<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 21, 1996
REGISTRATION STATEMENT NO. 333-02183
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
MARK IV INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 3052 23-1733979
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION CLASSIFICATION CODE NO.) IDENTIFICATION NUMBER)
OF INCORPORATION OR
ORGANIZATION)
501 JOHN JAMES AUDUBON PARKWAY
P.O. BOX 810
AMHERST, NEW YORK 14226-0810
(716) 689-4972
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
WILLIAM P. MONTAGUE
PRESIDENT
MARK IV INDUSTRIES, INC.
501 JOHN JAMES AUDUBON PARKWAY
P.O. BOX 810
AMHERST, NEW YORK 14226-0810
(716) 689-4972
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO:
DAVID L. FINKELMAN, ESQ. GERALD S. LIPPES, ESQ.
STROOCK & STROOCK & LAVAN LIPPES, SILVERSTEIN, MATHIAS & WEXLER
SEVEN HANOVER SQUARE LLP
NEW YORK, N.Y. 10004-2696 700 GUARANTY BUILDING
28 CHURCH STREET
BUFFALO, N.Y. 14202-3950
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
----------------
If the only securities being registered on this form are being in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [_]
----------------
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>
MARK IV INDUSTRIES, INC.
CROSS REFERENCE SHEET
PURSUANT TO RULE 404(a) AND ITEM 501(b) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF THE INFORMATION
REQUIRED BY PART I OF FORM S-4
<TABLE>
<S> <C>
1.Forepart of Registration and Outside
Front Cover Page of Prospectus.. Facing Page; Outside Front Cover Page;
Cross Reference Sheet; Inside Front
Cover Page
2.Inside Front and Outside Back Cover
Pages of Prospectus............. Inside Front Cover Page; Outside Back
Cover Page
3.Risk Factors, Ratio of Earnings to
Fixed Charges and Other
Information..................... Prospectus Summary; Selected Financial
Information
4.Terms of the Transaction............ Prospectus Summary; The Exchange
Offer; Certain Federal Income Tax
Considerations; Description of the
Exchange Notes
5.Pro Forma Financial Information..... Not Applicable
6.Material Contacts with the Company
Being Acquired.................. Not Applicable
7.Additional Information Required for
Reoffering by Persons and
Parties Deemed to be
Underwriters.................... Not Applicable
8.Interests of Named Experts and
Counsel......................... Not Applicable
9.Disclosure of Commission Position on
Indemnification for Securities
Act Liabilities................. Not Applicable
10.Information with Respect to S-3
Registrants..................... Available Information; Prospectus
Summary; Capitalization; Selected
Financial Information; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; Management; Principal
Securityholders; Description of the
Exchange Notes; Plan of Distribution;
Legal Matters; Experts; Consolidated
Financial Statements
11.Incorporation of Certain Information
by Reference.................... Incorporation of Certain Documents by
Reference
12.Information with Respect to S-2 or
S-3 Registrants................. Not Applicable
13.Incorporation of Certain Information
by Reference.................... Not Applicable
14.Information with Respect to
Registrants Other Than S-3 or S-
2 Registrants................... Not Applicable
15.Information with Respect to S-3
Companies....................... Not Applicable
16.Information with Respect to S-2 or
S-3 Companies................... Not Applicable
17.Information with Respect to
Companies Other Than S-2 or S-3
Companies....................... Not Applicable
18.Information if Proxies, Consents or
Authorizations are to be
Solicited....................... Not Applicable
19.Information if Proxies, Consents or
Authorizations are not to be
Solicited or in an Exchange
Offer .......................... Prospectus Summary; Incorporation of
Certain Documents by Reference;
Management; Principal Securityholders;
The Exchange Offer
</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 JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE +
+WOULD BE UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE +
+SECURITIES LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 21, 1996
PROSPECTUS
[Logo of Mark IV Industries appears here]
OFFER TO EXCHANGE
7 3/4% SENIOR SUBORDINATED NOTES DUE 2006
FOR ANY AND ALL OUTSTANDING
7 3/4% SENIOR SUBORDINATED NOTES DUE 2006
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [DAY],
[DATE], 1996, UNLESS EXTENDED BY MARK IV INDUSTRIES, INC. As more fully
described herein under "The Exchange Offer--Expiration Date; Extensions;
Amendment," the time the Exchange Offer expires (including extensions, if any,
by Mark IV) is referred to as the "Expiration Date."
Mark IV Industries, Inc., a Delaware Corporation ("Mark IV" or the
"Company"), is hereby offering (the "Exchange Offer"), upon the terms and
subject to the conditions set forth in this prospectus (the "Prospectus") and
the accompanying letter of transmittal (the "Letter of Transmittal"), to
exchange $1,000 principal amount of its 7 3/4% Senior Subordinated Notes due
April 1, 2006 (the "Exchange Notes"), which exchange has been registered under
the Securities Act of 1933, as amended (the "Securities Act") pursuant to a
registration statement of which this Prospectus is a part (the "Registration
Statement"), for each $1,000 principal amount of its outstanding 7 3/4% Senior
Subordinated Notes due April 1, 2006 (the "Private Notes" and, collectively
with the Exchange Notes, the "Notes"), of which $250,000,000 in aggregate
principal amount was issued and sold on March 11, 1996 in a transaction exempt
from registration under the Securities Act (the "Private Offering") and is
outstanding on the date hereof.
The form and terms of the Exchange Notes are substantially identical in all
respects (including principal amount, interest rate, maturity and ranking) to
the form and terms of the Private Notes, except that (i) the Exchange Notes
will have been registered under the Securities Act and, therefore, will not
bear legends restricting the transfer thereof and (ii) holders of the Exchange
Notes will not be entitled to certain rights of holders of the Private Notes
under the Registration Rights Agreement (as defined), which rights will
terminate upon consummation of the Exchange Offer. The Exchange Notes will
evidence the same indebtedness as the Private Notes and will be issued pursuant
to, and entitled to the benefits of, the Indenture (as defined) governing the
Private Notes. The Exchange Offer is being made to satisfy the obligations of
the Company under the Registration Rights Agreement relating to the Private
Notes. See "The Exchange Offer" and "Description of the Exchange Notes."
The Exchange Notes will bear interest at the rate of 7 3/4% per annum,
payable semi-annually on April 1 and October 1 of each year, commencing October
1, 1996. The Exchange Notes will bear interest from and including the date of
issuance of the Private Notes (March 11, 1996). The Exchange Notes will not be
subject to redemption prior to their stated maturity. Upon a Change of Control
(as defined), holders of the Exchange Notes will have the right, subject to
certain restrictions and conditions, to require the Company to purchase all or
any of their Notes at 101% of the principal amount thereof plus accrued and
unpaid interest, if any, through the date of purchase. See "Description of the
Exchange Notes--Change of Control."
The Exchange Notes will be general unsecured obligations of the Company, will
be subordinated in right of payment to the prior payment in full of all
existing and future Senior Indebtedness (as defined) of the Company, and will
be effectively subordinated to the indebtedness of the Company's subsidiaries.
At March 31, 1996, Senior Indebtedness of the Company and its subsidiaries was
approximately $243,800,000 (of which approximately $53,800,000 was indebtedness
of the Company's subsidiaries) and subordinated indebtedness of the Company
(including the Private Notes) was approximately $506,400,000. Subject to
certain restrictions, the Indenture pursuant to which the Exchange Notes will
be issued permits the Company to incur additional indebtedness, but, until such
time as the Exchange Notes are rated Investment Grade (as defined), prohibits
the incurrence by the Company of any indebtedness that is senior to the
Exchange Notes and subordinate to Senior Indebtedness. See "Description of the
Exchange Notes--Subordination."
-----------
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.
-----------
<PAGE>
The Private Notes were originally issued and sold in the Private Offering in
reliance upon the exemption provided in Section 4(2) of the Securities Act and
Rule 144A of the Securities Act. Accordingly, the Private Notes may not be
reoffered, resold or otherwise pledged, hypothecated or transferred in the
United States or to a U.S. person unless registered under the Securities Act
or unless an applicable exemption from the registration requirements of the
Securities Act is available. Based on an interpretation by the staff of the
Commission set forth in no-action letters issued to third parties, the Company
believes that the Exchange Notes issued pursuant to the Exchange Offer in
exchange for Private Notes may be offered for resale, resold and otherwise
transferred by a holder thereof (other than (i) an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act, (ii) a broker-dealer
who acquired Private Notes directly from the Company to resell pursuant to
Rule 144A or any other available exemption under the Securities Act or (iii) a
broker-dealer who acquired Private Notes as a result of market making or other
trading activities), without compliance with the registration and prospectus
delivery requirements of the Securities Act; provided that the holder is
acquiring Exchange Notes in the ordinary course of its business and is not
participating, and has no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes. Holders of Private
Notes wishing to accept the Exchange Offer must represent to the Company, as
required by the Registration Rights Agreement, that such conditions have been
met. The Company believes that none of the registered holders of the Private
Notes is an affiliate (as such term is defined in Rule 405 under the
Securities Act) of the Company.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Private Notes must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Private Notes, where
such Private Notes were acquired by such broker-dealer as a result of market-
making or other trading activities. The Company has agreed to make this
Prospectus (as it may be amended or supplemented) available to any broker-
dealer, upon request, for use in connection with any such resale, for a period
of one year after the Registration Statement is declared effective by the
Commission or until such earlier date on which all the Exchange Notes are
freely tradeable. However, any broker-dealer who acquired the Private Notes
directly from the Company may not fulfill its prospectus delivery requirements
with this Prospectus, but must comply with the registration and prospectus
delivery requirements of the Securities Act. See "The Exchange Offer--Resale
of the Exchange Notes" and "Plan of Distribution."
The Company will not receive any proceeds from, and has agreed to bear the
expenses of, the Exchange Offer. No underwriter is being used in connection
with the Exchange Offer. See "The Exchange Offer--Resale of the Exchange
Notes."
Prior to the Exchange Offer, there has been no public market for the Notes.
The Exchange Notes will not be listed on any securities exchange, but the
Private Notes are eligible for trading in the Private Offerings, Resales and
Trading through Automated Linkages ("PORTAL") market of the National
Association of Securities Dealers, Inc. There can be no assurance that an
active market for the Notes will develop. To the extent that a market for the
Notes does develop, the market value of the Notes will depend on market
conditions (such as yields on alternative investments), general economic
conditions, the Company's financial condition and certain other factors. Such
conditions might cause the Notes, to the extent they are traded, to trade at a
significant discount from face value. In addition, any Private Notes not
tendered and accepted in the Exchange Offer will remain outstanding. To the
extent that the Private Notes are tendered and accepted in the Exchange Offer,
a holder's ability to sell untendered, and tendered but unaccepted, Private
Notes could be adversely affected. Following consummation of the Exchange
Offer, the holders of Private Notes will continue to be subject to the
existing restrictions on transfer thereof and the Company will have no further
obligation to such holders to provide for the registration under the
Securities Act of the Private Notes except under certain limited
circumstances. See "The Exchange Offer--Termination of Certain Rights."
The Company will accept for exchange any and all validly tendered Private
Notes not withdrawn prior to 5:00 p.m., New York City time, on the Expiration
Date. Tenders of Private Notes may be withdrawn at any time prior to 5:00 p.m.
on the Expiration Date. The Exchange Offer is not conditioned on any minimum
aggregate principal amount of Private Notes being tendered or accepted for
exchange; provided, however, Private Notes may be tendered only in integral
multiples of $1,000. The Exchange Offer is subject to certain customary
conditions. See "The Exchange Offer--Conditions."
----------------
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE>
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF PRIVATE NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE EXCHANGE OFFER TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THE INFORMATION CONTAINED HEREIN IS AS OF THE DATE HEREOF AND
SUBJECT TO CHANGE, COMPLETION OR AMENDMENT WITHOUT NOTICE. NEITHER THE DELIVERY
OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL AT ANY TIME NOR
ANY EXCHANGE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
IN MAKING AN INVESTMENT DECISION REGARDING THE SECURITIES OFFERED HEREBY,
PROSPECTIVE INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE
TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE OFFERING IS
BEING MADE ON THE BASIS OF THIS PROSPECTUS. ANY DECISION TO EXCHANGE NOTES IN
THE EXCHANGE OFFER MUST BE BASED ON THE INFORMATION CONTAINED HEREIN.
The Exchange Notes will be available initially to qualified institutional
buyers only in book-entry form. The Company expects that the Exchange Notes
issued pursuant to the Exchange Offer will be issued in the form of a Global
Note (as defined), which will be deposited with, or on behalf of, The
Depository Trust Company (the "Depositary") and registered in its name or in
the name of Cede & Co., its nominee. Beneficial interests in the Global Note
representing the Exchange Notes will be shown on, and transfers thereof will be
effected through, records maintained by the Depositary and its participants.
After the initial issuance of the Global Note, Exchange Notes in certificated
form will be issued in exchange for the Global Note only in accordance with the
terms set forth in the Indenture. See "The Exchange Offer--Book Entry Transfer"
and "Description of the Exchange Notes--Book-Entry, Delivery and Form."
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 1
Incorporation of Certain Documents by Reference........................... 1
Prospectus Summary........................................................ 2
Use of Proceeds........................................................... 10
The Exchange Offer........................................................ 11
Capitalization............................................................ 19
Selected Financial Information............................................ 20
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 21
Business.................................................................. 26
Management................................................................ 32
Principal Securityholders................................................. 34
Description of the Exchange Notes......................................... 36
Certain Federal Income Tax Considerations................................. 51
Plan of Distribution...................................................... 52
Legal Matters............................................................. 53
Experts................................................................... 53
Index to Consolidated Financial Statements................................ F-1
</TABLE>
(iii)
<PAGE>
AVAILABLE INFORMATION
Mark IV Industries, Inc. ("Mark IV" or the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information filed by
the Company with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices
located at Seven World Trade Center, New York, New York 10048, and Suite 1400,
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661.
Copies of such materials can be obtained from the Public Reference Section of
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Such materials can also be inspected at the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form S-
4 (together with all amendments, exhibits, annexes and schedules thereto, the
"Registration Statement") pursuant to the Securities Act, and the rules and
regulations promulgated thereunder, with respect to the securities being
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and the securities offered hereby, reference is made to
the Registration Statement, including the exhibits filed as a part thereof and
otherwise incorporated therein. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete; with respect to such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made
to such exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by such
reference. Copies of the Registration Statement and the exhibits may be
inspected, without charge, at the offices of the Commission, or obtained at
prescribed rates from the Public Reference Section of the Commission at the
address set forth above.
