birmingham, Great Dane Charlotte, Great Dane Columbus, Great
Dane Houston, Great Dane Indianapolis, Great Dane Jacksonville, Great Dane
Knoxville, Great Dane Lancaster, Great Dane Memphis, Great Dane Miami, Great
Dane Nashville, Great Dane Orlando, Great Dane Richmond, Great Dane Springdale
and Great Dane Tampa are hereinafter sometimes called the "Subsidiary
Corporations.")
W I T N E S E T H:
WHEREAS, Great Dane Trailers is the record owner of all of the
issued and outstanding shares of the capital stock of each of the Subsidiary
Corporations; and
WHEREAS, the directors of Great Dane Trailers and the directors of
each of the Subsidiary Corporations have determined that it is in the best
interests of Great Dane Trailers and the Subsidiary Corporations that the
Subsidiary Corporations be merged into Great Dane Trailers.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, provisions and covenants contained
<PAGE>
herein, Great Dane Trailers and each of the Subsidiary Corporations agree as
follows:
1. The Subsidiary Corporations shall be merged into Great Dane
Trailers at the effective date (as hereinafter defined) and thereafter shall be
and exist as a single corporation under the applicable provisions of the laws of
the State of Georgia and the laws of the State under which each of the
Subsidiary Corporations is organized, and the parties hereto adopt and agree to
the following terms and conditions relating to the merger and the mode of
carrying the same into effect, by the transfer to Great Dane Trailers of all of
the assets of the Subsidiary Corporations, subject to all of the liabilities and
obligations of the Subsidiary Corporations which liabilities and obligations
Great Dane Trailers shall assume, in complete cancellation of all of the issued
and outstanding capital stock of the Subsidiary Corporations:
(a) The merger is conditioned upon the directors of Great Dane
Trailers and of each of the Subsidiary Corporations agreeing to adopt this Plan,
in accordance with the applicable provisions of the laws of the State of Georgia
and the laws of the State under which each of the Subsidiary Corporations is
organized.
<PAGE>
(b) Upon adoption of this plan and the obtaining of directors'
approval as provided in paragraph (a) above, Articles of Merger shall be filed
and recorded in accordance with the laws of the State of Georgia and the laws of
the State under which each of the Subsidiary Corporations is organized. The
merger shall be effective on July 1, 1989, at 12:00 A.M., which date is
hereinafter referred to as the "Effective Date."
(c) On the Effective Date, the separate existence of each of the
Subsidiary Corporations shall cease, and the Subsidiary Corporations shall be
merged into Great Dane Trailers which, as the Survivor Corporation, shall
possess all of the rights, privileges, powers and franchises, of a public as
well as of a private nature, and be subject to all of the restrictions,
disabilities and duties of each of the Subsidiary Corporations; and all and
singular, the rights, privileges, powers and franchises of the Subsidiary
Corporations, and all property, real, personal and mixed and all debts due to
the Subsidiary Corporations on whatever account, and all other things in action
belonging to such Subsidiary Corporations, shall be vested in the Survivor
Corporation; and all property, rights, privileges, powers and franchises, and
all and every other interest shall be thereafter as effectually the property of
the Survivor Corporation as same was of the Subsidiary Corporations, and the
title to any real estate vested by deed or otherwise, under the pertinent state
laws or any other
<PAGE>
jurisdiction, and any of the Subsidiary Corporations, shall not revert or be in
any way impaired; but all rights of creditors and all liens upon any property of
any of the Subsidiary Corporations shall be preserved unimpaired, and all debts,
liabilities and duties of the Subsidiary Corporations shall thenceforth attach
to the Survivor Corporation and may be enforced against it to the same extent as
if such debts, liabilities and duties had been incurred or contracted by it. At
any time, or from time to time, after the Effective Date, the last acting
officers of the Subsidiary Corporations and the corresponding officers of the
Survivor Corporation, may, in the names of the Subsidiary Corporations execute
and deliver all such proper deeds, assignments and other instruments and take or
cause to be taken all such further or other action as the Survivor Corporation
may deem necessary or desirable in order to vest, perfect or confirm in the
Survivor Corporation title to and possession of all of the Subsidiary
Corporations' property, rights, privileges, powers, franchises, immunities and
interests and otherwise to carry out the purposes of this Plan.
2. The name of the Survivor Corporation from and after the
Effective Date shall be GREAT DANE TRAILERS, INC.
3. (a) The Articles of Incorporation of Great Dane Trailers as in
effect on the date hereof shall from and after the Effective Date be and
continue to be the Articles of
<PAGE>
Incorporation of the Survivor Corporation until changed or amended as provided
by law.
(b) The Bylaws of Great Dane Trailers as in effect on the date
hereof shall from and after the Effective Date be and continue to be the Bylaws
of the Survivor Corporation until amended as provided therein.
4. The number, names and addresses of the directors and officers
of the Survivor Corporation, who shall hold office until their Successors are
elected and shall qualify, according to the Bylaws of the Survivor Corporation,
are:
DIRECTORS: David R. Markin
2016 N. Pitcher St.
Kalamazoo, MI 49007
Allan R. Tessler
2016 N. Pitcher St.
Kalamazoo, MI 49007
Martin L. Solomon
2016 N. Pitcher St.
Kalamazoo, MI 49007
Wilmer J. Thomas, Jr.
2016 N. Pitcher St.
Kalamazoo, MI 49007
OFFICERS: Harvey Granger, Jr., President
P. 0. Box 67
East Lathrop Avenue
Savannah, GA 31402
H.T. Skipper, Jr., Executive Vice
President
P. 0. Box 67
East Lathrop Avenue
Savannah, GA 31402
<PAGE>
Allan R. Tessler, Vice President
P. 0. Box 67
East Lathrop Avenue
Savannah, GA 31402
Daniel J. O'Connor, Secretary
P. 0. Box 67
East Lathrop Avenue
Savannah, GA 31402
5. The number of shares of authorized capital stock of the
Survivor Corporation is 200 shares of common stock of no par value, of which 100
shares are issued and outstanding.
6. The capital stock of each of the Subsidiary Corporations shall
be completely canceled, and that of Great Dane Trailers shall be unaffected by
the merger.
7. The Subsidiary Corporations agree that the business enterprise
and related activities of each of such corporations and of such corporations
taken as a whole shall continue after the Effective Date of the merger. In this
respect, the assets owned by the Subsidiary Corporations prior to the merger
shall continue to be owned by the Survivor Corporation after the merger, and
there shall be no sale or other disposition of such assets or termination of
business activities in respect of such merger or thereafter, except in the
ordinary course of business.
8. (a) This Plan may be terminated and the proposed merger
abandoned at any time before the Effective Date, whether
<PAGE>
before or after approval by the directors of Great Dane Trailers or of the
Subsidiary Corporations, if the Board of Directors of Great Dane Trailers or of
any of the Subsidiary Corporations duly adopts a resolution abandoning same.
(b) For the convenience of the parties hereto and to facilitate
the filing of this Plan, any number of counterparts hereof may be executed, and
each such counterpart shall be deemed to be an original instrument.
IN WITNESS WHEREOF, GREAT DANE TRAILER SALES, INC.; GREAT DANE
ATLANTA, INC.; GREAT DANE BIRMINGHAM, INC.; GREAT DANE CHARLOTTE, INC.; GREAT
DANE COLUMBUS, INC.; GREAT DANE HOUSTON, INC.; GREAT DANE INDIANAPOLIS, INC.;
GREAT DANE JACKSONVILLE, INC.; GREAT DANE KNOXVILLE, INC.; GREAT DANE LANCASTER,
INC.; GREAT DANE MEMPHIS, INC.; GREAT DANE MIAMI, INC.; GREAT DANE NASHVILLE,
INC.; GREAT DANE ORLANDO, INC.; GREAT DANE RICHMOND, INC.; GREAT DANE
SPRINGDALE, INC.; GREAT DANE TAMPA, INC.; and GREAT DANE TRAILERS, INC., have
caused this PLAN OF MERGER to be executed by their respective duly authorized
officers and their respective corporate seals to be affixed hereto, on the date
first above written.
GREAT DANE TRAILER SALES, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
<PAGE>
Attest: /s/ D.J. O'Connor
-------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE ATLANTA, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE BIRMINGHAM, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE CHARLOTTE, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE COLUMBUS, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
<PAGE>
GREAT DANE HOUSTON, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE INDIANAPOLIS, INC.
By: /s/ Henry T. Skipper, Jr.
---------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
-----------------------
Daniel J. O'Connor,
Secretary
GREAT DANE JACKSONVILLE, INC.
By: /s/ Henry T. Skipper, Jr.
----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE KNOXVILLE, INC.
By: /s/ Henry T.Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
<PAGE>
GREAT DANE LANCASTER, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE MEMPHIS, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
-------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE MIAMI, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE NASHVILLE, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
<PAGE>
GREAT DANE ORLANDO, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE RICHMOND, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
-------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE SPRINGDALE, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
GREAT DANE TAMPA, INC.
By: /s/ Henry T. Skipper, Jr.
----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
<PAGE>
GREAT DANE TRAILERS, INC.
By: /s/ Henry T. Skipper, Jr.
-----------------------------
Henry T. Skipper, Jr.,
President
[CORPORATE SEAL]
Attest: /s/ D.J. O'Connor
------------------------
Daniel J. O'Connor,
Secretary
<PAGE>
PETITION FOR AMENDMENT OF CHARTER
STATE OF GEORGIA )
) SS.:
CHATHAM COUNTY )
TO THE SUPERIOR COURT OF SAID
STATE AND COUNTY
The Petition of Great Dane Trailers, Inc. respectfully shows that:
1. It was originally incorporated by an order of this Court on
the 24th day of August, 1931 under the name and style of THE STEEL PRODUCTS
COMPANY, INC.
2. The Charter of the Corporation was revived and renewed on the
23rd day of December 1952 by order of this Court for a term of thirty-five (35)
years from and after the 24th day of August, 1951.
3. The name and style of the Corporation was changed by order of
this Court on the 13th day of December 1957 from THE STEEL PRODUCTS COMPANY,
INC. to GREAT DANE TRAILERS, INC.
4. Petitioner now seeks to amend its Charter so as to change the
authorized capital from $2,000,000 represented by the total par value of Class A
Preferred Stock, $100 par value, Class B Preferred Stock, $100 par value and
Common Stock, $1.00 par value to an authorized capital of $2,000,000 represented
by 200 shares of Common Stock without par value.
5. Pursuant to written waiver of notice of stockholders', a
meeting was held on May 22, 1968 at which the sole stockholder was represented.
Resolutions authorizing an
<PAGE>
amendment to the Company's Charter changing its capital structure was
unanimously adopted. A certified copy of said resolutions are attached hereto
and marked Exhibit A.
WHEREFORE, petitioner prays that this application for amendment be
allowed, filed and published as provided by law.
GREAT DANE TRAILERS, INC.
By /s/
----------------------
CHAIRMAN OF THE BOARD
<PAGE>
EXHIBIT A
"RESOLVED, that the Charter of this Corporation
be amended so as to change the authorized capital from
$2,000,000 represented by the total par value of Class A
Preferred Stock, $100 par value, Class B Preferred Stock,
$100 par value and Common Stock, $1.00 par value, to an
authorized capital of $2,000,000 represented by 200 shares
of Common Stock without par value;
FURTHER RESOLVED, that upon the filing of the
amendment to the Charter of this Corporation, set forth
in the foregoing resolution, with the appropriate
authorities of the State of Georgia, all of the outstanding
shares of Class A Preferred Stock, $100 par value, Class B
Preferred Stock, $100 par value, and Common Stock, $1.00 par
value, be changed into 100 shares of Common Stock, without
par value;
FURTHER RESOLVED, that the appropriate officers of this
Corporation are hereby authorized and directed to take the
necessary steps and to execute and file the necessary
documents to accomplish the purposes of the foregoing
resolutions."
I, GILES MORROW, Secretary of GREAT DANE TRAILERS, INC., a Georgia
corporation, do hereby certify that the foregoing is a true and correct copy of
resolutions which were adopted by the holder of all of the outstanding stock of
GREAT DANE TRAILERS, INC., at a special meeting of the stockholders of said
corporation, held on May 22, 1968.
This the 7th day of June, 1968.
/s/ Giles Morrow
-------------------
Secretary
(Corporate Seal)
<PAGE>
ORDER
The foregoing petition of GREAT DANE TRAILERS, INC. has been read
and considered and is hereby ordered filed.
It appears to this Court that the application for amendment in
connection with a change of the authorized capital stock of GREAT DANE TRAILERS,
INC. is within the laws of Georgia, and it is ordered that the petition be
published as required by law and the Charter of said Corporation is hereby
amended to change its authorized capital stock as prayed.
This 24th day of June, 1968.
/s/ Dunbar Harrison
---------------------
Judge, Superior Court
Chatham County
<PAGE>
(Affidavit - Corporate Charter)
STATE OF GEORGIA
CHATHAM COUNTY
Before me personally appeared /s/ Gail Sullivan who being first duly
sworn, deposes and says:
That deponent is an agent of Southeastern Newspapers Corporation, a
Georgia corporation, doing business in Chatham County, Georgia, under the trade
name of Savannah News-Press, publisher of Savannah Evening Press, a newspaper
having general circulation and whose principal place of business is in said
county and that she is duly authorized to make this affidavit:
That there has been deposited with said newspaper the cost, to-wit
Sixty Dollars ($60.00) of publishing four insertions, once a week for four
weeks of the application of the amendment of the charter of Great Dane Trailers
with the order of the Judge thereon.
/s/ Gail Sullivan
---------------------
(Deponent)
Sworn to and subscribed
before me this 25 day of
June, 1968
/s/ Miriam Polter
- --------------------------
Notary Public, Chatham County, Ga.
(Notarial Seal)
<PAGE>
CLERK'S OFFICE
SUPERIOR COURT OF CHATHAM COUNTY, GEORGIA
I, BEN P. AXSON, Clerk of the Superior Court of said County, do hereby
certify that the foregoing four (4) pages of typewritten matter constitute a
true and correct copy of the original application for Amendment of Charter
Great Dane Trailers, Inc., the original order of the Judge thereon,
and the filing of the Clerk thereon, and receipt for the costs which have been
paid to the Clerk, all as appears from the Records of this office.
IN TESTIMONY WHEREOF, I have hereunto set my official signature and the
seal of said Court this 26th day of June 1968.
/s/ Ben P. Axson
---------------------------
Clerk Superior Court,
Chatham County, Georgia
<PAGE>
IN THE SUPERIOR COURT OF CHATHAM COUNTY JUNE TERM, 1968
IN RE:
GREAT DANE TRAILERS, INC. AMENDMENT OF CHARTER
Bill of Costs
Clerk's Fee for Recording proceedings 500 Words
---------------------------------
at 15 CENTS per 100 words $ .75
----------------------------------------------
Clerk's Fee as prescribed by the Statute 5.00
------------------------
Total $5.75
Received Payment 26th day of June 1968
/s/ Ben P. Axson
-------------------------
Clerk Superior Court,
Chatham County, Georgia
<PAGE>
GEORGIA )
)
CHATHAM COUNTY )
TO THE SUPERIOR COURT OF SAID
STATE AND COUNTY
The Petition of THE STEEL PRODUCTS COMPANY, INC. for an amendment
to its Charter changing its name to GREAT DANE TRAILERS, INC., respectfully
shows:
1. At a special meeting of the stockholders of the Corporation
held at noon on the 27th day of November, 1957 in the offices of E. Ormonde
Hunter, Savannah Bank & Trust Building, Savannah, Georgia, pursuant to due
notice of the time, place and purpose of the said meeting, a resolution was
adopted as follows:
"RESOLVED, that the charter of the Corporation
be amended to change the corporate name from
THE STEEL PRODUCTS COMPANY, INC.
to
GREAT DANE TRAILERS, INC.
BE IT FURTHER RESOLVED, that the President and
Secretary of the Corporation are authorized and directed
to do all things necessary to accomplish the amendment to
the charter changing the corporate name to Great Dane
Trailers, Inc. so that same will become effective on the
first day of January, 1958."
A Certificate of the Secretary of the Corporation showing the proper
adoption of the said resolution is hereto attached as Exhibit "A" and made a
part of this Petition.
<PAGE>
2. Your Petitioner was incorporated by this Honorable Court with
its principal place of business in Chatham County, Georgia, on the 24th day of
August, 1931.
3. The Charter of the Corporation having expired, same was
revived and renewed on the 23rd day of December, 1952, by order of the Superior
Court of Chatham County, Georgia, for the term of thirty-five (35) years from
and after the 24th day of August, 1931.
4. When the Corporation was incorporated, the amount of capital
to be employed was fixed at Fifty Thousand Dollars ($50,000.00) divided into
five hundred (500) shares of common stock with the par value of One Hundred
Dollars ($100.00) per share, but Petitioner was given the right and power to
increase the said capital from time to time to any sum not to exceed Five
Hundred Thousand Dollars ($500,000.00); the said increase to be in common or
preferred stock or both. Thereafter, on the 18th day of July, 1938, the capital
of the Corporation was increased by the issuance of Fifty Thousand Dollars
($50,000.00) of preferred stock divided into five hundred (500) shares of the
par value of One Hundred Dollars ($100.00) each. Thereafter, on the 15th day of
December, 1952, by appropriate action of the Stockholders of the Corporation,
the capital of the Corporation was increased to a total of Five Hundred Thousand
Dollars ($500,000.00) by a common stock dividend of Four Hundred Thousand
Dollars ($400,000.00) par value.
<PAGE>
5. The Corporation thereafter amended its Charter by order dated
20 September, 1955, securing authority to increase its capital over and above
Five Hundred Thousand Dollars ($500,000.00) as aforesaid, up to any sum not in
excess of Two Million Dollars ($2,000,000.00), the increase to be effected from
time to time by action of its stockholders.
6. There have been no amendments to the original Charter other
than hereinbefore set forth.
7. The name "Great Dane Trailers, Inc." is not the name of any
other existing Corporation in the State of Georgia as shown by Certificate of
the Secretary of State hereto attached and made a part of this petition as
Exhibit "B".
WHEREFORE, your petitioner prays that its Charter may be amended as
petitioned, and that the same amendment may be placed on the record in the Book
of Charters and the minutes of the Superior Court of Chatham County, Georgia.
AND YOUR PETITIONER will ever pray.
THE STEEL PRODUCTS COMPANY, INC.
By: /s/ CHRIS HAMMOND
-----------------------------
President
CONNERAT, DUNN, HUNTER
CUBBEDGE & HOULIHAN
/s/ E. Ormonde Hunter
Attorneys for Petitioner
<PAGE>
EXHIBIT "A"
I, LENA H. CASSEL, do hereby certify that I am Secretary of The
Steel Products Company, Inc. and that the following resolution was unanimously
adopted by all Stockholders of record at a special meeting of the stockholders
of the Corporation held on the 27th day of November, 1957, pursuant to due
notice of the time, place and purpose of the said meeting to all Stockholders of
record:
"RESOLVED, that the charter of the Corporation be
amended to change the corporate name from
THE STEEL PRODUCTS COMPANY, INC.
to
GREAT DANE TRAILERS, INC.
BE IT FURTHER RESOLVED, that the President and
Secretary of the Corporation are authorized and directed
to do all things necessary to accomplish the amendment to
the charter changing the corporate name to Great Dane
Trailers, Inc. so that same will become effective on the
first day of January, 1958."
WITNESS my official hand and seal of the Corporation, this 11
day of December, 1957.
/s/ L.H. Cassel
------------------
Secretary
<PAGE>
G E O R G I A )
)
CHATHAM COUNTY )
TO THE SUPERIOR COURT OF SAID
STATE AND COUNTY,
The Petition of the STEEL PRODUCTS COMPANY, INC. for an
amendment to its Charter respectfully shows:
1. Your Petitioner was incorporated by this Honorable Court with
its principal place of business in Chatham County, Georgia, on the 24th day of
August, 1931.
2. The Charter of the Corporation having expired, same was
revived and renewed on the 23rd day of December, 1952, by order of the Superior
Court of Chatham County, Georgia, for the term of thirty-five (35) years from
and after the 24th day of August, 1951.
3. When the Corporation was incorporated, the amount of capital
to be employed was fixed at Fifty Thousand Dollars ($50,000.00) divided into
five hundred (500) shares of common stock with the par value of One Hundred
Dollars ($100.00) per share, but Petitioner was given the right and power to
increase the said capital from time to time at any sum not to exceed Five
Hundred Thousand Dollars ($500,000.00); the said increase to be in common or
preferred stock or both. Thereafter, on the 18th day of July, 1938, the capital
of the Corporation was increased by the issuance of Fifty Thousand Dollars
($50,000.00) of preferred stock divided into five hundred (500) shares of the
<PAGE>
par value of One Hundred Dollars ($100.00) each. Thereafter, on the 15th day of
December, 1952, by appropriate action of the Stockholders of the Corporation,
the capital of the Corporation was increased to a total of Five Hundred Thousand
Dollars ($500,000.00) by a common stock dividend of Four Hundred Thousand
Dollars ($400,000.00) par value.
4. The Corporation now desires authority to increase its capital
over and above Five Hundred Thousand Dollars ($500,000.00) as aforesaid up to
any sum not in excess of Two Million Dollars ($2,000,000.00) pursuant to which
all Stockholders of record, both preferred and common, unanimously adopted a
resolution as follows:
"RESOLVED that the Charter of the Corporation be amended so as to
provide that:
"The Capital of the Company may be increased from
time to time by a two-thirds majority vote of the
stockholders entitled to vote to any sum not to exceed a
total of Two Million Dollars ($2,000,000.00), and likewise
the said stock may be decreased from time to time to any
sum not less than Five Hundred Thousand Dollars ($500,000.00);
the said increase to be issued in such stock, common or
preferred, with such par value, dividend rate, priorities
and privileges as the said common stockholders may provide
with the approval of the preferred stockholders, if necessary,
as provided by law. Any of the new stock, if issued, may be
acquired and paid for by surrender of the present stock in
the Company as the said stockholder; may by a two-thirds
majority vote provide.
"BE IT FURTHER RESOLVED that the officers of the
Company are directed to carry to a conclusion such proceedings as may be
necessary to effect the proposed amendment."
<PAGE>
A certificate of the Secretary of the Corporation showing the proper
adoption of the said resolution to amend the Charter is hereto attached as
Exhibit "A" and made a part of this petition.
5. There have been no amendments to the original Charter other
than hereinbefore set forth.
WHEREFORE, your Petitioner prays that its Charter may be amended, as
petitioned, and that the same may be placed on record in the Book of Charters in
the Superior Court of Chatham County, Georgia.
AND YOUR PETITIONER will ever pray.
THE STEEL PRODUCTS COMPANY, INC.
By E. ORMONDE HUNTER
--------------------------
Its attorney-at-law
<PAGE>
G E O R G I A )
)
CHATHAM COUNTY )
I, LENA H. CASSEL, do hereby certify that I am Secretary of
the Steel Products Company, Inc. and that the following resolution was
unanimously adopted by all Stockholders of record at a special meeting of the
Stockholders of the Corporation held on the 14th day of September, 1955,
pursuant to due notice of the time, place and purpose of the said meeting to all
Stockholders of record:
"RESOLVED that the Charter of the Corporation be amended so as to
provide that:
"The capital of the Company may be increased from time to time
by a two-thirds majority vote of the Stockholders entitled to vote
to any sum not to exceed a total of $2,000,000.00 and likewise the
said stock may be decreased from time to time to any sum not less
then $500,000.00; the said increase to be issued in such stock,
common or preferred, with such par value, dividend rate, priorities
and privileges as the said common stockholders may provide with the
approval of the preferred stockholders, if necessary, as provided by
law. Any of the new stock, if issued, may be acquired and paid for
by surrender of the present stock in the Company as the said
stockholders may by a two-thirds majority vote provide.
"BE IT FURTHER RESOLVED that the officers of the Company are
directed to carry to a conclusion such proceedings as may be necessary to effect
the proposed amendment."
WITNESS my official hand and seal of the Corporation, this 14 day
of September, 1955.
/s/ LENA H. CASSEL
---------------------
Secretary.
(CORP SEAL)
EXHIBIT "A"
<PAGE>
TO THE SUPERIOR COURT OF CHATHAM COUNTY,
GEORGIA.
IN RE:
Petition of STEEL PRODUCTS )
COMPANY, INC. for Amendment )
to its Charter. )
O R D E R
The foregoing Petition for the amendment to the Charter of the
STEEL PRODUCTS COMPANY, INC. being presented and same appearing to be
lawful and legitimately within the purview and intention of the laws of this
State, it is hereby
ORDERED, DECREED and ADJUDGED that the present Charter of the
Steel Products Company, Inc. be and is hereby amended as follows:
"The Capital of the Company may be increased from time to time
by a two-thirds majority vote of the Stockholders entitled to vote to any
sum not to exceed a total of Two Million Dollars ($2,000,000.00), and
likewise the said stock may be decreased from time to time to any sum not
less than Five Hundred Thousand Dollars ($500,000.00); the said increase
to be issued in such stock, common or preferred, with such par value,
dividend rate, priorities and privileges as the said common stockholders
may provide with the approval of the preferred stockholders, if necessary,
as provided by law. Any of the new stock, if issued, may be acquired and
paid for by surrender of the present stock on the Company as the said
stockholders may by a two-thirds majority vote provide."
IN OPEN COURT, this 20 day of September, 1955.
/s/ EDWIN A. MCWHERTER
-----------------------------------
JUDGE, SUPERIOR COURT, CHATHAM CO.,
GEORGIA.
<PAGE>
IN THE SUPERIOR COURT OF CHATHAM COUNTY SEPTEMBER TERM, 1955.
IN RE:
STEEL PRODUCTS COMPANY, INC. AMENDMENT TO CHARTER
Bill of Costs
Clerk's Fee for Record proceedings 1100 Words
-------------------------
at 15 CENTS per 100 words $1.65
-----------------------------------
Clerk's Fee as prescribed by the Statute $5.00
--------------------
Total - - - - - $6.65
Received Payment 20th day of September, 1955.
/s/ William B. Scott
------------------------------
Clerk Superior Court, Chatham
County, Georgia
<PAGE>
C L E R K ' S O F F I C E
SUPERIOR COURT OF CHATHAM COUNTY, GEORGIA
I, WILLIAM B. SCOTT, Clerk of the Superior Court of said County, do
hereby certify that the foregoing Four (4) pages of typewritten matter
constitute a true and correct copy of the original application for
AMENDMENT TO CHARTER STEEL PRODUCTS COMPANY, INC. the original
order of the Judge thereon, and the filing of the Clerk thereon, and receipt for
the costs which have been paid to the Clerk, all as appears from the Records of
this office.
IN TESTIMONY WHEREOF, I have hereunto set my official signature and
the seal of said Court this 20th day of September 1955.
/S/ William B. Scott
------------------------------
Clerk Superior Court, Chatham
County, Georgia
<PAGE>
G E O R G I A )
)
CHATHAM COUNTY )
TO THE SUPERIOR COURT OF SAID COUNTY
The Petition of THE STEEL PRODUCTS COMPANY, INC. for reviver of
its Charter respectfully shows:
ONE
Your Petitioner was incorporated by this Honorable Court with its
principal place of business in Chatham County, Georgia, on the 24th day of
August 1931; a certified copy of the Charter, as same appears upon the record of
this Court, Judgment Number, J - 28075, being made a part of this petition as
Exhibit "A". There have been no amendments thereto.
TWO
The Charter of the Corporation expired by its terms on the 24th day
of August, 1951, but the Corporation has continued in business in ignorance of
such expiration, continuously conducting its affairs under its Charter and
By-Laws as a Corporation.
THREE
The Corporation now desires to revive its charter for thirty-five
(35) years from the date of expiration with all the rights, powers and
privileges which are accorded by the present laws of Corporation; all in
accordance with resolution to that effect, adopted unanimously by all
stockholders of record in
<PAGE>
meeting duly called for that purpose, a certified copy of which is made a part
of this petition as Exhibit "B".
FOUR
Petitioner has secured and does herewith tender to the Court a
certificate of the Secretary of State that the name, THE STEEL PRODUCTS
COMPANY, INC., is not the name of any other existing Corporation of the State
of Georgia.
WHEREFORE YOUR PETITIONER prays that:
(a) The Charter of the Steel Products Company, Inc. may be revived
from the 24th day of August, 1951; the said Corporation to be incorporated for
thirty-five (35) years from that date.
(b) All acts, since the expiration of said Charter, done in the
name of and for and on behalf of said Corporation, be ratified and confirmed as
the acts of the Corporation.
(c) The Corporation, as revived, may have all the powers,
privileges and rights granted by the present laws of Corporation.
/s/ Geo. A. Mercer, Jr.
------------------------
PRESIDENT
/S/ Connerat, Dunn, Hunter,
CUBBEDGE & HOULIHAN
----------------------------
ATTORNEY FOR PETITIONER
<PAGE>
G E O R G I A )
)
CHATHAM COUNTY )
TO THE SUPERIOR COURT OF CHATHAM COUNTY
The petition of JOSEPH PEARCE WHELESS, GEORGE A. MERCER, JR., and
FRANCIS S. MACKALL, all of Chatham County, Georgia respectfully shows the Court
as follows:-
1ST:- That they desire for themselves, their associates and
successors, a charter and to be incorporated under the name of
THE STEEL PRODUCTS COMPANY, INC.
2ND:- That they desire to be incorporated for a period of
twenty years with the right to renew said charter at the expiration of that
time.
3RD:- The object of the Corporation is pecuniary gain to
itself and to its shareholders.
4TH:- Petitioners desire the right to carry on the business
which the Corporation intends to do; the same being as follows:-
(A) To design, purchase, manufacture, sell, install, repair and
deal in all kinds of products made out of iron, steel, aluminum, and any other
materials ferrous and/or non-ferrous.
(B) To buy, own, possess, sell and deal in all kinds of materials,
ferrous or non-ferrous, whether in the raw, partly manufactured, or completely
manufactured state.
(C) To design, purchase, manufacture, sell, install and repair all
kinds of ventilating systems and equipment, including fans, air-conditioning
systems and apparatus, pneumatic apparatus for gathering, conveying and
disposing or raw material, waste, manufactured or partly manufactured products.
(D) To design, purchase, manufacture, sell, install, and repair
heating and tempering apparatus and sheet metal work.
(E) To design, purchase, manufacture, sell, repair and demonstrate
motor trucks; truck, automobile and tractor trailers; both semi and full
trailers; truck bodies and trailer bodies of all kinds; and also all kinds of
material and equipment used in connection with such trucks, truck bodies and
trailers.
(F) To carry on an engineering and manufacturing business and to
let, rent, repair and deal in machinery and implements of all kinds.
<PAGE>
5TH:- The principal place of business shall be in Chatham
County, Georgia, but petitioners desire that the Corporation shall have the
right to establish branches, agencies, and factories and to carry on the said
business in other places within the State of Georgia and other States of the
United States and foreign countries whenever its Board of Directors may
determine to do so, subject to the approval of the majority vote of the entire
voting stock of the Corporation.
6TH:- The amount of capital to be employed which will be
actually paid in before the completion of the organization, and over 10% of
which has been paid in, is the sum of Fifty Thousand ($50,000.00) Dollars,
divided into Five Hundred (500) Shares of common stock of the par value of One
Hundred, ($100.00) Dollars each, but petitioners desire the right and power to
increase said capital from time to time to any sum not in excess of Five Hundred
Thousand ($500,000.00) Dollars, when expressly authorized by three-fourths vote
of the entire voting stock of the corporation and similarly to decrease such
increased capital to any sum not less than Fifty Thousand ($50,000.00) Dollars;
in the event that there be any increased capital such may be either common or
preferred or both.
7TH:- Petitioners desire the right to make all kinds of
contracts, purchase, hold, and sell any property of any kind and execute
appropriate conveyances, which may be necessary in legitimately carrying into
effect the purpose of the corporation and for securing debts due to it, and to
exercise all corporate powers necessary to the purposes of its organization.
8TH:- Petitioners desire that the corporation have the power
to either lease or mortgage or to lease and mortgage its property, real and
personal, and its franchises, and to execute conveyances appropriate to such
purposes provided that no lease of both property and franchises shall be
effective unless expressly authorized or ratified by three-fourths vote of the
entire voting stock of the corporation.
9TH:- The holder of each share of common stock shall be
entitled to one vote and if and whom such preferred stock shall be issued it
shall have such priorities and be issued on such terms and conditions as may be
fixed or determined by three-fourths vote of the entire voting stock of the
corporation.
10TH:- Petitioners desire that the capital stock of said
corporation may be paid for in cash and/or property at a fair valuation.
11TH:- Petitioners desire the right to have and use a common
seal, to plead, and to impleaded, to make such by-laws as may be necessary and
to exercise all corporate powers necessary for the purpose of its organization,
and to have all powers and privileges and immunities incident to like private
corporations permissible under the laws and statutes of Georgia for such cases
made and provided.
<PAGE>
WHEREFORE petitioners pray that this Honorable Court may pass an
order declaring that this petition for a charter and incorporation be granted
and that the petitioners, their associates and successors be incorporated under
the said corporate name with the said capital for the purposes and objects and
with the powers and privileges and immunities aforesaid.
/s/ F. S. Mackall
-------------------------
ATTORNEY FOR PETITIONER.
IN THE SUPERIOR COURT OF CHATHAM COUNTY, GEORGIA.
IN RE: )
THE STEEL PRODUCTS COMPANY, INC. )
ORDER OF INCORPORATION.
The petition of JOSEPH PEARCE WAILS, GEORGE A. MERCER, JR.,
and FRANCIS S. MACKALL to be incorporated under the name of THE STEEL PRODUCTS
COMPANY, INC. for a period of twenty years, having been duly read and
considered, and it appearing to the Court that the said petition has been
published in the Savannah Evening Press once a week for four weeks, and the Laws
otherwise complied with;
IT IS HEREBY ORDERED AND ADJUDGED the the petitioners prayers
and all the privileges prayed for be granted and said Corporation have all the
rights, privileges and immunities lawfully enjoyed by any like corporation in
this state.
IN Open Court This 24th day of August 1931.
/S/ Peter W. Meldrim
-----------------------
JUDGE SUPERIOR COURT OF
CHATHAM COUNTY, GEORGIA
<PAGE>
STATE OF GEORGIA )
CHATHAM COUNTY ) CLERK'S OFFICE, SUPERIOR COUNTY
I, JOHN R. FAWCETT, Deputy Clerk of the Superior Court of Chatham
County, Georgia, do hereby certify: the annexed and foregoing two (2) sheets to
be a true and correct Photo-copy of the petition and Order of Incorporation of
the "STEEL PRODUCTS COMPANY, INC." granted on the 24TH day of August, 1931, as
the same appears of record and on file in this office, under Judgement number
J-28075.
IN WITNESS WHEREOF, I have hereunto set my official signature and affixed the
Seal of Superior Court, at the City of Savannah, County and State aforesaid upon
the 16TH day of DECEMBER in the year of our Lord One Thousand Nine Hundred
and Fifty-two (1952).
/s/ John R. Fawcett
- ----------------------------
Deputy Clerk Superior Court,
Chatham County, Georgia
SEAL
EXHIBIT "A"
<PAGE>
G E O R G I A )
)
CHATHAM COUNTY )
I, L. H. CASSEL, do hereby certify that I am Secretary of Steel
Products Company, Inc. and that a resolution was unanimously adopted by all
Stockholders of Record at the regular annual Stockholders' Meeting of the
Corporation, held on the 15th day of December, 1952, pursuant to call and notice
which included the reviving of said Charter.
"RESOLVED that the Charter of the Corporation be revived as
provided by the laws of the State of Georgia, same having expired on the
24th day of August, 1951, but the Corporation having continued in business
in ignorance of such expiration, although the Company has continued to
function as a Corporation in all matters since that date; the president of
the Corporation being authorized and directed to do any and all things
proper and necessary to accomplish the reviver of the said Charter with
all powers now incident to Corporations of this State."
GIVEN under my official hand and the Seal of the Corporation, this
19TH day of December, 1952.
/S/ L. H. Cassel
----------------
SECRETARY
(SEAL
OF
CORP)
EXHIBIT "B"
<PAGE>
IN THE SUPERIOR COURT OF CHATHAM COUNTY,
GEORGIA.
IN RE:
PETITION FOR REVIEW OF CHARTER OF THE STEEL
PRODUCTS COMPANY, INC.
O R D E R
The Petition of THE STEEL PRODUCTS COMPANY, INC. is granted for
the reviver of its Charter, it appearing that the application is legitimately
within the purview and intention of the laws of Georgia and that this is not the
name of any other existing Corporation, and the reviver of the said Charter is
effective from and after the 24th day of August, 1951, for a term of thirty-five
(35) years from said date, with all the rights, powers and privileges granted in
said Charter and all rights, powers and privileges given to Corporations of this
State by its present laws; hereby ratifying and confirming, as the act and deed
of the said Corporation, all matters which have been done since the date of the
expiration for and in the name of the Corporation.
Let this Petition and Order be filed and advertised as required by
law.
IN OPEN COURT, this 23 day of December, 1952.
(SEND) D. A. ANKINSON
----------------------------------------
JUDGE, SUPERIOR COURT, CHATHAM
COUNTY, GEORGIA.
<PAGE>
IN THE SUPERIOR COURT OF CHATHAM COUNTY DECEMBER TERM, 1952.
IN RE:
REVIVAL OF CHARTER "THE STEEL PRODUCTS COMPANY,INC."
Bill of Costs
Clerk's Fee for Record proceedings 1000 Words
-------------------------
at 15 CENTS per 100 words $1.50
----------------------------------
Clerk's Fee as prescribed by the Statute $5.00
--------------------
Total - - - - - $6.50
Received Payment 23rd day of December, 1952.
/s/ William B. Scott
-----------------------------
Clerk Superior Court, Chatham
County, Georgia
<PAGE>
C L E R K ' S O F F I C E
SUPERIOR COURT OF CHATHAM COUNTY, GEORGIA
I, WILLIAM B. SCOTT, Clerk of the Superior Court of said County, do
hereby certify that the foregoing Seven (7) pages of typewritten matter
constitute a true and correct copy of the original application for
Revival OF Charter "THE STEEL PRODUCTS COMPANY, INC." the
original order of the Judge thereon, and the filing of the Clerk thereon, and
receipt for the costs which have been paid to the Clerk, all as appears from the
Records of this office.
IN TESTIMONY WHEREOF, I have hereunto set my official signature and
the seal of said Court this 23rd day of December 1952.
/s/ William B. Scott
--------------------------
Clerk Superior Court, Chatham
County, Georgia
<PAGE>
TO THE SUPERIOR COURT OF CHATHAM COUNTY,
GEORGIA.
IN RE:
Petition of THE
STEEL PRODUCTS COMPANY,
INC. for the Amendment to
its Charter.
O R D E R
The foregoing Petition for the amendment of the Charter of THE
STEEL PRODUCTS COMPANY, INC. to change its name to GREAT DANE TRAILERS, INC.
being presented and same appearing to be lawful and legitimately within the
purview and intention of the laws of this State, it is hereby
ORDERED, DECREED and ADJUDGED that the present Charter of The
Steel Products Company, Inc. be and is hereby amended, and the name of the
Company changed to GREAT DANE TRAILERS, INC.
IN OPEN COURT, this 13 day of December, 1957.
/s/ EDWIN A. MCWHORTER
------------------------------
JUDGE, SUPERIOR COURT, CHATHAM
COUNTY, GEORGIA.
<PAGE>
IN THE SUPERIOR COURT OF CHATHAM COUNTY DECEMBER TERM, 1957.
IN RE:
THE STEEL PRODUCTS COMPANY, INC. CHANGE OF NAME TO GREAT
DANE TRAILERS, INC.
Bill of Costs
Clerk's Fee for Record proceedings 1000 Words
--------------------------
at 15 CENTS per 100 words $1.50
------------------------------------
Clerk's Fee as prescribed by the Statute $6.00
--------------------
Total - - - - - $6.50
Received Payment 13th day of December, 1957.
/s/ William P. Scott
-----------------------------
Clerk Superior Court, Chatham
County, Georgia
<PAGE>
STATE OF GEORGIA )
COUNTY OF CHATHAM )
Personally appeared before the undersigned officer, duly authorized
to administer oaths, Jewel Lucas, who, on oath deposes and says that
she is the duly authorized agent of the MORNING NEWS, INC., a corporation
created and existing under the Laws of the State of Georgia, and that said
corporation publishes the Savannah Evening Press, a newspaper having general
circulation and whose principal place of business is in Chatham County, Georgia,
and that here has been deposited with said newspaper the costs, to-wit
$54.00 of publishing four insertions, once a week for four weeks, of
the application of Amend Charter of The Steel Products Company, Inc.
with the order of the Judge thereon.
Sworn to and subscribed before
me this 12th day of December 1957. /s/ Jewel Lucas
/s/ Ester Zittrauer
- --------------------
Notary Public, Chatham County, Georgia
<PAGE>
C L E R K ' S O F F I C E
SUPERIOR COURT OF CHATHAM COUNTY, GEORGIA
I, WILLIAM B. SCOTT, Clerk of the Superior Court of said County, do
hereby certify that the foregoing four (4) pages of typewritten matter
constitute a true and correct copy of the original application for CHANGE OF
NAME FROM THE STEEL PRODUCTS COMPANY, INC. TO GREAT DANE TRAILERS, INC. the
original order of the Judge thereon, and the filing of the Clerk thereon, and
receipt for the costs which have been paid to the Clerk, all as appears from the
Records of this office.
IN TESTIMONY WHEREOF, I have hereunto set my official signature and
the seal of said Court this 13th day of December 1957.
/s/ William B. Scott
--------------------
Clerk Superior Court, Chatham
<PAGE>
Exhibit 3.4
BYLAWS
OF
GREAT DANE TRAILERS, INC.
ARTICLE ONE
CAPITAL STOCK
1.1 Share certificates shall be numbered in the order in which they are
issued. They shall be signed by the President and Secretary or an Assistant
Secretary and the seal of the corporation shall be affixed thereto. The name of
the person owning the shares, the number of shares and the date of issue shall
be entered on the stub of each certificate. Any such certificates exchanged or
returned shall be cancelled by the Secretary or an Assistant Secretary and
placed in the minute book.
1.2 Transfers of shares shall be made on the records of the corporation
by the holder in person or by power of attorney, on surrender of the old
certificate for such shares, duly endorsed for transfer.
1.3 Each holder of common stock shall be entitled to one (1) vote for
each share of stock standing in his or her name.
1.4 Shares in the corporation shall be voted by the holder of record or
by another shareholder in the corporation in accordance with a proxy or any
agreement providing for the voting of the shares.
<PAGE>
ARTICLE TWO
SHAREHOLDERS' MEETINGS
2.1 The annual meeting of the shareholders of the corporation shall be
held on the third Wednesday in September of each year, or, if said day is not a
legal holiday, then on the next succeeding day not a holiday; provided,
however, the Board of Directors, by appropriate resolution, may select another
date for the annual meeting of shareholders.
2.2 Annual or special meetings of shareholders may be held within or
without the State of Georgia at such place and time as may from time to time be
fixed by the Board of Directors or as may be specified in the notice of said
meeting.
2.3 Special meetings of the shareholders may be called at any time by
the President, any director, or any holder or holders of as much as one-third of
the outstanding capital stock of the corporation, upon not less than ten (10)
nor more than fifty (50) days notice, either mailed to the last known address or
personally given to each shareholder. Notice of any special meeting of
shareholders shall state the purpose or purposes for which the meeting is
called.
2.4 Notice of any meeting of the shareholders may be waived by
instrument in writing executed before or after the meeting. Attendance at such
meeting in person or by proxy shall constitute a waiver of such notice thereof,
unless such attendance is for the sole purpose of objecting to the holding of
such meeting.
2.5 At all meetings of shareholders a majority of the
2.
<PAGE>
outstanding shares of stock shall constitute a quorum for the transaction of
business, and no resolution or business shall be transacted without the
favorable vote of the holders of a majority of the shares represented at the
meeting and entitled to vote. A lesser number may adjourn from day to day, and
shall announce the time and place to which the meeting is adjourned if they do
so adjourn the meeting.
2.6 Any action to be taken at a meeting of the shareholders, or any
action that may be taken at a meeting of the shareholders, may be taken without
a meeting if a consent in writing setting forth the action so taken shall be
signed by, all of the shareholders entitled to vote with respect to the subject
matter thereof.
ARTICLE THREE
DIRECTORS
3.1 Subject to these Bylaws, or any lawful agreement between or among
the shareholders, the full and entire management of the affairs and business of
the corporation shall be vested in the Board of Directors, which shall have and
may exercise all of the powers that may be exercised or performed by the
corporation.
3.2 The Board of Directors shall consist of five persons. Thereafter,
the then serving Board of Directors shall be empowered to, from time to time,
increase or reduce the fixed number of directors serving on the Board of
Directors. Any decision by the Board of Directors to increase or reduce the
fixed number of directors comprising the Board of Directors shall
3.
<PAGE>
require the vote of a majority of the directors then serving. No reduction in
the number of directors shall have the effect of shortening the term of any
incumbent director. Directors shall be elected at an annual meeting of the
shareholders and serve for a term of one (1) year and until their successors are
elected. A majority of said directors shall constitute a quorum for the
transaction of business. All resolutions adopted and all business transacted by
the Board of Directors shall require the affirmative vote of a majority of the
directors present at the meeting.
3.3 If any vacancy shall occur among the directors by reason of death,
resignation, incapacity to serve, an increase in the number of directors, or
otherwise, the remaining directors shall continue to act; such vacancies may be
filled by a majority of the directors then in office, and, if not filled by
action of the directors, may be filled by the shareholders at any meeting held
during the existence of a vacancy.
3.4 The directors shall meet annually following the annual meeting of
the shareholders. Special meetings of the directors may be called at any time
by the President or by any director, on two (2) days notice. Notice of any such
meeting may be waived by instrument in writing. Attendance in person at such
meeting shall constitute a waiver of notice thereof, unless such attendance is
for the sole purpose of objecting to the holding of such meeting.
3.5 Any action to be taken at a meeting of the directors,
4.
<PAGE>
or any action that may be taken at a meeting of the directors, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the directors.
3.6 Any director may be removed from office, with or without cause, upon
the majority vote of the shareholders at a meeting with respect to which notice
of such purpose is given.
ARTICLE FOUR
OFFICERS
4.1 The principal officers of the corporation shall consist of a
President, a Secretary and a Treasurer. The officers shall be elected by the
Board of Directors and shall serve at the pleasure of the directors.
4.2 The President shall be the chief executive officer of the
corporation and shall have general and active management of the operation of the
corporation. The President also shall be responsible for the day-to-day
administration of the corporation, including general supervision of the policies
and financial affairs of the corporation.
4.3 The Secretary (or an Assistant Secretary) shall keep the minutes of
all the meetings of the shareholders and directors and shall have charge of the
minute book and seal of the corporation. The Secretary shall perform such other
duties and have such other powers as may be assigned to him from time to time by
the Board of Directors and/or the President.
4.4 The Treasurer shall be charged with the day-to-day management of the
financial affairs of the corporation and shall
5.
<PAGE>
have the responsibility to recommend action concerning the corporation's
financial affairs to the President and the Board of Directors. The Treasurer
shall also have such other duties and responsibilities as may be assigned to him
from time to time by the Board of Directors and/or the President.
4.5 The Board of Directors may elect, or the President may appoint, one
or more Vice Presidents and one or more assistants to the Secretary and/or
Treasurer, who, if elected, shall have such duties and responsibilities as may
be prescribed by the Board of Directors and/or the President.
4.6 Any person may hold two or more offices except the offices of
President and Secretary.
ARTICLE FIVE
SEAL
5.1 The seal of the corporation shall be in such form as the Board of
Directors may from time to time determine. In the event it is inconvenient to
use such seal at any time, the signature of the corporation followed by the
word "SEAL" enclosed in parentheses or scroll, shall be deemed the seal of the
corporation. The seal shall be in the custody of the Secretary (or as Assistant
Secretary) and shall be affixed on all corporate share certificates and other
corporate papers where necessary or appropriate.
ARTICLE SIX
AMENDMENTS
6.1 These Bylaws may be amended by a majority vote of the Board of
Directors or by majority vote of the shareholders,
6.
<PAGE>
provided that the shareholders may provide by resolution that any Bylaw
provision adopted, repealed, amended or altered by them may not be repealed,
amended, altered or readopted by the Board of Directors.
ARTICLE SEVEN
INDEMNIFICATION
7.1 (a) Under the circumstances prescribed in section 7.2 hereof, the
corporation shall indemnify and hold harmless any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption that the person did not act in a manner which he
7.
<PAGE>
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) Under the circumstances prescribed in section 7.2 hereof, the
corporation shall indemnify and hold harmless any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation, unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper.
7.2 To the extent that a director, officer, employee or
8.
<PAGE>
agent of the corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in section 7.1 hereof, or
in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith. Except as provided in the preceding sentence and
except as may be ordered by a court, any indemnification under section 7.1
hereof shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in section 7.1 hereof. Such a determination shall be made
(1) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2) by
independent legal counsel employed by the corporation, in a written opinion, if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, or (3) by the affirmative vote of a majority
of the shares entitled to vote thereon.
7.3 Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors
generally or as to a specific case or as to a specific person or persons
(designated by name, title or class of persons), upon receipt of an undertaking
by or on behalf of the director, officer, employee
9.
<PAGE>
or agent to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the corporation as authorized in this Article
Seven.
7.4 The provisions for indemnification and advancement of expenses
provided by this Article Seven shall not be deemed exclusive of any other
rights, in respect of indemnification or otherwise, to which those seeking
indemnification may be entitled under any bylaw, agreement, either specifically
or in general terms, resolution, or approved by the affirmative vote of the
holders of a majority of the shares entitled to vote thereon taken at a meeting
the notice of which specified that such bylaw, resolution or agreement would be
placed before the shareholders, both as to action by a director, officer,
employee or agent in his official capacity and as to action in another capacity
while holding such office or position, except that no such other rights, in
respect to indemnification or otherwise, may be provided or granted with respect
to the liability of any director, officer, employee or agent for (a) any
appropriation, in violation of his duties, of any business opportunity of the
corporation; (b) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (c) liabilities of a
director imposed by section 14-2-832 of the Georgia Business Corporation Code;
or (d) any transaction from which the director, officer, employee or agent
derived an improper personal benefit.
7.5 (a) The corporation may purchase and maintain insurance on behalf
of any person who is or was a director,
10.
<PAGE>
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under the provisions of this
Article Seven.
(b) If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the shareholders or
by an insurance carrier pursuant to insurance maintained by the corporation, the
corporation shall, not later than the next annual meeting of shareholders unless
such meeting is held within three months from the date of such payment, and, in
any event within 15 months from the date of such payment, send by first class
mail (or if the corporation shall have at the time more than 500 shareholders
entitled to vote, by such other means as may be authorized by the Georgia
Business Corporation Code for notices of meetings of shareholders), to its
shareholders of record at the time entitled to vote for the election of
directors a statement specifying the persons paid, the amounts paid, and the
nature and status at the time of such payment of the litigation or threatened
litigation.
7.6 As a condition to any such right of indemnification, or to receive
advancement of expenses, the corporation may require that it be permitted to
participate in the defense of any such action or proceeding through legal
counsel designated by the
11.
<PAGE>
corporation and at the expense of the corporation.
7.7 The rights to indemnification and advancement of expenses provided
in this Article Seven shall continue notwithstanding that a person who would
otherwise have been entitled to indemnification or advancement of expenses
hereunder shall have ceased to be a director, officer, employee or agent, and
shall inure to the benefit of the heirs, executors and administrators of such
persons.
12.
<PAGE>
Exhibit 3.5
ARTICLES OF INCORPORATION
OF
GREAT DANE TRAILERS NEBRASKA, INC.
I.
The name of the corporation is: "Great Dane Trailers Nebraska,
Inc."
II.
The corporation shall have perpetual duration.
III.
The corporation is organized for profit under the Nebraska Business
Corporation Act for the purpose of the manufacturing of truck trailers and the
doing and performing of all acts and things incidental and/or related thereto,
and for any other lawful purpose for which corporations may be incorporated
under sections 21-2001 to 21-20,134 of the Nebraska Business Corporation Act.
IV.
The corporation shall have all of the powers and shall enjoy all of
the rights, privileges and immunities as provided for under the Nebraska
Business Corporation Act.
V.
The corporation shall have the authority to issue not more than
1,000 shares of $1.00 par value common stock.
VI.
The initial registered office of the corporation shall be
<PAGE>
located at 1200 Centennial Road, Wayne, Wayne County, Nebraska 68787. The
initial registered agent of the corporation is K. L. Mendel, whose address is
1200 Centennial Road, Wayne, Nebraska 68787.
VII.
The name and address of the incorporator is John M. Hewson, III,
Hunter, Maclean, Exley & Dunn, P.C., Third Floor, 200 East St. Julian Street,
Savannah, Georgia 31401.
VIII.
The mailing address of the initial principal office of the
corporation is c/o K. L. Mendel, 1200 Centennial Road, Wayne, Nebraska 68787.
IX.
The corporation may make distributions to its shareholders and/or
purchase its own shares to the fullest extent permitted by the Nebraska Business
Corporation Act as the same now exists or hereafter may be amended.
IN WITNESS WHEREOF, the undersigned incorporator has set his hand
and seal to these Articles of Incorporation, this 4th day of December, 1989.
/s/ JOHN M. HEWSON III (L.S.)
-----------------------
John M. Hewson, III,
Incorporator
<PAGE>
GREAT DANE TRAILERS, INC.
Lathrop Avenue
P.O. Box 67
Savannah, Georgia 31402-0067
(912) 232-4471
December 6, 1989
Secretary of State of Nebraska
Corporations Division
State Capitol Building
Lincoln, Nebraska 68509
Re: Incorporation of Great Dane Trailers Nebraska, Inc.
Dear Sir:
As Secretary of Great Dane Trailers, Inc., and Great Dane Trailers
Indiana, Inc., I hereby state the following:
1. Great Dane Trailers, Inc., a Georgia corporation, is qualified
to do business in the State of Nebraska.