The Company is required by the terms of the Indenture to furnish the Trustee
(as defined) with annual reports containing consolidated financial statements
audited by its independent certified public accountants and with quarterly
reports containing unaudited condensed consolidated financial statements for
each of the first three quarters of each fiscal year.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by the Company
pursuant to the Exchange Act are incorporated by reference in this Prospectus
and made a part hereof: the Company's Annual Report on Form 10-K for the fiscal
year ended February 29, 1996; and the Company's Current Report on Form 8-K
dated March 21, 1996, as amended by the Company's Current Report on Form 8-K/A
dated March 27, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the Offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which is also incorporated or deemed to be
incorporated by reference herein modifies, supersedes or replaces such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to any person to whom this Prospectus
is delivered, upon written or oral request of such person, a copy of any or all
of the documents which have been incorporated by reference in this Prospectus,
other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into the documents so incorporated. Any such request
should be directed to Investor Relations, Mark IV Industries, Inc., 501 John
James Audubon Parkway, P.O. Box 810, Amherst, New York 14226-0810 (telephone
number: (716) 689-4972).
1
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere or incorporated by reference in this Prospectus. Unless the context
otherwise requires, all references herein to the "Company" or "Mark IV" include
Mark IV Industries, Inc. and its subsidiaries.
THE COMPANY
Mark IV is a diversified manufacturer of a broad range of proprietary and
other power and fluid transfer products and systems which serve primarily
automotive and industrial markets. Many of Mark IV's product groups have a
significant, and in certain instances the leading, share of their respective
markets. Products manufactured by Mark IV principally serve specialized needs
in markets in which relatively few manufacturers compete. These products are
sold primarily directly, but also through independent distributors, to other
manufacturers and commercial users in the United States and Europe and, to a
lesser extent, in Canada, Latin America and the Far East. Mark IV operates 79
manufacturing facilities and 56 distribution and sales locations and employs
approximately 18,200 people in 19 countries.
During fiscal 1996, the Company reorganized what had been identified as its
primary business segment, Power and Fluid Transfer, into separately managed and
market-focused businesses. As a result, in connection with the preparation of
its financial statements for its fiscal year ended February 29, 1996, the
Company determined to reclassify the operations included in that segment into
two segments--Mark IV Automotive and Mark IV Industrial, with its former
Professional Audio segment being included in the new Industrial segment. Mark
IV's business strategy is focused on building its worldwide Automotive and
Industrial business segments through internal growth, continuation of cost
control and quality improvement programs, and selective strategic domestic and
foreign acquisitions. The Company's operating strategy emphasizes management
for continuous improvement, establishing co-operative programs with customers
to engineer, design and develop higher value added systems in addition to
individual products, and the introduction of new, more cost effective and
durable products.
In furtherance of these strategies, over its last five fiscal years Mark IV
has: (i) emphasized continuous product development, with a significant amount
of its current sales arising from the introduction of new products or products
which have been redesigned; (ii) substantially increased its industrial hose
and couplings production capacity and strengthened its position in that market
through its recent acquisition of the Imperial Eastman Division of The Pullman
Company ("Imperial Eastman"); (iii) considerably enhanced its ability to
provide a broader range of products to its existing customers through its
November 1994 acquisition of Purolator Products Company ("Purolator"), a
leading manufacturer of automotive and industrial filtration products and
systems; (iv) significantly expanded its presence in Western Europe through its
June 1993 acquisition of Pirelli Trasmissioni Industriali, S.p.A. ("PTI"), a
leading Italian-based manufacturer of power transmission products; and (v)
established distribution centers to serve markets in Central and South America
and the Pacific Rim, and acquired manufacturing and distribution facilities in
Mexico. Mark IV believes that, having established an efficient global
manufacturing and distribution network, it is well positioned to benefit from
its leading domestic market position and its increased presence in European and
other foreign markets.
RECENT DEVELOPMENTS
As part of the Company's strategy to become more focused within its
Industrial segment, Mark IV is exploring the possibility of selling its non-
core businesses. In October 1995, the Company announced the possible sale of
its Transportation Products businesses, which have aggregate annual sales of
approximately $225.0 million. In January 1996, the Company announced that it is
also exploring the possible sale of its professional audio business which has
annual sales of approximately $200.0 million. The potential sales remain in
their preliminary stages and, therefore, there can be no assurance that any
such sales will occur. If the
2
<PAGE>
Company were to consummate all or a portion of such sales, the net proceeds
thereof would be used to reduce Senior Indebtedness, to fund future
acquisitions in core business areas, and/or, depending on market prices and
other relevant considerations, to repurchase outstanding shares of the
Company's Common Stock.
In furtherance of Mark IV's strategy of focusing on building its Industrial
segment, on March 5, 1996 Mark IV acquired Imperial Eastman for a purchase
price of approximately $78.0 million. Imperial Eastman manufactures industrial
hose and couplings products complementary to those currently produced by
Mark IV, and has annual sales of approximately $135.0 million.
THE EXCHANGE OFFER
The Exchange Offer.......... The Company is hereby offering to exchange
$1,000 principal amount of Exchange Notes for each
$1,000 principal amount of Private Notes that are
properly tendered and accepted. The Company will
issue Exchange Notes on or promptly after the
Expiration Date. As of the date hereof, there is
$250,000,000 aggregate principal amount of Private
Notes outstanding. See "The Exchange Offer--
Purpose of the Exchange Offer."
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued
to third parties, the Company believes that the
Exchange Notes issued pursuant to the Exchange
Offer in exchange for Private Notes may be
offered for resale, resold and otherwise
transferred by a holder thereof (other than (i)
an "affiliate" of the Company within the meaning
of Rule 405 under the Securities Act, (ii) a
broker-dealer who acquired Private Notes directly
from the Company to resell pursuant to Rule 144A
or any other available exemption under the
Securities Act or (iii) a broker-dealer who
acquired Private Notes as a result of market
making or other trading activities), without
compliance with the registration and prospectus
delivery requirements of the Securities Act;
provided that the holder is acquiring Exchange
Notes in the ordinary course of its business and
is not participating, and has no arrangement or
understanding with any person to participate, in
the distribution of the Exchange Notes. Holders
of Private Notes wishing to accept the Exchange
Offer must represent to the Company, as required
by the Registration Rights Agreement, that such
conditions have been met. The Company believes
that none of the registered holders of the
Private Notes is an affiliate (as such term is
defined in Rule 405 under the Securities Act) of
the Company. Any broker-dealer that resells
Exchange Notes that were received by it for its
own account pursuant to the Exchange Offer and
any broker or dealer that participates in the
distribution of such Exchange Notes may be deemed
to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale
of Exchange Notes and any commissions or
concessions received by any such persons may be
deemed to be underwriting compensation under the
Securities Act.
3
<PAGE>
Each broker-dealer that receives Exchange Notes
for its own account in exchange for Private Notes
must acknowledge that it will deliver a
prospectus in connection with any resale of such
Exchange Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus,
as it may be amended or supplemented from time to
time, may be used by a broker-dealer in
connection with resales of Exchange Notes
received in exchange for Private Notes, where
such Private Notes were acquired by such broker-
dealer as a result of market-making or other
trading activities. The Company has agreed to
make this Prospectus (as it may be amended or
supplemented) available to any broker-dealer,
upon request, for use in connection with any such
resale, for a period of one year after the
Registration Statement is declared effective by
the Commission or until such earlier date on
which all the Exchange Notes are freely
tradeable. However, any broker-dealer who
acquired the Private Notes directly from the
Company other than as a result of market-making
activities or ordinary trading activities may not
fulfill its prospectus delivery requirements with
this Prospectus, but must comply with the
registration and prospectus delivery requirements
of the Securities Act. See "The Exchange Offer--
Resale of the Exchange Notes."
Registration Rights
Agreement.................. The Private Notes were sold by the Company on
March 11, 1996 to Bear, Stearns & Co. Inc. (the
"Initial Purchaser") pursuant to a Purchase
Agreement, dated March 5, 1996, by and between
the Company and the Initial Purchaser (the
"Purchase Agreement"). Pursuant to the Purchase
Agreement, the Company and the Initial Purchaser
entered into a Registration Rights Agreement,
dated as of March 11, 1996 (the "Registration
Rights Agreement"), which grants the holders of
the Private Notes certain exchange and
registration rights. The Exchange Offer is
intended to satisfy such rights, which will
terminate upon the consummation of the Exchange
Offer except under certain limited circumstances.
See "The Exchange Offer--Termination of Certain
Rights."
Holders of Private Notes who do not tender their
Private Notes in the Exchange Offer will continue
to hold such Private Notes and will be entitled
to all the rights and limitations applicable
thereto under the Indenture. All untendered, and
tendered but not unaccepted Private Notes will
continue to be subject to the restrictions on
transfer provided for in the Private Notes and
the Indenture. To the extent that Private Notes
are tendered and accepted in the Exchange Offer,
the trading market, if any, for the Private Notes
could be adversely affected.
Expiration Date............. The Exchange Offer will expire at 5:00 p.m., New
York City time, on , 1996, unless
the Exchange Offer is extended
4
<PAGE>
by the Company, in its sole discretion, in which
case the term "Expiration Date" shall mean the
latest date and time to which the Exchange Offer
is extended. See "The Exchange Offer--Expiration
Date; Extensions; Amendments."
Accrued Interest on the
Exchange Notes and the
Private Notes.............. The Exchange Notes will bear interest from and
including the date of issuance of the Private
Notes (March 11, 1996). Holders whose Private
Notes are accepted for exchange will be deemed to
have waived the right to receive any interest
accrued on the Private Notes. See "The Exchange
Offer--Interest on the Exchange Notes."
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain
customary conditions that may be waived by the
Company. The Exchange Offer is not conditioned
upon any minimum aggregate principal amount of
Private Notes being tendered for exchange. See
"The Exchange Offer--Conditions."
Procedures for Tendering
Private Notes.............. Each Holder of Private Notes wishing to accept
the Exchange Offer must complete, sign and date
the Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal, or
such facsimile, together with such Private Notes
and any other required documentation to Fleet
National Bank, as exchange agent (the "Exchange
Agent"), at its address set forth herein. By
executing the Letter of Transmittal, the holder
will represent to and agree with the Company
that, among other things, (i) the Exchange Notes
to be acquired by such holder of Private Notes in
connection with the Exchange Offer are being
acquired by such holder in the ordinary course of
its business, (ii) such holder is not currently
participating and has no arrangement or
understanding with any person to participate in a
distribution of the Exchange Notes, (iii) if such
holder is a broker-dealer registered under the
Exchange Act or is participating in the Exchange
Offer for the purposes of distributing the
Exchange Notes, such holder will comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with a
secondary resale transaction of the Exchange
Notes acquired by such person and cannot rely on
the position of the staff of the Commission set
forth in no-action letters (see "The Exchange
Offer--Resale of Exchange Notes"), (iv) such
holder understands that a secondary resale
transaction described in clause (iii) above and
any resales of Exchange Notes obtained by such
holder in exchange for Private Notes acquired by
such holder directly from the Company should be
covered by an effective registration statement
containing the selling securityholder information
required by Item 507 or Item 508, as applicable,
of Regulation S-K of the Commission and (v) such
holder is not an
5
<PAGE>
"affiliate," as defined in Rule 405 under the
Securities Act, of the Company. If the holder is
a broker-dealer that will receive Exchange Notes
for its own account in exchange for Private Notes
that were acquired as a result of market-making
activities or other trading activities, such
holder will be required to acknowledge in the
Letter of Transmittal that such holder will
deliver a prospectus in connection with any
resale of such Exchange Notes; however, by so
acknowledging and by delivering a prospectus,
such holder will not be deemed to admit that it
is an "underwriter" within the meaning of the
Securities Act. See "The Exchange Offer--
Procedures for Tendering."
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose Private Notes are
registered in the name of a broker, commercial
bank, trust company or other nominee and who
wishes to tender such Private Notes in the
Exchange Offer should contact such registered
holder promptly and instruct such registered
holder to tender on such beneficial owner's
behalf. If such beneficial owner wishes to tender
on such owner's own behalf, such owner must,
prior to completing and executing the Letter of
Transmittal and delivering such owner's Private
Notes, either make appropriate arrangements to
register ownership of the Private Notes in such
owner's name or obtain a properly completed bond
power from the registered holder. The transfer of
registered ownership may take considerable time
and may not be able to be completed prior to the
Expiration Date. See "The Exchange Offer--
Procedures for Tendering."
Guaranteed Delivery
Procedures................. Holders of Private Notes who wish to tender their
Private Notes and whose Private Notes are not
immediately available or who cannot deliver their
Private Notes, the Letter of Transmittal or any
other documentation required by the Letter of
Transmittal to the Exchange Agent prior to the
Expiration Date must tender their Private Notes
according to the guaranteed delivery procedures
set forth under "The Exchange Offer--Guaranteed
Delivery Procedures."
Acceptance of the Private
Notes and Delivery of the
Exchange Notes............. Subject to the satisfaction or waiver of the
conditions to the Exchange Offer, the Company
will accept for exchange any and all Private
Notes that are properly tendered in the Exchange
Offer prior to the Expiration Date. The Exchange
Notes issued pursuant to the Exchange Offer will
be delivered on the earliest practicable date
following the Expiration Date. See "The Exchange
Offer--Terms of the Exchange Offer."
Withdrawal Rights........... Tenders of Private Notes may be withdrawn at any
time prior to the Expiration Date. See "The
Exchange Offer--Withdrawal of Tenders."
6
<PAGE>
Certain Federal Income Tax
Considerations............. For a discussion of certain material federal
income tax considerations relating to the
exchange of the Exchange Notes for the Private
Notes, see "Certain Federal Income Tax
Considerations."
Exchange Agent.............. Fleet National Bank is serving as the Exchange
Agent in connection with the Exchange Offer.
TERMS OF THE EXCHANGE NOTES
The Exchange Offer applies to $250,000,000 aggregate principal amount of the
Private Notes. The form and terms of the Exchange Notes are substantially
identical in all respects (including principal amount, interest rate, maturity
and ranking) to the form and terms of the Private Notes, except that (i) the
Exchange Notes will have been registered under the Securities Act and,
therefore, will not bear legends restricting the transfer thereof and (ii)
holders of the Exchange Notes will not be entitled to certain rights of holders
of the Private Notes under the Registration Rights Agreement, which rights will
terminate upon consummation of the Exchange Offer. The Exchange Notes will
evidence the same indebtedness as the Private Notes and will be issued pursuant
to, and entitled to the benefits of, the Indenture governing the Private Notes.
The Exchange Offer is being made to satisfy the obligations of the Company
under the Registration Rights Agreement relating to the Private Notes. For
further information and for definitions of certain capitalized terms used
below, see "The Exchange Offer" and "Description of the Exchange Notes."
Issuer...................... Mark IV Industries, Inc.
Securities Offered.......... $250,000,000 principal amount of 7 3/4% Senior
Subordinated Notes due April 1, 2006 (the
"Exchange Notes").
Maturity Date............... April 1, 2006.
Interest Rate............... The Exchange Notes will bear interest at a rate
of 7 3/4% per annum.
Interest Payment Dates...... Interest will accrue on the Exchange Notes from
and including the date of the initial issuance of
the Private Notes (March 11, 1996) and will be
payable semi-annually on each April 1 and October
1, commencing October 1, 1996.
Change of Control........... Upon a Change of Control, holders of the Exchange
Notes will have the right, subject to certain
restrictions and conditions, to require the
Company to purchase all or any portion of their
Exchange Notes at 101% of the principal amount
thereof plus accrued and unpaid interest, if any,
through the date of purchase. See "Description of
the Exchange Notes--Change of Control."
Subordination...............
The Exchange Notes will be unsecured obligations
of the Company, will be subordinated in right of
payment to the prior payment in full of all
Senior Indebtedness of the Company, and will be
effectively subordinated to the indebtedness of
the Company's subsidiaries. At March 31, 1996,
Senior Indebtedness of the Company and its
subsidiaries was approximately
7
<PAGE>
$243,800,000 (of which approximately $53,800,000
was indebtedness of the Company's subsidiaries)
and subordinated indebtedness of the Company
(including the Private Notes) was approximately
$506,400,000. Subject to certain restrictions,
the Indenture pursuant to which the Exchange
Notes will be issued permits the Company to incur
additional indebtedness, but, until such time as
the Exchange Notes are rated Investment Grade,
prohibits the incurrence by the Company of any
indebtedness that is senior to the Exchange Notes
and subordinate to Senior Indebtedness. See
"Description of the Exchange Notes--
Subordination."
Certain Covenants........... The Indenture restricts, among other things, the
payment of dividends, the repurchase of capital
stock and the making of certain other Restricted
Payments (as defined), the incurrence of
additional indebtedness, the incurrence of
certain Liens (as defined) and certain mergers,
consolidations or sales of assets. Upon the
Exchange Notes being rated Investment Grade,
certain of the restrictions will no longer be
applicable. See "Description of the Exchange
Notes--Certain Covenants."
8
<PAGE>
SUMMARY FINANCIAL DATA
(DOLLARS IN THOUSANDS)
The following tables set forth summary consolidated financial data of the
Company for each of the three fiscal years in the period ended February 29,
1996. Such financial data are derived from the Company's audited consolidated
financial statements included elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED THE LAST DAY OF
FEBRUARY,
----------------------------------
1994(1) 1995(2) 1996
---------- ---------- ----------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................. $1,244,200 $1,603,300 $2,088,500
========== ========== ==========
Operating income before depreciation and
amortization............................. $ 173,500 $ 215,800 $ 279,400
Depreciation and amortization............. 41,700 51,500 66,800
---------- ---------- ----------
Operating income (3)...................... $ 131,800 $ 164,300 $ 212,600
========== ========== ==========
Income from continuing operations......... $ 51,100 $ 67,900 $ 92,400
========== ========== ==========
OTHER DATA:
Consolidated cash flow/fixed charge
coverage ratio (4):
Actual................................... 3.46x 3.98x 4.55x
As adjusted (5).......................... -- -- 4.36x
Ratio of earnings to fixed charges (4):
Actual................................... 2.50x 2.87x 3.26x
As adjusted (5).......................... -- -- 3.09x
Percentage of long-term debt to total
capitalization........................... 62.2% 49.0% 47.0%
</TABLE>
<TABLE>
<CAPTION>
LAST DAY OF FEBRUARY,
-------------------------------
1994 1995 1996
---------- ---------- ---------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital................................. $ 312,800 $ 379,700 404,900
Total assets.................................... 1,282,300 1,846,400 2,013,100
Long-term debt.................................. 567,200 610,700 642,500
Stockholders' equity............................ 345,400 635,500 725,500
</TABLE>
- --------
(1) Includes the results of operations of the PTI business from its June 1993
acquisition date.
(2) Includes the results of operations of the Purolator business from its
November 1994 acquisition date.
(3) Represents income from continuing operations before interest expense and
taxes.
(4) See footnotes (4) and (6) to "Selected Financial Information" for
information as to methods of calculating cash flow and fixed charge ratios.
(5) As adjusted to reflect the interest expense on the Notes at an interest
rate of 7 3/4% per annum and the application of the net proceeds thereof to
reduce borrowings outstanding under the Company's previously existing $650
million credit agreement (the "1994 Credit Agreement") which was entered
into November 1994.
9
<PAGE>
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Company's
obligations under the Registration Rights Agreement. The Company will not
receive any cash proceeds from the issuance of the Exchange Notes offered
hereby. In consideration of issuing the Exchange Notes as contemplated in this
Prospectus, the Company will receive in exchange Private Notes in like
principal amount, the form and terms of which are the same as the form and
terms of the Exchange Notes, except as otherwise described herein. The Private
Notes surrendered in exchange for the Exchange Notes will be retired and
cancelled and cannot be reissued. Accordingly, issuance of the Exchange Notes
will not result in any increase in the indebtedness of the Company.
The net proceeds from the sale of the Private Notes, which were approximately
$244,100,000 (after deducting estimated expenses and discounts related to the
Private Offering), were used to reduce outstanding indebtedness under the
Company's new Credit Agreement (the "Credit Agreement") which was entered into
on March 8, 1996, prior to consummation of the Private Offering on March 11,
1996. The Credit Agreement replaced the Company's previously existing 1994
Credit Agreement. At March 31, 1996, borrowings under the Credit Agreement
totalled approximately $215,000,000 and the weighted average interest rate on
such borrowings was approximately 6.15%. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources" for a summary of the terms of the Credit Agreement.
10
<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Private Notes were sold by the Company on March 11, 1996 (the "Closing
Date") to the Initial Purchaser pursuant to the Purchase Agreement. The Initial
Purchaser subsequently sold the Private Notes to (i) "qualified institutional
buyers" ("QIBs"), as defined in Rule 144A under the Securities Act ("Rule
144A"), in reliance on Rule 144A. As a condition to the sale of the Private
Notes, the Company and the Initial Purchaser entered into the Registration
Rights Agreement on March 11, 1996. Pursuant to the Registration Rights
Agreement, the Company agreed that, unless the Exchange Offer is not permitted
by applicable law or Commission policy, it would (i) file with the Commission a
Registration Statement under the Securities Act with respect to the Exchange
Notes within 30 days after the Closing Date, (ii) use its best efforts to cause
such Registration Statement to become effective under the Securities Act within
120 days after the Closing Date and (iii) use its best efforts to consummate
the Exchange Offer within 30 business days after the Registration Statement has
become effective. A copy of the Registration Rights Agreement has been filed as
an exhibit to the Registration Statement. The Registration Statement is
intended to satisfy certain of the Company's obligations under the Registration
Rights Agreement and the Purchase Agreement.
RESALE OF THE EXCHANGE NOTES
With respect to the Exchange Notes, based upon an interpretation by the staff
of the Commission set forth in certain no-action letters issued to third
parties, the Company believes that a holder (other than (i) an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act, (ii) a
broker-dealer who purchased such Exchange Notes directly from the Company to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act, or (iii) a broker-dealer who acquired Private Notes as a result
of market making or other trading activities) who exchanges Private Notes for
Exchange Notes in the ordinary course of business and who is not participating,
does not intend to participate, and has no arrangement with any person to
participate, in a distribution of the Exchange Notes, will be allowed to resell
Exchange Notes to the public without further registration under the Securities
Act and without delivering to the purchasers of the Exchange Notes a prospectus
that satisfies the requirements of Section 10 of the Securities Act. However,
if any holder acquires Exchange Notes in the Exchange Offer for the purpose of
distributing or participating in the distribution of the Exchange Notes or is a
broker-dealer, such holder cannot rely on the position of the staff of the
Commission enumerated in certain no-action letters issued to third parties and
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction, unless an exemption
from registration is otherwise available. Each broker-dealer that receives
Exchange Notes for its own account in exchange for Private Notes, where such
Private Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Private Notes where
such Private Notes were acquired by such broker-dealer as a result of market-
making or other trading activities. Pursuant to the Registration Rights
Agreement, the Company has agreed to make this Prospectus, as it may be amended
or supplemented from time to time, available to broker-dealers for use in
connection with any resale for a period of one year after the Registration
Statement is declared effective or until such earlier date on which the
Exchange Notes are freely tradeable. See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus and
in the Letter of Transmittal, the Company will accept any and all Private Notes
validly tendered and not withdrawn prior to the Expiration Date. The Company
will issue $1,000 principal amount of Exchange Notes in exchange for each
11
<PAGE>
$1,000 principal amount of outstanding Private Notes surrendered pursuant to
the Exchange Offer. Private Notes may be tendered only in integral multiples of
$1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Private Notes except that (i) the exchange will be registered under the
Securities Act and, therefore, the Exchange Notes will not bear legends
restricting the transfer thereof and (ii) holders of the Exchange Notes will
not be entitled to any of the rights of holders of Private Notes under the
Registration Rights Agreement, which rights will terminate upon the
consummation of the Exchange Offer except under certain limited circumstances.
See "--Termination of Certain Rights." The Exchange Notes will evidence the
same indebtedness as the Private Notes (which they replace) and will be issued
under, and be entitled to the benefits of, the Indenture, which also authorized
the issuance of the Private Notes, such that both series of Notes will be
treated as a single class of debt securities under the Indenture.
As of the date of this Prospectus, $250,000,000 in aggregate principal amount
of the Private Notes are outstanding and registered in the name of Cede & Co.,
as nominee for DTC. Only a registered holder of the Private Notes (or such
holder's legal representative or attorney-in-fact) as reflected on the records
of the Trustee under the Indenture may participate in the Exchange Offer. There
will be no fixed record date for determining registered holders of the Private
Notes entitled to participate in the Exchange Offer.
Holders of the Private Notes do not have any appraisal or dissenters' rights
under the Indenture in connection with the Exchange Offer. The Company intends
to conduct the Exchange Offer in accordance with the provisions of the
Registration Rights Agreement and the applicable requirements of the Securities
Act, the Exchange Act and the rules and regulations of the Commission
thereunder.
The Company shall be deemed to have accepted validly tendered Private Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Private Notes for the purposes of receiving the Exchange Notes from the
Company.
Holders who tender Private Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Private
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time on
, 1996, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will (i) notify the
Exchange Agent of any extension by oral or written notice, (ii) mail to the
registered holders an announcement thereof and (iii) issue a press release or
other public announcement, which shall include disclosure of the approximate
number of Private Notes deposited to date, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. Without limiting the manner in which the Company may choose to make a
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, the Company shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.
The Company reserves the right, in its reasonable discretion, (i) to delay
accepting any Private Notes, (ii) to extend the Exchange Offer or (iii) if any
conditions set forth below under "--Conditions" shall not have been satisfied,
to terminate the Exchange Offer by giving oral or written notice of such delay,
extension
12
<PAGE>
or termination to the Exchange Agent. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered holders. If the Exchange Offer is
amended in a manner determined by the Company to constitute a material change,
the Company will promptly disclose such amendment by means of a prospectus
supplement that will be distributed to the registered holders, and the Company
will extend the Exchange Offer for a period of five to ten business days,
depending upon the significance of the amendment and the manner of disclosure
to the registered holders, if the Exchange Offer would otherwise expire during
such five to ten business day period.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest at a rate equal to 7 3/4% per annum.
Interest on the Exchange Notes will be payable semi-annually in arrears on each
April 1 and October 1, commencing October 1, 1996. Holders of Exchange Notes
will receive interest on October 1, 1996 from the date of initial issuance of
the Exchange Notes, plus an amount equal to the accrued interest on the Private
Notes from March 11, 1996, the date of initial issuance of the Private Notes,
to the date of exchange thereof for Exchange Notes. Holders of Private Notes
that are accepted for exchange will be deemed to have waived the right to
receive any interest accrued on the Private Notes.
PROCEDURES FOR TENDERING
Only a registered holder of Private Notes may tender such Private Notes in
the Exchange Offer. To tender in the Exchange Offer, a holder of Private Notes
must complete, sign and date the Letter of Transmittal, or a facsimile thereof,
have the signatures thereon guaranteed if required by the Letter of
Transmittal, and mail or otherwise deliver such Letter of Transmittal or such
facsimile to the Exchange Agent at the address set forth on the Outside Back
Cover Page of this Prospectus for receipt prior to the Expiration Date. In
addition, either (i) certificates for such Private Notes must be received by
the Exchange Agent along with the Letter of Transmittal, (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such
Private Notes, if such procedure is available, into the Exchange Agent's
account at the Depositary pursuant to the procedure for book-entry transfer
described below, must be received by the Exchange Agent prior to the Expiration
Date or (iii) the holder must comply with the guaranteed delivery procedures
described below.
The tender by a holder that is not withdrawn prior to the Expiration Date
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF PRIVATE NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR PRIVATE NOTES SHOULD BE SENT TO
THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH
HOLDERS.
Any beneficial owner(s) of the Private Notes whose Private Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender should contact the registered holder
promptly and instruct such registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on such owner's own
behalf, such owner must, prior to completing and executing the Letter of
Transmittal and delivering such owner's Private Notes, either make appropriate
arrangements to register ownership of the Private Notes in such owner's name or
obtain a properly completed bond power from the registered holder. The transfer
of registered ownership may take considerable time.
13
<PAGE>
Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "--Withdrawal of Tenders"), as the case may be, must be guaranteed
by an Eligible Institution (as defined) unless the Private Notes tendered
pursuant thereto are tendered (i) by a registered holder who has not completed
the box titled "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures
on a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be made by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act which is a member of
one of the recognized signature guarantee programs identified in the Letter of
Transmittal (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Private Notes listed therein, such Private Notes must be endorsed
or accompanied by a properly completed bond power, signed by such registered
holder as such registered holder's name appears on such Private Notes.
If the Letter of Transmittal or any Private Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
The Exchange Agent and the Depositary have confirmed that any financial
institution that is a participant in the Depositary's system may utilize the
Depositary's Automated Tender Offer Program to tender Private Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Private Notes will be
determined by the Company in its reasonable discretion, which determination
will be final and binding. The Company reserves the absolute right to reject
any and all Private Notes not properly tendered or any Private Notes the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Private Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Private Notes must be cured within such time as the
Company shall determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Private Notes, neither the
Company, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Private Notes will not be deemed
to have been made until such defects or irregularities have been cured or
waived.
While the Company has no present plan to acquire any Private Notes that are
not tendered in the Exchange Offer or to file a registration statement to
permit resales of any Private Notes that are not tendered pursuant to the
Exchange Offer, the Company reserves the right in its sole discretion to
purchase or make offers for any Private Notes that remain outstanding
subsequent to the Expiration Date or, as set forth below under "--Conditions,"
to terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Private Notes in the open market, in privately negotiated transactions
or otherwise. The terms of any such purchases or offers could differ from the
terms of the Exchange Offer.