2. Great Dane Trailers Indiana, Inc., a Delaware corporation, is
qualified to do business in the State of Nebraska.
3. Great Dane Trailers Indiana, Inc., owns the trade name "Great
Dane Trailers Nebraska," for use in the State of Nebraska.
4. Permission is hereby granted that the Articles of
Incorporation of Great Dane Trailers Nebraska, Inc., a Nebraska corporation, be
filed by your office.
Should you require additional information, please do not hesitate to
contact me.
Very truly yours,
GREAT DANE TRAILERS, INC.
By: s/ DANIEL J. O'CONNOR
----------------------------
Daniel J. O'Connor
Secretary
GREAT DANE TRAILERS INDIANA, INC.
By: s/ DANIEL J. O'CONNOR
----------------------------
Daniel J. O'Connor
Secretary
<PAGE>
STATE OF NEBRASKA )
) ss.
WAYNE COUNTY )
I, Linda Granfield, of said County, being first duly sworn, do depose and say
that I am bookkeeper of THE WAYNE HERALD, which is a legal semi-weekly
newspaper, wholly printed and published in its office in Wayne, Wayne County,
Nebraska, for more than fifty-two consecutive weeks prior to the first
publication of the annexed notice and the present time; that said newspaper now
has and during all of that time had an actual bona fide circulation of more than
three hundred copies weekly within said Wayne County, and that the notice hereto
attached has been published weekly for three consecutive week(s), in said paper,
commencing on the 14 day of December, 1989, and ending on the 28 day of December
1989 and further deponent sayeth not.
s/ LINDA GRANFIELD
- -----------------------------
Subscribed and sworn to before me this 10th day of January, 1990.
s/ PEGGY L. WRIGHT
- -------------------------------
Notary Public
<PAGE>
CERTIFICATE OF REVIVAL OR RENEWAL
OF A DOMESTIC OR NONPROFIT CORPORATION
To be submitted, in duplicate, to:
Secretary of State, Suite 2300 State Capitol,
Lincoln, Nebraska 68509
KNOWN ALL MEN BY THESE PRESENTS:
1. Now comes Kenneth L. Mendel, Vice President, and Robert V. Dyer, Asst.
Secretary and/or Treasurer, who on April 1, 1990, were duly elected as
officers of Great Dane Trailers Nebraska Inc. located as 1200 N.
Centennial Rd. Wayne, NE. 68787 a Nebraska corporation duly organized
under and by virtue of the laws of the state of Nebraska, for the purposes
of revising or renewing said corporation.
2. The existence of this corporation became (or will become) inoperative on
April 16, 1990, because of dissolution by the office of the Secretary of
State by expiration of existence, or for nonpayment of occupational taxes
or annual fees. The revival of this corporation shall be perpetual unless
sooner dissolved by proper action of its stockholders, or by due process
of law.
3. The registered office of this corporation in Nebraska shall be 1200 N.
Centennial Rd* Wayne Wayne Nebraska 68787 and the registered agent at such
address shall be Kenneth L. Mendel.**
* Address shall be complete, using full street address. A box number is
acceptable only in those cases where street addresses are not available.
** If the above-named registered agent or registered office constitutes a
change from the previous designation, this information will be entered
onto the corporation's records in this office. No further notification or
filing of a separate form is necessary.
SIGNATURE OF AT LEAST TWO
OFFICERS REQUIRED:
FILING FEES.
Domestic Revival . . .$28,00 Vice President KENNETH L. MENDEL
-----------------
Nonprofit Revival. . .$18.00 Asst. Secretary ROBERT V. DYER
---------------
Treasurer
-----------------------
- --------------------------------------------------------------------------
<PAGE>
CERTIFICATE OF GOOD STANDING IN THE STATE OF NEBRASKA
I, ALLEN J. BEERMANN, Secretary of State, do hereby certify the above-named
corporation to be in good standing.
IN TESTIMONY WHEREOF, the Secretary of State of Nebraska has hereby affixed his
signature or facsimile thereof and seal on the date set out in the recording
data.
(State Seal)
<PAGE>
DOMESTIC
CHANGE OF REGISTERED AND/OR REGISTERED OFFICE
(Submit in Duplicate)
TO: ALLEN J. BEERMANN, Secretary of State, Lincoln, Nebraska 68509
The following corporation, pursuant to the laws of the State of Nebraska, does
hereby wish to change its Registered Agent and/or Registered Office in the State
of Nebraska.
GREAT DANE TRAILERS NEBRASKA, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BEFORE CHANGE: GREAT DANE TRAILERS NEBRASKA, INC.
Registered Agent: KENNETH L. MENDEL 1046128
1200 N. CENTENNIAL RD.
Registered Office WAYNE NE 68787 Nebraska
- -----------------
The following change of registered office, registered agent, or both, were
authorized by a resolution duly adopted by the board of directors on the ______
day of July 1990.
The registered office of this corporation in Nebraska shall be 1200 N.
Centennial Rd* Wayne Nebraska 68787 and the registered agent at such address
shall be Terry Hanson.
* Address shall be complete, using full street address. A box number is
acceptable only in those cases where street addresses are not available.
Such statement shall be executed by the corporation by its president or a vice
president:
Dated: 8-6-92 President:
------------------------- ----------------------------------
or
Vice President:
---------------------------
<PAGE>
Exhibit 3.6
BYLAWS
OF
GREAT DANE TRAILERS NEBRASKA, INC.
ARTICLE ONE
CAPITAL STOCK
1.1 Share certificates shall be numbered in the order in which they are
issued. They shall be signed by the President and countersigned by the
Secretary or an Assistant Secretary, and the seal of the corporation shall be
affixed thereto. The name of the person owning the shares, the number of shares
and the date of issue shall be entered on the stub of each certificate. Any
share certificate exchanged, transferred or cancelled, including the stub of
each share certificate issued, shall be kept by the Secretary in the
corporation's minute book.
1.2 Transfers of shares shall be made on the records of the corporation
by the holder in person or by power of attorney, on surrender of the old
certificate for such shares, duly endorsed for transfer.
1.3 Each holder of common stock shall be entitled to one (1) vote for
each share of stock standing in his or her name.
1.4 Shares in the corporation shall be voted by the holder of record or
by another shareholder in the corporation in accordance with a proxy or any
agreement providing for the voting of the shares.
<PAGE>
ARTICLE TWO
SHAREHOLDERS' MEETINGS
2.1 The annual meeting of the shareholders of the corporation shall be
held at the corporation's principal office on the first Monday in January of
each year, or, if said day is not a business day, then on the next succeeding
day which is a business day; provided, however, the Board of Directors, by
appropriate resolution, may select another date and place for the annual meeting
of shareholders.
2.2 Annual or special meetings of shareholders may be held within or
without the State of Nebraska at such place and time as may from time to time be
fixed by the Board of Directors or as may be specified in the notice of said
meeting. If no location is specified, such meeting shall be held at the
principal office of the corporation.
2.3 Special meetings of the shareholders may be called at any time by
the President, any director or any holder or holders of as much as one-third of
the outstanding capital stock of the corporation. Notice of annual and special
meetings shall be given to the shareholders of record entitled to vote not less
than ten (10) nor more than sixty (60) days before the meeting. Notice of any
special meeting of shareholders shall state the purpose or purposes for which
the meeting is called, and no action may be taken at a special meeting which is
not specified or described in such notice.
2.4 Notice of any meeting of the shareholders may be waived by
instrument in writing executed before or after the meeting.
2.
<PAGE>
Attendance at such meeting in person or by proxy shall constitute a waiver of
such notice thereof, unless such attendance is for the sole purpose of objecting
to the holding of such meeting.
2.5 At all meetings of shareholders a majority of the outstanding shares
of stock shall constitute a quorum for the transaction of business, and no
resolution or business shall be transacted without the favorable vote of the
holders of a majority of the shares represented at the meeting and entitled to
vote. A lesser number may adjourn from day to day, announcing the time and
place to which the meeting is adjourned, but no further notice of the resumption
of an adjourned meeting need be given.
2.6 Any action to be taken at a meeting of the shareholders, or any
action that may be taken at a meeting of the shareholders, may be taken without
a meeting if a consent in writing, setting forth the action so taken, shall be
signed by, all of the shareholders entitled to vote with respect to the subject
matter thereof.
ARTICLE THREE
DIRECTORS
3.1 Subject to these Bylaws, or any lawful agreement between or among
the shareholders, the full and entire management of the affairs and business of
the corporation shall be vested in the Board of Directors, which shall have and
may exercise all of the powers that may be exercised or performed by the
corporation.
3.
<PAGE>
3.2 The Board of Directors shall consist of one or more members.
Directors shall be elected at the annual meeting of shareholders and serve until
the next annual meeting of shareholders or until their successors are elected,
whichever is later. A majority of the directors (or one-half of the directors
if there is an even number of directors then in office) shall constitute a
quorum for the transaction of business. All resolutions adopted and all
business transacted by the Board of Directors shall require the affirmative vote
of a majority of the directors present at the meeting.
3.3 The directors may fill the place of any director which may become
vacant prior to the expiration of his or her term, such appointment by the
directors to continue until the expiration of the term of the director whose
place has become vacant.
3.4 The directors shall meet annually following the annual meeting of
the shareholders. Special meetings of the directors may be called at any time
by the President or by any director upon two (2) days notice. Notice of any
such meeting may be waived by instrument in writing. Attendance in person at
such meeting shall constitute a waiver of notice thereof, unless such attendance
is for the sole purpose of objecting to the holding of such meeting.
3.5 Any action to be taken at a meeting of the directors, or any action
that may be taken at a meeting of the directors, may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the
4.
<PAGE>
directors.
3.6 Any director may be removed from office, with or without cause, upon
the majority vote of the shareholders at a meeting with respect to which notice
of such purpose is given.
ARTICLE FOUR
OFFICERS
4.1 The principal officers of the corporation shall consist of a
President and a Secretary and a Treasurer. The officers shall be elected by
the Board of Directors and shall serve at the pleasure of the directors.
4.2 Unless otherwise directed by the Board of Directors, the President
shall be the chief executive officer of the corporation, shall have general and
active management of the operation of the corporation, and shall be responsible
for the day-to-day administration of the corporation, including general
supervision of the policies and financial affairs of the corporation. The
President shall also perform such other duties and have such other powers and
responsibilities as may be assigned to him or her from time to time by the Board
of Directors.
4.3 The Secretary shall be responsible for the minutes of all the
meetings of the shareholders and directors and for authenticating records of the
corporation. The Secretary shall have charge of the corporation's minute book
and seal. The Secretary shall also perform such other duties and have such
other powers and responsibilities as may be assigned to him or her from time to
time by the President and/or the Board of
5.
<PAGE>
Directors.
4.4 The Treasurer shall be charged with the day-to-day management of the
financial affairs of the corporation and shall have the responsibility to
recommend action concerning the corporation's financial affairs to the President
and the Board of Directors. The Treasurer shall also perform such other duties
and have such other powers and responsibilities as may be assigned to him or her
from time to time by the President and/or the Board of Directors.
4.5 The Board of Directors may elect, or the President with the
concurrence of the Board of Directors may appoint, one or more Vice Presidents
and one or more assistants to the Secretary and/or Treasurer, who, if elected or
appointed, shall have such duties and responsibilities as may be assigned to
them from time to time by the President and/or the Board of Directors.
4.6 Any two or more offices may be held by the same person.
ARTICLE FIVE
SEAL
5.1 The seal of the corporation shall be in such form as the Board of
Directors may from time to time determine. In the event it is inconvenient to
use such seal at any time, the signature of the corporation followed by the
word "SEAL" enclosed in parentheses or scroll, shall be deemed the seal of the
corporation. The seal shall be in the custody of the Secretary and shall be
affixed on all corporate share certificates and other corporate papers where
necessary or appropriate.
6.
<PAGE>
ARTICLE SIX
AMENDMENTS
6.1 These Bylaws may be amended by a majority vote of the Board of
Directors or by a majority vote of the shareholders, provided that the
shareholders may provide by resolution that any Bylaw provision adopted,
repealed, amended or altered by them may not be repealed, amended, altered or
readopted by the Board of Directors.
ARTICLE SEVEN
NOTICES
7.1 Any notice required to be given under these Bylaws may be personally
delivered or may be mailed by first class mail, postage pre-paid, addressed to
the recipient at the address for such recipient maintained by the corporation in
its records. Such notice shall be deemed to have been given when received if
personally delivered or, if mailed, on the third day after the day on which it
was mailed. Any shareholder or director may establish or change the address to
which such notices shall be mailed or delivered by so notifying the corporation
in accordance with this Section 7.1. All notices to the corporation shall be
mailed or delivered to the principal office of the corporation.
ARTICLE EIGHT
INDEMNIFICATION
8.1 (a) Under the circumstances prescribed in section 8.2 hereof, the
corporation shall indemnify and hold harmless any person who was or is a party
or is threatened to be made a party
7.
<PAGE>
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation), by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERE or
its equivalent, shall not, of itself, create a presumption that the person did
not act in a manner which he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) Under the circumstances prescribed in section 8.2 hereof, the
corporation shall indemnify and hold harmless any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in
8.
<PAGE>
the right of the corporation to procure a judgment in its favor by reason of the
fact he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation; except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation,
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.
8.2 To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in section 8.1 hereof, or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith. Except as provided in the preceding sentence and except
as may be ordered by a court, any indemnification under section 8.1 hereof shall
be made by the
9.
<PAGE>
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
section 8.1 hereof. Such a determination shall be made (1) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) by independent legal counsel
employed by the corporation, in a written opinion, if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, or (3) by the affirmative vote of a majority of the shares entitled to
vote thereon.
8.3 Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors
generally or as to a specific case or as to a specific person or persons
(designated by name, title or class of persons), upon receipt of an undertaking
by or on behalf of the director, officer, employee or agent to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the corporation as authorized in this Article Eight.
8.4 The provisions for indemnification and advancement of expenses
provided by this Article Eight shall not be deemed exclusive of any other
rights, in respect of indemnification or otherwise, to which those seeking
indemnification may be entitled
10.
<PAGE>
under any bylaw, agreement, either specifically or in general terms, resolution,
or approved by the affirmative vote of the holders of a majority of the shares
entitled to vote thereon taken at a meeting the notice of which specified that
such bylaw, resolution or agreement would be placed before the shareholders,
both as to action by a director, officer, employee or agent in his official
capacity and as to action in another capacity while holding such office or
position, except that no such other rights, in respect to indemnification or
otherwise, may be provided or granted with respect to the liability of any
director, officer, employee or agent for (a) any appropriation, in violation of
his duties, of any business opportunity of the corporation; (b) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (c) liabilities of a director imposed by section 14-2-832 of
the Nebraska Business Corporation Act; or (d) any transaction from which the
director, officer, employee or agent derived an improper personal benefit.
8.5 (a) The corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability
11.
<PAGE>
under the provisions of this Article Eight.
(b) If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the shareholders or
by an insurance carrier pursuant to insurance maintained by the corporation, the
corporation shall, not later than the next annual meeting of shareholders unless
such meeting is held within three months from the date of such payment, and, in
any event within 15 months from the date of such payment, send by first class
mail (or if the corporation shall have at the time more than 500 shareholders
entitled to vote, by such other means as may be authorized by the Nebraska
Business Corporation Act for notices of meetings of shareholders), to its
shareholders of record at the time entitled to vote for the election of
directors a statement specifying the persons paid, the amounts paid, and the
nature and status at the time of such payment of the litigation or threatened
litigation.
8.6 As a condition to any such right of indemnification, or to receive
advancement of expenses, the corporation may require that it be permitted to
participate in the defense of any such action or proceeding through legal
counsel designated by the corporation and at the expense of the corporation.
8.7 The rights to indemnification and advancement of expenses provided
in this Article Eight shall continue notwithstanding that a person who would
otherwise have been entitled to indemnification or advancement of expenses
hereunder shall have ceased to be a director, officer, employee or agent,
12.
<PAGE>
and shall inure to the benefit of the heirs, executors and administrators of
such persons.
13.
<PAGE>
Exhibit 3.7
STATE OF TENNESSEE
--------------------------
CERTIFICATE OF INCORPORATION
--------------------------
Name. First. The name of the corporation is
ARROW EQUIPMENT CO., INC.
Address. Second. The address of the principal office of this
corporation in the State of Tennessee is
635 Hernando Street, Memphis, Tennessee.
Business. Third. The general nature of the business to be
transacted by this corporation is Lease or rent,
repair and service, and manufacture, purchase or
sell trucks and trailers, truck and trailer bodies
and highway motor equipment; [and generally deal
in renting or leasing, repairing, servicing,
manufacturing, purchasing and selling trucks and
trailer equipment, and highway motor equipment]
and accessories and component parts; also
generally deal in trucks and trailers, in truck
and trailer parts, repairs, service, equipment and
sell and exchange of trucks, trailers, truck and
trailer highway and motor equipment, accessories
and parts.
Stock, with Fourth. The maximum number of shares of stock
Classification which this corporation is authorized
and Distinguish- to have outstanding at any time is Five
ing Character- hundred (500) shares of common stock of
istics, if any. One Hundred Dollars ($100.00) per share with full
voting rights.
Initial Fifth. The amount of capital with which this
Capital. corporation will begin business shall be (not less
than One Thousand) Fifty Thousand Dollars; and
when such amount so fixed shall have been
subscribed for, all subscriptions of the stock of
this corporation shall be enforceable and it may
proceed to do business in the same manner and as
fully as though the maximum
<PAGE>
number of shares authorized under the provisions
of the preceding section hereof shall have been
subscribed for.
Duration. Sixth. The time of existence of this corporation shall be
perpetual.
Other Provi- Seventh.
sions, (See
Sec. 5, Sub-
section 7 of
the Corporation
Act of 1929.)
We, the undersigned, apply to the State of Tennessee, by virtue of
the laws of the land, for a Charter of Incorporation for the purposes and with
the powers, etc., declared in the foregoing instrument.
Witness our hands this 15th day of June, 1954.
Subscribing Witness: Nathan A. Carter, Jr.
Nathan A. Carter, Jr.
Sarah Martin Carter
Sarah Martin Carter
C. A. Davis, Jr.
C. A. Davis, Jr.
STATE OF TENNESSEE, COUNTY OF Shelby
Personally appeared before me the undersigned (Clerk of the County
Court or Notary Public) the within-named incorporations, Nathan A. Carter, Jr.,
Sarah Martin Carter, and C. A Davis, Jr. with whom I am personally acquainted,
and who acknowledged that they executed the within application for a Charter of
Incorporation for the purposes therein contained and expressed.
Witness my hand and official seal at office in Memphis, Tennessee,
this 15th day of June, 1954.
----------------------------------
C. A. Davis
(Signature of Notary Public)
(If Notary Public) My Commission expires 12 day of July, 1956.
(Official Title) Notary Public
<PAGE>
I, Edward Friar, Secretary of State, do certify that this Charter,
with certificate attached, the contents of which is a true copy, was this day
registered and certified by me.
This 16th day of June, 1954 G. EDWARD FRIAR, Secretary of
State. Fee $20.00
<PAGE>
AMENDMENT TO CHARTER OF INCORPORATION
OF
ARROW EQUIPMENT CO., INC., OF MEMPHIS, TENNESSEE
------------------------------
WHEREAS, at a called meeting of the Board of Directors of the Arrow
Equipment Co., Inc., said meeting having been properly called and held at the
office of the company at 635 Hernando Street, Memphis, Tennessee, a resolution
was passed by the Board of Directors of said corporation declaring it advisable
to increase the authorized capital stock of the corporation from five hundred
(500) shares of common stock of One Hundred Dollars ($100.00) per share with
full voting rights, to One thousand (1,000) shares of common stock of One
Hundred Dollars ($100.00) per share with full voting rights, and
WHEREAS, at a meeting of the stockholders of the Arrow Equipment
Co., Inc. properly called and held at the office of said company at 635 Hernando
Street, Memphis, Tennessee, at which meeting all of the stockholders of said
corporation were present in person, a resolution was unanimously passed
authorizing the Directors of said Corporation to apply to the State of Tennessee
for an amendment to the charter of said corporation whereby the authorized
capital stock of the corporation is increased to one thousand (1,000) shares of
common stock of One Hundred Dollars ($100.00) per share with full voting rights,
which resolution has been duly entered upon the minutes of said corporation, and
WHEREAS, at a subsequently called meeting of the Board of Directors
of said Corporation, properly called and held at the office of said corporation
at 635 Hernando Street, Memphis, Tennessee, the Board of Directors of said
Corporation, by proper resolution properly entered upon the minutes of said
corporation authorized and directed N. A. Carter, Jr. as President, and C. A.
Davis as Secretary of the Corporation to execute proper certificate applying for
amendment of the charter of the corporation for the purposes set out in the
resolution.
NOW THEREFORE, we, the undersigned, comprising the Board of
Directors and the President and Secretary respectively of the Arrow Equipment
Co., Inc., of 635 Hernando Street, Memphis, Tennessee, hereby apply to the State
of Tennessee for an amendment to the charter of incorporation for the purpose of
increasing the authorized capital stock of the corporation from five hundred
(500) shares of common stock of One Hundred Dollars ($100.00) per share with
full voting rights, to one thousand (1,000) shares of common stock of One
Hundred Dollars ($100.00) per shares with full voting rights.
<PAGE>
WITNESS our hands at memphis, Tennessee, this 27th day of October,
1954.
N. A. CARTER, JR.
-------------------------------
N. A. Carter, Jr. President
N. A. CARTER, JR.
- -------------------------------
N. A. Carter, Jr. Director
C. A. DAVIS
-------------------------------
C. A Davis Secretary
SARAH MARTIN CARTER
- -------------------------------
Sarah Martin Carter Director
C. A. DAVIS
- -------------------------------
C. A Davis Director
STATE OF TENNESSEE
COUNTY OF SHELBY
Personally appeared before me, the undersigned Notary Public, the
within named directors and officers, N. A. Carter, Jr., Sarah Martin Carter and
C. A. Davis, Directors, and N. A. Carter, Jr., President and C. A. Davis,
Secretary, with each of whom I am personally acquainted and who acknowledged
they executed the within application for an amendment to the Charter of
Incorporation for the purposes therein contained and expressed.
WITNESS my hand and Notarial Seal at office at Memphis, Tennessee,
this the 27 day of October, 1954.
(SEAL) CHARLES A. WALT
-------------------------------
Notary Public
My commission expires 3-30-56.
I, G. EDWARD FRIAR, Secretary of State, do hereby certify that this
amendment to charter, with certificate attached, the foregoing of which is a
true copy, was this day registered and certified to by me. This the 28th day of
October, 1954.
G. EDWARD FRIAR,
SECRETARY OF STATE
FEE: $20.00
<PAGE>
AMENDMENT TO CHARTER OF INCORPORATION
OF
ARROW EQUIPMENT CO., INC., MEMPHIS, TENNESSEE
------------------------------
WHEREAS, at a meeting of the Board of Directors of the Arrow
Equipment Co., Inc., said meeting having been properly called and held at the
office of the company at 1095 Harbor Avenue, Memphis, Tennessee, at 10:00 A.M.,
May 21, 1956, a resolution was passed by the Board of Directors of said
corporation declaring it advisable to increase the authorized capital stock of
the corporation from one thousand (1,000) shares of common stock of One Hundred
Dollars ($100.00) per share with full voting rights to twenty-five hundred
(2,500) shares of common stock of One Hundred Dollars ($100.00) per share with
full voting rights and to twelve hundred fifty (1,250) shares of preferred
stock, the preferred stock to be issued at the par value of One Hundred Dollars
($100.00) each, without any voting rights and the holders of said preferred
stock shall be entitled to receive and shall receive dividends on the value of
such stock as fixed by the Board of Directors pursuant to law at the rate of
five percent (5%) per annum, which shall be cumulative and set aside from the
net earnings and paid before any dividends shall be set aside or paid on the
shares of common capital stock and in event of liquidation or dissolution, or
winding up of the corporation or its business affairs the holders of shares of
preferred capital stock shall be entitled to be paid first before any
distribution of payment is to be made among the holders of common capital stock,
and
WHEREAS, at a meeting of the stockholders of the Arrow Equipment
Co., Inc. properly called and held at the office of said company at 1095 Harbor
Avenue, at 11:00 A.M., May 21, 1956, at which meeting all of the stockholders of
said corporation were present in person, the resolution mentioned in the
preceding paragraph was presented and on motion duly made and unanimously
carried said resolution unanimously adopted, and has been duly entered upon the
minutes of the corporation, and
WHEREAS, at a subsequent meeting of the Board of Directors of Arrow
Equipment Co., Inc. held at 12:00 A.M., May 21, 1956 at the office of the
corporation at 1095 Harbor Avenue, Memphis, Tennessee, the Board of Directors of
said corporation by proper resolution duly entered upon the minutes of the
corporation authorized and directed N. A. Carter, Jr., as President, and Sarah
Martin Carter, Secretary of the corporation, to execute proper certificate
applying for amendment of the charter of the corporation for the purposes set
out in the resolution.
<PAGE>
NOW, THEREFORE, we, the undersigned, comprising the Board of
Directors, and the President and Secretary, respectively, of the Arrow Equipment
Co., Inc., of 1095 Harbor Avenue, Memphis, Tennessee, hereby apply to the State
of Tennessee for amendment to the charter of the corporation for the purpose of
increasing the authorized capital stock of the corporation from one thousand
(1,000) shares of common stock of par value of One Hundred Dollars ($100.00) per
share with full voting rights, to twenty-five hundred (2500) shares of common
stock of par value of one Hundred Dollars ($100.00) per share [with full voting
rights, and twelve hundred fifty (1250) shares of preferred stock of par value
of One Hundred Dollars ($100.00) per share] without voting rights, and of the
characteristic rights and privileges as hereinbefore enumerated.
WITNESS our hands at Memphis, Tennessee, this the 21st day of May,
1956.
N. A. CARTER, JR.
-------------------------------
N. A. Carter, Jr. President
N. A. CARTER, JR.
- -------------------------------
N. A. Carter, Jr. Director
SARAH MARTIN CARTER
-------------------------------
Sarah Martin Carter Secretary
SARAH MARTIN CARTER
- -------------------------------
Sarah Martin Carter Director
C. A. DAVIS
- -------------------------------
C. A Davis Director
STATE OF TENNESSEE
COUNTY OF SHELBY
Personally appeared before me, the undersigned Notary Public, the
within named directors and officers, N. A. Carter, Jr., Sarah Martin Carter and
C. A. Davis, Directors, and N. A. Carter, Jr., President and Sarah Martin
Carter, Secretary, with each of whom I am personally acquainted and who
acknowledged they executed the within application for an amendment to the
Charter of Incorporation for the purposes therein contained and expressed.
WITNESS my hand and Notarial Seal at office at Memphis, Tennessee,
this the 21st day of May, 1956.
(SEAL) C. A. DAVIS, JR.
-------------------------------
Notary Public
My commission expires 20 April 1956
<PAGE>
I, G. EDWARD FRIAR, Secretary of State, do hereby certify that this
amendment to charter, with certificate attached, the foregoing of which is a
true copy, was this day registered and certified to by me. This the 24th day of
May, 1956.