By tendering, each holder of Private Notes will represent to the Company
that, among other things, (i) Exchange Notes to be acquired by such holder of
Private Notes in connection with the Exchange Offer are being acquired by such
holder in the ordinary course of business of such holder, (ii) such holder (if
not a broker-dealer referred to in the last sentence of this paragraph) does
not intend to engage and will not engage in the distribution of the Exchange
Notes, (iii) such holder has no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes, (iv) such holder
acknowledges and agrees that any person who is a broker-dealer registered under
the Exchange Act or is participating in the Exchange
14
<PAGE>
Offer for the purposes of distributing the Exchange Notes must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction of the Exchange Notes, acquired
by such person and cannot rely on the position of the staff of the Commission
set forth in certain no-action letters, (v) such holder understands that a
secondary resale transaction described in clause (iv) above and any resales of
Exchange Notes obtained by such holder in exchange for Private Notes acquired
by such holder directly from the Company should be covered by an effective
registration statement containing the selling securityholder information
required by Item 507 or Item 508, as applicable, of Regulation S-K of the
Commission and (vi) such holder is not an "affiliate," as defined in Rule 405
under the Securities Act, of the Company. If the holder is a broker-dealer that
will receive Exchange Notes for such holder's own account in exchange for
Private Notes that were acquired as a result of market-making activities or
other trading activities, such holder will be required to acknowledge in the
Letter of Transmittal that such holder will deliver a copy of this Prospectus
(as it may be supplemented or amended) in connection with any resale of such
Exchange Notes; however, by so acknowledging and by delivering a prospectus,
such holder will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
RETURN OF PRIVATE NOTES
If any tendered Private Notes are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer or if Private Notes are
withdrawn or are submitted for a greater principal amount than the holders
desire to exchange, such unaccepted, withdrawn or non-exchanged Private Notes
will be returned without expense to the tendering holder thereof (or, in the
case of Private Notes tendered by book-entry transfer into the Exchange Agent's
account at the Depositary pursuant to the book-entry transfer procedures
described below, such Private Notes will be credited to an account maintained
with the Depositary) as promptly as practicable.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Private Notes at DTC for purposes of the Exchange Offer within two
business days after the date of this Prospectus, and any financial institution
that is a participant in the Depositary's systems may make book-entry delivery
of Private Notes by causing DTC to transfer such Private Notes into the
Exchange Agent's account at DTC in accordance with DTC's procedures for
transfer. However, although delivery of Private Notes may be effected through
book-entry transfer at DTC, the Letter of Transmittal or facsimile thereof,
with any required signature guarantees and any other required documents, must,
in any case, be transmitted to and received by the Exchange Agent at the
address set forth below under "--Exchange Agent" on or prior to the Expiration
Date or pursuant to the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Private Notes and (i) whose Private Notes
are not immediately available or (ii) who cannot deliver their Private Notes,
the Letter of Transmittal or any other required documents to the Exchange Agent
prior to the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery) setting forth the name and
address of the holder, the certificate number(s) of such Private Notes and
the principal amount of Private Notes tendered, stating that the tender is
being made thereby and guaranteeing that, within five New York Stock
Exchange trading days after the Expiration Date, the Letter of Transmittal
(or a facsimile thereof), together with the certificate(s) representing the
Private Notes in proper form for transfer or a Book-Entry Confirmation, as
the case may be, and any other documents required by the Letter of
Transmittal, will be deposited by the Eligible Institution with the
Exchange Agent; and
15
<PAGE>
(c) Such properly executed Letter of Transmittal (or facsimile thereof),
as well as the certificate(s) representing all tendered Private Notes in
proper form for transfer and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within five New York Stock
Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Private Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Private Notes may be
withdrawn at any time prior to the Expiration Date.
To withdraw a tender of Private Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. Any such
notice of withdrawal must (i) specify the name of the person having deposited
the Private Notes to be withdrawn (the "Depositor"), (ii) identify the Private
Notes to be withdrawn (including the certificate number or numbers and
principal amount of such Private Notes) and (iii) be signed by the holder in
the same manner as the original signature on the Letter of Transmittal by which
such Private Notes were tendered (including any required signature guarantees).
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by the Company, in its sole
discretion, whose determination shall be final and binding on all parties. Any
Private Notes so withdrawn will be deemed not to have been validly tendered for
purposes of the Exchange Offer and no Exchange Notes will be issued with
respect thereto unless the Private Notes so withdrawn are validly retendered.
Properly withdrawn Private Notes may be retendered by following one of the
procedures described above under "The Exchange Offer--Procedures for Tendering"
at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange the Exchange Notes for, any
Private Notes, and may terminate the Exchange Offer as provided herein before
the acceptance of such Private Notes, if the Exchange Offer violates applicable
law, rules or regulations or an applicable interpretation of the staff of the
Commission.
If the Company determines in its reasonable discretion that any of these
conditions are not satisfied, the Company may (i) refuse to accept any Private
Notes and return all tendered Private Notes to the tendering holders, (ii)
extend the Exchange Offer and retain all Private Notes tendered prior to the
expiration of the Exchange Offer, subject, however, to the rights of holders to
withdraw such Private Notes (see "--Withdrawal of Tenders") or (iii) waive such
unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Private Notes that have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Company will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders of the Private Notes, and the Company
will extend the Exchange Offer for a period of five to ten business days,
depending upon the significance of the waiver and the manner of disclosure to
the registered holders, if the Exchange Offer would otherwise expire during
such five to ten business day period.
TERMINATION OF CERTAIN RIGHTS
All rights under the Registration Rights Agreement (including registration
rights) of holders of the Private Notes eligible to participate in the Exchange
Offer will terminate upon consummation of the Exchange Offer except with
respect to the Company's continuing obligations (i) to indemnify such holders
(including any broker-dealers) and certain parties related to such holders
against certain liabilities (including liabilities under the Securities Act),
(ii) to provide, upon the request of any holder of a transfer-restricted
16
<PAGE>
Private Note, the information required by Rule 144A(d)(4) under the Securities
Act in order to permit resales of such Private Notes pursuant to Rule 144A,
(iii) to use its best efforts to keep the Registration Statement effective to
the extent necessary to ensure that it is available for resales of Exchange
Notes by broker-dealers for a period of up to one year from the date the
Registration Statement is declared effective or until such earlier date on
which the Exchange Notes are freely tradeable and to provide copies of the
latest version of the Prospectus to such broker-dealers upon their request
during such period and (iv) to file a shelf registration statement as required
by the Registration Rights Agreement if any holder of transfer-restricted Notes
notifies the Company within 20 business days of the consummation of the
Exchange Offer that (A) such holder is prohibited by applicable law or
Commission policy from participating in the Exchange Offer, or (B) such holder
may not resell the Exchange Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and that this Prospectus is not
appropriate or available for such resales by such holder, or (C) that such
holder is a broker-dealer and holds Private Notes acquired directly from the
Company or one of its affiliates (see "--Liquidated Damages").
LIQUIDATED DAMAGES
The Registration Rights Agreement provides that (i) the Company will file the
Registration Statement with the Commission on or prior to 30 days after the
Closing Date, (ii) the Company will use its best efforts to have the
Registration Statement declared effective by the Commission on or prior to 120
days after the Closing Date, (iii) unless the Exchange Offer would not be
permitted by applicable law or Commission policy, the Company will commence the
Exchange Offer and use its best efforts to issue, on or prior to 30 business
days after the date on which the Registration Statement is declared effective
by the Commission, Exchange Notes in exchange for all Private Notes tendered
prior thereto in the Exchange Offer and (iv) if obligated to file a shelf
registration statement pursuant to the terms of the Registration Rights
Agreement (the "Shelf Registration Statement" and, collectively with the
Registration Statement, the "Registration Statements"), the Company will use
its best efforts to file such Shelf Registration Statement with the Commission
on or prior to 30 days after such filing obligation arises and to cause the
Shelf Registration to be declared effective by the Commission on or prior to
120 days after such obligation arises. If (a) the Company fails to file any of
the Registration Statements required by the Registration Rights Agreement on or
before the date specified for such filing, (b) any of such Registration
Statements is not declared effective by the Commission on or prior to the date
specified for such effectiveness (the "Effectiveness Target Date"), or (c) the
Company fails to consummate the Exchange Offer within 30 business days of the
Effectiveness Target Date with respect to the Registration Statement, or (d)
the Shelf Registration Statement or the Registration Statement is declared
effective but thereafter ceases to be effective or usable in connection with
resales of Transfer Restricted Securities during the periods specified in the
Registration Rights Agreement (each such event referred to in clauses (a)
through (d) above a "Registration Default"), then the Company will pay
Liquidated Damages to each holder of Transfer Restricted Securities with
respect to the first 90-day period immediately following the occurrence of such
Registration Default in an amount equal to $.05 per week per $1,000 principal
amount of Notes constituting Transfer Restricted Securities held by such
Holder. The amount of the Liquidated Damages will increase by an additional
$.05 per week per $1,000 principal amount constituting Transfer Restricted
Securities with respect to each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum amount of Liquidated Damages of $.50
per week per $1,000 principal amount of Notes constituting Transfer Restricted
Securities. All accrued Liquidated Damages will be paid by the Company on each
Damages Payment Date (as defined in the Indenture) to the Global Note Holder
(as defined in the Indenture) by wire transfer of immediately available funds
or by federal funds check and to Holders of Certificated Securities (as defined
in the Indenture) by mailing checks to their registered addresses. Following
the cure of all Registration Defaults, the accrual of Liquidated Damages will
cease. For purposes of the foregoing, "Transfer Restricted Securities" means
each Private Note and each Exchange Note, as applicable, until (i) the date on
which such Private Note has been exchanged by a person other than a broker-
dealer for an Exchange Note in the Exchange Offer, (ii) following the exchange
by a broker-dealer in the Exchange Offer of a Private Note for an Exchange
Note, the date on which such Exchange Note is sold to a purchaser who receives
from such broker-dealer on or prior to the date of such sale a copy of the
Prospectus, (iii) the
17
<PAGE>
date on which such Note has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or (iv)
the date on which such Note is distributed to the public pursuant to Rule 144
under the Securities Act.
Holders of Notes will be required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information
to be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Notes included in
the Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$250,000. Such expenses include registration fees, fees and expenses of the
Exchange Agent and the Trustee, accounting and legal fees and printing costs,
among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Private Notes pursuant to the Exchange Offer. If, however, a transfer tax is
imposed for any reason other than the exchange of the Private Notes pursuant to
the Exchange Offer, then the amount of any such transfer taxes (whether imposed
on the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
CONSEQUENCE OF FAILURE TO EXCHANGE
Participation in the Exchange Offer is voluntary. Holders of the Private
Notes are urged to consult their financial and tax advisors in making their own
decisions on what action to take.
The Private Notes that are not exchanged for the Exchange Notes pursuant to
the Exchange Offer will remain restricted securities. Accordingly, such Private
Notes may be resold only (i) to a person whom the seller reasonably believes is
a QIB in a transaction meeting the requirements of Rule 144A, (ii) in a
transaction meeting the requirements of Rule 144 under the Securities Act,
(iii) outside the United States to a foreign person in a transaction meeting
the requirements of Rule 904 under the Securities Act, (iv) in accordance with
another exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel if the Company so requests), (v) to the
Company or (vi) pursuant to an effective registration statement and, in each
case, in accordance with any applicable securities laws of any state of the
United States or any other applicable jurisdiction.
ACCOUNTING TREATMENT
For accounting purposes, the Company will recognize no gain or loss as a
result of the Exchange Offer. The expenses of the Exchange Offer will be
amortized over the term of the Exchange Notes.
18
<PAGE>
CAPITALIZATION
The following table sets forth the audited consolidated capitalization of
the Company as of February 29, 1996. Such amounts include the effect of the
sale of the Private Notes and the application of the net proceeds to repay a
portion of amounts outstanding under the 1994 Credit Agreement as though such
transactions had occurred on February 29, 1996. See "Use of Proceeds."
<TABLE>
<CAPTION>
FEBRUARY 29, 1996
(DOLLARS IN THOUSANDS)
----------------------
<S> <C>
Current maturities of long-term debt(1).................. $ 7,900
==========
Long-term debt, excluding current maturities(1):
Senior debt:
1994 Credit Agreement.................................. $ 97,300
Other.................................................. 38,800
----------
Total senior debt.................................... 136,100
----------
Subordinated debt:
7 3/4% Senior Subordinated Notes due April 1, 2006..... 248,400
8 3/4% Senior Subordinated Notes due April 1, 2003..... 258,000
----------
Total subordinated debt.............................. 506,400
----------
Total long-term debt................................. 642,500
----------
Stockholders' equity:
Preferred Stock, $.01 par value:
10,000,000 shares authorized:
None issued............................................ --
Common Stock, $.01 par value:
100,000,000 shares authorized:
62,988,643 shares issued(2)............................ 600
Additional paid-in capital.............................. 617,600
Retained earnings....................................... 109,700
Foreign currency translation adjustment................. (2,400)
----------
Total stockholders' equity........................... 725,500
----------
Total capitalization................................. $1,368,000
==========
</TABLE>
- --------
(1) See Note 7 to the Company's audited consolidated financial statements,
appearing elsewhere herein, for interest rates and other information
regarding the Company's outstanding indebtedness.
(2) The number of shares has been adjusted to give effect to a 5% stock
dividend paid on the outstanding shares of Common Stock on April 26, 1996
and excludes 1,753,000 shares reserved for issuance upon exercise of
outstanding employee stock options.
19
<PAGE>
SELECTED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
The following tables set forth selected consolidated financial information
of the Company for each of the five fiscal years in the period ended February
29, 1996. These tables should be read in conjunction with the Company's
audited consolidated financial statements appearing elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED THE LAST DAY OF FEBRUARY,
----------------------------------------------------------
1992 1993 1994(1) 1995(2) 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $1,004,300 $1,085,700 $1,244,200 $1,603,300 $2,088,500
---------- ---------- ---------- ---------- ----------
Operating costs:
Cost of products sold.. 641,900 698,800 803,500 1,060,000 1,413,500
Selling and
administration........ 200,600 215,100 236,300 292,700 347,200
Research and
development........... 24,900 26,100 30,900 34,800 48,400
Depreciation and
amortization.......... 28,300 32,100 41,700 51,500 66,800
---------- ---------- ---------- ---------- ----------
Total operating
costs............... 895,700 972,100 1,112,400 1,439,000 1,875,900
---------- ---------- ---------- ---------- ----------
Operating income (3).... 108,600 113,600 131,800 164,300 212,600
Interest expense........ 64,700 51,600 50,100 53,900 61,200
---------- ---------- ---------- ---------- ----------
Income before securities
transactions and
provision for taxes.... 43,900 62,000 81,700 110,400 151,400
Gain (loss) on
securities
transactions........... (2,400) -- -- -- --
---------- ---------- ---------- ---------- ----------
Income before provision
for taxes.............. 41,500 62,000 81,700 110,400 151,400
Provision for income
taxes.................. 14,700 22,900 30,600 42,500 59,000
---------- ---------- ---------- ---------- ----------
Income from continuing
operations............. 26,800 39,100 51,100 67,900 92,400
Discontinued operations,
net of taxes........... 2,000 3,600 -- -- --
---------- ---------- ---------- ---------- ----------
Income before
extraordinary items and
cumulative effect of
accounting change...... 28,800 42,700 51,100 67,900 92,400
Extraordinary gain
(loss) from early
extinguishment of debt,
net of taxes........... (4,500) (3,700) (21,700) (1,100) --
Cumulative effect of
accounting change...... -- -- (26,000) -- --
---------- ---------- ---------- ---------- ----------
Net income.............. $ 24,300 $ 39,000 $ 3,400 $ 66,800 $ 92,400
========== ========== ========== ========== ==========
OTHER DATA:
Consolidated cash
flow/fixed charge
coverage ratio (4):
Actual................. 2.13x 2.80x 3.46x 3.98x 4,55x
As adjusted (5)........ -- -- -- -- 4.36x
Ratio of earnings to
fixed charges (6):
Actual................. 1.63x 2.09x 2.50x 2.87x 3.26x
As adjusted (5)........ -- -- -- -- 3.09x
Capital expenditures.... $ 20,700 $ 35,500 $ 41,400 $ 50,800 $ 95,500
</TABLE>
<TABLE>
<CAPTION>
LAST DAY OF FEBRUARY,
------------------------------------------------------
1992 1993 1994 1995 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $ 285,500 $ 275,400 $ 312,800 $ 379,700 $ 404,900
Total assets............ 1,104,500 1,124,800 1,282,300 1,846,400 2,013,100
Long-term debt,
excluding current
maturities............. 525,400 497,100 567,200 610,700 642,500
Stockholders' equity.... 311,900 345,600 345,400 635,500 725,500
</TABLE>
- -------
(1) Includes the results of operations of the PTI business from its June 1993
acquisition date.