G. EDWARD FRIAR,
SECRETARY OF STATE
FEE: $37.50
<PAGE>
Amendment to Charter of Incorporation
AT A MEETING OF THE BOARD OF DIRECTORS OF
ARROW EQUIPMENT CO., INC. duly held at the office of said
corporation in Memphis, Tennessee, on the 10th day of June, 1966, the following
resolution was adopted, its advisability declared and a meeting of the
stockholders duly called to vote thereon; which resolution is as follows:
BE IT RESOLVED by the Board of Directors of the Arrow Equipment Co., Inc. that
application be made, as required by Law for an Amendment to the Charter of Arrow
Equipment Co., Inc. changing the name of the Corporation to Arrow Trailers, Inc.
<PAGE>
We, N. A. Carter, Jr. and Sarah Martin Carter the President and
Secretary, respectively, of Arrow Equipment Co., Inc. a corporation chartered
and organized under the laws of the State of Tennessee, in pursuance to
directions from the Directors of the corporation, hereby certify that at a
meeting of the stockholders of said corporation, legally called and held at the
office of said corporation in the town of Memphis a resolution in writing was
adopted by an affirmative vote of the stockholders, said affirmative vote
representing a majority of the shares of stock in said corporation, declaring
the desire of the stockholders to amend the charter of their said company for
the purposes set forth in said resolution above set out, and that said
resolution was duly entered on the minutes of said corporation:
Now, therefore, we hereby certify to the fact of the adoption of
said resolution by the stockholders of said corporation for the purposes set
out, to the end that this certificate may be duly recorded in the office of the
Secretary of State.
Witness our hands this the 10th day of June, 1966.
-------------------------------
President or Vice-President
-------------------------------
Secretary of Asst. Secretary
<PAGE>
STATE OF TENNESSEE
COUNTY OF SHELBY
Personally appeared before me, a Notary Public of the county
aforesaid N. A. Carter, Jr. and Sarah Martin Carter with whom I am personally
acquainted, and who made oath before me in due form of law that N. A. Carter,
Jr., is the president and Sarah Martin Carter is the Secretary of Arrow
Equipment Co., Inc. and that the statements made in the foregoing certificate
are true.
<PAGE>
Witness my hand and official seal at office in Memphis, Tennessee,
this 10th day of June, 1966.
--------------------------------
Notary Public
(If Notary Public) My Commission expires 10 day of Jan, 1967.
We the undersigned, comprising a majority of the Board of Directors
of Arrow Equipment Co., Inc., apply to the State of Tennessee for an amendment
to the charter of that corporation for the purposes therein shown.
Witness our signatures this the 10th day of June, 1966.
-------------------------------
N. A. Carter, Jr.
-------------------------------
Sarah Martin Carter
-------------------------------
C. A. Davis
STATE OF TENNESSEE
COUNTY OF SHELBY
Personally appeared before me, a Notary Public (official title), the
within named N. A. Carter, Jr., Sarah Martin Carter, and C. A. Davis Directors
of Arrow Equipment Co., Inc. with whom I am personally acquainted, and who
acknowledge that as such Directors they executed the within application for an
<PAGE>
amendment to the charter of incorporation for the purposes therein contained and
expressed
Witness my hand an seal of office, this the 10th day of June, 1966.
------------------------------
Official Title - Notary Public
(If Notary Public) My Commission expires 10 day of Jan, 1967.
<PAGE>
I, JOE C. CARR, Secretary of State, do hereby certify that this
amendment to charter, with certificate attached, the foregoing of which is a
true copy, was this day registered and certified to by me.
This the 17th day of June, 1966.
JOE C. CARR,
SECRETARY OF STATE
FEE: $10.00
<PAGE>
Prepared by and return to:
WILLIAM D. EVANS, JR., ATTORNEY
Suite 2000, One Commerce Square
Memphis, Tennessee 38103
ARTICLES OF AMENDMENT
TO THE CHARTER
OF
ARROW TRAILERS, INC.
-------------------------
Pursuant to the provisions of Section 48-303 of the Tennessee
General Corporation Act, the undersigned corporation adopts the following
Articles of Amendment to its Charter:
1. The name of the corporation is ARROW TRAILERS, INC.
2. The amendment adopted is:
Article 1 regarding the name of the corporation is amended to
state:
"The name of the corporation shall be
GREAT DANE TRAILERS TENNESSEE, INC."
3. The amendment was duly adopted at a meeting of the Board of
Directors on December 23, 1975.
4. This amendment is to become effective immediately.
DATED: January 20, 1976.
GREAT DANE TRAILERS TENNESSEE, INC.
By
---------------------------------
Brooke Reeve, Jr., Chairman of
the Board
<PAGE>
I, JOE C. CARR, Secretary of State, do hereby certify that this
amendment to charter, with certificate attached, the foregoing of which is a
true copy, was this day registered and certified to by me. This 23rd day of
March, 1976.
JOE C. CARR,
SECRETARY OF STATE
FEE: $10.00
<PAGE>
DESIGNATION, REVOCATION OR CHANGE
OF
REGISTERED AGENT
OF
GREAT DANE TRAILER TENNESSEE, INC.
----------------------------------
To the Secretary of State of the State of Tennessee:
Pursuant to the provisions of Section 48-1201 of the Tennessee
General Corporation Act, the undersigned foreign or domestic corporation or the
incorporator or incorporators of a domestic corporation being organized under
the Act submit the following statement for the purpose of designating, revoking,
or changing, as the case may be, the registered agent for the corporation in the
State of Tennessee:
1. The name of the corporation if Great Dane Trailer Tennessee,
Inc.
2. The name and street address of its registered agent in the
State of Tennessee shall be Joseph C. Jensen, 1095 Harbor Avenue, Memphis,
Tennessee 38113.
Dated May 25, 1984.
GREAT DANE TRAILER TENNESSEE, INC.
By:
-------------------------------
Title: Vice-President
<PAGE>
ARTICLES OF AMENDMENT TO THE CHARTER
OF
GREAT DANE TRAILERS TENNESSEE, INC.
CHANGING THE PRINCIPAL OFFICE
Pursuant to the provisions of Section 48-303 of the Tennessee
General Corporation Act, the undersigned corporation adopts the following
articles of amendment to its charter:
1. The name of the corporation is:
GREAT DANE TRAILERS TENNESSEE, INC.
2. The amendment adopted is:
The address of the principal office of the corporation
in the State of Tennessee shall be:
Street: 1095 Harbor Ave.
City: Memphis
Zip Code: 38113
County: Shelby
3. The amendment was duly adopted (at a meeting) (by the unanimous
written consent) of the directors on January 16, 1984. (Strike
inapplicable words).
4. The amendment is to be effective when filed by the Secretary of
State, unless otherwise stated (not later than thirty (30) days after such
filing).
<PAGE>
Dated: , 19
--------------- ---
GREAT DANE TRAILERS TENNESSEE, INC.
Name of Corporation
By:
------------------------------
Signature
SECRETARY
------------------------------
Title
FILING FEE OF $10.00 REQUIRED, IN ADDITION TO ANNUAL REPORT FEE.
<PAGE>
DESIGNATION, REVOCATION OR CHANGE
OF
REGISTERED AGENT
OF
Great Dane Trailers Tennessee Inc.
To the Secretary of State of Tennessee:
Pursuant to the provisions of Section 48.1201 of the Tennessee General
Corporation Act, the undersigned foreign or domestic corporation or the
incorporator or incorporators of a domestic corporation being organized under
the Act submit the following statement for the purpose of designating, revoking
or changing, as the case may be, the registered agent for the corporation in the
state of Tennessee:
1. The name of the corporation is Great Dane Trailers Tennessee, Inc.
The address of the corporation is 1095 Harbor Ave., Memphis, Tennessee
38113
If a foreign corporation, state or country of incorporation
2. The name and street address of its registered agent in the State of
Tennessee shall be Joseph C. Jensen, 1095 Harbor Ave. Memphis Tenn 38113
Dated , 1984
-------
GREAT DANE TRAILERS TENNESSEE INC.
Name of Corporation
By
-------------------------------
(Title)
<PAGE>
Exhibit 3.8
BYLAWS
OF
GREAT DANE TRAILERS TENNESSEE, INC.
ARTICLE ONE
CAPITAL STOCK
1.1 Share certificates shall be numbered in the order in which they are
issued. They shall be signed by the President and countersigned by the
Secretary or an Assistant Secretary, and the seal of the corporation shall be
affixed thereto. The name of the person owning the shares, the number of shares
and the date of issue shall be entered on the stub of each certificate. Any
share certificate exchanged, transferred or cancelled, including the stub of
each share certificate issued, shall be kept by the Secretary in the
corporation's minute book.
1.2 Transfers of shares shall be made on the records of the corporation
by the holder in person or by power of attorney, on surrender of the old
certificate for such shares, duly endorsed for transfer.
1.3 Each holder of common stock shall be entitled to one (1) vote for
each share of stock standing in his or her name.
1.4 Shares in the corporation shall be voted by the holder of record or
by another shareholder in the corporation in accordance with a proxy or any
agreement providing for the voting of the shares.
<PAGE>
ARTICLE TWO
SHAREHOLDERS' MEETINGS
2.1 The annual meeting of the shareholders of the corporation shall be
held at the corporation's principal office on the first Monday in January of
each year, or, if said day is not a business day, then on the next succeeding
day which is a business day; provided, however, the Board of Directors, by
appropriate resolution, may select another date and place for the annual meeting
of shareholders.
2.2 Annual or special meetings of shareholders may be held within or
without the State of Tennessee at such place and time as may from time to time
be fixed by the Board of Directors or as may be specified in the notice of said
meeting. If no location is specified, such meeting shall be held at the
principal office of the corporation.
2.3 Special meetings of the shareholders may be called at any time by
the President, any director or any holder or holders of as much as one-third of
the outstanding capital stock of the corporation. Notice of annual and special
meetings shall be given to the shareholders of record entitled to vote not less
than ten (10) nor more than sixty (60) days before the meeting. Notice of any
special meeting of shareholders shall state the purpose or purposes for which
the meeting is called, and no action may be taken at a special meeting which is
not specified or described in such notice.
2.4 Notice of any meeting of the shareholders may be waived by
instrument in writing executed before or after the meeting.
2.
<PAGE>
Attendance at such meeting in person or by proxy shall constitute a waiver of
such notice thereof, unless such attendance is for the sole purpose of objecting
to the holding of such meeting.
2.5 At all meetings of shareholders a majority of the outstanding shares
of stock shall constitute a quorum for the transaction of business, and no
resolution or business shall be transacted without the favorable vote of the
holders of a majority of the shares represented at the meeting and entitled to
vote. A lesser number may adjourn from day to day, announcing the time and
place to which the meeting is adjourned, but no further notice of the resumption
of an adjourned meeting need be given.
2.6 Any action to be taken at a meeting of the shareholders, or any
action that may be taken at a meeting of the shareholders, may be taken without
a meeting if a consent in writing, setting forth the action so taken, shall be
signed by, all of the shareholders entitled to vote with respect to the subject
matter thereof.
ARTICLE THREE
DIRECTORS
3.1 Subject to these Bylaws, or any lawful agreement between or among
the shareholders, the full and entire management of the affairs and business of
the corporation shall be vested in the Board of Directors, which shall have and
may exercise all of the powers that may be exercised or performed by the
corporation.
3.
<PAGE>
3.2 The Board of Directors shall consist of one or more members.
Directors shall be elected at the annual meeting of shareholders and serve until
the next annual meeting of shareholders or until their successors are elected,
whichever is later. A majority of said directors (or one-half of the directors
if there is an even number of directors then in office) shall constitute a
quorum for the transaction of business. All resolutions adopted and all
business transacted by the Board of Directors shall require the affirmative vote
of a majority of the directors present at the meeting.
3.3 The directors may fill the place of any director which may become
vacant prior to the expiration of his or her term, such appointment by the
directors to continue until the expiration of the term of the director whose
place has become vacant.
3.4 The directors shall meet annually following the annual meeting of
the shareholders. Special meetings of the directors may be called at any time
by the President or by any director upon two (2) days notice. Notice of any
such meeting may be waived by instrument in writing. Attendance in person at
such meeting shall constitute a waiver of notice thereof, unless such attendance
is for the sole purpose of objecting to the holding of such meeting.
3.5 Any action to be taken at a meeting of the directors, or any action
that may be taken at a meeting of the directors, may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the
4.
<PAGE>
directors.
3.6 Any director may be removed from office, with or without cause, upon
the majority vote of the shareholders at a meeting with respect to which notice
of such purpose is given.
ARTICLE FOUR
OFFICERS
4.1 The principal officers of the corporation shall consist of a
President, a Secretary and a Treasurer. The officers shall be elected by the
Board of Directors and shall serve at the pleasure of the directors.
4.2 Unless otherwise directed by the Board of Directors, the President
shall be the chief executive officer of the corporation, shall have general and
active management of the operation of the corporation, and shall be responsible
for the day-to-day administration of the corporation, including general
supervision of the policies and financial affairs of the corporation. The
President shall also perform such other duties and have such other powers and
responsibilities as may be assigned to him or her from time to time by the Board
of Directors.
4.3 The Secretary shall be responsible for the minutes of all the
meetings of the shareholders and directors and for authenticating records of the
corporation. The Secretary shall have charge of the corporation's minute book
and seal. The Secretary shall also perform such other duties and have such
other powers and responsibilities as may be assigned to him or her from time to
time by the President and/or the Board of
5.
<PAGE>
Directors.
4.4 The Treasurer shall be charged with the day-to-day management of the
financial affairs of the corporation and shall have the responsibility to
recommend action concerning the corporation's financial affairs to the President
and the Board of Directors. The Treasurer shall also perform such other duties
and have such other powers and responsibilities as may be assigned to him or her
from time to time by the President and/or the Board of Directors.
4.5 The Board of Directors may elect, or the President with the
concurrence of the Board of Directors may appoint, one or more Vice Presidents
and one or more assistants to the Secretary and/or Treasurer, who, if elected or
appointed, shall have such duties and responsibilities as may be assigned to
them from time to time by the President and/or the Board of Directors.
4.6 Any two or more offices may be held by the same person.
ARTICLE FIVE
SEAL
5.1 The seal of the corporation shall be in such form as the Board of
Directors may from time to time determine. In the event it is inconvenient to
use such seal at any time, the signature of the corporation followed by the
word "SEAL" enclosed in parentheses or scroll, shall be deemed the seal of the
corporation. The seal shall be in the custody of the Secretary and shall be
affixed on all corporate share certificates and other corporate papers where
necessary or appropriate.
6.
<PAGE>
ARTICLE SIX
AMENDMENTS
6.1 These Bylaws may be amended by majority vote of the Board of
Directors or by a majority vote of the shareholders, provided that the
shareholders may provide by resolution that any Bylaw provision adopted,
repealed, amended or altered by them may not be repealed, amended, altered or
readopted by the Board of Directors.
ARTICLE SEVEN
NOTICES
7.1 Any notice required to be given under these Bylaws may be personally
delivered or may be mailed by first class mail, postage pre-paid, addressed to
the recipient at the address for such recipient maintained by the corporation in
its records. Such notice shall be deemed to have been given when received if
personally delivered or, if mailed, on the third day after the day on which it
was mailed. Any shareholder or director may establish or change the address to
which such notices shall be mailed or delivered by so notifying the corporation
in accordance with this Section 7.1. All notices to the corporation shall be
mailed or delivered to the principal office of the corporation.
ARTICLE EIGHT
INDEMNIFICATION
8.1 (a) Under the circumstances prescribed in section 8.2 hereof, the
corporation shall indemnify and hold harmless any person who was or is a party
or is threatened to be made a party
7.
<PAGE>
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation), by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERE or
its equivalent, shall not, of itself, create a presumption that the person did
not act in a manner which he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) Under the circumstances prescribed in section 8.2 hereof, the
corporation shall indemnify and hold harmless any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in
8.
<PAGE>
the right of the corporation to procure a judgment in its favor by reason of the
fact he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation; except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation,
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.
8.2 To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in section 8.1 hereof, or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith. Except as provided in the preceding sentence and except
as may be ordered by a court, any indemnification under section 8.1 hereof shall
be made by the
9.
<PAGE>
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
section 8.1 hereof. Such a determination shall be made (1) by the Board of
Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) by independent legal counsel
employed by the corporation, in a written opinion, if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, or (3) by the affirmative vote of a majority of the shares entitled to
vote thereon.
8.3 Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors
generally or as to a specific case or as to a specific person or persons
(designated by name, title or class of persons), upon receipt of an undertaking
by or on behalf of the director, officer, employee or agent to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the corporation as authorized in this Article Eight.
8.4 The provisions for indemnification and advancement of expenses
provided by this Article Eight shall not be deemed exclusive of any other
rights, in respect of indemnification or otherwise, to which those seeking
indemnification may be entitled
10.
<PAGE>
under any bylaw, agreement, either specifically or in general terms, resolution,
or approved by the affirmative vote of the holders of a majority of the shares
entitled to vote thereon taken at a meeting the notice of which specified that
such bylaw, resolution or agreement would be placed before the shareholders,
both as to action by a director, officer, employee or agent in his official
capacity and as to action in another capacity while holding such office or
position, except that no such other rights, in respect to indemnification or
otherwise, may be provided or granted with respect to the liability of any
director, officer, employee or agent for (a) any appropriation, in violation of
his duties, of any business opportunity of the corporation; (b) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (c) liabilities of a director imposed by the Tennessee General
Corporation Act; or (d) any transaction from which the director, officer,
employee or agent derived an improper personal benefit.
8.5 (a) The corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article Eight.
11.
<PAGE>
(b) If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the shareholders or
by an insurance carrier pursuant to insurance maintained by the corporation, the
corporation shall, not later than the next annual meeting of shareholders unless
such meeting is held within three months from the date of such payment, and, in
any event within 15 months from the date of such payment, send by first class
mail (or if the corporation shall have at the time more than 500 shareholders
entitled to vote, by such other means as may be authorized by the Tennessee
General Corporation Act for notices of meetings of shareholders), to its
shareholders of record at the time entitled to vote for the election of
directors a statement specifying the persons paid, the amounts paid, and the
nature and status at the time of such payment of the litigation or threatened
litigation.
8.6 As a condition to any such right of indemnification, or to receive
advancement of expenses, the corporation may require that it be permitted to
participate in the defense of any such action or proceeding through legal
counsel designated by the corporation and at the expense of the corporation.
8.7 The rights to indemnification and advancement of expenses provided
in this Article Eight shall continue notwithstanding that a person who would
otherwise have been entitled to indemnification or advancement of expenses
hereunder shall have ceased to be a director, officer, employee or agent, and
shall inure to the benefit of the heirs, executors and administrators of such
persons.
12.
<PAGE>
Exhibit 3.9
ARTICLES OF AMENDMENT
OF
LOS ANGELES GREAT DANE, INC.
I.
The name of the corporation is: "LOS ANGELES GREAT DANE, INC."
II.
The Article of Incorporation of Los Angeles Great Dane, Inc., a
Georgia Corporation (the "Corporation"), are hereby amended by deleting the
reference to the name of "Los Angeles Great Dane, Inc." in numbered Article "I"
of said Articles and substituting in lieu thereof the name "Great Dane Los
Angeles, Inc."
III.
The above amendment was adopted, without shareholder action, by the
unanimous consent of all of the members of the Board of Directors of the
Corporation on the date set forth below, in accordance with the O.C.G.A.
Sections 14-2-1002(6) and 14-2-821. Shareholder action was not required
pursuant to O.C.G.A. Section 14-2-1002.
IN WITNESS WHEREOF, Los Angeles Great Dane, Inc. has caused its duly
authorized officers to execute these Articles of Amendment and its corporate
seal to be hereunder affixed, this 24TH day of June, 1993.
LOS ANGELES GREAT DANE, INC.
By: /s/ W. R. Hildebrand
---------------------------
President
[CORPORATE SEAL] Attest: /s/ Tom Horan
----------------------
Secretary
<PAGE>
ARTICLES OF INCORPORATION
OF
LOS ANGELES GREAT DANE, INC.
I.
The name of the corporation is Los Angeles Great Dane, Inc."
II.
The corporation shall have perpetual duration.
III.
The corporation is a corporation for profit created under the
Georgia Business Corporation Code and is organized for the purpose of engaging
in the sale and distribution of over the road trailers and the doing and
performing of all acts and things incidental and/or related thereto, and for any
other legal purpose.
IV.
The corporation shall have all of the powers and shall enjoy all of
the rights, privileges and immunities provided for in the Georgia Business
Corporation Code.
V.
The corporation shall have the authority to issue not more than
1,000 shares of common stock without par value. Such shares may be issued for
such consideration as may be fixed from time to time by the Board of Directors.
<PAGE>
VI.
The corporation shall not commence business until it has received
not less than $500 in payment for the issuance of its shares of stock.
VII.
The initial registered office of the corporation shall be at the
offices of Great Dane Trailers, Inc., Lathrop Avenue, Savannah, Georgia 31402.
The initial registered agent of the corporation at such address shall be Harvey
Granger, Jr.
VIII.
The name and address of the incorporator is Harvey Granger, Jr., c/o
Great Dane Trailers, Inc., Lathrop Avenue, Savannah, Georgia 31402.
IX.
The initial Board of Directors of the corporation shall consist of
five members whose name and address are as follows:
NAME ADDRESS
---- -------
Brooke Reeve, Jr. c/o Great Dane Trailers, Inc.
Lathrope Avenue
Savannah, Georgia 31402
Harvey Granger, Jr. c/o Great Dane Trailers, Inc.
Lathrope Avenue
Savannah, Georgia 31402
Henry T. Skipper, Jr. c/o Great Dane Trailers, Inc.
Lathrope Avenue
Savannah, Georgia 31402
Brent Cardwell 14500 Firestone Blvd.
La Mirada, California 90638
Burt Cardwell 14500 Firestone Blvd.
La Mirada, California 90638
<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator has set his hand
and seal to these Articles of Incorporation, this the 18th day of August, 1981.
/s/ Harvey Granger (L.S.)
---------------------
Harvey Granger, Jr.
<PAGE>
STATE OF GEORGIA )
)
COUNTY OF CHATHAM )
CONSENT TO APPOINTMENT AS REGISTERED AGENT
As required by Section 22-401(c) of the Georgia Business Corporation
Code, the undersigned, HARVEY GRANGER, JR., hereby consents to his appointment
as the registered agent of Los Angeles Great Dane, Inc.
Dated: August 18th, 1981.
----
/s/ Harvey Granger
-----------------------------------
Harvey Granger, Jr.
<PAGE>
Exhibit 3.10
BYLAWS
OF
LOS ANGELES GREAT DANE, INC.
ARTICLE ONE
CAPITAL STOCK
1.1 Share certificates shall be numbered in the order in which they are
issued. They shall be signed by the President and countersigned by the
Secretary or an Assistant Secretary, and the seal of the corporation shall be
affixed thereto. The name of the person owning the shares, the number of shares
and the date of issue shall be entered on the stub of each certificate. Any
share certificate exchanged, transferred or cancelled, including the stub of
each share certificate issued, shall be kept by the Secretary in the
corporation's minute book.
1.2 Transfers of shares shall be made on the records of the corporation
by the holder in person or by power of attorney, on surrender of the old
certificate for such shares, duly endorsed for transfer.
1.3 Each holder of common stock shall be entitled to one (1) vote for
each share of stock standing in his or her name.
1.4 Shares in the corporation shall be voted by the holder of record or
by another shareholder in the corporation in accordance with a proxy or any
agreement providing for the voting of the shares.
<PAGE>
ARTICLE TWO
SHAREHOLDERS' MEETINGS
2.1 The annual meeting of the shareholders of the corporation shall be
held at the corporation's principal office on the first Monday in January of
each year, or, if said day is not a business day, then on the next succeeding
day which is a business day; provided, however, the Board of Directors, by
appropriate resolution, may select another date and place for the annual meeting
of shareholders.
2.2 Annual or special meetings of shareholders may be held within or
without the State of Georgia at such place and time as may from time to time be
fixed by the Board of Directors or as may be specified in the notice of said
meeting. If no location is specified, such meeting shall be held at the
principal office of the corporation.
2.3 Special meetings of the shareholders may be called at any time by
the Chairman of the Board of Directors, the President, or any holder or holders
of as much as one-third of the outstanding capital stock of the corporation.
Notice of annual and special meetings shall be given to the shareholders of
record entitled to vote not less than ten (10) nor more than fifty (50) days
before the meeting. Notice of any special meeting of shareholders shall state
the purpose or purposes for which the meeting is called, and no action may be
taken at a special meeting which is not specified or described in such notice.
2.
<PAGE>
2.4 Notice of any meeting of the shareholders may be waived by
instrument in writing executed before or after the meeting. Attendance at such
meeting in person or by proxy shall constitute a waiver of such notice thereof,
unless such attendance is for the sole purpose of objecting to the holding of
such meeting.
2.5 At all meetings of shareholders a majority of the outstanding shares
of stock shall constitute a quorum for the transaction of business, and no
resolution or business shall be transacted without the favorable vote of the
holders of a majority of the shares represented at the meeting and entitled to
vote. A lesser number may adjourn from day to day, announcing the time and
place to which the meeting is adjourned, and ten (10) days notice of the
resumption of an adjourned meeting shall be given to the shareholders of record
entitled to vote before the adjourned meeting is continued.
2.6 Any action to be taken at a meeting of the shareholders, or any
action that may be taken at a meeting of the shareholders, may be taken without
a meeting if a consent in writing, setting forth the action so taken, shall be
signed by, all of the shareholders entitled to vote with respect to the subject
matter thereof.
ARTICLE THREE
DIRECTORS
3.1 Subject to these Bylaws, or any lawful agreement between or among
the shareholders, the full and entire management of the affairs and business of
the corporation shall be vested in the Board of Directors, which shall have and
may
3.
<PAGE>
exercise all of the powers that may be exercised or performed by the
corporation.
3.2 The Board of Directors shall consist of five (5) members. Great
Dane Trailers, Inc., being the majority shareholder of the Corporation, shall
have the authority to elect three (3) of the directors of the corporation, and
the minority shareholder(s) shall have the authority to elect the remaining two
(2) directors. Directors shall be elected at the annual meeting of shareholders
and serve until the next annual meeting of shareholders or until their
successors are elected, whichever is later. A majority of said directors shall
constitute a quorum for the transaction of business. All resolutions adopted
and all business transacted by the Board of Directors shall require the
affirmative vote of three (3) of the directors present at the meeting.
3.3 Should the place of any director become vacant prior to the
expiration of his or her term, the shareholder(s) who elected such director
shall be entitled to appoint a director to fill such vacancy. Such newly
appointed director shall continue until the expiration of the term of the
director whose place became vacant.
3.4 The directors shall meet annually following the annual meeting of
the shareholders. Special meetings of the directors may be called at any time
by the Chairman of the Board of Directors or by any one (1) director upon five
(5) days notice. All such special meetings of the directors shall be held at
the corporation's principal office, unless otherwise agreed by a
4.
<PAGE>
majority of the directors. Notice of any such meeting may be waived by
instrument in writing. Attendance in person at such meeting shall constitute a
waiver of notice thereof, unless such attendance is for the sole purpose of
objecting to the holding of such meeting.
3.5 Any action to be taken at a meeting of the directors, or any action
that may be taken at a meeting of the directors, may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the directors.
3.6 Any director may be removed from office, with or without cause, upon
the majority vote of the shareholders at a meeting with respect to which notice
of such purpose is given.
ARTICLE FOUR
OFFICERS
4.1 The principal officers of the corporation shall consist of a
Chairman of the Board of Directors, a President and a Secretary/Treasurer. The
officers shall be elected by the Board of Directors and shall serve at the
pleasure of the directors. The offices of President and Secretary/Treasurer may
not be held by the same person.
4.2 The Chairman of the Board of Directors shall be the chief executive
officer of the corporation and be responsible for the formulation of the sales
and operating policies of the corporation. The Chairman of the Board of
Directors also shall perform such other duties and have such other powers and
responsibilities as may be assigned to him or her from time to
5.
<PAGE>
time by the Board of Directors.
4.3 The President shall be the chief operating officer of the
corporation and shall have general and active management of the operation of the
corporation. The President shall be responsible for the day-to-day
administration of the corporation, including general supervision of the policies
and financial affairs of the corporation.
4.4 The Secretary/Treasurer shall be responsible for the minutes of all
the meetings of the shareholders and directors and for authenticating records of
the corporation. The Secretary/Treasurer shall have charge of the corporation's
minute book and seal. The Secretary/Treasurer shall be charged with the overall
responsibility of the financial affairs of the corporation and shall have the
responsibility to recommend action concerning the corporation's financial
affairs to the Chairman of the Board of Directors, the President and the Board
of Directors. The Secretary/Treasurer also shall perform such other duties and
have such other powers and responsibilities as may be assigned to him or her
from time to time by the Chairman of the Board of Directors, the President
and/or the Board of Directors.
4.5 The Board of Directors may elect, or the Chairman of the Board of
Directors and/or the President with the concurrence of the Board of Directors
may appoint, one or more Vice Presidents and one or more assistants to the
Secretary/Treasurer, who, if elected or appointed, shall have such duties and
responsibilities as may be assigned to them from time to time by the Chairman of
the Board of Directors, the President and/or the
6.
<PAGE>
Board of Directors.
ARTICLE FIVE
SEAL
5.1 The seal of the corporation shall be in such form as the Board of
Directors may from time to time determine. In the event it is inconvenient to
use such seal at any time, the signature of the corporation followed by the
word "SEAL" enclosed in parentheses or scroll, shall be deemed the seal of the
corporation. The seal shall be in the custody of the Secretary (or as Assistant
Secretary) and shall be affixed on all corporate share certificates and other
corporate papers where necessary or appropriate.
ARTICLE SIX
AMENDMENTS
6.1 These Bylaws may be amended by a vote of at least three (3)
directors or by a majority vote of the shareholders, provided that the
shareholders may provide by resolution that any Bylaw provision adopted,
repealed, amended or altered by them may not be repealed, amended, altered or
readopted by the Board of Directors.
ARTICLE SEVEN
NOTICES
7.1 Any notice required to be given under these Bylaws may be personally
delivered or may be mailed by first class mail, postage pre-paid, addressed to
the recipient at the address for such recipient maintained by the corporation in
its records. Such notice shall be deemed to have been given when received if
7.
<PAGE>
personally delivered or, if mailed, on the third day after the day on which it
was mailed. Any shareholder or director may establish or change the address to
which such notices shall be mailed or delivered by so notifying the corporation
in accordance with this Section 7.1. All notices to the corporation shall be
mailed or delivered to the principal office of the corporation.
ARTICLE EIGHT
INDEMNIFICATION
8.1 (a) Under the circumstances prescribed in section 8.2 hereof, the
corporation shall indemnify and hold harmless any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by
8.
<PAGE>
judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERE or
its equivalent, shall not, of itself, create a presumption that the person did
not act in a manner which he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) Under the circumstances prescribed in section 8.2 hereof, the
corporation shall indemnify and hold harmless any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation, unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability, but in view of all the circumstances of the case,
such person is fairly
9.
<PAGE>
and reasonably entitled to indemnity for such expenses which the court shall
deem proper.
8.2 To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in section 8.1 hereof, or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith. Except as provided in the preceding sentence and except
as may be ordered by a court, any indemnification under section 8.1 hereof shall
be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in section 8.1 hereof. Such a determination shall be made (1)
by the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (2) by independent
legal counsel employed by the corporation, in a written opinion, if such a
quorum is not obtainable, or, even if obtainable a quorum of disinterested
directors so directs, or (3) by the affirmative vote of a majority of the shares
entitled to vote thereon.
8.3 Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or
10.
<PAGE>
proceeding as authorized by the Board of Directors generally or as to a specific
case or as to a specific person or persons (designated by name, title or class
of persons), upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this Article Eight.
8.4 The provisions for indemnification and advancement of expenses
provided by this Article Eight shall not be deemed exclusive of any other
rights, in respect of indemnification or otherwise, to which those seeking
indemnification may be entitled under any bylaw, agreement, either specifically
or in general terms, resolution, or approved by the affirmative vote of the
holders of a majority of the shares entitled to vote thereon taken at a meeting
the notice of which specified that such bylaw, resolution or agreement would be
placed before the shareholders, both as to action by a director, officer,
employee or agent in his official capacity and as to action in another capacity
while holding such office or position, except that no such other rights, in
respect to indemnification or otherwise, may be provided or granted with respect
to the liability of any director, officer, employee or agent for (a) any
appropriation, in violation of his duties, of any business opportunity of the
corporation; (b) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (c) liabilities of a
director imposed by section 14-2-832 of the Georgia Business Corporation Code;
or (d) any transaction from
11.
<PAGE>
which the director, officer, employee or agent derived an improper personal
benefit.
8.5 (a) The corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article Eight.
(b) If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the shareholders or
by an insurance carrier pursuant to insurance maintained by the corporation, the
corporation shall, not later than the next annual meeting of shareholders unless
such meeting is held within three months from the date of such payment, and, in
any event within 15 months from the date of such payment, send by first class
mail (or if the corporation shall have at the time more than 500 shareholders
entitled to vote, by such other means as may be authorized by the Georgia
Business Corporation Code for notices of meetings of shareholders), to its
shareholders of record at the time entitled to vote for the election of
directors a statement specifying the persons paid, the amounts paid, and the
nature and status at the time of such payment of the litigation or threatened
litigation.
12.
<PAGE>
8.6 As a condition to any such right of indemnification, or to receive
advancement of expenses, the corporation may require that it be permitted to
participate in the defense of any such action or proceeding through legal
counsel designated by the corporation and at the expense of the corporation.
8.7 The rights to indemnification and advancement of expenses provided
in this Article Eight shall continue notwithstanding that a person who would
otherwise have been entitled to indemnification or advancement of expenses
hereunder shall have ceased to be a director, officer, employee or agent, and
shall inure to the benefit of the heirs, executors and administrators of such
persons.
13.
<PAGE>
Exhibit 3.11
RESTATED
CERTIFICATE OF INCORPORATION
OF
CHECKER MOTORS CORPORATION
The following shall constitute the Restated Certificate of
Incorporation of Checker Motors Corporation:
1. NAME. The name of the corporation is CHECKER MOTORS
CORPORATION (hereinafter called the "Corporation").
2. PURPOSE. The Corporation may engage in any activity within
the purposes for which corporations may be organized under the New Jersey
Business Corporation Act.
3. NUMBER OF SHARES. The aggregate number of shares which the
Corporation shall have authority to issue is: one thousand (1,000), all of
which shall be Common Shares of the par value of one dollar ($1.00) each.
4. OFFICE AND REGISTERED AGENT. The address of the
Corporation's current registered office is 156 West State Street in the City of
Trenton, County of Mercer and State of New Jersey. The name of its current
registered agent at that address is United States Corporation Company.
5. NUMBER OF DIRECTORS; NAMES AND ADDRESSES OF CURRENT
DIRECTORS. The number of Directors constituting the current board of directors
is four (4) and the names and addresses of the persons who serve as such
directors are:
<PAGE>
NAME ADDRESS
---- -------
David R. Markin c/o Checker Motors Corporation
2016 North Pitcher Street
Kalamazoo, Michigan 49007
Wilmer J. Thomas, Jr. 420 East 54th Street
New York, New York 10022
Allan R. Tessler c/o Shea & Gould
330 Madison Avenue
New York, New York 10017
Martin L. Solomon 131 East 69th Street
New York, New York 10021
6. Each person, now or hereafter a director or officer of the
Corporation, shall be indemnified by the Corporation against all costs and legal
or other expenses, including costs or amount of settlement, reasonably incurred
by or imposed upon him in connection with or resulting from any claim, action,
suit or proceeding to which he is or may be made a party by reason of his being
or having been a director or officer of the Corporation (whether or not a
director of officer at the time such costs or expenses are incurred by or
imposed by him), to the fullest extent permitted by Section 14A:3-5 of the New
Jersey Business Corporation Act or any successor statute. The right of
indemnification herein provided shall not be exclusive of other rights to which
any such person may be entitled as a matter of law.
<PAGE>
7. DURATION. The duration of the Corporation is perpetual.
IN WITNESS WHEREOF, the undersigned has executed this RESTATED
CERTIFICATE OF INCORPORATION this 11th day of March, 1986.
CHECKER MOTORS CORPORATION
By:
---------------------------------
Richard A. Yealin, Vice President
<PAGE>
CERTIFICATE OF MERGER
OF
YELLOW CAB COMPANY
and
CHECKER TAXI COMPANY, INC.
INTO
CHECKER MOTORS CORPORATION
To: The Secretary of State
State of New Jersey
Pursuant to the provisions of Title 14A of the New Jersey Business
Corporation Act, the undersigned corporations hereby execute the following
Certificate of Merger.
1. Checker Motors Corporation ("Motors"), a corporation organized
and existing under the laws of the State of New Jersey and owning all of the
outstanding shares of each class and series of Yellow Cab Company ("Yellow") and
Checker Taxi Company Inc. ("Taxi"), its subsidiary corporations organized and
existing under the laws of the States of Maine and New York, respectively,
hereby agrees to the merger of these two subsidiary corporations into Motors,
which is hereinafter designated as the "Surviving Corporation."
2. The total authorized capital stock of the Surviving
Corporation shall be 1,000 shares of Common Stock, par value $1.00 per share.
3. The address of the Surviving Corporation's
<PAGE>
registered office is 156 West State Street, Trenton, County of Mercer, New
Jersey 08625 and the name of its registered agent at such address is the United
States Corporation Company.
4. The Plan of Merger attached hereto as Exhibit A was approved
by the Boards of Directors of the undersigned corporations.
5. The number of outstanding shares of each class and series of
the subsidiary corporation party to the merger, and the number of such shares of
each class and series owned by the parent corporation, is as follows:
Name of No. of Shares No. of Shares
Subsidiary Class Series Outstanding Owned by Parent
- ---------- ----- ------ ------------- ---------------
Yellow Common N/A 76 76
Stock
Taxi Common N/A 2 2
Stock
6. This Certificate shall be effective upon the later of (i) the
date of its filing with the Secretary of State and (ii) December 31, 1987,
PROVIDED, that the effective date of this Certificate shall not be later than
thirty (30) days after the date of filing.
7. The laws of New York and Maine, the states under which Taxi
and Yellow, respectively, are organized, permit such merger and have been, or
upon compliance with filing and recording requirements, will have been complied
with.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned corporations has caused
this Certificate of Merger to be executed in its respective name by its
respective Vice President as of the 28th day of December, 1987.
CHECKER MOTORS CORPORATION
By:
----------------------------
Allan R. Tessler
Vice President
Attest:
By:
---------------------------
Mark L. Friedman
Assistant Secretary
YELLOW CAB COMPANY
By:
----------------------------
Allan R. Tessler
Vice President
Attest:
By:
---------------------------
Mark L. Friedman
Assistant Secretary
CHECKER TAXI COMPANY INC.
By:
----------------------------
Allan R. Tessler
Vice President
Attest:
By:
---------------------------
Mark L. Friedman
Assistant Secretary
<PAGE>
AGREEMENT
AND
PLAN OF MERGER
OF
YELLOW CAB COMPANY
and
CHECKER TAXI COMPANY INC.
INTO
CHECKER MOTORS CORPORATION
AGREEMENT AND PLAN OF MERGER dated December 28, 1987 among Yellow
Cab Company, a Maine Corporation ("Yellow"), Checker Taxi Company Inc., a New
York corporation ("Taxi") (sometimes hereinafter collectively referred to as the
"Terminating Corporations"), and Checker Motors Corporation (sometimes
hereinafter referred to as "Motors"). The parties hereby agree as follows:
1. Upon the effective date of the merger, the Terminating
Corporations shall, pursuant to the provisions of the New Jersey Business
Corporation Act, the Maine Business Corporation Act, and the New York Business
Corporation Law be merged with and into Motors, which shall be the surviving
corporation (the "Surviving Corporation") and which shall continue to exist
under the name of Checker Motors Corporation. The separate corporate existence
of the Terminating Corporations shall cease upon the Effective Date of the
merger (the "Effective Date").
<PAGE>
2. The Certificate of Incorporation of Motors, as in effect on
the Effective Date, shall continue in full force and effect as the Certificate
of Incorporation of the Surviving Corporation until changed or amended in the
manner prescribed by the provisions of the laws of the State of New Jersey. The
merger will effect no changes in the Certificate of Incorporation of Motors.
3. The by-laws of Motors, as in effect on the Effective Date,
shall continue in full force and effect as the by-laws of the Surviving
Corporation until altered or amended as therein or as otherwise provided under
the authority of the laws of the State of New Jersey.
4. The directors and officers of the Surviving Corporation upon
the Effective date shall be the members of the Board of Directors and the
officers of Motors, all of whom shall hold their directorships and offices until
the election and qualification of their respective successors or until their
tenure is otherwise terminated in accordance with the by-laws of the Surviving
Corporation.
5. The Terminating Corporations have outstanding only one class
of Common Stock. The number of outstanding shares of stock of the Terminating
Corporations is as follows:
Name Number % owned by Checker
---- ------ ------------------
Yellow 76 100%
Taxi 2 100%
<PAGE>
6. All of the issued and outstanding shares of stock of the
Terminating Corporations immediately prior to the merger shall, upon the
Effective Date, be surrendered and canceled. The shares of Motors shall not be
converted, but each share of Motors which is issued and outstanding as of the
Effective Date shall continue to represent one issued and outstanding share of
stock of the Surviving Corporation.
7. The Terminating Corporations and Motors that stipulate that
they will cause to be executed, filed and recorded any documents prescribed by
the laws of the States of Maine, New Jersey and New York and that they will
cause to be performed all necessary acts within the States of Maine, New Jersey,
and New York and elsewhere to effectuate the merger.
8. The Board of Directors and the proper officers of the
Terminating Corporations and Motors are hereby authorized, empowered and
directed to do any and all acts and things, and to make, execute, deliver, file
and record any and all instruments, papers documents which shall be or become
necessary, proper or convenient to carry out or put into effect any of the
provisions of this Agreement and Plan of Merger or of the merger herein provided
for.
<PAGE>
9. This Agreement and Plan of Merger shall be governed by the
laws of the State of New Jersey without giving effect to conflicts of laws.
CHECKER MOTORS CORPORATION
By:
-----------------------
Allan R. Tessler
YELLOW CAB COMPANY
By:
-----------------------
Allan R. Tessler
CHECKER TAXI COMPANY INC.
By:
-----------------------
Allan R. Tessler
<PAGE>
CERTIFICATE OF MERGER
OF
CHECKER HOLDING CORPORATION
INTO
CHECKER MOTORS CORPORATION
To: The Secretary of State
State of New Jersey
Pursuant to the provisions of Title 14A of the New Jersey Business
Corporation Act, the undersigned corporations hereby execute the following
Certificate of Merger.
1. Checker Holding Corporation ("Holding"), a corporation
organized and existing under the laws of the State of Delaware, and owning all
of the outstanding shares of each class and series of Checker Motors Corporation
("Motors"), its subsidiary corporation organized and existing under the laws of
the State of New Jersey, hereby agrees to merge itself into Motors, which is
hereinafter designated as the "Surviving Corporation."
2. The total authorized capital stock of the Surviving
Corporation shall be 1,000 shares of Common Stock, par value $1.00, all of the
same class.
3. The address of the Surviving Corporation's registered office
is 156 West State Street, Trenton, County of Mercer, New Jersey 08625 and the
name of its registered agent at such address is the United States Corporation
Company.
4. The Plan of Merger attached hereto as Exhibit A was
<PAGE>
approved by the Boards of Directors of Holding and Motors and by the
stockholders of Holding and Motors.
5. (a) 2,000 shares of Common Stock of Holding, all of one class
are entitled to vote and entitled to vote on the Plan of Merger, and all of
which shares of Common Stock of Holding voted for the Plan of Merger.
(b) Twenty-two shares of Common Stock of Motors, which are
all owned by Holding, all of one class are entitled to vote and entitled to vote
on the Plan of Merger, and all of which shares of Common Stock of Motors voted
for the Plan of Merger.
6. The number of outstanding shares of each class and series of
the subsidiary corporation party to the merger, and the number of such shares of
each class and series owned by the parent corporation, is as follows:
Name of No. of Shares No. of Shares
Subsidiary Class Series Outstanding Owned by Parent
- ---------- ----- ------ ------------- ---------------
Motors Common N/A 22 22
Stock
7. This Certificate shall be effective upon the later of (i) the
date of its filing with the Secretary of State and (ii) December 31, 1987,
PROVIDED, that the effective date of this Certificate shall not be later than
thirty (30) days after the date of filing.
8. The laws of Delaware, the state under which Holding was
organized, permit such merger and have been, or upon compliance with filing and
recording requirements, will have been complied with.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned corporations has caused
this Certificate of Merger to be executed in its respective name by its
respective Vice President as of the 28th day of December, 1987.
CHECKER HOLDING CORPORATION
By:
------------------------
Allan R. Tessler
Vice President
Attest:
By:
---------------------------
Mark L. Friedman
Assistant Secretary
CHECKER MOTORS CORPORATION
By:
-----------------------
Allan R. Tessler
Vice President
Attest:
By:
---------------------------
Mark L. Friedman
Assistant Secretary
<PAGE>
AGREEMENT
AND
PLAN OF MERGER
OF
CHECKER HOLDING CORPORATION
INTO
CHECKER MOTORS CORPORATION
AGREEMENT AND PLAN OF MERGER dated December 28, 1987 between Checker
Holding Corporation, a Delaware corporation (sometimes hereinafter collectively
referred to as the "Terminating Corporation"), and Checker Motors Corporation
(sometimes hereinafter referred to as "Motors"). The parties hereby agree as
follows:
1. Upon the effective date of the merger, the Terminating
Corporation shall, pursuant to the provisions of the Delaware General
Corporation Law and the New Jersey Business Corporation Act, be merged with and
into Motors, which shall be the surviving corporation ("the Surviving
Corporation") and which shall continue to exist under the name of Checker Motors
Corporation. The separate corporate existence of the Terminating Corporation
shall cease upon the Effective Date of the merger (the "Effective Date").
2. The Certificate of Incorporation of Motors, as in effect on
the Effective Date, shall continue in full force and effect as the Certificate
of Incorporation of the Surviving
<PAGE>
Corporation until changed or amended in the manner prescribed by the provisions
of the laws of the State of New Jersey. The merger will effect no changes in
the Certificate of Incorporation of Motors.
3. The by-laws of Motors, as in effect on the Effective Date,
shall continue in full force and effect as the by-laws of the Surviving
Corporation until altered or amended as therein or as otherwise provided under
the authority of the laws of the State of New Jersey.
4. The directors and officers of the Surviving Corporation upon
the Effective date shall be the members of the Board of Directors and the
officers of Motors, all of whom shall hold their directorships and offices until
the election and qualification of their respective successors or until their
tenure is otherwise terminated in accordance with the by-laws of the Surviving
Corporation.
5. The Terminating Corporation has outstanding 2,000 shares of
Common Stock, all of one class.
6. All of the issued and outstanding shares of stock of the
Terminating Corporation immediately prior to the merger shall, upon the
Effective Date, be surrendered and each share of stock of the Terminating
Corporation which is issued and outstanding and so surrendered as of the
Effective Date shall be exchanged into and shall represent one-half issued and
outstanding shares of stock of the Surviving Corporation. All of issued and
outstanding shares of stock of Motors immediately prior to the merger shall,
upon the
<PAGE>
Effective Date, be surrendered and canceled.
7. The Terminating Corporation and Motors stipulate that they
will cause to be executed, filed and recorded any documents prescribed by the
laws of the States of Delaware and New Jersey and that they will cause to be
performed all necessary acts within the State of Delaware and New Jersey and
elsewhere to effectuate the merger.
8. The Boards of Directors and the proper officers of the
Terminating Corporation and Motors are hereby authorized, empowered and directed
to do any and all acts and things, and to make, execute, deliver, file and
record any and all instruments, papers documents which shall be or become
necessary, proper or convenient to carry out or put into effect any of the
provisions of this Agreement and Plan of Merger or of the merger herein provided
for.
CHECKER MOTORS CORPORATION
By:
------------------------
Allan R. Tessler
CHECKER HOLDING CORPORATION
By:
------------------------
Allan R. Tessler
<PAGE>
Exhibit 3.12
CHECKER MOTORS CORPORATION
BY-LAWS
OFFICERS
1. The principal office shall be at 117 Main Street, in the
Borough of Flemington, Hunterdon County, New Jersey. The Agent in Charge of
said office, upon whom process against the Corporation may be served, is Edwin
K. Large, Jr.
SEAL
2. The corporate seal shall have inscribed thereon the name of
the Corporation, the year of its organization and the words "Corporate Seal, New
Jersey."
STOCKHOLDERS' MEETING
3. All meetings of the stockholders shall be held at any place
within the United States, as may be specified by the Board of Directors.
4. The annual meeting of stockholder shall be held each year at
such date and time as may be specified by the Board of Directors.
5. The holders of a majority of the stock issued and outstanding,
present in person, or represented by proxy, shall be requisite and shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by law, by the Certificate of
Incorporation or by these
<PAGE>
By-Laws. If, however, such majority shall not be present or represented at any
meeting of the stockholders, the stockholders present in person, or by proxy,
shall have power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until the requisite amount of stock shall be
present. At such adjourned meeting at which the requisite amount of voting
stock shall be represented any business may be transacted which might have been
transacted at the meeting as originally notified.
6. At each meeting of the stockholders every stockholder entitled
to vote shall be entitled to vote in person or by proxy appointed by an
instrument in writing subscribed by such stockholder or by his duly authorized
attorney and delivered to the inspectors at the meeting, and he shall have one
vote for each share of stock registered in his name at the time of the closing
of the transfer books for said meeting, or on the record date fixed by the
directors pursuant to the provisions of section 41 hereof, as the case may be.
In case the transfer books have not been closed, and no date has been fixed as a
record date for the determination of the stockholders entitled to vote, no share
of stock shall be voted on at any election which has been transferred on the
books of the Corporation within twenty days preceding such election. The vote
for directors, and, upon demand of any stockholder authorized to vote, the vote
upon any question before the meeting, shall be by ballot. At all elections of
directors, each stockholder entitled to vote shall be entitled to as many votes
as shall equal the
<PAGE>
number of his shares of stock multiplied by the number of directors or be
elected, and he may cast all of said votes for a single director or may
distribute them among the number to be voted for or any two or more of them as
he may see fit. All elections shall be had and all questions decided by a
plurality vote.
7. Written notice of the annual meeting shall be mailed to each
stockholder authorized to vote, at such address as appears on the stock book of
the Corporation, at least ten days prior to the meeting.
8. Each election shall be conducted by two inspectors, who may or
may not be a stockholders, appointed by the presiding officer of the meeting.
The inspectors shall be sworn to the faithful performance of their duties and
shall in writing certify to the returns. No person who is a candidate for the
office of director shall be an inspector.
9. The officer or agent having charge of the stock transfer books
for shares of the Corporation shall make and certify a complete list, which may
consist of cards arranged alphabetically, of the stockholders entitled to vote
at any stockholders' meeting or any adjournment thereof, which shall be arranged
alphabetically within each class, series, or group of stockholders maintained by
the Corporation for convenience of reference, with the address of, and the
number of shares held by, each stockholder, and be produced at the time and
place of the meeting, be subject to the inspection of any stockholder during the
whole time of the meeting and be prima facie evidence as to who are
<PAGE>
the stockholders entitled to examine such list or to vote at the meeting.
10. Special meetings of the stockholders for any purpose or
purposes, other than those regulated by statute, may be called by the Chairman
of the Board, President or in his absence the Vice President, and shall be
called by the President or Secretary at the request in writing a majority of the
Board of Directors, or at the request in writing by stockholders owning a
majority in amount of the entire capital stock of the Corporation issued and
outstanding. Such request shall state the purpose or purposes of the proposed
meeting.
11. Business transacted at all special meetings shall be confined
to the objects stated in the call and matters germane thereto.
12. Written notice of a special meeting of stockholders stating
the time and place and object thereof, shall be mailed, postage prepaid, at
least ten days before such meeting, to each stockholder at such address as
appears on the books of the Corporation.
DIRECTORS
13. The property and business of this Corporation shall be managed
by its Board of Directors, which shall consist of four (4) members. The
directors, except as otherwise provided in the Amended Certificate of
Incorporation or the By-Laws of this Corporation, shall be elected by the
stockholders eligible to vote at the annual meeting of the stockholders of this
Corporation, to
<PAGE>
serve for terms provided for in the Amended Certificate of Incorporation as
amended at the annual meeting of the stockholders held July 16, 1941, and until
their successors shall be elected and shall qualify. The Board of Directors is
authorized, by the vote of a majority of the entire number of directors, to fill
any vacancies created by any increase in the number of directors.
14. The directors may hold their meetings and have one or more
offices, and keep the books of the Corporation at such places as they may from
time to time determine.
In addition to the powers and authorities by these By-Laws expressly
conferred upon them, the Board may exercise all such powers of the Corporation,
and do all such lawful acts and things as are not by statute or by the
Certificate of Incorporation, or by these By-Laws directed or required to be
exercised or done by the stockholders.
15. Without prejudice tot he general powers conferred by the last
preceding clause, and the other powers conferred by statute by the Certificate
of Incorporation and by these By-Laws, it is hereby expressly declared that the
Board of Directors shall have the following powers, that it to say:
1. From time to time make and change the rules and regulations,
not inconsistent with these By-Laws, for the management of the
Corporation's business and affairs;
2. To purchase or otherwise acquire for the Corporation any
property, rights or privileges which the Corporation is
authorized to acquire, at such
<PAGE>
price or consideration and generally on such terms and
conditions as they think fit;
3. At their discretion to pay for any property or rights acquired
by the Corporation either wholly or partly in money, stocks,
bonds, debentures, or other securities of the Corporation;
4. To create, make, and issue mortgages, bonds, deeds of trust,
trust agreements and negotiable or transferable instruments
and securities, secured by mortgage or otherwise, and to do
every other act and thing necessary to effectuate the same;
5. To appoint and at their discretion remove or suspend such
subordinate officers, agents or servants, permanently or
temporarily, as they think fit, and to determine their duties,
and fix, and from time to time change their salaries or
emoluments, and to require security in such instances and in
such amounts as they think fit;
6. To confer by resolution upon any appointed officer of the
Corporation the power to choose, remove or suspend such
subordinate officers, agents or servants;
7. To appoint any person or corporation to accept and hold in
trust for the Corporation, or in which it is interested. or
for any other purpose, and to execute and do all such deeds
and things as may be requisite in relation to any such trust;
8. To determine who shall be authorized on the Corporation's
behalf to sign bills, notes, receipts, acceptances,
endorsements, checks, releases, contracts and documents;
<PAGE>
9. To delegate any of the powers of the Board in the course of
the current business of the Corporation to any standing or
special committee, or to any officer or agent, and to appoint
any person to be the agents of the Corporation with such
powers (including the power to subdelegate) and upon such
terms as they think fit.