(2) Includes the results of operations of the Purolator business from its
November 1994 acquisition date.
(3) Represents income from continuing operations before interest expense,
securities transactions and taxes.
(4) The consolidated cash flow/fixed charge coverage ratio is defined in the
Indenture to be the ratio of consolidated cash flow to consolidated fixed
charges. See "Description of the Exchange Notes."
(5) As adjusted to reflect the interest expense on the Notes at an interest
rate of 7 3/4% per annum and the application of the net proceeds thereof
to reduce borrowings outstanding under the 1994 Credit Agreement.
(6) For the purpose of calculating the ratio of earnings to fixed charges, (i)
earnings consist of income from continuing operations before income taxes
plus fixed charges and (ii) fixed charges consist of interest expense
incurred, capitalized interest, amortization of debt expense and 15% of
rental payments under operating leases (an amount estimated by management
to be the interest component of such rentals).
20
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
In connection with the preparation of its consolidated financial statements
for its fiscal year ended February 29, 1996, the Company determined to
reclassify the operations included in its former Power and Fluid Transfer
business segment into two business segments: (i) Automotive and (ii)
Industrial, with its former Professional Audio segment being included in the
new Industrial segment. The Company's current business strategy is focused upon
the enhancement of these business segments through internal growth, cost
control and quality improvement programs and selective, strategic acquisitions,
with an emphasis on expanding the Company's international presence in each
segment. For a discussion of the Company's plans relating to the possible sale
of its Transportation Products and Professional Audio businesses included in
its Industrial segment, see "Business--Recent Developments."
RESULTS OF OPERATIONS
Three Years Ended February 29, 1996
During fiscal 1996, the Company reorganized what had been identified as its
primary business segment, Power and Fluid Transfer, into separately managed and
market-focused businesses. As a result, as noted above, the Company determined
to reclassify the operations of that segment into the following two business
segments:
(i) Automotive, which includes the design, manufacture and distribution of
fuel, power transmission, and fluid handling systems and components,
and filters and filtration systems for the global automotive
aftermarket and original equipment manufacturers ("OEM") market; and
(ii) Industrial, which includes the design, manufacture and distribution of
power transmission, fluid handling, and filtration systems and
components for industrial OEM and industrial distribution markets
worldwide. The Industrial segment also includes the Company's
Transportation Products business and its former Professional Audio
segment.
The results of operations of Purolator have been included in the Company's
results of operations for fiscal 1995 from its November 1994 acquisition date.
In reviewing the Company's sales performance, the following results by
segment should be considered for each of the fiscal years presented (dollars in
thousands):
<TABLE>
<CAPTION>
1994 1995 1996
---------- --------------------- ---------------------
% INCREASE % INCREASE
OVER PRIOR OVER PRIOR
AMOUNT AMOUNT YEAR AMOUNT YEAR
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Sales to Customers:
Automotive............. $ 532,600 $ 718,900 35.0% $1,004,300 39.7%
Industrial............. $ 711,600 $ 884,400 24.3% $1,084,200 22.6%
---------- ---------- ---- ---------- ----
Total ................ $1,244,200 $1,603,300 28.9% $2,088,500 30.3%
========== ========== ==== ========== ====
</TABLE>
The most significant reason for the increase in net sales in fiscal 1996 is
the fact that the results of operations of Purolator were included for all of
fiscal 1996, and for only four months following Purolator's November 1994
acquisition date in fiscal 1995. On a pro forma basis, including Purolator for
all of fiscal 1995, net sales increased by $175.0 million (9.2%) in fiscal 1996
on a consolidated basis, and by $57.1 million (6.0%) for the Automotive
business segment.
The $199.8 million increase in net sales for the Industrial segment for
fiscal 1996 was generated primarily by the segment's domestic power
transmission and fluid handling business product lines. The Automotive
segment's increase in net sales, excluding the effects of Purolator, was
primarily the result of increased OEM sales in Europe, offset somewhat by
reduced sales in the segment's domestic aftermarket product lines.
21
<PAGE>
The increase in net sales in fiscal 1995 was also primarily the result of the
Purolator acquisition. Excluding the results of Purolator, sales increased
approximately $200.0 million (21.1%) over fiscal 1994, with $105.0 million of
the increase coming from domestic sales, and the balance being generated
primarily in Europe.
Cost of products sold as a percentage of consolidated net sales were 64.6%,
66.1%, and 67.7% in fiscal 1994, 1995 and 1996, respectively. The increase in
the percentage of costs in fiscal 1996 is primarily the result of the Purolator
acquisition, due to its historically lower gross margin. On a pro forma basis
including Purolator for the entire fiscal year, such costs were 67.2% for
fiscal 1995. This level of costs also reflects the positive effects of the
Company's cost control programs, which have helped to substantially offset the
negative pressures on the margins experienced by both of the Company's business
segments.
Selling and administration costs as a percentage of consolidated net sales
were 19.0%, 18.3% and 16.6% in fiscal 1994, 1995 and 1996, respectively. The
reductions in fiscal 1995 and 1996 are primarily the result of the Purolator
acquisition, which had a lower level of such costs. On a pro forma basis
including Purolator for the entire fiscal year, such costs were 17.7% for
fiscal 1995. The reductions also reflect operating efficiencies achieved in
fiscal 1996 from the integration of the Purolator business and the
reorganization of the Company's business segments. The lower level of costs
also indicates that the Company's continued emphasis on cost control and cycle
time reduction has been successful in offsetting the impact of inflation on
such costs.
Research and development costs increased by $13.6 million (39.1%) in fiscal
1996 over fiscal 1995, which in turn increased by $3.9 million (12.6%) over
fiscal 1994. The increases in fiscal 1995 and 1996 are primarily due to the
Purolator acquisition. As a percentage of consolidated net sales, such costs
were in the range of 2.2% to 2.5% in each of fiscal 1994, 1995 and 1996. This
consistent level of investment reflects the Company's continuing emphasis on
new product development.
Depreciation and amortization expense increased by $15.3 million (29.7%) in
fiscal 1996 over fiscal 1995, which in turn increased by $9.8 million (23.5%)
over fiscal 1994. The increases in fiscal 1995 and 1996 are primarily
attributable to the Purolator acquisition, and the increased level of capital
equipment expenditures.
The above mentioned items resulted in the following operating income for each
of the fiscal years presented (dollars in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
----------------- ----------------- -----------------
% OF % OF % OF
RELATED RELATED RELATED
AMOUNT SALES AMOUNT SALES AMOUNT SALES
-------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
OPERATING INCOME
Automotive............... $ 66,300 12.5% $ 79,300 11.0% $110,600 11.0%
Industrial............... 80,400 11.3% 100,900 11.4% 119,400 11.0%
-------- ---- -------- ---- -------- ----
Total operating income
before corporate
expenses................ 146,700 11.8% 180,200 11.2% 230,000 11.0%
Corporate expenses....... (14,900) (1.2)% (15,900) (1.0)% (17,400) ( .8)%
-------- ---- -------- ---- -------- ----
Operating Income (a)..... $131,800 10.6% $164,300 10.2% $212,600 10.2%
======== ==== ======== ==== ======== ====
</TABLE>
- --------
(a) Including Purolator's results of operations on a pro-forma basis for all of
fiscal 1994 and 1995, operating income as a percentage of consolidated net
sales would have been 9.7%, 10.0% and 10.2% for fiscal 1994, 1995 and 1996,
respectively. The increase is primarily attributable to the Company's
emphasis on cost control as discussed above.
In spite of the increased interest costs resulting from borrowings to fund
the Purolator acquisition, interest expense increased only $7.3 million (13.5%)
in fiscal 1996 in comparison to fiscal 1995. The relatively slight increase in
fiscal 1996's expense was achieved as a result of the financing transactions
referred to under "Liquidity and Capital Resources," as well as lower interest
rates resulting from the Company's improved debt to total capitalization
position. Fiscal 1995's interest expense increased $3.8 million (7.6%) over
fiscal 1994's interest expense. This slight increase was achieved for the same
reasons notwithstanding the higher interest rates prevailing during fiscal
1995.
22
<PAGE>
The Company's provision for income taxes as a percentage of income before
provision for taxes was 37.5%, 38.5% and 39.0% in fiscal 1994, 1995 and 1996,
respectively. The higher rates in fiscal 1995 and 1996 were primarily the
result of increased income in foreign jurisdictions with higher statutory tax
rates than in the U.S.
As a result of all of the above, the Company's income before extraordinary
items in fiscal 1996 increased $24.5 million (36.1%) over fiscal 1995. In turn,
fiscal 1995's income before extraordinary items increased $16.8 million (32.9%)
over fiscal 1994 (before the effect of an accounting change in 1994).
As a result of replacing prior credit facilities and the issuance of the
Company's 8 3/4% Senior Subordinated Notes due 2003, the Company incurred
extraordinary losses, net of related tax benefits, of $1.1 million and $21.7
million in fiscal 1995 and 1994, respectively. Additionally, the Company's
adoption of SFAS No. 106 in fiscal 1994 resulted in the recognition of a net of
tax charge of $26.0 million as the cumulative effect of the accounting change
in fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company's short-term capital needs are met by cash generated through
operations, and supplemented by borrowings under its various credit facilities
to the extent required. During fiscal 1996, net cash provided by earnings was
$183.0 million, a 45% increase over the $126.5 million generated in fiscal
1995, which in turn represented a 39% increase over fiscal 1994. At February
29, 1996, the Company's working capital investment was $404.9 million, a net
increase of $25.2 million or 7% in comparison to February 28, 1995. As a
percentage of sales, working capital at February 29, 1996 represented 19% of
fiscal 1996 net sales as compared to a 20% relationship at the end of fiscal
1995, computed on a pro forma basis as if the results of operations of
Purolator had been included for all of fiscal 1995. Management anticipates that
its working capital investment as a percentage of net sales will be reduced
further during fiscal 1997.
Capital expenditures in fiscal 1996 were $95.5 million, which exceeds
depreciation and amortization expense of $66.8 million in fiscal 1996 and
capital expenditures of $50.8 million in fiscal 1995. Approximately $11.0
million of the increase in capital expenditures resulted from the capital
requirements of Purolator for all of fiscal 1996, and only four months of
fiscal 1995. Additionally, approximately $21.0 million of such increase related
to a new manufacturing facility and other increased capacity requirements in
the European units of the Company's Automotive business segment, primarily in
Italy. The balance of the increase related to the U.S. units of the Company's
Industrial business segment, including a new centralized warehouse and
distribution facility. Management anticipates that the Company's capital
expenditure requirements will continue to exceed its annual depreciation and
amortization charges over the next few years.
Cash generated from earnings in fiscal 1996 was sufficient to fund the
Company's capital expenditure investments as well as its increased working
capital requirements. Management believes that cash generated from earnings
will continue to be sufficient to fund such needs for the foreseeable future.
The Company's long-term capital needs are met by cash generated from
earnings, bank financing, and public debt and equity offerings. Recent
financing activities of a longer term nature include the following:
-- In October 1994, the Company entered into agreements with certain
holders of its 6 1/4% Convertible Debentures due February 15, 2011 to
convert approximately $76.7 million of the debentures into approximately
5.9 million shares of the Company's Common Stock. In January 1995, the
Company called for redemption the $37.5 million remaining principal
amount of the debentures. As a result of the call for redemption,
substantially all of the remaining debentures were converted into 2.8
million shares of the Company's Common Stock.
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-- In November 1994, the Company acquired all of the stock of Purolator for
a total cash purchase price, including expenses, of approximately $286.3
million. Funding for the acquisition was provided by borrowings under
the Company's 1994 Credit Agreement.
-- In December 1994, the Company completed an underwritten public offering
of 6.8 million shares of its Common Stock at a public offering price of
$17.23 per share. The net proceeds of approximately $113.0 million were
used to repay a portion of the Company's outstanding indebtedness under
its 1994 Credit Agreement.
-- In March 1996, the Company entered into the new Credit Agreement with
various financial institutions. The Credit Agreement currently provides
for a five-year, non-amortizing revolving credit facility with borrowing
availability of $400.0 million under a domestic facility (the "Domestic
Credit Facility") and $100.0 million under a multi-currency facility
(the "Multi-Currency Credit Facility"). The Multi-Currency Credit
Facility permits borrowings to be made in dollars as well as specified
foreign currencies. The proceeds of the initial borrowings under the
Credit Agreement were used to repay all amounts outstanding under the
Company's previously existing credit agreements. See Note 7 to the
Company's audited financial statements for information as to applicable
interest rates and covenants.
-- In March 1996, the Company completed the private placement of $250.0
million principal amount of the Private Notes at a purchase price of
99.36% of their face amount. The net proceeds from the sale of the
Private Notes were used to reduce outstanding indebtedness under the
Credit Agreement. For a description of the terms of the Private Notes,
see "Description of the Exchange Notes."
The March 1996 transactions referenced above have been presented in the
Company's audited consolidated balance sheet as at February 29, 1996 as if they
had occurred as of that date.
As of March 31, 1996, the Company had borrowing availability under its Credit
Agreement of approximately $285.0 million and additional availability under its
various other domestic and foreign demand lines of credit of approximately
$125.0 million.
FOREIGN CURRENCY
The Company does not hold or issue derivatives for trading purposes and is
not a party to leveraged derivatives transactions. The Company's sales from
foreign locations and exports are significant; therefore, the Company does
enter into foreign currency forward contracts as a hedge for certain existing
or anticipated business transactions denominated in various foreign currencies.
The maximum notional amount of foreign currency forward contracts outstanding
at any one time during fiscal 1996 amounted to approximately $23.9 million and
the approximate notional amount of such contracts outstanding was $7.8 million
at February 29, 1996.
IMPACT OF INFLATION
Although the Company has experienced delays in its ability to pass on certain
inflation related cost increases, the Company does not expect that such delays
or the overall impact of inflation will have a material impact on the Company's
operations.
RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 121--Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of ("SFAS
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<PAGE>
No. 121"). SFAS No. 121 requires that long-lived assets and certain
identifiable intangibles and goodwill related to those assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. SFAS No. 121 is effective
for the Company's fiscal year ending February 28, 1997, and management is in
the process of assessing its impact on its financial statements. While it is
anticipated that SFAS No. 121 will require a non-cash charge to reduce the
carrying value of certain of the Company's fixed assets and goodwill values,
the Company has not completed its estimate at the present time.
In October 1995, the FASB also issued Statement No. 123--Accounting for
Stock-Based Compensation ("SFAS No. 123"), which is also effective for the
Company's fiscal year ending February 28, 1997. SFAS No. 123 encourages, but
does not require, recognition of compensation expense based on the fair value
of equity instruments (such as stock options) granted to employees. The Company
does not plan to record compensation for its stock option grants to employees;
therefore, the adoption of SFAS No. 123 will have no impact on its financial
position or results of operations. The Company will provide pro forma
disclosures of the effects of applying the fair value method in the Notes to
the Company's future financial statements.
25
<PAGE>
BUSINESS
GENERAL
Mark IV is a diversified manufacturer of a broad range of proprietary and
other power and fluid transfer products and systems which serve primarily
automotive and industrial markets. Many of Mark IV's product groups have a
significant, and in certain instances the leading, share of their respective
markets. Products manufactured by Mark IV principally serve specialized needs
in markets in which relatively few manufacturers compete. These products are
sold primarily directly, but also through independent distributors, to other
manufacturers and commercial users in the United States and Europe and, to a
lesser extent, in Canada, Latin America and the Far East. Mark IV operates 79
manufacturing facilities and 56 distribution and sales locations and employs
approximately 18,200 people in 19 countries.
During fiscal 1996, the Company reorganized what had been classified as its
primary business segment, Power and Fluid Transfer, into separately managed and
market-focused businesses. As a result, in connection with the preparation of
its financial statements for its fiscal year ended February 29, 1996, the
Company determined to reclassify the operations included in that segment into
two segments--Mark IV Automotive and Mark IV Industrial, with its former
Professional Audio segment being included in the new Industrial segment. Mark
IV's business strategy is focused on building, its worldwide, Automotive and
Industrial business segments through internal growth, continuation of cost
control and quality improvement programs, and selective strategic domestic and
foreign acquisitions. The Company's operating strategy emphasizes management
for continuous improvement, establishing cooperative programs with customers to
engineer, design and develop higher value added systems in addition to
individual products, and the introduction of new, more cost effective and
durable products.
In furtherance of these strategies, over its last five fiscal years Mark IV
has: (i) emphasized continuous product development, with a significant amount
of its current sales arising from the introduction of new products or products
which have been redesigned; (ii) substantially increased its industrial hose
and couplings production capacity and strengthened its position in the hose and
couplings products market through its recent acquisition of Imperial Eastman;
(iii) considerably enhanced its ability to provide a broader range of products
to its existing customers through its November 1994 acquisition of Purolator, a
leading manufacturer of automotive and industrial filtration products and
systems; (iv) significantly expanded its presence in Western Europe through its
June 1993 acquisition of PTI, a leading Italian-based manufacturer of power
transmission products; and (v) established distribution centers to serve
markets in Central and South America and the Pacific Rim, and acquired
manufacturing and distribution facilities in Mexico. Mark IV believes that,
having established an efficient global manufacturing and distribution network,
it is well positioned to benefit from its leading domestic market position and
its increased presence in European and other foreign markets.
RECENT ACQUISITIONS
As part of the Company's strategic growth plans, in November 1994 Mark IV
acquired Purolator, which is a leading manufacturer of filtration products,
including automotive oil, air and fuel filters; residential and commercial
heating, ventilating and air-conditioning ("HVAC") filters; high-technology
liquid filtration products; and specialized industrial filters and filtration
systems. The total cost of the acquisition was $286.3 million. Purolator's
filtration business complements the Company's fluid transfer products since
many of Purolator's products serve customers in the same markets as the
Company's other power and fluid transfer products, such as certain industrial
markets, the automotive aftermarket and, to a much lesser extent, the
automotive OEM market. In addition, filters are generally an integral part of
most power and fluid transfer systems produced by the Company. In particular,
the acquisition of Purolator strengthens Mark IV's presence in the automotive
aftermarket since more than 60% of Purolator's annual sales have been made to
customers in this market. Mark IV also believes that its extensive sales and
distribution network are providing opportunities for increased sales of
Purolator's products.
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<PAGE>
In furtherance of Mark IV's strategy of focusing on building its Industrial
segment, on March 5, 1996 Mark IV acquired Imperial Eastman for a purchase
price of approximately $78.0 million. Imperial Eastman manufactures industrial
hose and couplings products complementary to existing Mark IV products, and has
annual sales of approximately $135.0 million.
RECENT DEVELOPMENTS
As part of the Company's strategy to become more focused within its
Industrial segment, Mark IV is exploring the possibility of selling its non-
core businesses. In October 1995, the Company announced the possible sale of
its Transportation Products businesses which have aggregate annual sales of
approximately $225.0 million. In January 1996, the Company announced that it is
also exploring the possible sale of its Professional Audio business which has
annual sales of approximately $200.0 million. The potential sales remain in
their preliminary stages and, therefore, there can be no assurance that any
such sales will occur. If the Company were to consummate all or a portion of
such sales, the net proceeds thereof would be used to reduce Senior
Indebtedness, to fund future acquisitions in core business areas, and/or,
depending on market prices and other relevant considerations, to repurchase
outstanding shares of the Company's Common Stock.
SEGMENT INFORMATION
As discussed above, in connection with the preparation of its financial
statements for its fiscal year ended February 29, 1996, the Company has
reclassified the operations included in its former Power and Fluid Transfer
segment into the following two business segments:
(i) Automotive, which includes the design, manufacture and distribution of
fuel, power transmission, and fluid handling systems and components,
and filters and filtration systems for the global automotive
aftermarket and OEM market; and
(ii) Industrial, which includes the design, manufacture and distribution of
power transmission, fluid handling, and filtration components and
systems for industrial OEM and industrial distribution markets
worldwide. The Industrial segment also includes the Company's
Transportation Products business and its former Professional Audio
segment.
A more detailed discussion concerning the Company's two reclassified business
segments follows. Financial information regarding such business segments is
presented in Note 14 to the Company's audited consolidated financial statements
included elsewhere herein.
MARK IV AUTOMOTIVE
OVERVIEW
During the latter part of fiscal 1996, the Company's worldwide automotive OEM
and aftermarket operations were combined to form Mark IV Automotive as a global
manufacturer of automotive systems and components primarily operating under the
trade names of Dayco and Purolator. Mark IV Automotive's sales accounted for
about 48%, or $1.0 billion, of the Company's total consolidated net sales in
fiscal 1996, with approximately 38% of such sales to customers outside of the
U.S.
Mark IV Automotive develops, manufactures and markets systems and components
primarily in the fuel, power transmission, fluid handling and filtration
technology areas. In the design, manufacture and distribution of its products,
Mark IV Automotive places particular emphasis on the use of complete systems or
subsystems to meet the needs of its global customers. In addition, products are
designed to improve or enhance automotive safety, passenger comfort and/or the
environment.
Mark IV Automotive's fuel products include all systems and components
required for the safe transport of fuel from the gas tank inlet into a
vehicle's gas tank, and then from the tank into the engine. Products vary from
complete fuel systems to individual components, including tubes, hose,
couplings, fuel filler and
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<PAGE>
other assemblies, fittings, valves, canisters and filters. Power transmission
products, of which Mark IV Automotive is a leading manufacturer, include
accessory drive and camshaft drive systems, consisting of components such as
belts, pulleys, idlers and tensioners, for the global automotive market. Fluid
handling products consist of hose and hose assemblies for power steering, air
conditioning, oil cooler, and other high-pressure applications, as well as
radiator hose, heater hose and other related hose, couplings and assemblies.
Automotive filtration products, of which Mark IV Automotive is a leading
manufacturer, include a complete line of filters and filter housing for
automotive, light-truck and heavy duty applications.
AUTOMOTIVE OEM
Mark IV Automotive designs and manufactures systems and components for most
vehicle manufacturers, including OEMs in North America, Europe and Asia. The
segment's Automotive OEM business accounted for approximately 21% of the
Company's consolidated net sales in fiscal 1996.
The Company's wholly-owned subsidiary, Dayco Products, Inc. ("Dayco"),
designs, develops and manufactures automotive accessory drive, camshaft drive,
fuel, air conditioning, and power steering systems for the global automotive
OEM market, as well as radiator, heater, fuel, engine and transmission oil
cooler assemblies. These systems and assemblies consist of various hose, belts,
filters, tensioners, brackets, pulleys, canisters and sprockets. Dayco has
development programs with respect to various automotive systems with the
Detroit "Big Three," U.S. foreign-based OEMs, and most of the major European
automotive manufacturers. An emphasis on systems development as a hose and
assembly producer has helped Dayco gain market share in the power steering hose
assembly market. In addition, Dayco continues to benefit from the increasing
demand in Europe for automobiles equipped with power steering and air
conditioning. Almost 50% of vehicles produced in Europe today include both air
conditioning and power steering, while in the U.S., over 95% of all new
vehicles are comparably equipped. The Company believes that the number of cars
manufactured in Europe which feature these products is growing at a faster rate
than the overall market, representing a continuing growth opportunity for Mark
IV Automotive. Moreover, the Company believes that the increase in the number
of motor vehicles in operation in Asia and the high-temperature climate in
populous portions of Asia should create a strong demand for Dayco's air
conditioning hose assemblies.
The acquisition of Purolator has provided increased market opportunities with
the Company's multi-national OEM customers. Purolator's products are being
incorporated into Dayco's systems, and the distribution of Purolator's products
is expected to be enhanced by Dayco's global OEM programs. Purolator's equity
interest in Purolator India Limited expands the Company's manufacturing
capabilities and OEM markets in Southeast Asia, while Purolator's 50% ownership
in Purodenso Corp., a joint venture with Nippondenso of Japan, provides access
to the OEM transplant market in the U.S. During fiscal 1995 and 1996, the
Company continued to expand its international manufacturing base through
acquisitions in Mexico and Sweden and the establishment of manufacturing
operations in Argentina where the construction of a new manufacturing facility
is planned for fiscal 1998.
AUTOMOTIVE AFTERMARKET
Mark IV Automotive products in the automotive aftermarket include a vast
array of automotive belts, hose, filters and accessories sold to automotive
warehouse distributors, oil companies, quick lubes, original equipment service
centers, retail and auto parts chains, mass merchandisers, farm and fleet
stores, and hardware distributors. The automotive aftermarket accounted for
approximately 27% of the Company's consolidated net sales in fiscal 1996.
The Company's automotive aftermarket business is divided between the
"traditional" and "maintenance" markets. The traditional market, which accounts
for about one third of the aftermarket business, includes standard "wear-and-
tear" replacement and repair products, such as belts and hose. The balance of
aftermarket sales are to the maintenance market, which includes regularly
scheduled maintenance or upkeep products, such as filters.
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Automotive aftermarket products include V-ribbed belts, V-belts, and timing
belts; radiator, automotive service, fuel line and heater hose and assemblies;
as well as fan clutches, transmission oil coolers, fan blades, electric fans,
couplings and pulleys. With the addition of Purolator, product offerings were
expanded to include a complete line of automotive oil, air and fuel filters for
virtually all automobiles and light duty trucks currently operated in North
America, including those manufactured by North American, Japanese and European
OEMs. The Company believes that the combined Dayco/Purolator distribution
system and complementary customer base provide opportunities for revenue
growth, margin improvement and increased market penetration.
MARK IV INDUSTRIAL
OVERVIEW
Mark IV Industrial combines the industrial operations of Dayco, Purolator and
Imperial Eastman and offers engineered systems and components primarily in the
fluid power, power transmission, fluid transfer and filtration technology areas
to specifically targeted industrial markets around the world. Mark IV
Industrial also encompasses the Company's Transportation Products and
Professional Audio business units. Mark IV Industrial accounted for
approximately 52%, or $1.1 billion, of the Company's total consolidated net
sales in fiscal 1996, with approximately 32% of such sales to customers outside
of the U.S.
INDUSTRIAL SYSTEMS AND COMPONENTS
Many of Mark IV's Industrial products are sold directly to industrial OEMs
for use in agricultural, marine, manufacturing, office, mining, environmental,
fuel dispensing and fuel flow equipment applications, as well as in products
such as snowmobiles, washing machines, golf carts, vacuum cleaners, outboard
motors and lawn mowers. The balance of sales of these products are to
distributors of industrial replacement belts and filters, industrial and
hydraulic hose and couplings, and lawn and garden product distributors and
retailers, such as hardware chains, home centers and mass merchandisers, in
addition to government agencies and contractors. Net sales in these markets
accounted for approximately 33% of the Company's consolidated net sales in
fiscal 1996.
Mark IV Industrial's fluid power products include high-pressure hydraulic and
pneumatic hose, couplings and assemblies for a variety of industrial customers,
primarily through its Dayco and Imperial Eastman operations. Recent products
include a series of agricultural hose operational at up to 3,000 pounds per
square inch, designed for use on agricultural equipment; a high-pressure,
spiral wire hose for use on large, off-road construction and agricultural
equipment, such as earth movers and combines; a line of flexible, general
purpose wire braid hose and hose assemblies for use in chemical refineries and
in other high pressure applications; and a wire braid hose capable of handling
a multitude of fluids for a variety of applications.
Mark IV Industrial, through its Dayco operation, also designs and
manufactures belts and drive systems for industrial power transmission
applications. The Company's belts and drive systems can be found in a diverse
range of industrial applications, including for use in heavy-duty farm
equipment, rock crushers, lathes, snowmobiles, cooling towers, air handling and
petroleum pumping units, underground mines, lawn mowers and other grounds care
equipment, and, recently, in products ranging from exercise treadmills to
industrial dough mixers and large appliances, such as washers and dryers.
Mark IV Industrial's fluid transfer products provide customers with hose and
couplings for transferring liquids, ranging from corrosive chemicals to water,
air and other gaseous materials, and solid matter as diverse as flour and
concrete. These products can be found in agricultural applications, refineries
and service stations, underground mines, sandblasting jobs, welding processes,
chemical transference applications, transportation equipment, vacuum cleaners,
steel mills and in garden and air hose applications.
Through Purolator, Mark IV Industrial offers specialized industrial fluid
filters for the aeropower, fluid processing and general industrial markets, as
well as for government and military applications. Purolator's
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other products include heating and air-conditioning filters for residential,
commercial and industrial uses and,
through the operations of Purolator's subsidiary, Facet International, Inc.
("Facet"), high performance filtration and separation products and systems for
commercial and military aviation applications. Facet's products are sold to
oil companies, airlines and defense ministries. Facet also produces bilge
separators for the commercial and military marine markets, as well as
environmental protection filters that separate oil from water.