MEETINGS OF THE BOARD
16. The newly elected board may meet at such place and time as
shall be fixed by the vote of the stockholders at the annual meeting, for the
purpose of organization and otherwise, and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting; provided, a majority of the whole Board shall be present; or such place
and time may be fixed by the consent in writing of all the directors.
17. Regular meetings of the Board may be held without notice at
such time and place as shall from time to time be determined by the Board.
18. At all meetings of the Board the presence of a majority of the
directors then in office shall be necessary and sufficient to constitute a
quorum for the transaction of business, and the act of a majority of the
directors present at any meeting at which there is a quorum, shall be the act of
the Board of Directors, except as may be otherwise specifically provided by
statute or by the Certificate of Incorporation, or by these By-Laws.
19. Special meetings of the Board of Directors may be called by
the Chairman of the Board, President, or the Vice
<PAGE>
President acting in the absence of the President, or the Secretary, on two (2)
days' written notice sent by mail or telegraph to each of the directors, or upon
one (1) day's written notice served personally on each of the directors; special
meetings shall be called by the President, or the Vice President acting in the
absence of the President, or the Secretary, in like manner and on like notice on
the written request of two (2) directors.
OFFICERS
20. The officers of the Corporation shall consist of a Chairman of
the Board of Directors, a President, one or more Vice Presidents, Secretary and
Treasurer, and such Assistant Secretaries or Assistant Treasurers as the Board
of Directors, of the Executive committee, may elect or appoint. The Board of
Directors or Executive committee may appoint other subordinate officers, agents
and employees as shall seem necessary who shall perform such duties as from time
to time shall be prescribed by the Board of Directors or the Executive
Committee, the Chairman of the Board or the President. One person may hold the
office of Secretary and Treasurer, or Vice President and Secretary, or Vice
President and Treasurer, or Chairman of the Board of Directors and President,
but one person shall not hold the office of President, Secretary and Treasurer.
21. The Board of Directors, immediately after each annual meeting
of stockholders shall elect by ballot a Chairman of the Board, and President
from their own number and the Board shall
<PAGE>
also annually elect a Secretary, Treasurer and one or more Vice Presidents who
need not be members of the Board, and a majority of the whole number of
directors shall be necessary for the election of each of said officers.
22. The Board may appoint such other officers and agents as it
shall deem necessary, who shall have such authority and shall perform such
duties as from time to time shall be prescribed by the Board.
23. The salaries of all officers and general agents of the
Corporation shall be fixed by the Board of Directors.
24. The officers of the Corporation shall hold office for one year
and until their successors are chosen and qualify in their stead. Any officer
elected or appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the whole Board of Directors.
EXECUTIVE COMMITTEE
25. There may be an executive committee of two directors or more
appointed by the Board, who may meet at stated times, or on notice to all by any
of their own number, during the intervals between the meetings of the Board;
they shall advise with and aid the officers of the Corporation in all matters
concerning its interests and the management of its business, and generally
perform such duties and exercise such powers as may be directed or delegated by
the Board of Directors from time to time. The Board may delegate to such
committee authority to exercise all the powers
<PAGE>
of the Board in the current and ordinary business of the Corporation while the
Board is not in session. Vacancies in the membership of the committee shall be
filled by the Board of Directors at a regular meeting or at a special meeting
called for that purpose.
26. The Executive Committee shall keep regular minutes of its
proceedings and report the same to the Board when required.
COMPENSATION OF DIRECTORS
27. Directors by resolution of the Board may receive either a
stated fee for their services plus expenses of attendance, or a fixed sum and
expenses of attendance for attendance at each regular or special meeting of the
Board; provided, that nothing herein contained shall be construed to preclude
any Directors from serving the Corporation in any other capacity and receiving
compensation therefor.
28. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
THE CHAIRMAN OF THE BOARD AND PRESIDENT
29. The Chairman of the Board shall preside at all meetings of the
stockholders and of the Board of Directors. The President, in the absence of
the Chairman of the Board, shall preside at meetings of the stockholders and of
the Board of Directors. The Board of Directors shall designate either the
Chairman of the Board or the President as chief executive officer
<PAGE>
of the Corporation shall have general and active management of the business of
the Corporation; he shall see that all orders and resolutions of the Board are
carried into effect, subject, however, to the right of the directors to delegate
any specific powers, except such as may be by statute exclusively conferred on
the chief executive officer, to any other officer or officers of the
Corporation.
The chief executive officer shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the Corporation, shall keep in
safe custody the seal of the Corporation, and when authorized by the Board,
affix the seal to any instrument requiring the same, and the seal when so
affixed shall be attested by the signature of the Secretary or the Treasurer.
He or the Vice President shall sign certificates of stock.
During such time as the Chairman of the Board or the President, as
the case may be, is not the chief executive officer, he shall have such
authority and perform such duties as the directors may determine. In case of
the absence or disability of the chief executive officer or when circumstances
prevent the chief executive officer from acting, the President (if the Chairman
of the Board is the chief executive officer) or the Chairman of the Board (if
the President is the chief officer) shall perform the duties of the Chief
executive officer.
30. The chief executive officer shall be ex officio a member of
all standing committees.
<PAGE>
VICE PRESIDENT
31. The Vice President designated by the Board of Directors shall,
in the absence or disability of the President, perform the duties and exercise
the powers of the President, and such Vice President and any other Vice
Presidents elected or appointed by the Board of Directors shall perform such
other duties as shall from time to time be imposed upon him by the Board.
32. When required by the Board, the Secretary shall attend sessions
of the Board and meetings of the stockholders and act as clerk thereof, and
record all votes and the minutes of all proceedings in a book to be kept for the
purpose; and shall perform like duties for the standing committees when
required. He shall give or cause to be given, notice of all meetings of the
stockholders and of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or President, and under whose
supervision he shall be. He shall be sworn to the faithful discharge of his
duty.
THE TREASURER
33. The Treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation, and shall deposit all
moneys, and other valuable effects, in the name and to the credit of the
Corporation, in such depositaries as may be designated by the Board of
Directors.
<PAGE>
34. He shall disburse the funds of the Corporation as may be
ordered by the Board, taking proper vouchers for such disbursements, and shall
render to the President and Directors, at the regular meetings of the Board, or
whenever they may require it, an account of all his transactions as Treasurer
and of the financial condition of the Corporation.
35. He shall, if required by the Board of Directors, give the
Corporation a bond in a sum, and with one or more sureties satisfactory to the
Board, for the faithful performance of the duties of his office, and for the
restoration to the Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
Corporation.
VACANCIES
36. If the office of any Director, or of the Chairman of the Board,
President, Vice President, Secretary or Treasurer or other officer or agent, one
or more, becomes vacant, by reason of death, resignation, retirement,
disqualification, removal from office or otherwise, the Directors then in
office, although less than a quorum, by a majority vote, may choose a successor
or successors, who shall hold office for the unexpired term in respect of which
such vacancy occurred.
<PAGE>
OFFICERS MAY RESIGN
37. Any Director or other officer may resign his office at any
time, such resignation to be made in writing and to take effect from the time of
its receipt by the Corporation, unless some time be fixed in the resignation,
and then from that time. The acceptance of a resignation shall not be required
to make it effective.
DUTIES OF OFFICERS MAY BE DELEGATED
38. In case of the absence of any officer of the Corporation, or
for any other reason that the Board may deem sufficient, the Board may delegate
the powers or duties of such officer to any other officer, or to any Director,
for the time being; provided, a majority of the entire Board concur therein.
CERTIFICATES OF STOCK
39. The certificates of stock of the Corporation shall be numbered
and registered as they are issued. They shall exhibit the holder's name and the
number of shares and shall be signed by the President or Vice President and
Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary and
shall bear the Corporate Seal.
TRANSFERS OF STOCK
40. Transfers of stock shall be made on the books of the
Corporation only by the person named in the certificate or by
<PAGE>
attorney, lawfully constituted in writing, and upon surrender of such
certificate.
41. The Board of Directors may close the transfer books in their
discretion for a period not exceeding sixty days preceding any meeting, annual
or special, of the stockholders, or the day appointed for the payment of a
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital stock shall go into effect; provided,
however, that in lieu of closing the stock transfer books as aforesaid, the
Board of Directors may fix in advance a date not exceeding sixty (60) days
preceding the date of any meeting of stockholders, or the date for the payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, as a
record date for the determination of the stockholders entitled to notice of and
to vote at any such meeting, or entitled to receive payment of any such
dividend, or any such allotment of rights, or to exercise the rights in respect
to any such change, conversion or exchange of capital stock, and in such case
only stockholders of record on the date so fixed shall be entitled to such
notice of and vote at such meeting, or to receive payment of such dividend, or
allotment of rights, or to exercise such rights as the case may be,
notwithstanding any transfer of any stock on the books of the Corporation after
any such record date fixed as aforesaid.
42. The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in
<PAGE>
fact thereof and accordingly shall not be bound to recognize any equitable or
other claim to or interest in such share on the part of any other person whether
or not it shall have express or other notice thereof, save as expressly provided
by the laws of New Jersey.
LOST CERTIFICATE
43. The Board of Directors may direct a new certificate to be
issued in place of any certificate theretofore issued by the Corporation,
alleged to have been lost or destroyed, upon satisfaction of such requirements
as the Board of Directors, in its discretion, may impose on the issue of such
new certificate, including a requirement that the alleged owner give the
Corporation a bond of indemnity in form and with one or more sureties
satisfactory to the Board of Directors, in such amount as the Board of Directors
may determine.
INSPECTION OF BOOKS
44. The Directors shall determine from time to time whether, and,
if allowed, when and under what conditions and regulations the accounts and
books of the Corporation (except such as may be statute be specifically open to
inspection) or any of them shall be open to the inspection of the stockholders,
and the stockholders' rights in this respect are and shall be restricted and
limited accordingly.
<PAGE>
CHECKS
45. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers as the Board of Directors may from
time to time designate.
FISCAL YEARS
46. The fiscal year shall begin the first day of January in each
year.
DIVIDENDS
47. The Directors shall not be required in January in each year,
after reserving over and above its capital stock paid in as a working capital
for said Corporation, such sum, if any, as shall have been fixed by the
stockholders, to declare a dividend among its stockholders, of the whole of its
accumulated profits exceeding the amount so reserved and to pay the same to such
stockholders on demand; but the Board of Directors may fix a sum which may be
reserved or set aside, over and above the Corporation's capital paid in, as
working capital of the Corporation, and from time to time they may increase,
diminish and vary the same in their absolute judgment and discretion and may
determine whether any, and if any, what part of the accumulated profits shall be
declared in dividends and paid to the stockholders, and may direct and determine
the use and disposition of any surplus or net profits over and above the capital
stock paid in.
<PAGE>
DIRECTORS' ANNUAL STATEMENT
48. The Board of Directors shall present at each annual meeting and
when called for by the stockholders at any special meeting of the stockholders,
a full and clear statement of the business and condition of the Corporation.
NOTICES
49. Whenever under the provisions of these By-Laws notice is
required to be given to any Director, officer or stockholder, it shall not be
construed to mean a personal notice, but such notice may be given in writing by
depositing the same in the post office or letter box, in a post-paid sealed
wrapper, addressed to such stockholder, officer or Director, at such address as
appears on the books of the Corporation, or, in default of other address, to
such Director, officer or stockholder at the General Post Office in the City of
Jersey City, New Jersey, and such notice shall be deemed to be given at the time
when the same shall be thus mailed.
Any stockholder, Director, or officer may waive any notice required
to be given under these By-Laws.
AMENDMENTS
50. The stockholders, by the affirmative vote of a majority of the
stock issues and outstanding, may at any regular meeting or upon notice at any
special meeting, alter or amend these By-Laws.
<PAGE>
51. The Board of Directors, by affirmative vote of a majority of
the whole Board, may alter or amend these By-Laws; provided, however, that if
all of the members of the Board are not present at the meeting where the
alteration or amendment is proposed, no alteration or amendment shall be made
unless the proposed alteration or amendment is adopted at a subsequent regular
or special meeting.
INTERPRETATION
52. In these By-Laws, unless there shall be something in the
subject or context inconsistent therewith, "office" and "principal office" mean
the registered office in the State of New Jersey.
"Stockholder" means a registered owner of a share or shares of the
capital stock.
"Meeting" includes an election of Directors.
"Board" and "Board of Directors" mean the Directors of the
Corporation for the time being, duly convened in a regular or special meeting.
Words importing singular numbers include the plural and vice versa;
words importing males include females; and words importing natural persons
include corporations.
<PAGE>
Exhibit 3.13
ARTICLES OF INCORPORATION
of
SOUTH CHARLESTON
STAMPING & MANUFACTURING COMPANY
The undersigned, acting as an incorporator pursuant to Section 26,
Article 1, Chapter 31 of the Code of West Virginia, hereby adopts the following
Articles of Incorporation pursuant to Section 27, Article 1, Chapter 31 of the
Code of West Virginia.
I. The name of the corporation shall be South Charleston Stamping
& Manufacturing Company.
II. The period of duration of the corporation shall be perpetual.
III. The purpose or purposes for which the corporation is organized
are to engage in all activities and to take all actions which are lawful for a
corporation organized under the laws of the State of West Virginia, whether
expressly or impliedly permitted by statute or otherwise.
IV. The address of the principal office of the corporation is 3100
MacCorkle Avenue, S.W., in the City of South Charleston, in the county of
Kanawha, and State of West Virginia 25303.
V. The name and address of the person to whom shall be sent
notice or upon whom process shall be served, or service of which is accepted by
the Secretary of State, is John T. Wise, Plant Manager, 3100 MacCorkle Avenue,
S.W., South Charleston, West Virginia 25303.
<PAGE>
VI. The number of directors constituting the initial board of
directors is three, and their names and addresses are:
John Kerr 888 W. Big Beaver
Box 3951
Troy, Michigan 48007-3951
William Davidson 888 W. Big Beaver
Box 3951
Troy, Michigan 48007-3951
Kurt Vilders 888 W. Big Beaver
Box 3951
Troy, Michigan 48007-3951
VII. The name and address of the incorporator is Thomas A. Heywood,
1600 Commerce Square, Charleston, West Virginia 25301.
VIII. The amount of the total authorized capital stock of the
corporation shall be One Thousand Dollars ($1,000.00), which shall be divided
into one thousand (1000) shares of common stock of the par value of One Dollar
($1.00) each.
IX. No shareholder or other person shall have any preemptive right
whatsoever.
X. The internal affairs of the corporation shall be regulated in
accordance with the bylaws of the corporation.
THE UNDERSIGNED, for the purpose of forming a corporation under the
laws of the State of West Virginia, does make and file these ARTICLES OF
INCORPORATION, and I have accordingly hereunto set my hand this 11th day of
February, 1988.
THOMAS G. HEYWOOD
-------------------------
Incorporator
<PAGE>
STATE OF WEST VIRGINIA
COUNTY OF KANAWHA, TO WIT:
I, CAMDEN P. SIEGRIST, a Notary Public of said County, do certify
that Thomas A. Heywood, whose name is signed to the foregoing Articles of
Incorporation of South Charleston Stamping & Manufacturing Company, bearing date
the 11th day of February, 1988, has this day personally appeared before me in my
said County and acknowledged his signature to be the same.
GIVEN under my hand and seal this 11th day of February, 1988.
My commission expires June 5, 1995.
CAMDEN P. SIEGRIST
-------------------------
Notary Public
[NOTARIAL SEAL]
This instrument was prepared by
BOWLES, McDAVID, GRAFF & LOVE
1600 Commerce Square
Charleston, West Virginia 25325-1386
<PAGE>
ARTICLES OF AMENDMENT
to
ARTICLES OF INCORPORATION
of
SOUTH CHARLESTON
STAMPING & MANUFACTURING COMPANY
Pursuant to the provisions of Section 31, Article 1, Chapter 31 of
the Code of West Virginia, the undersigned corporation adopts the following
Articles of Amendment to its Articles of Incorporation:
FIRST: The name of the corporation is South Charleston Stamping
& Manufacturing Company.
SECOND The following Amendments to the Articles of
Incorporation were adopted by the shareholders of the corporation on April 23,
1992, in the manner prescribed by Sections 107 and 147, Article 1, Chapter 31:
RESOLVED, that Article VIII of the Articles of Incorporation of
South Carolina Stamping & Manufacturing Company shall be amended as
follows:
VIII. Section 8.1. The amount of the total authorized capital
stock of the corporation shall be Fifty Million One Thousand Dollars
($50,001,000.00), which shall be divided into classes of which one
thousand (1,000) shares of the Par Value of One Dollar ($1.00) each
shall be designated Common Stock, and five million
<PAGE>
(5,000,000) shares of a Par Value of Ten Dollars ($10.00) each shall
be designated as Preferred Stock.
Section 8.2. The Board of Directors is authorized, subject to
limitations prescribed by law and the Articles of Incorporation of
the corporation to provide for the issuance of the shares of
Preferred Stock in series and by filing a certificate pursuant to
the applicable law of West Virginia, to establish from time to time
the number of shares to be included in each such series, and to fix
and determine the relative rights and preferences of the shares of
any such series.
The authority of the Board with respect to each series shall
include, but not be limited to, determination of the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and if so, from which date or
dates, and the relative rights of priority, if any, of payment
of dividends on shares of that series;
(c) Whether that series shall have
<PAGE>
voting rights, in addition to the voting rights provided by
law, and, if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges,
and if so, the terms and conditions of such conversion,
including provision for adjustment of the conversion rate in
such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which
they shall be redeemable, and the amount per share payable in
case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so,
the terms and amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or
<PAGE>
involuntary liquidation, dissolution or winding up of the
corporation, and the relative rights of priority, if any, of
payment of shares of that series;
(h) Any other relative rights, preferences and limitations
of that series.
Section 8.3. Dividends on outstanding shares of Preferred Stock
shall be paid or declared and set apart for payment before any
dividends shall be paid or declared and set apart for payment on the
common shares with respect to the same dividend period.
Section 8.4. If upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the assets available
for distribution to holders of shares of Preferred Stock of all
series shall be insufficient to pay such holders the full
preferential amount to which they are entitled, then such assets
shall be distributed ratably among the shares of all series of
Preferred Stock in accordance with the respective preferential
amounts (including unpaid cumulative dividends, if any) payable with
respect thereto.
THIRD: The number of shares of the corporation outstanding at
the time of such adoption was 1,000; and the number
<PAGE>
of shares entitled to vote thereon was 1,000.
FOURTH: The number of shares voted for such amendment was 900;
and the number of shares voted against such amendment was 0.
Dated: April 23, 1992.
SOUTH CHARLESTON STAMPING &
MANUFACTURING COMPANY
By JOHN T. WISE
----------------------------
Its Vice-President
and SHARON THOMAS
----------------------------
Its Secretary
<PAGE>
STATE OF WEST VIRGINIA,
COUNTY OF KANAWHA, TO WIT:
I, MARTHA L. COOK, a notary public, do hereby certify that on the 23
day of April, 1992, personally appeared before me John T. Wise, who, being by me
first duly sworn, declared that he is the Vice-President of South Charleston
Stamping & Manufacturing Company, that he signed the foregoing document as
Vice-President of the corporation, and that the statements therein contained are
true.
My commission expires: April 30, 1999.
MARTHA L. COOK
----------------------------
Notary Public
This instrument Prepared By:
Steptoe & Johnson
P.O. Box 2190
Clarksburg, WV 26302-2190
<PAGE>
STATEMENT OF DESIGNATION
OF SERIES AND FIXING AND
DETERMINING THE RELATIVE
RIGHTS AND PREFERENCES THEREOF
SOUTH CHARLESTON
STAMPING & MANUFACTURING COMPANY
Pursuant to the provisions of Section 79, Article 1, Chapter 31 of
the Code of West Virginia and Article VIII of the Articles of Incorporation, as
amended, of South Charleston Stamping & Manufacturing Company, the undersigned
South Charleston Stamping & Manufacturing Company hereby executes the following
statement of designation of series and fixing and determining the relative
rights and preferences thereof:
I. The name of the corporation is SOUTH CHARLESTON STAMPING &
MANUFACTURING COMPANY.
II. A copy of the resolution of the board of directors of the
corporation establishing and designating the series, and fixing and determining
the relative rights and preferences thereof is attached hereto and made a part
hereof as Exhibit A.
III. The date of the adoption of such resolution was April 24,
1992.
<PAGE>
IV. Such resolution was duly adopted by the board of directors by
a written unanimous consent and agreement.
Dated: April 24, 1992.
SOUTH CHARLESTON STAMPING &
MANUFACTURING COMPANY
By JOHN T. WISE
----------------------------
Its Vice-President
and SHARON THOMAS
----------------------------
Its Secretary
<PAGE>
STATE OF WEST VIRGINIA
COUNTY OF KANAWHA, TO WIT:
I, Martha L. Cook, a notary public, do hereby certify that on the 27
day of April, 1992, personally appeared before me John T. Wise, who, being by me
first duly sworn, declared that he is the Vice-President of South Charleston
Stamping & Manufacturing Company, that he signed the foregoing document as
Vice-President of the corporation, and that the statements therein contained are
true.
My commission expires: April 30, 1999.
MARTHA L. COOK
----------------------------
Notary Public
This Instrument Prepared By:
Steptoe & Johnson
P.O. Box 2190
Clarksburg, WV 26302-2190
<PAGE>
EXHIBIT A
RESOLVED, that, pursuant to the authority expressly granted to
and vested in the Board of Directors by the Articles of
Incorporation of the Corporation, the Board of Directors hereby
creates a series of Preferred Stock of the Corporation to consist of
4,500,000 shares, and the Board of Directors hereby fixes the voting
powers, designation, preferences and relative, participating,
optional or other special rights, and the qualifications,
limitations or restrictions thereof, of the shares of such series as
follows:
1. DESIGNATION. The shares of the series of Preferred
Stock created hereby shall be designated Series A Cumulative
Preferred Stock (hereinafter sometimes called the "Series A
Preferred Stock").
2. DIVIDENDS. The holders of shares of Series A
Preferred Stock shall be entitled to receive, if and when declared
payable by the Board of Directors out of assets legally available
for the payment of dividends, cumulative cash dividends at the rate
of $0.50 per share per annum from the date on which such shares have
been originally issued. Such dividends shall be cumulative from the
date of issue, so that no dividend (other than a dividend payable in
Common Stock of the Corporation or other distribution shall be paid
or declared or made on, and no amount shall be applied to the
redemption of, any Common Stock or any other class of stock ranking
junior to the Series A Preferred Stock as to dividends or assets
unless full cumulative dividends for the then current dividend
period shall have been or simultaneously therewith shall be paid or
declared, on outstanding Preferred Stock of all series entitled to
receive dividends at the rates determined for the respective series.
Accumulations of dividends shall not bear interest. In the event
that dividends are not paid in full, the shares of Series A
Preferred Stock shall share ratably in the payment of dividends,
including accumulations, if any, in accordance with the sums which
would be payable on said shares if all dividends were declared and
paid in full.
3. REDEMPTION. So long as full cumulative dividends on
all outstanding shares of Preferred Stock for all dividend periods
ending on or prior
<PAGE>
to the date fixed for redemption shall have been paid or declared
and set apart for payment, and subject to any applicable
requirements of West Virginia law, the Corporation may, at the
option of the Board of Directors of the Corporation, redeem the
whole or any part of the shares of Series A Preferred Stock at any
time after issuance of such shares at a redemption price equal to
one hundred percent (100%) of the issue price of such shares plus
the amount of unpaid accumulated dividends, if any, to the date of
such redemption. all such redemptions shall be effected in
accordance with the procedure for redemptions set forth in the West
Virginia Corporation Act in effect at the times of such redemptions.
4. LIQUIDATION. In the event of any dissolution,
liquidation or reduction of capital resulting in distribution of
assets to stockholders, or winding up of the Corporation, whether
voluntarily or involuntarily, the holders of shares of Series A
Preferred Stock then outstanding shall be entitled to receive in
cash out of the assets of the Corporation, whether capital or
surplus or otherwise, before any distribution of the assets shall be
made to the holders of Common Stock or of any other class of stock
ranking junior to the Preferred Stock as to dividends or assets, an
amount equal to one hundred percent (100%) of the issue price of
such shares, to be payable on the share of such series in the event
of voluntary or involuntary dissolution, liquidation or reduction of
capital resulting in distribution of assets to stockholders, or
winding up, as the case may be, in all cases, with unpaid
accumulated dividends, if any, whether such dividends are earned,
declared or otherwise, to the date fixed for such payment. If the
assets shall not be sufficient to pay in full the amount so
determined to be payable on all shares of the Preferred Stock in the
event of such voluntary or involuntary dissolution, liquidation or
reduction of capital resulting in distribution of assets to
stockholders, or winding up, as the case may be, then the assets
available for payment shall be distributed ratably among the holders
of the Preferred Stock of all series in accordance with the amounts
so determined to be payable on the shares of each series in the
event of voluntary or involuntary dissolution, liquidation, or
reduction of capital resulting in distribution of assets to
stockholders, or winding up, as the case may be, in
<PAGE>
proportion to the full preferential amounts, together with any and
all dividend arrearage, to which they are respectively entitled.
After payment to the holders of the Preferred Stock of the full
preferential amounts hereinbefore provided for, the holders of
Series A Preferred Stock will have no other rights or claims to any
of the remaining assets of the Corporation either upon distribution
of such assets or upon dissolution, liquidation or winding up.
5. VOTING POWERS. (a) Except a set forth herein or in the
Certificate of Incorporation of the Corporation or to the extent
required by the applicable provisions of the West Virginia
Corporation Act, the holders of shares of Series A Preferred Stock
shall not have any rights to vote for any purpose or on any matter
whatsoever, all such voting power being vested exclusively in the
shares of Common Stock or the Corporation, holders of shares of
Series A Preferred Stock shall not be entitled to receive notice of
any meeting of shareholders of the Corporation or which they are not
entitled to vote.
(b) The holders of shares of Preferred Stock
Outstanding on the record date for any such meeting of the
shareholders shall be entitled to vote, as a single class, upon any
proposed amendment to the Certificate of Incorporation of the
Corporation, if such amendment would (i) increase or decrease the
aggregate number of authorized shares of Preferred Stock, (ii)
increase or decrease the par value of shares of Preferred Stock,
(iii) effect an exchange, reclassification or cancellation of all or
a part of the shares of Preferred Stock, (iv) effect an exchange, or
create a right of exchange of all or any part of the shares of
another class into shares of Preferred Stock, (v) change the
designations, preferences, limitations or relative rights of the
shares of Preferred Stock, (vi) change the shares of Preferred
Stock, whether with or without par value,into the same or a
different number of shares, either with or without par value, of the
same class or another class or classes; (vii) create a new class of
preferred stock having rights and preferences prior or superior to
the shares of the Preferred Stock, or increase the rights and
preferences, or the number of authorized shares, of any class having
rights and preferences prior or superior to the shares of the
Preferred Stock or
<PAGE>
increase the rights and preferences of any class sharing rights or
preferences later or inferior to the shares of the Preferred Stock
in such a manner as to become prior or superior to the shares of the
Preferred Stock or (viii) cancel or otherwise affect accumulated but
undeclared dividends on the shares of Preferred Stock; and no such
proposed amendment shall be deemed to have been adopted and approved
without the affirmative vote of holders of that number of shares of
Preferred Stock then outstanding which shall be required pursuant to
the provisions of the West Virginia Corporation Act in effect at the
time of such vote.
(c) The Holders of shares of Preferred Stock
outstanding on the record date fixed for any such meeting of the
shareholders shall be entitled to vote, as a single class, upon any
resolution authorizing (i) any plan of merger or plan of
consolidation involving the Corporation, (ii) the dissolution of the
Corporation, and (iii) the sale, lease, exchange or other
disposition of all, or substantially all, of the property and assets
of the Corporation,if not made in the regular course of business,
and no such resolution shall be deemed to have been adopted and
approved without the affirmative vote of holders of that number of
shares of Preferred Stock then outstanding which shall be required
pursuant to that provision of the West Virginia Corporation Act in
effect at the time of such vote.
6. NO PREEMPTIVE RIGHTS. Two holders of shares of Series
A Preferred Stock at any time outstanding shall have no preemptive
or preferential right to subscribe for or purchase any shares of
stock, or rights or options to purchase shares of stock whether now
or hereafter authorized, or any securities convertible into
exchangeable for shares of stock or into rights or options to
purchase shares of stock of the Corporation of any class.
<PAGE>
Exhibit 3.14
BYLAWS
OF
SOUTH CHARLESTON STAMPING & MANUFACTURING COMPANY
ARTICLE I
SEAL
The common seal of this corporation shall be circular in form and
shall have inscribed thereon the words ."South Charleston Stamping &
Manufacturing Company Corporate Seal," and for such purposes there is adopted
the seal whose impression is made on the margin hereof.
ARTICLE II
LOCATION
The principal office of the corporation shall be, 3100 MacCorkle
Avenue, S.W., South Charleston, West Virginia 25303. The corporation may,
however, maintain an office or offices and the business of the corporation may
be transacted at such other place or places in the State of West Virginia or
elsewhere as the board of directors may from time to time determine.
ARTICLE III
STOCKHOLDERS' MEETING
SECTION 1 - ANNUAL MEETING.
The regular annual meeting of the stockholders of the corporation for
the election of directors and for the transaction of the lawful business of the
corporation shall be held on the second Tuesday in March of each year, either at
the principal office of the corporation, or at such other place in or outside
West Virginia as shall be designated in the notice or waiver of notice of such
regular annual meeting. Should said date fall on a legal holiday, the regular
annual meeting shall be on the first business day following.
SECTION 2 - GENERAL OR SPECIAL MEETING.
A general, regular or special meeting of the stockholders may be held
at the principal office of the corporation, or at such other place in or outside
West Virginia as shall be designated in the notice or waiver of notice of such
special or general meeting whenever called by the board of directors, by the
president and secretary, or by any number of stockholders owning in the
aggregate
<PAGE>
at least one-tenth (1/10th) of the number of shares outstanding.
SECTION 3 - NOTICE OF MEETING
Notice of the regular annual meeting of the stockholders shall be
given in writing by the president or vice president or secretary of the
corporation.
Notice of a general or special meeting of the stockholders shall be
given by notice in writing signed by the stockholders making the call for said
meeting, or if called by the board of directors shall be signed by the president
or vice president or secretary of the corporation, and/or if called by the
president and secretary shall be signed by them. Said written notice shall
state the place, day and hour of the meeting, and, in case of a special meeting,
the purpose or purposes for which the meeting is called, and shall be delivered
not less than ten (10) nor more than fifty (50) days before the date of the
meeting, either personally or by mail, by or at the direction of the president,
secretary, or the officer or persons calling the meeting, to each stockholder of
record or member entitled to vote at such meeting. If such notice shall be
mailed, the postage shall be prepaid, and it shall be addressed to each of the
stockholders of record at the post office address of each of the stockholders
appearing on the books of the corporation, or, if an address is specified for
this purpose by a stockholder, then to such address.
SECTION 4 - WAIVER OF NOTICE.
Any meeting of the stockholders may be held without notice and
publication of notice if a written waiver thereof be signed by all of the
stockholders and filed with the records of the meeting either before or after
the holding thereof. When, however, it is required by statute that notice shall
be given in a particular manner and such notice cannot be legally waived, then
such notice shall be given in the manner provided by such statute.
SECTION 5 WRITTEN AGREEMENT IN LIEU OF MEETING.
Whenever the vote of stockholders at a meeting thereof is required or
permitted to be taken in connection with any corporate action, the meeting and
vote of such stockholders may be dispensed with if all of the stockholders who
would have been entitled to vote upon the action, if such meeting were held,
shall agree in writing to such corporate action being taken, and such agreement
shall have like effect and validity as though the action were duly taken by the
unanimous action of all stockholders entitled to vote at a meeting of such
stockholders duly called and legally held.
SECTION 6 - QUORUM.
<PAGE>
At all meetings of the stockholders, a quorum of the stockholders
shall consist of a majority of all the shares of stock entitled to vote,
represented by the holders thereof in person or represented by proxy. If a
quorum is present, the affirmative vote of a majority of the shares represented
at the meeting and entitled to vote on the subject matter shall be the act of
the stockholders.
SECTION 7 - ADJOURNMENT AND RECESSES.
Any number of shares less than a quorum present and/or represented by
proxy at any stockholders' meeting may adjourn said meeting from time to time
until a quorum is present.
Every meeting of the stockholders may adjourn or recess from time to
time until its business is completed.
SECTION 8 - ORGANIZATION.
The president shall call meetings of the stockholders to order and
shall act as chairman of such meeting. The stockholders present may appoint any
stockholder to act as chairman of any meeting in the absence of the president or
with his consent if present.
The secretary of the corporation shall act as secretary of all
meetings of the stockholders. In the absence of the secretary at any such
meeting, the presiding officer may appoint any person to act as secretary
thereof and to keep a record of the proceedings.
SECTION 9 - VOTING
At each election for directors every stockholder entitled to vote at
such election shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected and
for whose election he has a right to vote, or to cumulate his votes by giving
one candidate as many votes as the number of such directors multiplied by the
number of his shares shall equal, or by distributing such votes on the same
principle among any number of such candidates, and the directors shall not be
elected in any other manner, except as provided in Article IV, Section 2, of the
bylaws.
On any other question to be determined by a vote of shares of any
meeting of stockholders, each stockholder shall be entitled to one vote for each
share, of stock owned by him and entitled to vote and he may exercise this right
in person or by proxy.
<PAGE>
ARTICLE IV
BOARD OF DIRECTORS
SECTION 1 - POWERS, QUALIFICATIONS, NUMBER AND TERM OF OFFICE.
The business and property of the corporation shall be managed and
controlled by the board of directors to be elected at each regular annual
meeting of the corporation. The board of directors shall consist of one or more
persons as may be provided for by the stockholders at the regular annual
meeting. Each director shall hold office from the time of his election until
the next regular annual meeting of the stockholders of the corporation or until
his successor is elected and qualified or until he is removed by a vote of the
stockholders. No director need be a resident of the State of West Virginia or a
stockholder of the corporation in order to hold said office.
SECTION 2 - VACANCIES.
Any vacancies occurring in the board of directors and any directorship
to be filled by reason of an increase in the number of directors, unless the
Articles of Incorporation or bylaws provide that a vacancy shall be, filled in
some other manner, may be filled by the affirmative vote of a majority of the
stockholders or of the remaining directors though less than a quorum of the
board of directors. A director elected to fill a vacancy shall be elected for
the unexpired term of his predecessor in office. Any directorship to be filled
by reason of an increase in the number of directors may be filled by the board
of directors for a term of office continuing only until the next election of
directors by the stockholders.
SECTION 3 - PLACE OF MEETING
Meetings of the board of directors, regular or special, may be held
either within or without this State.
SECTION 4 - REGULAR MEETINGS.
The regular meeting of the board of directors shall be held annually
on the second Tuesday in March of each year following the annual meeting of
stockholders.
SECTION 5 - SPECIAL MEETINGS.
Special meetings of the board of directors shall be held whenever
called by direction of the president, vice-president, or any two of the
directors.
<PAGE>
SECTION 6 - NOTICE; WAIVER OF NOTICE.
No notice shall be required of the regular meetings of the board of
directors. Notice of special meetings of the board of directors shall be given
by mailing a written notice to each director at his last known post office
address at least two (2) days before the time of the meeting. Such notice shall
state the time, place and purpose of such special meeting.
Notice of such special meetings of the board of directors shall be
considered waived if a director shall attend in person or if every director
shall in writing file with the records of the meeting, either before or after
the holding of such meeting, a written waiver of such notice, except that
attendance of a director at a meeting shall not constitute a waiver of notice if
such director attends for the express purpose of objecting to the transaction of
any business because the meeting is not lawfully called or convened.
SECTION 7 - WRITTEN AGREEMENT IN LIEU OF MEETING.
Whenever the vote of directors at a meeting thereof is requited or
permitted to be taken in connection with any corporate action, the meeting and
vote of such directors may be dispensed with if all of the directors shall
consent and agree in writing to such corporate action being taken, and such
agreement (which shall set forth the action so taken and be signed by all of the
directors) shall have like effect and validity as though the action were duly
taken by the unanimous action of all directors at a meeting of such directors
duly called and legally held.
SECTION 8 - QUORUM.
A majority of the members of the board of directors shall constitute a
quorum thereof for the transaction of business, but if at any meeting of said
board of directors there shall be less than a quorum present, any number of said
directors may adjourn said meeting from time to time and place to place until a
quorum is present.
SECTION 9 - PRESIDING OFFICER; RECORDING OFFICER.
At all meetings of the board of directors, the president or a
vice-president, or in the absence of them, any director elected by the directors
present, shall preside. The secretary or any person appointed by the directors
present, shall keep a record of the proceedings. The records shall be verified
by the signature of the person acting as chairman of the meeting.
SECTION 10 - VOTING WHEN INTERESTED.
<PAGE>
No contract or other transaction between a corporation and one or more
of its directors or any other corporation, firm, association or entity in which
one or more of its directors are directors or officers or are financially
interested, shall be void or voidable solely because of such relationship or
interest or because such director or directors were present at the meeting of
the board of directors which authorizes, approves or ratifies such contract or
transaction or because his or their votes are counted for such purpose if (a)
the fact of such relationship or interest is disclosed or known to the board of
directors which authorizes, approves or ratifies the contract or transaction by
a vote or consent sufficient for the purpose without counting the votes or
consents of such interested directors; or (b) the fact of such relationship is
disclosed or known to the stockholders entitled to vote and they authorize,
approve or ratify such contract or transaction by vote or written consent; or
(c) the contract or transaction is fair and reasonable to the corporation.
Interested directors may be counted in determining the presence of a quorum at a
meeting of the board of directors which, authorizes, approves or ratifies such
contract or transaction. on any question involving the authorization, approval
or ratification of any such contract or transaction, the names of those voting
each way shall be entered on the record of their proceedings.
SECTION 11 - COMPENSATION OF DIRECTORS.
For attendance at any meeting of the board of directors or any
committee thereof, each director shall receive such compensation as may be fixed
from time to time by the board. If no compensation be fixed by the board in
such cases, no director shall be entitled to receive any compensation for his
attendance.
SECTION 12 - RATIFICATION OF STOCKHOLDERS.
The board of directors, in its discretion, may submit any contract or
act for approval or ratification at any annual meeting of the shareholders or
any general or special meeting called for the purpose of considering any
contract or act; and any contract or act which shall be approved and ratified by
the vote of the holders of a majority in interest of the capital stock of the
corporation that is represented in person or by proxy at such meeting, providing
only that a quorum of the stockholders be either so represented in person or by
proxy, shall be as valid and binding upon the corporation and upon all the
stockholders as though it had been approved and ratified by each and every
stockholder of the corporation.
SECTION 13 - GENERAL POWERS.
The board of directors shall elect the officers hereinafter provided
for in Article V, Section 1 of the bylaws, and
<PAGE>
in case of the absence of the president and/or the vice president, the board may
appoint a president pro tempore who for the time shall discharge the official
duties of the president, and the board of directors shall determine what is such
absence as will justify the election of the president pro tempore.
The board of directors, by resolution adopted by a majority of the
full board of directors, may designate from among its members an executive
committee and one or more other committees each of which, to the extent provided
in such resolution, shall have and may exercise all the authority of the board
of directors, except in reference to amending the Articles of Incorporation,
adopting a plan of merger or consolidation, recommending to the stockholders the
sale, lease, exchange or other disposition of all or substantially all the
property and assets of the corporation otherwise than in the usual and regular
course of its business, recommending to the stockholders a voluntary dissolution
of the corporation or a revocation thereof, or amending the bylaws of the
corporation. The designation of any such committee and the delegation thereto
of authority shall not operate to relieve the board of directors, or any member
thereof, of any responsibility imposed by law.
SECTION 14 - REMOVAL.
At a meeting of stockholders called expressly for that purpose, any
director or the entire board of directors may be removed, with or without cause,
by a vote of the holders of a majority of the shares entitled to vote at an
election of directors. If less than the entire board is to be removed, no one
of the directors may be removed if the votes cast against his removal would be
sufficient to elect him.
ARTICLE V
OFFICERS
SECTION 1 - OFFICERS.
The officers of the corporation shall consist of a president, vice
president, secretary and treasurer. The board of directors may, from time to
time, also appoint or elect such other additional officers and agents, and
prescribe the duties thereof, as the board of directors shall deem expedient.
One person may hold more than one office, except that the president and
secretary shall not be the same person. No officer shall execute, acknowledge
or verify any instrument in more than one capacity, if such instrument is
required by law or by the bylaws to be executed, acknowledged and verified or
countersigned by two or more officers.
SECTION 2 - ELECTION AND TERMS OF OFFICE.
<PAGE>
The board of directors shall elect the aforementioned officers, who
shall hold office until the next regular annual meeting of the stockholders, or
until their successors are elected and qualified. None of the directors or
officers of the corporation need be stockholders. All appointees, agents, and
employees, other than officers, shall hold office at the discretion of the
president. The board of directors shall fix the salary and compensation for all
officers, agents and employees.
SECTION 3 - REMOVAL.
Any officer or agent may be removed by the board of directors whenever
in its judgment the best interests of the corporation will be served thereby,
but such removal shall be without prejudice to the contract rights, if any, of
the person so removed. Election or appointment of an officer or agent shall not
of itself create contract rights.
SECTION 4 POWERS AND DUTIES OF THE PRESIDENT.
The president shall be the chief executive officer and the head of the
corporation; he shall have general charge and supervision over the business and
affairs of the corporation, subject to the control of the board of directors.
The president shall annually prepare a full and true statement of the affairs of
the corporation which shall be submitted by him at the annual meeting of the
stockholders and filed within twenty (20) days thereafter at the principal
office of the corporation in this State, where it shall, during the usual
business hours of each secular day, be open for inspection by any stockholder of
the corporation. He shall have authority to sign, execute and acknowledge and
deliver any and all deeds, assignments and trust deeds, releases, powers of
attorney, assignments of mortgages and other similar documents, or any other
instruments of whatsoever kind or nature authorized, generally or specially, by
the board of directors, and shall perform all other duties required of him by
the laws of the State of West Virginia, and such other duties as may be
prescribed by these bylaws or as may from time to time be assigned to him by the
board of directors.
SECTION 5 - VICE PRESIDENT.
The vice president shall, concurrently with the president, but
subject to his superior right and authority, have all the right, powers and
authority and perform all the duties of the president of the corporation. Any
additional vice president shall have the powers conferred by and perform the
duties assigned by the board of directors.
SECTION 6 - SECRETARY.
The secretary shall attend all meetings of the
<PAGE>
stockholders and of the board of directors and shall keep correct minutes of all
the proceedings of all such meetings and record the same in a book or books to
be kept by him for such purpose. He shall have power to affix the seal of the
corporation to all instruments by him attested, and, together with the president
or vice president, to execute all conveyances or other formal instruments
requiring formal execution by the corporation under its corporate name and seal.
He shall be the custodian of all records and files of the corporation, and
shall, from time to time, whenever requested to do so, make full detailed
reports regarding the same to the president, the vice president, the board of
directors, and to the stockholders when in meeting lawfully assembled.
SECTION 7 - TREASURER.
The treasurer shall have custody of all the funds and securities of
the corporation which shall come into his hands. He shall keep accurate
accounts, in such form as may be approved by the board of directors, of all the
financial transactions of the corporation, and shall close said accounts and
balance said books of account at least once in each year. He shall, whenever
required by the president, the vice president, or by the board of directors,
render a report of all moneys received and disbursed by the corporation and of
the financial condition of the corporation, and shall perform such other
appropriate duties and have such power as may be required of, or conferred upon
him, by the board of directors.
SECTION 7 - GENERAL PROVISIONS.
All officers and agents of the corporation, as between themselves and
the corporation, shall have such authority and perform such duties in the
management of the corporation as may be imposed upon them, and have such powers
as may be given them by the president or by the board of directors.
All books, records and files of the corporation shall at all times be
open to the inspection of the president, the vice president, and the board of
directors.
Any or all of the officers shall give such bond or bonds for the
faithful discharge of, their respective duties in such sum or sums as and when
the board of directors may from time to time in its discretion require.
Any duty authorized, provided and/or required to be performed by any
officer of this corporation may be performed by this duly authorized assistant.
<PAGE>
ARTICLE VI
FUNDS AND ACCOUNTS
SECTION 1 - RECEIPTS.
The president, vice president, secretary and treasurer are each
authorized to receive and receipt for all moneys due and payable to the
corporation from any source whatsoever, and to endorse for deposit checks,
drafts and other money orders in the name of the corporation or on its behalf,
and to give full discharge and receipt therefor.
SECTION 2 - DEPOSITS.
All funds of the corporation shall be deposited in such banks or trust
companies (or with such other corporations and firms) as have been or may from
time to time be designated for such purposes by the board of directors.
SECTION 3 - CHECKS, NOTES, ETC.
All bills, notes, checks, drafts, or other orders for money and
negotiable instruments of the corporation shall be made in the name of the
corporation and shall be signed by such officer or employee of the corporation
as may be designated for such purposes by the board of directors.
ARTICLE VII
CERTIFICATE OF STOCK
SECTION 1 - FORM OF STOCK CERTIFICATE.
The form of stock certificate for shares of stock of the corporation
shall be in words and figures substantially as shown on the example stock
certificate attached hereto and made a part of these bylaws:
SECTION 2 - ISSUE AND REGISTRATION.
Stock certificates of the corporation shall be signed by the president
or a vice president and the secretary or an assistant secretary of the
corporation, and may be sealed with the seal of the corporation or a facsimile
thereof. The signatures of the president or vice president and the secretary or
assistant secretary upon a certificate may be facsimiles if the certificate is
manually signed on behalf of a transfer agent or a registrar, other than the
corporation itself or an employee of the corporation. In case any officer who
has signed or whose facsimile
<PAGE>
signature has been placed upon such certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the corporation
with the same effect as if he were such officer at the date of its issue.
The certificates shall be numbered and shall be entered on the stock
register in the name of the person owning the shares represented by such
certificate, and in case of cancellation, the date of cancellation also shall be
entered on the stock register and the statement of cancellation as required by
the law shall be filed. Every certificate surrendered to the corporation for
transfer shall be canceled and preserved by the officer or agent of the
corporation having custody of the stock certificates, and a statement of
cancellation shall be filed, and no new certificate shall be issued until the
old certificate has been thus canceled except as provided in Section 5 of this
Article.
SECTION 3 - TRANSFER.
Title to a certificate of stock and to the shares represented thereby
shall be transferred only as provided by Article 8, Chapter 46 of the Code of
West Virginia.
SECTION 4 - DIVIDENDS.
Dividends may be declared by the board of directors, from time to
time, and paid in cash or property only out of the unreserved and unrestricted
earned surplus of the corporation, except that no dividend may be paid when the
corporation is insolvent or where the payment thereof would render it insolvent
or when the declaration or payment thereof would be contrary to any restriction
contained in the Articles of Incorporation. Dividends may be declared and paid
in the corporation's own treasury shares out of any treasury shares that have
been reacquired out of corporate surplus. Dividends may be declared and paid in
the corporation's own authorized but unissued shares out of any unreserved and
unrestricted surplus, provided (1) in the case of par value shares, such shares
shall be issued at not less than par value thereof an amount equal to the
aggregate par value of the shares issued as a dividend shall be transferred to
stated capital from surplus; and (2) in the case of shares without par value,
such shares shall be issued at such stated value as fixed by the board of
directors and there shall be transferred from surplus to stated capital an
amount equal to the stated value fixed for such shares and the amount per share
so transferred shall be disclosed to the stockholders receiving the dividends.
SECTION 5 - LOST, DESTROYED OR STOLEN CERTIFICATES.
A stockholder requesting the issuance of a stock certificate of the
corporation in lieu of a lost, destroyed or stolen certificate shall promptly
give notice to the corporation of
<PAGE>
such loss, destruction or theft, and publish in a newspaper of general
circulation published in the County within, which the corporation then has its
principal place of business, a notice of such loss once a week for two (2)
successive weeks. Such stockholder shall file with the officers of this
corporation, first, an affidavit setting forth the time, place and circumstances
of the loss to the best of his knowledge and belief, and, second, proof of his
having advertised the loss in a newspaper of general circulation, published in
the County within which the corporation then has its principal place of
business, once a week for two (2) weeks. He shall also execute and deliver to
the corporation a bond with good security in a penalty of unlimited amount,
conditioned to indemnify the corporation and all persons whose rights may be
affected by the issuance of the new certificates against any loss in consequence
of the new certificate being issued.
The corporation will issue the new stock certificate if the above
requirements are completed before the corporation has notice that the
certificate has been acquired by a bona fide purchaser.
The board of directors, in its discretion, may authorize the issuance
of a new certificate in lieu of the one lost, destroyed or stolen without
requiring the publication of said notice or the giving of a bond.
ARTICLE VIII
FISCAL YEAR
The fiscal year of the corporation shall begin January 1 and end
December 31 each year.
ARTICLE IX
MISCELLANEOUS
SECTION 1 - VOTING UPON STOCKS.
Unless otherwise ordered by the board of directors, the president
shall have full power and authority on behalf of the corporation, whether in
person or by proxy, to attend and to act and to vote at any meeting of
stockholders of any corporation in which this corporation may hold stock, and at
any such meeting shall possess and may exercise any and all the rights and
powers incident to the ownership of such stock, and which, as the owner thereof,
this corporation might have possessed and exercised if present. The board of
directors by resolution may, from time to time, confer like powers upon any
other person or persons.
<PAGE>
SECTION 2 - CONTRACTS WITH DIRECTORS AND OFFICERS.
No contract or other transaction between a corporation and one or more
of its directors or any other corporation, firm, association or entity in which
one or more of its directors are directors or officers or are financially
interested, shall be either void or voidable because of such relationship or
interest or because such director or directors are present at the meeting of the
board of directors or a committee thereof which authorizes, approves or ratifies
such contract or transaction or because his or their votes are counted for such
purpose, if (1) the fact of such relationship or interest is disclosed or known
to the board of directors or committee which authorizes, approves or ratifies
the contract or transaction by a vote or consent sufficient for the purpose
without counting the votes or consents of such interested directors; or (2) the
fact of such relationship or interest is disclosed or known to the stockholders
entitled to vote and they authorize, approve or ratify such contract or
transaction by vote or written consent; or (3) the contract or transaction is
fair and reasonable to the corporation.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
On any question involving the authorization, approval or ratification
of any such contract or transaction, the names of those voting each way shall be
entered on the record of their proceedings.
SECTION 3 - INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that he
is or was a director, officer, or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines, taxes and penalties and interest thereon, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action or proceeding if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, that such
person did not have reasonable cause to believe that his conduct was unlawful.
<PAGE>
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
proceeding by or in the right of the corporation to procure judgment in its
favor by reason of the fact that he is or was a director, officer, or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, or agent of another corporation, partnership, joint venture
trust or other enterprise, against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or settlement of
such action or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made in respect of any
claim, issue or matter, including, but not limited to, taxes or any interest or
penalties thereon, as to which such person shall have been adjudged to be liable
for negligence or misconduct in the performance of his duty to the corporation
unless and only to the extent that the court in which such action or proceeding
was brought shall determine upon application that, despite the adjudication of
liability but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which such court shall
deem proper.
To the extent that a director, officer, or agent of a corporation has
been successful on the merits or otherwise in defense of any action or
proceeding heretofore referred to or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Any indemnification provided for herein shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth.
Such determination shall be made (1) by the board of directors by a majority
vote of a quorum consisting of directors who were not parties to such action or
proceeding, or (2) if such a quorum is not obtainable, or even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
Expenses (including attorneys' fees) incurred in defending a civil or
criminal action or proceeding may be paid by the corporation in advance of the
final disposition of such action or proceeding as authorized in the manner
herein provided, upon receipt of an undertaking by or on behalf of the director,
officer, or agent to repay such amount unless it shall ultimately be determined
that he is entitled to be indemnified by the corporation as authorized in this
section
<PAGE>
The indemnification provided for herein shall not be deemed exclusive
of any other rights to which any stockholder or member may be entitled under any
bylaw, agreement, vote of stockholders, members or disinterested directors or
otherwise, both as to action in his official capacity and as to a person who has
ceased to be a director, officer, or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
SECTION 4 - KEEPING BOOKS AND RECORDS.
The corporation shall keep correct and complete books and records of
account and shall keep minutes of the proceedings of its stockholders and board
of directors; and shall keep at its principal office, or at the office of its
transfer agent or registrar, a record of its stockholders, giving the names and
addresses of all stockholders and the number and class of the shares held by
each.
SECTION 5 - INSPECTION OF BOOKS AND RECORDS.
Any person who shall have been a holder of record of shares or of
voting trust certificates therefor at least six months immediately preceding his
demand or shall be the holder of record of, or the holder of record of voting
trust certificates for, at least five percent (5%) of all the outstanding shares
of the corporation, upon written demand stating the purpose thereof, shall have
the right to examine, in person, or by agent or attorney, at any reasonable time
or times, for any proper purpose its relevant books and records of accounts,
minutes, and record of stockholders and to make extracts therefrom.
ARTICLE X
AMENDMENTS
The power to alter, amend or repeal the bylaws or adopt new bylaws,
subject to repeal or alteration by action of the stockholders, shall be vested
in the board of directors.