OTHER
TRANSPORTATION PRODUCTS. Mark IV designs and manufactures products and
systems serving two principal components of the Transportation Products
market. Mark IV produces information displays, door systems, interior hardware
and other systems for mass transit buses and railcars. In addition, the
Company produces electronic vehicle identification products for the electronic
toll and traffic management markets, as well as information signs and traffic
signals and controllers. These products, which are manufactured and sold in
North America and throughout Europe, accounted for approximately 10% of the
Company's total consolidated net sales in fiscal 1996.
The Company's customers include OEMs of mass transit bus and rail vehicles
and commercial aircraft, as well as state and local highway and transportation
agencies. Some of the products offered by the Transportation Products business
unit are also sold to the aftermarket. The Transportation Products market is
predominantly contract-driven, with many of the contracts spanning one or more
years.
Luminator Mass Transit, together with the Company's subsidiaries in Germany
and France, designs, markets and produces electronic vehicle information and
passenger information display systems and components for mass transit buses
and railcars throughout the world. The Company's F-P Electronics subsidiary is
a producer of digital electromagnetic display components, supplying products
to all of the major manufacturers of mass transit information display systems
in North America and Europe, including the Company's Luminator operations. F-P
Electronics products are also used in gasoline pump displays, variable message
signs for highways, time and temperature displays, and scoreboards. The
Company's Vapor business units in the U.S. and Canada supply complete bus door
systems, as well as basic components, to the transit industry. Vapor also
supplies the railroad industry with various electronic products. Mark IV's
Luminator Aircraft Products unit supplies interior lighting and other
passenger comfort systems for commercial aircraft, as well as aircraft panel,
navigation, landing and emergency lighting for general aviation customers. In
addition, Luminator makes a comprehensive line of night vision compatible
interior and exterior lighting used in military applications.
Mark IV's Automatic Signal/Eagle Signal and Interstate Highway Sign
operations manufacture products sold primarily to state and local governments,
as well as transportation agencies, in the U.S. and Canada. Automatic
Signal/Eagle Signal products include traffic and pedestrian signals, signal
control devices and complete traffic management systems. Interstate Highway
Sign manufactures reflective directional, informational, regulatory and
warning signs for the nation's highways and other roadways. Interstate's
products include a newer line of signs, using exterior light, that provide
better visibility and are easier to maintain.
Mark IV's Intelligent Vehicle Highway Systems ("IVHS") products and their
markets have been in development for a number of years. In March 1994, Mark
IV's IVHS equipment was selected by a group representing eight toll
authorities in New Jersey, New York, Pennsylvania and Delaware for use in the
net E-ZPass SM electronic toll collection system. Mark IV's IVHS provides the
tag and reader equipment for the E-ZPass system, which is designed to
eliminate the need for motorists to exchange cash, tokens, or tickets at toll
booths. Tolls will be paid electronically as vehicles pass through the booths,
reducing congestion and pollution, increasing accuracy in toll collection, and
improving driver convenience on toll roads, bridges and tunnels.
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<PAGE>
The Company announced in October 1995 that it is exploring the possibility of
selling the Transportation Products business unit. The sale of the unit, which
is at a preliminary stage, is being pursued in connection with the Company's
long-term strategy of focusing on the worldwide industrial and automotive
aftermarket and OEM markets.
PROFESSIONAL AUDIO. The Professional Audio business units accounted for
approximately 9% of the Company's consolidated net sales in fiscal 1996. This
group of companies, known in the marketplace as Mark IV Audio, provides a
comprehensive range of high quality, high performance audio products to the
professional audio market, including recording studio equipment, systems for
live performance, and permanently installed engineered sound systems. Products
include microphones, mixing consoles, signal processors, amplifiers and
loudspeakers, and accessory items for use in a wide variety of applications.
The Company views the Professional Audio business as consisting generally of
four markets: fixed installation; concert sound and commercial audio; retail
stores for professional musicians; and other professional audio applications.
Mark IV Audio's largest market is fixed installations, which encompasses
permanently installed engineered sound systems in cinemas, theaters, concert
halls, stadiums, sports arenas, airports, hotels, convention centers, amusement
parks, houses of worship and other facilities where music or speech is
amplified. The concert sound and commercial audio market includes sound systems
for touring concerts and live theater productions and radio and television
broadcast and production and sound recording applications. The retail market
for professional musicians consists of a large number of retail stores selling
high quality amplifiers, loud speaker systems, microphones (wired and
wireless), mixing consoles and signal processors to professional musicians. The
fourth Professional Audio market encompasses a variety of applications,
including microphones and earphones for field and aircraft communications, both
military and civilian, and equipment for high speed duplication of audio tapes.
The Company announced in January 1996 that it is exploring the possibility of
selling its Professional Audio businesses. The proposed sale of these
businesses, which is also at a preliminary stage, is being pursued in
connection with the Company's long-term strategy of focusing on the worldwide
industrial and automotive aftermarket and OEM markets.
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MANAGEMENT
The following table sets forth certain information regarding the Directors
and executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITIONS AND OFFICES WITH THE COMPANY
- ---- --- --------------------------------------
<S> <C> <C>
Sal H. Alfiero................. 58 Chairman of the Board and Chief Executive
Officer
William P. Montague............ 49 President and Director
Gerald S. Lippes............... 56 Secretary and Director
Bruce A. McNiel................ 47 Senior Vice President
Kurt J. Johansson.............. 54 Senior Vice President
Frederic L. Cook............... 49 Senior Vice President--Administration
John J. Byrne.................. 46 Vice President and Chief Financial Officer
Richard L. Grenolds............ 46 Vice President and Chief Accounting Officer
Douglas J. Fiegel.............. 48 Vice President, Financial Control and
Reporting
Patricia A. Richert............ 45 Vice President and Chief Information Officer
Clement R. Arrison............. 66 Director
Joseph G. Donohoo.............. 77 Director
Herbert Roth, Jr............... 67 Director
</TABLE>
SAL H. ALFIERO has been Chairman of the Board and Chief Executive Officer of
the Company since its incorporation. Mr. Alfiero serves as a Director of
Phoenix Home Life Mutual Insurance Company and is also a Director of Marine
Midland Bank. He holds a B.S. degree in Aeronautical Engineering from
Rensselaer Polytechnic Institute and holds an M.B.A. degree from the Harvard
Graduate School of Business Administration.
WILLIAM P. MONTAGUE has been employed by the Company since April 1972 and was
elected President and a Director effective March 1, 1996. He was previously a
Vice President of the Company since May 1974 and was elected Executive Vice
President and Chief Financial Officer in March 1986. He holds both a B.S.
degree in accounting and an M.B.A. degree from Wilkes University and is a
certified public accountant. He is a member of the Chase Manhattan Bank, N.A.
Regional Advisory Board and a Director of Gilbraltar Steel Corporation and
International Imaging Materials, Inc.
GERALD S. LIPPES has been general counsel, Secretary and a Director of the
Company since its incorporation. He has been engaged in the private practice of
law since 1965 and is a partner of the firm of Lippes, Silverstein, Mathias &
Wexler LLP, Buffalo, New York. Mr. Lippes is also a Director of Gibraltar Steel
Corporation.
BRUCE A. McNIEL was elected Senior Vice President of the Company in December
1994 and is President of the Company's Dayco Products, Inc. subsidiary,
headquartered in Miamisburg, Ohio. Mr. McNiel has worldwide responsibility for
the Company's Industrial Division. Mr. McNiel has been employed by Dayco since
1977, and prior to his appointment as President of Dayco in March 1993, served
in numerous executive positions, including Executive Vice President of Sales
and Marketing, and Senior Vice President of Finance and Administration. He
holds a B.S. degree in accounting from Wright State University and an M.B.A.
degree from the University of Dayton.
KURT J. JOHANSSON was elected Senior Vice President of the Company in
December 1994 and is President of the Company's Dayco Europe AB subsidiary,
headquartered in Solvesborg, Sweden, as well as Executive Vice President of
Dayco. Mr. Johansson has worldwide responsibility for the Company's Automotive
Division. Mr. Johansson has been with Dayco Europe since October 1990. Mr.
Johansson studied at the School of Economics and Business Administration in
Stockholm, Sweden, as well as the Technical University in Gothenburg, Sweden.
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FREDERIC L. COOK was elected Senior Vice President-Administration in March
1988, and prior thereto, had served as Vice President-Finance of the Company
since May 1986. Prior to joining the Company, Mr. Cook was a tax partner with
the accounting firm of Coopers & Lybrand L.L.P., where he was employed for 19
years. He holds a B.S. degree in accounting from the Rochester Institute of
Technology and is a certified public accountant.
JOHN J. BYRNE has been employed by the Company since September 1973 and was
elected Vice President and Chief Financial Officer effective March 1, 1996. He
has been a Vice President since March 1986 and was elected Vice President-
Finance of the Company in March 1988. He holds a B.S. degree in accounting from
Pennsylvania State University and an M.B.A. degree from Canisius College.
RICHARD L. GRENOLDS was elected Vice President and Chief Accounting Officer
in July 1989. Prior to joining the Company, Mr. Grenolds was a general practice
partner with the accounting firm of Coopers & Lybrand L.L.P., where he was
employed for 17 years. He holds a B.S. degree in accounting from the Rochester
Institute of Technology and is a certified public accountant.
DOUGLAS J. FIEGEL was elected Vice President, Financial Control and Reporting
in 1990. Prior to that he was the Company's Controller since joining the
Company in 1986. He holds a B.B.A. degree from Niagara University and is a
certified public accountant.
PATRICIA A. RICHERT has been employed by the Company since 1973, and has been
Vice President and Chief Information Officer since 1990. In August 1994 she was
also appointed Dayco's Vice President of Information Technology. She holds a
B.S. degree in accounting from the University of Buffalo.
CLEMENT R. ARRISON has been a Director of the Company since November 1976. He
was President of the Company from 1976 until his retirement effective March 1,
1996. Mr. Arrison continues to serve as a consultant to the Company. He holds a
B.S. degree in engineering from the University of Michigan and holds a
professional engineering license.
JOSEPH G. DONOHOO has been a Director of the Company since its incorporation.
He is Chairman of the Board of the Gibson Group, Inc. ("Gibson"), a marketer of
paper board, and Chairman of the Board of Clinch River Corporation ("Clinch
River"), a manufacturer of semi-chemical corrugating material. Clinch River is
a majority owned subsidiary of Gibson.
HERBERT ROTH, JR. has been a Director of the Company since September 1985,
having been Chairman of the Board and Chief Executive Officer of LFE
Corporation prior to its acquisition by Mark IV in July 1985. Mr. Roth also
serves as a Director of Boston Edison Company, Phoenix Home Life Mutual
Insurance Company, Landauer, Inc., Tech/Ops Sevcon, Inc., and Phoenix Total
Return Fund, Inc., and is a trustee of Phoenix Series Fund, Phoenix Multi-
Portfolio Fund and The Big Edge Series Fund.
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<PAGE>
PRINCIPAL SECURITYHOLDERS
The following table sets forth information as of April 30, 1996 (except as
otherwise noted) with respect to all stockholders known by the Company to be
the beneficial owners of more than 5% of its outstanding Common Stock, each
Director, the five most highly compensated executive officers, and all
executive officers and Directors as a group. Unless otherwise indicated, the
address of each person named below is 501 John James Audubon Parkway, P.O. Box
810, Amherst, New York 14226-0810.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
NAME SHARES(1) OF CLASS
---- --------- --------
<S> <C> <C>
Sal H. Alfiero....................................... 4,582,991(2) 7.3%
FMR Corporation...................................... 6,836,474(3) 10.9%
Tiger Management Corporation......................... 6,081,181(4) 9.7%
Clement R. Arrison................................... 1,847,370(5) 2.9%
Gerald S. Lippes..................................... 1,774,748(6) 2.8%
William P. Montague.................................. 849,814(7) 1.3%
Joseph G. Donohoo.................................... 26,229(8) *
Herbert Roth, Jr..................................... 26,003 *
Frederic L. Cook..................................... 71,524(9) *
Bruce A. McNiel...................................... 56,612(10) *
Kurt J. Johansson.................................... 23,661(11) *
All Executive Officers and Directors as a Group (13
persons)............................................ 9,442,311(12) 14.9%
</TABLE>
- --------
* Less than 1%
(1) Except as otherwise indicated in the following footnotes, each person
listed in the table has both sole voting and sole investment power with
respect to the number of shares of Common Stock set forth opposite his
name. Messrs. Alfiero, Arrison, Lippes, Montague, and Cook, each of whom is
an executive officer of the Company, have the right to direct the Trustee
of the Company's defined benefit pension plan (the "Plan") with respect to
the voting of and investment in the shares of the Company's Common Stock
owned by such Plan. As of January 31, 1996, the Plan owned 1,588,785 shares
of the Company's Common Stock (2.5% of the total outstanding). Such
executive officers are not participants in the Plan and disclaim any
beneficial ownership in the shares, and the shares have not been included
in the amounts listed in this table.
(2) Includes 303,876 shares of Common Stock issued to Mr. Alfiero under the
Mark IV Industries, Inc. 1992 Restricted Stock Plan (the "Restricted
Plan"), as well as 42,722 shares of Common Stock issuable under currently
exercisable options granted under the Mark IV Industries, Inc. and
Subsidiaries 1992 Incentive Stock Option Plan (the "1992 Option Plan").
Also includes 15,154 shares of Common Stock allocated to Mr. Alfiero's
self-directed accounts in the Company's retirement and 401(k) savings plan.
Does not include 15,276 shares of Common Stock owned by the Alfiero Family
Charitable Foundation of which Mr. Alfiero is one of four directors and for
which he disclaims beneficial ownership.
(3) Based on information set forth in a statement on Schedule 13-G filed with
the SEC by FMR Corporation ("FMR") on February 14, 1996, FMR held on behalf
of itself and its subsidiaries, Fidelity Management and Research Company
("Fidelity"), and Fidelity Management Trust Company ("Fidelity Trust"), an
aggregate of 6,836,474 shares (adjusted for 5% stock dividend issued April
26, 1996) of Common Stock. The power to vote or direct the voting of such
shares resides with the respective Boards of Trustees of the investment
funds established and managed by FMR and its subsidiaries. The stated
business address of FMR, Fidelity and Fidelity Trust is 82 Devonshire
Street, Boston, MA 02109.
(4) Based on information set forth in a statement on Schedule 13-G filed with
the SEC by Tiger Management Corporation ("Tiger") on April 9, 1996. Tiger,
a corporation controlled by majority shareholder Julian H. Robertson, Jr.,
beneficially owns an aggregate of 6,081,181 shares (adjusted for 5% stock
dividend issued April 26, 1996) of Common Stock. Excluded from these shares
are 306,703 shares (adjusted for 5% stock dividend issued April 26, 1996)
held on behalf of Panther Partners L.P., an investment corporation
controlled by Mr. Robertson. The stated business address of Tiger is 101
Park Avenue, New York, NY 10178.
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<PAGE>
(5) Does not include 54,218 shares of Common Stock owned by the Arrison Family
Charitable Foundation of which Mr. Arrison is one of four directors and for
which he disclaims beneficial ownership.