<PAGE>
Exhibit 3.15
CERTIFICATE OF INCORPORATION
OF
YELLOW CAB COMPANY
under
The Delaware General Corporation Law
<PAGE>
CERTIFICATE OF INCORPORATION
OF
YELLOW CAB COMPANY
FIRST. The name of the Corporation is YELLOW CAB COMPANY.
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
Corporation Law of the State of Delaware.
FOURTH. The total number of shares of stock which the Corporation
shall have authority to issue is 2,000 shares of common stock of the par value
of $.01 per share, all of the same class.
FIFTH. The name and mailing address of the incorporator is
Timish K. Hnateyko, c/o Hutton Ingram Yuzek Gainen Carroll & Bertolotti, 250
Park Avenue, 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.
<PAGE>
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,
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
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<PAGE>
disinterested directors, by provision of law, or otherwise.
NINTH. No director of the Corporation shall be liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, provided that this provision does not eliminate
the liability 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
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<PAGE>
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 Corporation, 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.
TENTH. Whenever a compromise or arrangement is proposed between
this Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and
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<PAGE>
the said reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of this
Corporation, as the case may be, and also on this Corporation.
IN WITNESS WHEREOF, I have made, signed, and sealed this Certificate
of Incorporation this 25th day of July, 1994.
/s/ Timish K. Hnateyko
---------------------------------------
Timish K. Hnateyko, Incorporator
- 5 -
<PAGE>
BY-LAWS
of
YELLOW CAB COMPANY
As adopted July 25, 1994
<PAGE>
______________________________
YELLOW CAB COMPANY
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 at such date, time, and place, either within or without the State
of Delaware, as may be specified by the Board of Directors.
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 time, place, and the purpose or
purposes of the meeting, of stockholders who together own of record a majority
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 Corpora-
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<PAGE>
tion may transact any business which might have been transacted at the original
meeting. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 1.6 ORGANIZATION.
The Chairman of the Board, if any, or in his absence the
President, or in their absence any Vice President, 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
Presidents. The Secretary of the Corporation shall act as secretary of all
meetings of stockholders, but, in the absence of the Secretary, the chairman of
the meeting may appoint any other person to 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
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<PAGE>
any meeting duly called and held for the election of directors at 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.
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 a board of four directors; provided,
however, that the Board, by resolution adopted by vote of a majority of the then
authorized number of directors, may increase or decrease the number of
directors. The directors shall be elected by the holders of shares entitled to
vote thereon at the annual meeting of stockholders, and each shall serve
(subject to the provisions of Article IV) until the next succeeding annual
meeting of stockholders and until his respective successor has been elected and
qualified.
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.
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<PAGE>
Section 2.3 MEETINGS.
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 a majority of the directors
then in office.
Section 2.4 NOTICE OF SPECIAL MEETINGS.
The Secretary, or in his absence any other officer of the
Corporation, shall give each director notice of the time and place of holding of
special meetings of the Board of Directors by mail at least four days before the
meeting, or by telegram, cable, facsimile, or personal service at least two days
before the meeting. 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 of the total number of members 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
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<PAGE>
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 such other person as the directors may select. The Secretary of the
Corporation shall act as secretary of the meeting, but in his absence the
chairman of the meeting may appoint any person to act as secretary of the
meeting.
Section 2.6 COMMITTEES.
The Board of Directors may, by resolution passed by a majority of
the whole Board, designate one or more committees, each committee to consist of
one or more of the directors of the Corporation. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not 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
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<PAGE>
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 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
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<PAGE>
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.
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.
ARTICLE III
OFFICERS
Section 3.1 EXECUTIVE OFFICERS.
The executive officers of the Corporation shall be a Chairman of
the Board, a President, 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
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<PAGE>
such other officers (including a 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 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.
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
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<PAGE>
specidied therein or, if the thime be 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 director 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.
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 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.
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<PAGE>
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.
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 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.
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<PAGE>
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
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.
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<PAGE>
ARTICLE VI
MISCELLANEOUS
Section 6.1 CORPORATE SEAL.
The corporate seal shall have inscribed thereon the name of the
Corporation 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 January 1, and
end on December 31.
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 provided by
law, may be given personally, or by mail, or, in the case of directors or
officers, by telegram, cable, facsimile, or telecopy, addressed to such address
as appears on the books of the Corporation. Any notice given by telegram,
cable, or facsimile 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.
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
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<PAGE>
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 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,
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<PAGE>
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>
Exhibit 3.17
CERTIFICATE OF INCORPORATION
OF
CMC KALAMAZOO INC.
under
The Delaware General Corporation Law
<PAGE>
CERTIFICATE OF INCORPORATION
OF
CMC KALAMAZOO INC.
FIRST. The name of the Corporation is CMC KALAMAZOO 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
Corporation Law of the State of Delaware.
FOURTH. The total number of shares of stock which the Corporation
shall have authority to issue is 2,000 shares of common stock of the par value
of $.01 per share, all of the same class.
FIFTH. The name and mailing address of the incorporator is
Timish K. Hnateyko, c/o Hutton Ingram Yuzek Gainen Carroll & Bertolotti, 250
Park Avenue, 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
<PAGE>
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.
NINTH. No director of the Corporation shall be liable to
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<PAGE>
the Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, provided that this provision does not eliminate
the liability 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
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<PAGE>
the liabilities of directors of the Corporation, 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.
TENTH. Whenever a compromise or arrangement is proposed between
this Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors
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<PAGE>
or class of creditors, and/or on all the stockholders or class of stockholders,
of this Corporation, as the case may be, and also on this Corporation.
IN WITNESS WHEREOF, I have made, signed, and sealed this Certificate
of Incorporation this 25th day of July, 1994.
/s/ Timish K. Hnateyko
--------------------------------
Timish K. Hnateyko, Incorporator
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<PAGE>
Exhibit 3.18
BY-LAWS
of
CMC KALAMAZOO INC.
As adopted July 25, 1994
<PAGE>
------------------------------
CMC KALAMAZOO 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 at such date, time, and place, either within or without the State
of Delaware, as may be specified by the Board of Directors.
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 time, place, and the purpose or
purposes of the meeting, of stockholders who together own of record a majority
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 Corpora-
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<PAGE>
tion may transact any business which might have been transacted at the original
meeting. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 1.6 ORGANIZATION.
The Chairman of the Board, if any, or in his absence the President,
or in their absence any Vice President, 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 Presidents.
The Secretary of the Corporation shall act as secretary of all meetings of
stockholders, but, in the absence of the Secretary, the chairman of the meeting
may appoint any other person to 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
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<PAGE>
any meeting duly called and held for the election of directors at 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.
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 a board of four directors; provided,
however, that the Board, by resolution adopted by vote of a majority of the then
authorized number of directors, may increase or decrease the number of
directors. The directors shall be elected by the holders of shares entitled to
vote thereon at the annual meeting of stockholders, and each shall serve
(subject to the provisions of Article IV) until the next succeeding annual
meeting of stockholders and until his respective successor has been elected and
qualified.
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.
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<PAGE>
Section 2.3 MEETINGS.
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 a majority of the directors
then in office.
Section 2.4 NOTICE OF SPECIAL MEETINGS.
The Secretary, or in his absence any other officer of the
Corporation, shall give each director notice of the time and place of holding of
special meetings of the Board of Directors by mail at least four days before the
meeting, or by telegram, cable, facsimile, or personal service at least two days
before the meeting. 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 of the total number of members 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
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<PAGE>
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 such other person as the directors may select. The Secretary of the
Corporation shall act as secretary of the meeting, but in his absence the
chairman of the meeting may appoint any person to act as secretary of the
meeting.
Section 2.6 COMMITTEES.
The Board of Directors may, by resolution passed by a majority of
the whole Board, designate one or more committees, each committee to consist of
one or more of the directors of the Corporation. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not 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
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<PAGE>
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 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
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<PAGE>
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.
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.
ARTICLE III
OFFICERS
Section 3.1 EXECUTIVE OFFICERS.
The executive officers of the Corporation shall be a Chairman of the
Board, a President, 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
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<PAGE>
such other officers (including a 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 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.
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
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<PAGE>
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 director 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.
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 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.
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<PAGE>
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.
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 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.
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<PAGE>
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 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.
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<PAGE>
ARTICLE VI
MISCELLANEOUS
Section 6.1 CORPORATE SEAL.
The corporate seal shall have inscribed thereon the name of the
Corporation 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 January 1, and end
on December 31.
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 provided by law, may be given
personally, or by mail, or, in the case of directors or officers, by telegram,
cable, facsimile, or telecopy, addressed to such address as appears on the books
of the Corporation. Any notice given by telegram, cable, or facsimile 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.
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
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<PAGE>
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 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,
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<PAGE>
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>
Exhibit 3.19
CERTIFICATE OF INCORPORATION
OF
CHICAGO AUTOWERKS INC.
under
The Delaware General Corporation Law
<PAGE>
CERTIFICATE OF INCORPORATION
OF
CHICAGO AUTOWERKS INC.
FIRST. The name of the Corporation is CHICAGO AUTOWERKS 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
Corporation Law of the State of Delaware.
FOURTH. The total number of shares of stock which the Corporation
shall have authority to issue is 2,000 shares of common stock of the par value
of $.01 per share, all of the same class.
FIFTH. The name and mailing address of the incorporator is Timish
K. Hnateyko, c/o Hutton Ingram Yuzek Gainen Carroll & Bertolotti, 250 Park
Avenue, 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.
<PAGE>
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,
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
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<PAGE>
disinterested directors, by provision of law, or otherwise.
NINTH. No director of the Corporation shall be liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, provided that this provision does not eliminate
the liability 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
-3-
<PAGE>
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 Corporation, 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.
TENTH. Whenever a compromise or arrangement is proposed between
this Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and
-4-
<PAGE>
the said reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of this
Corporation, as the case may be, and also on this Corporation.
IN WITNESS WHEREOF, I have made, signed, and sealed this Certificate
of Incorporation this 25th day of July, 1994.
/s/ TIMISH K. HNATEYKO
----------------------------------
Timish K. Hnateyko,
Incorporator
-5-
<PAGE>
Exhibit 3.20
BY-LAWS
of
CHICAGO AUTOWERKS INC.
As adopted July 25, 1994
<PAGE>
------------------------------
CHICAGO AUTOWERKS 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 at such date, time, and place, either within or without the State
of Delaware, as may be specified by the Board of Directors.
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 time, place, and the purpose or
purposes of the meeting, of stockholders who together own of record a majority
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 Corpora-
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<PAGE>
tion may transact any business which might have been transacted at the original
meeting. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 1.6 ORGANIZATION.
The Chairman of the Board, if any, or in his absence the President,
or in their absence any Vice President, 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 Presidents.
The Secretary of the Corporation shall act as secretary of all meetings of
stockholders, but, in the absence of the Secretary, the chairman of the meeting
may appoint any other person to 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
-3-
<PAGE>
any meeting duly called and held for the election of directors at 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.
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 a board of two directors; provided,
however, that the Board, by resolution adopted by vote of a majority of the then
authorized number of directors, may increase or decrease the number of
directors. The directors shall be elected by the holders of shares entitled to
vote thereon at the annual meeting of stockholders, and each shall serve
(subject to the provisions of Article IV) until the next succeeding annual
meeting of stockholders and until his respective successor has been elected and
qualified.
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.
-4-
<PAGE>
Section 2.3 MEETINGS.
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 a majority of the directors
then in office.
Section 2.4 NOTICE OF SPECIAL MEETINGS.
The Secretary, or in his absence any other officer of the
Corporation, shall give each director notice of the time and place of holding of
special meetings of the Board of Directors by mail at least four days before the
meeting, or by telegram, cable, facsimile, or personal service at least two days
before the meeting. 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 of the total number of members 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
-5-
<PAGE>
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 such other person as the directors may select. The Secretary of the
Corporation shall act as secretary of the meeting, but in his absence the
chairman of the meeting may appoint any person to act as secretary of the
meeting.
Section 2.6 COMMITTEES.
The Board of Directors may, by resolution passed by a majority of
the whole Board, designate one or more committees, each committee to consist of
one or more of the directors of the Corporation. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not 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
-6-
<PAGE>
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 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
-7-
<PAGE>
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.
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.
ARTICLE III
OFFICERS
Section 3.1 EXECUTIVE OFFICERS.
The executive officers of the Corporation shall be a Chairman of the
Board, a President, 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
-8-
<PAGE>
such other officers (including a 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 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.
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
-9-
<PAGE>
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 director 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.
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 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.
-10-
<PAGE>
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.
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 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.
-11-
<PAGE>
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 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.
-12-
<PAGE>
ARTICLE VI
MISCELLANEOUS
Section 6.1 CORPORATE SEAL.
The corporate seal shall have inscribed thereon the name of the
Corporation the year of its organization, and the words "Corporate Seal" and
"Delaware".
Section 6.2 FISCAL YEAR.
The fiscal year of the Corporation shall be determined by resolution
of the Board of Directors.
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 provided by
law, may be given personally, or by mail, or, in the case of directors or
officers, by telegram, cable, facsimile, or telecopy, addressed to such address
as appears on the books of the Corporation. Any notice given by telegram,
cable, or facsimile 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.
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
-13-
<PAGE>
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 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,
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<PAGE>
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.
-15-
<PAGE>
Exhibit 10.44
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 Employee 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/ David R. Markin
------------------------------
Name: David R. Markin
Title: President
AGREED AND ACKNOWLEDGED:
/s/ Jay H. Harris
- ------------------------------
Jay H. Harris
<PAGE>
EXHIBIT 12.1
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
3 MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1993 1994
--------- ---------- ---------- --------- --------- --------- ---------
Income (Loss) from Operations Before
Minority Equity, Income Taxes,
Extraordinary Items and Accounting
Changes............................... $ 1,178 $ (24,407) $ (34,178) $ (6,868) $ 9,121 $ 1,860 $ 11,611
Add:
Interest expense...................... 57,879 61,596 47,425 42,726 41,614 10,465 10,044
Portion of rents representative of
interest factor (1).................. 1,300 1,200 1,200 1,267 1,600 400 467
--------- ---------- ---------- --------- --------- --------- ---------
Income As Adjusted...................... $ 60,357 $ 38,389 $ 14,447 $ 37,125 $ 52,335 12,725 $ 22,122
--------- ---------- ---------- --------- --------- --------- ---------
--------- ---------- ---------- --------- --------- --------- ---------
Fixed Charges:
Interest expense...................... $ 57,879 $ 61,596 $ 47,425 $ 42,726 $ 41,614 $ 10,465 $ 10,044
Portion of rent representative of
interest factor (1)................... 1,300 1,200 1,200 1,267 1,600 400 467
--------- ---------- ---------- --------- --------- --------- ---------
Fixed Charges........................... $ 59,179 $ 62,796 $ 48,625 $ 43,993 $ 43,214 10,865 $ 10,511
--------- ---------- ---------- --------- --------- --------- ---------
--------- ---------- ---------- --------- --------- --------- ---------
Ratio of Earnings to Fixed Charges...... 1.0x 0.6x 0.3x 0.8x 1.2x 1.2x 2.1x
<FN>
- --------------
(1) That portion of operating lease rental expense which is representative of
the interest factor (deemed by management to be one-third of rental
expense).
</TABLE>
<PAGE>
EXHIBIT 12.1 -- (CONTINUED)
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
COMPUTATION OF PRO FORMA RATIO OF EBITDA TO CASH INTEREST EXPENSE
(DOLLARS IN THOUSANDS)
The following computations for the year ended December 31, 1993, and three
months ended March 31, 1994, reflect, on a pro forma basis, EBITDA, cash
interest expense and the resultant ratios. The computations give effect to the
refinancing of certain indebtedness as identified herein.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, THREE MONTHS ENDED
1993 MARCH 31, 1994
-------------- ---------------------
<S> <C> <C>
Income (Loss) from Operations Before Minority Equity, Income Taxes,
Extraordinary Items and Accounting Changes............................... $ 2,747 $ 10,066
Add:
Interest expense......................................................... 44,568 10,621
Depreciation and amortization............................................ 23,295 5,631
Amortization or cost in excess of net assets acquired.................... 1,250 313
Other amortization....................................................... 3,878 971
Special charge 7,500 --
-------------- --------
EBITDA..................................................................... $ 83,238 $ 27,602
-------------- --------
-------------- --------
Cash Interest Expense:
Interest expense......................................................... $ 44,568 $ 10,621
Less cash interest incurred during the call period for the 12 3/4%
Debentures and the 14 1/2% Debentures................................... (1,261)
Less noncash interest:
Other.................................................................. (294) (74)
-------------- --------
Cash Interest Expense...................................................... $ 43,013 $ 10,547
-------------- --------
-------------- --------
Pro Forma Ratio of EBITDA to Cash Interest Expense......................... 1.9x 2.6x
</TABLE>
<PAGE>
EXHIBIT 12.1 -- (CONTINUED)
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EBITDA TO CASH INTEREST EXPENSE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
3 MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1993 1994
--------- ---------- ---------- --------- --------- --------- ---------
Income (Loss) from Operations Before
Minority Equity, Income Taxes,
Extraordinary Items and Accounting
Changes............................... $ 1,178 $ (24,407) $ (34,178) $ (6,868) $ 9,121 $ 1,860 $ 11,611
Add:
Interest expense...................... 57,879 61,596 47,425 42,726 41,614 10,465 10,044
Depreciation and amortization......... 18,186 20,784 20,931 21,054 23,295 5,571 5,631
Amortization of cost in excess of net
assets acquired...................... 1,252 1,250 1,250 1,250 1,250 312 313
Other amortization.................... 1,705 2,717 2,876 2,727 1,878 467 471
Special Charge........................ -- -- -- -- 7,500 -- --
--------- ---------- ---------- --------- --------- --------- ---------
EBITDA.................................. $ 80,200 $ 61,940 $ 38,304 $ 60,889 $ 84,658 $ 18,675 $ 28,070
--------- ---------- ---------- --------- --------- --------- ---------
--------- ---------- ---------- --------- --------- --------- ---------
Cash Interest Expense:
Interest expense...................... $ 57,879 $ 61,596 $ 47,425 $ 42,726 $ 41,614 $ 10,465 $ 10,044
Less noncash interest:
Amortization of debt discount....... (26,638) (24,690) (1,045) (1,181) (1,372) (324) (393)
Amortization of debt expense........ (368) (350) (299) (294) (294) (73) (74)
--------- ---------- ---------- --------- --------- --------- ---------
Cash Interest Expense................... $ 30,873 $ 36,556 $ 46,081 $ 41,251 $ 39,948 $ 10,068 $ 9,577
--------- ---------- ---------- --------- --------- --------- ---------
--------- ---------- ---------- --------- --------- --------- ---------
Ratio of EBITDA to Cash Interest
Expense............................... 2.6x 1.7x 0.8x 1.5x 2.1x 1.9x 2.9x
</TABLE>
<PAGE>
EXHIBIT 12.1 -- (CONTINUED)
INTERNATIONAL CONTROLS CORP. AND SUBSIDIARIES
COMPUTATION OF PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
The following computations for the year ended December 31, 1993, and three
months ended March 31, 1994, reflect, on a pro forma basis, earnings available
for fixed charges, fixed charges and resultant ratios. The computations give
effect to the refinancing identified in the document.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, THREE MONTHS ENDED
1993 MARCH 31, 1994
-------------- ---------------------
<S> <C> <C>
Income (Loss) from Operations Before Minority Equity, Income Taxes,
Extraordinary Items and Accounting Changes............................... $ 2,165 $ 10,618
Add:
Interest expenses........................................................ 46,568 10,537
Annual amortization of debt expenses arising from the offering........... 2,000 500
Portion of rents representative of interest factor (1)................... 1,600 467
-------------- --------
Income As Adjusted......................................................... $ 52,333 $ 22,122
-------------- --------
-------------- --------
Fixed Charges:
Interest expense......................................................... 46,568 $ 10,537
Annual amortization of debt expenses arising from the offering........... 2,000 500
Portion of rent representative of interest factor (1).................... 1,600 467
-------------- --------
Fixed Charges.............................................................. $ 50,168 $ 11,504
-------------- --------
-------------- --------
Pro Forma Ratio of Earnings to Fixed Charges............................... 1.0x 1.9x
<FN>
- --------------
(1) That portion of operating lease rental expense which is representative of
the interest factor (deemed by management to be one-third of rental
expense).
</TABLE>
<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 reports on International Controls Corp. and
Subsidiaries dated March 1, 1994, Checker Motors Corporation and Subsidiaries
(Issuer Group) dated March 1, 1994, except for Note A as to which the date is
July 26, 1994, and Great Dane Trailers, Inc., and Subsidiaries dated March 1,
1994, in Amendment No. 3 to the Registration Statement (Form S-1, No. 033-52255)
and related Prospectus of International Controls Corp. dated July 29, 1994.
/s/ ERNST & YOUNG
Kalamazoo, Michigan
July 29, 1994
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below, hereby constitutes and appoints Allan R. Tessler, David R.
Markin, Jay H. Harris, Marlan R. Smith, Martin L. Solomon and Wilmer J. Thomas,
Jr., and each of them, as his attorney-in-fact and agent, with full power of
substitution and revocation, for such person and in such person's name, place
and stead, in any and all capacities, to sign any or all amendments or
post-effective amendments to International Control Corp.'s, Great Dane Trailers,
Inc.'s, Great Dane Trailers Tennessee, Inc.'s, Great Dane Trailers Nebraska,
Inc.'s, Great Dane Los Angeles, Inc.'s, Checker Motors Corporation's, Checker
Motors Co. L.P.'s and South Charleston Stamping & Manufacturing Company's
(collectively the "Issuers") Registration Statement on Form S-1 in connection
with the registration of up to $215,000,000 in principal amount of Senior
Secured Notes due 2001, and up to 115,000 Units each consisting of $1,000 in
principal amount of Senior Subordinated Secured Notes due 2004 and one Warrant
to purchase common stock of the Company (collectively, the "Securities"), and to
file the same, with exhibits thereto and other documents in connection therewith
with the Securities and Exchange Commission, and to enable the Company to comply
with the Securities Act of 1933, as amended, and the requirements of the
Securities and Exchange Commission in connection with the registration of the
Securities, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as such person might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact and
agent or his substitute or substitutes may do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, each of the undersigned has signed his name as
of the date set forth below.
/s/ Allan R. Tessler July 28 , 1994
- ------------------------- --------
Allan R. Tessler
/s/ David R. Markin July 28, 1994
- ------------------------- --------
David R. Markin
/s/ Jay H. Harris July 28, 1994
- ------------------------- --------
Jay H. Harris
/s/ Marlan R. Smith July 28, 1994
- ------------------------- --------
Marlan R. Smith
/s/ Martin L. Solomon July 28, 1994
- ------------------------- --------
Martin L. Solomon
/s/ Wilmer J. Thomas, Jr. July 28, 1994
- ------------------------- --------
Wilmer J. Thomas, Jr.
Page 1 of 4
<PAGE>
POWER OF ATTORNEY
, 1994
- ------------------------- --------
Thomas W. Horan
/s/ John T. Wise July 25, 1994
- ------------------------- --------
John T. Wise
/s/ David M. Hannah July 25, 1994
- ------------------------- --------
David M. Hannah
, 1994
- ------------------------- --------
Willard R. Hildebrand
, 1994
- ------------------------- --------
Fred T. Mote
, 1994
- ------------------------- --------
C.F. Hammond, III
Page 2 of 4
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below, hereby constitutes and appoints Allan R. Tessler, David R.
Markin, Jay H. Harris, Marlan R. Smith, Martin L. Solomon and Wilmer J. Thomas,
Jr., and each of them, as his attorney-in-fact and agent, with full power of
substitution and revocation, for such person and in such person's name, place
and stead, as an officer of Great Dane Trailers, Inc., Great Dane Trailers
Tennessee, Inc., Great Dane Trailers Nebraska, Inc., and Great Dane Los Angeles,
Inc. to sign any or all amendments or post-effective amendments to International
Control Corp.'s (the "Company"), Great Dane Trailers, Inc.'s, Great Dane
Trailers Tennessee, Inc.'s, Great Dane Trailers Nebraska, Inc.'s, Great Dane Los
Angeles, Inc.'s, Checker Motors Corporation's, Checker Motors Co. L.P.'s and
South Charleston Stamping & Manufacturing Company's (collectively the "Issuers")
Registration Statement on Form S-1 in connection with the registration of up to
$215,000,000 in principal amount of Senior Secured Notes due 2001, and up to
115,000 Units each consisting of $1,000 in principal amount of Senior
Subordinated Secured Notes due 2004 and one Warrant to purchase common stock of
the Company (collectively, the "Securities"), and to file the same, with
exhibits thereto and other documents in connection therewith with the Securities
and Exchange Commission, and to enable the Issuers to comply with the Securities
Act of 1933, as amended, and the requirements of the Securities and Exchange
Commission in connection with the registration of the Securities, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done to accomplish the
above as fully to all intents and purposes as such person might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has signed his name as
of the date set forth below.
/s/ Thomas W. Horan July 25, 1994
- ------------------------- --------
Thomas W. Horan
/s/ Willard R. Hildebrand July 25, 1994
- ------------------------- --------
Willard R. Hildebrand
/s/ Fred T. Mote July 25, 1994
- ------------------------- --------
Fred T. Mote
/s/ C.F. Hammond, III July 25, 1994
- ------------------------- --------
C.F. Hammond, III
Page 3 of 4
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below, hereby constitutes and appoints Allan R. Tessler, David R.
Markin, Jay H. Harris, Marlan R. Smith, Martin L. Solomon and Wilmer J. Thomas,
Jr., and each of them, as his attorney-in-fact and agent, with full power of
substitution and revocation, for such person and in such person's name, place
and stead, as a director of Great Dane Trailers, Inc., Great Dane Trailers
Tennessee, Inc., Great Dane Trailers Nebraska, Inc., and Great Dane Los Angeles,
Inc. after consultation with and approval of the undersigned, to sign any or all
amendments or post-effective amendments to International Control Corp.'s (the
"Company"), Great Dane Trailers, Inc.'s, Great Dane Trailers Tennessee, Inc.'s,
Great Dane Trailers Nebraska, Inc.'s, Great Dane Los Angeles, Inc.'s, Checker
Motors Corporation's, Checker Motors Co. L.P.'s and South Charleston Stamping &
Manufacturing Company's Registration Statement on Form S-1 in connection with
the registration of up to $215,000,000 in principal amount of Senior Secured
Notes due 2001, and up to 115,000 Units each consisting of $1,000 in principal
amount of Senior Subordinated Secured Notes due 2004 and one Warrant to purchase
common stock of the Company (collectively, the "Securities"), and to file the
same, with exhibits thereto and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every such act to
accomplish the above, as fully as such person might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has signed his name as
of the date set forth below.
/s/ Thomas W. Horan July 25, 1994
- ------------------------- --------
Thomas W. Horan
/s/ Willard R. Hildebrand July 25, 1994
- ------------------------- --------
Willard R. Hildebrand
/s/ Fred T. Mote July 25, 1994
- ------------------------- --------
Fred T. Mote
/s/ C.F. Hammond, III July 25, 1994
- ------------------------- --------
C.F. Hammond, III
Page 4 of 4