(6) Includes 18,233 shares of Common Stock issued to Mr. Lippes under the
Restricted Plan, as well as 31,336 shares of Common Stock issuable under
currently exercisable options granted pursuant to the 1992 Option Plan.
Does not include 48,755 shares of Common Stock owned by the Lippes Family
Charitable Foundation of which Mr. Lippes is one of four directors and for
which he disclaims beneficial ownership.
(7) Includes 21,127 shares of Common Stock issued to Mr. Montague under the
Restricted Plan, as well as 35,470 shares of Common Stock issuable under
currently exercisable options granted pursuant to the 1992 Option Plan.
Also includes 6,030 shares of Common Stock allocated to Mr. Montague's
self-directed accounts in the Company's retirement and 401(k) savings plan.
Does not include 12,223 shares of Common Stock owned by the Montague Family
Charitable Foundation of which Mr. Montague is one of four directors and
for which he disclaims beneficial ownership.
(8) Includes 8,301 shares of Common Stock held by The Gibson Group, Inc.
Pension Fund, of which Mr. Donohoo is a trustee and has voting power.
(9) Includes 2,894 shares of Common Stock issued to Mr. Cook under the
Restricted Plan, as well as 7,244 shares of Common Stock issuable under
currently exercisable options granted pursuant to the 1992 Option Plan.
Also includes 1,550 shares of Common Stock allocated to Mr. Cook's self-
directed accounts in the Company's retirement and 401(k) savings plan.
(10) Includes 2,894 shares of Common Stock issued to Mr. McNiel under the
Restricted Plan, as well as 40,324 shares of Common Stock issuable under
currently exercisable options granted pursuant to the Company's 1988
Incentive Stock Option Plan (the "1988 Plan") and the 1992 Option Plan.
Also includes 2,780 shares of Common Stock allocated to Mr. McNiel's self-
directed accounts in the Company's retirement and 401(k) savings plan.
(11) Includes 2,894 shares of Common Stock issued to Mr. Johansson under the
Restricted Plan, as well as 20,768 shares of Common Stock issuable under
currently exercisable options granted pursuant to the 1988 and 1992 Option
Plans.
(12) Includes 388,093 shares of Common Stock issued to the group under the
Restricted Plan, as well as 244,499 shares of Common Stock issuable under
currently exercisable options granted pursuant to the 1988 and 1992 Option
Plans. Includes 33,440 shares of Common Stock allocated to the officers'
self-directed accounts in the Company's retirement and 401(k) savings
plan.
35
<PAGE>
DESCRIPTION OF THE EXCHANGE NOTES
GENERAL
The Exchange Notes will be issued pursuant to an indenture (the "Indenture")
dated as of March 11, 1996 between the Company and Fleet National Bank, as
trustee (the "Trustee"). The Exchange Notes will evidence the same indebtedness
as the Private Notes (which they replace) and will be entitled to the benefits
of the Indenture. The form and terms of the Exchange Notes are the same as the
form and terms of the Private Notes except that (i) the Exchange Notes will
have been registered under the Securities Act and, therefore, the Exchange
Notes will not bear legends restricting the transfer thereof and (ii) holders
of the Exchange Notes will not be entitled to certain rights of holders of the
Private Notes under the Registration Rights Agreement, which rights will
terminate upon consummation of the Exchange Offer. The terms of the Exchange
Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (the "Trust Indenture
Act") as in effect on the date of the Indenture. The Exchange Notes are subject
to all such terms and holders of the Exchange Notes are referred to the
Indenture and the Trust Indenture Act for a statement thereof. The following
summary of certain provisions of the Indenture does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the Trust
Indenture Act and the provisions of the Indenture (a copy of which has been
filed as an Exhibit to the Registration Statement of which this Prospectus
forms a part), including the definitions therein of certain terms used below.
The definitions of certain terms used in the following summary are set forth
below under "--Certain Definitions."
The Exchange Notes will be general unsecured obligations of the Company, will
be subordinated in right of payment to the prior payment in full of all
existing and future Senior Indebtedness of the Company, and will be effectively
subordinated to the indebtedness of the Company's Subsidiaries. See "--
Subordination".
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $250,000,000 and will
mature on April 1, 2006. Interest on the Notes will accrue at the rate of 7
3/4% per annum and will be payable semi-annually on each April 1 and October 1
commencing on October 1, 1996, to holders of record of the Notes ("Holders") on
the immediately preceding March 15 and September 15, whether or not a business
day. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from March 11, 1996,
the date of initial issuance of the Private Notes. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months.
Principal of, premium and Liquidated Damages, if any, and interest on the
Notes will be payable at the office or agency of the Company maintained for
such purpose within or without the City and State of New York or, at the option
of the Company, payment of interest, principal and Liquidated Damages, if any,
may be made by check mailed to the Holders at their respective addresses set
forth in the register of the Holders; provided that all payments with respect
to Global Notes and Certificated Securities the holders of whom have given wire
transfer instructions to the Company will be required to be made by wire
transfer of same day funds to the accounts specified by the holders thereof.
Unless otherwise designated by the Company, the Company's office or agency in
New York will be the office of the Trustee maintained for such purpose. The
Notes will be issued only in registered form, without coupons, in denominations
of $1,000 and integral multiples thereof.
REDEMPTION
The Notes are not redeemable by the Company, in whole or in part, prior to
their stated maturity.
36
<PAGE>
CHANGE OF CONTROL
Upon the occurrence of a Change of Control (as defined below), each Holder
will have the right to require the repurchase of all or any part of such
Holder's Notes pursuant to the offer described below (the "Change of Control
Offer") at a purchase price equal to 101% of the aggregate principal amount of
the Notes to be repurchased plus accrued and unpaid interest and Liquidated
Damages, if any, thereon through the date of purchase.
Immediately following any Change of Control, the Company is required to mail
a notice to the Trustee and to each Holder stating: (i) that the Change of
Control Offer is being made pursuant to the Repurchase Upon Change of Control
covenant of the Indenture and that all Notes tendered will be accepted for
payment; (ii) the purchase price and the purchase date (the "Change of Control
Payment Date"), which may not be earlier than 30 days or later than 60 days
from the date the notice is mailed; (iii) that any Note not tendered will
continue to accrue interest; (iv) that, unless the Company defaults in the
payment therefor, all Notes accepted for payment pursuant to the Change of
Control Offer will cease to accrue interest and Liquidated Damages, if any, on
and after the Change of Control Payment Date; (v) that holders electing to have
any Notes purchased pursuant to a Change of Control Offer will be required to
surrender those Notes to the Paying Agent at the address specified in the
notice prior to the close of business on the third business day preceding the
Change of Control Payment Date; (vi) that Holders will be entitled to withdraw
Notes they have tendered on the terms and conditions set forth in such notice;
and (vii) that holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered; provided that the portion of each Note purchased and each
such new Note issued must be in a principal amount of $1,000 and integral
multiples thereof.
On the Change of Control Payment Date, the Company will (i) accept for
payment all Notes or portions thereof tendered pursuant to the Change of
Control Offer and not withdrawn, (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof so
tendered and not withdrawn, and (iii) deliver or cause to be delivered to the
Trustee all Notes so tendered and not withdrawn together with an officer's
certificate specifying the Notes or portions thereof tendered to the Company.
The Paying Agent will promptly mail to each Holder of Notes so tendered and not
withdrawn payment in an amount equal to the purchase price for such Notes, and
the Trustee will promptly authenticate and mail to such Holder a new Note equal
in principal amount to any unpurchased portion of the Notes surrendered. The
Company will publicly announce the results of the Change of Control Offer on or
as soon as practicable after the Change of Control Payment Date.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes triggered by a Change of Control.
A "Change of Control" will be deemed to have occurred at such time as either
of the following events occurs:
(i) there is consummated any consolidation or merger of the Company (A)
in which the Company is not the continuing or surviving corporation or (B)
pursuant to which the Common Stock of the Company would be converted into
cash, securities or other property, in each case other than a consolidation
or merger of the Company in which the holders of the Common Stock
outstanding immediately prior to the consolidation or merger hold, directly
or indirectly, at least a majority of the common stock of the continuing or
surviving corporation immediately after such consolidation or merger or the
majority of the members of the board of directors of the surviving entity
immediately after such consolidation or merger are Continuing Directors; or
(ii) there is filed a report on Schedule 13D or 14D-1 (or any successor
schedule, form or report) pursuant to the Exchange Act, disclosing that any
person (defined, solely for the purposes of the Change of Control
provision, as the term "person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange
37
<PAGE>
Act or any successor provision to either of the foregoing) has become the
beneficial owner (as the term "beneficial owner" is defined under Rule 13d-
3 or any successor rule or regulation promulgated under the Exchange Act)
of 50% or more of the combined voting power of all the Company's then
outstanding securities entitled to vote generally for the election of
directors; provided, however, that a person shall not be deemed to be the
beneficial owner of, or to own beneficially, (A) any securities tendered
pursuant to a tender or exchange offer made by or on behalf of such person
or any of such person's Affiliates or associates until such tendered
securities are accepted for purchase or exchange thereunder, or (B) any
securities if such beneficial ownership (1) arises solely as a result of a
revocable proxy delivered in response to a proxy or consent solicitation
made pursuant to the applicable rules and regulations under the Exchange
Act, and (2) is not also then reportable on Schedule 13D (or any successor
schedule) under the Exchange Act.
Notwithstanding the foregoing, a Change of Control shall not be deemed to
have occurred under clause (ii) of the immediately preceding paragraph solely
by virtue of the Company, any such Subsidiary thereof, any employee stock
ownership plan or any other employee benefit plan of the Company or any such
Subsidiary or any other person holding securities of the Company for or
pursuant to the terms of any such employee benefit plan, filing or becoming
obligated to file a report under or in response to Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report) under the Exchange Act,
disclosing beneficial ownership by it of securities of the Company, whether in
excess of 50% of the combined voting power of all the Company's then
outstanding securities entitled to vote generally for the election of directors
or otherwise.
The Change of Control purchase feature of the Notes may in certain
circumstances make more difficult or discourage a takeover of the Company and,
thus, the removal of incumbent management. The Change of Control purchase
feature, however, is not the result of management's knowledge of any specific
effort to accumulate shares of Common Stock or to obtain control of the Company
by means of a merger, tender offer, solicitation or otherwise, or part of a
plan by management to adopt a series of anti-takeover provisions. Instead, the
Change of Control purchase feature is a standard term contained in other
similar debt offerings and the terms of such feature result from negotiations
between the Company and the Initial Purchaser.
If a Change of Control were to occur, there can be no assurance that the
Company would have sufficient funds to pay the Change of Control purchase price
for all Notes tendered by the holders thereof. In addition, the Company's
ability to make such payment may be limited by the terms of its then-existing
borrowing and other agreements. Certain of the agreements relating to the
Company's Senior Indebtedness, including the Credit Agreement, have similar
change of control provisions that may have the effect of further limiting the
Company's ability to pay the Change of Control purchase price for Notes
tendered by the holders thereof. The failure of the Company to make such
payment to holders of Notes, if continued for 45 days after receipt of written
notice of Default from the Trustee or the holders of at least 25% of the
aggregate principal amount of the Notes then outstanding, specifying such
Default and requiring that it be remedied, would constitute an Event of Default
under the terms of the Indenture. See "--Events of Default and Remedies."
SUBORDINATION
The Notes will be general unsecured obligations of the Company, will be
subordinated in right of payment to the prior payment in full of all existing
and future Senior Indebtedness of the Company, and will be effectively
subordinated to the indebtedness of the Company's Subsidiaries. At March 31,
1996, Senior Indebtedness of the Company and its subsidiaries was approximately
$243,800,000 (of which approximately $53,800,000 was indebtedness of the
Company's Subsidiaries) and subordinated indebtedness of the Company (including
the Private Notes) was approximately $506,400,000. Subject to certain
restrictions, the Indenture permits the Company to incur additional
indebtedness, but, until such time as the Notes are rated Investment Grade,
prohibits the incurrence by the Company of any indebtedness that is senior to
the Notes and subordinate to Senior Indebtedness.
38
<PAGE>
Upon any bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its properties, or any assignment for the
benefit of creditors or marshalling of the assets and liabilities or the
Company or any distribution to creditors or a liquidation or dissolution of the
Company, the holders of Senior Indebtedness will be entitled to receive payment
in full in cash or, at the option of such holders, cash equivalents of all
obligations with respect to Senior Indebtedness, before the Holders receive any
payment of principal, premium or Liquidated Damages, if any, or interest on the
Notes or receive any distributions to which the Holders would otherwise be
entitled.
Upon the maturity of any Senior Indebtedness by lapse of time, acceleration
(unless waived, rescinded or annulled) or otherwise, all principal thereof and
interest thereon shall first be paid in full in cash, or such payment duly
provided for in cash or in a manner satisfactory to the holders of such Senior
Indebtedness, before any payment is made on account of principal, premium or
Liquidated Damages, if any, interest, fees or expenses on the Notes.
The Company may not, directly or indirectly, pay principal, premium or
Liquidated Damages, if any, or interest on the Notes and may not acquire any
Notes for cash or property or make any other distribution with respect to the
Notes if (i) a default in the payment of principal or interest on any Senior
Indebtedness occurs and is continuing (a "Payment Default") unless and until
such default has been cured or waived; or (ii) a default, other than a Payment
Default, on any Senior Indebtedness occurs and is continuing that permits the
holders (or the agent) of such Senior Indebtedness to accelerate its maturity
(a "Non-Payment Default"), and such default is either the subject of judicial
proceedings or the Trustee or the Paying Agent receives a notice of the default
from a person who may give it pursuant to the terms of the Indenture at least
two business days prior to the relevant payment date; provided, however, that
only one such notice relating to the same event of default or any other default
existing at the time of such notice under the Senior Indebtedness may be given
during any 365-consecutive-day period.
The Company shall resume payments on the Notes and may acquire them upon the
earlier of when (a) the default is cured or waived, or (b) in the case of a
default referred to in clause (ii) in the immediately preceding paragraph, the
179th day after receipt of the notice referred to therein if the default is not
the subject of judicial proceedings.
A Payment Default or Non-Payment Default with respect to the Senior
Indebtedness does not suspend the rights of the Trustee or the Holders to take
any action to accelerate the maturity of the Notes; provided, however, that all
Senior Indebtedness then or thereafter due shall be paid first. In addition,
any acceleration of the maturity of the Notes as a result of the failure by the
Company to make any payment of principal, premium or Liquidated Damages, if
any, or interest on the Notes as a result of the foregoing subordination
provisions shall be automatically rescinded if (i) all defaults on Senior
Indebtedness are permanently cured or waived and (ii) the payment or payments,
the omission of which gave rise to the Event of Default, is or are made within
179 days after the Trustee received notice of the default or defaults on Senior
Indebtedness and at the time of such recision no other Default or Event of
Default shall have occurred and be continuing. See "Events of Default and
Remedies."
As a result of the subordination provisions described above, in the event of
insolvency of the Company, funds that would otherwise be payable to Holders
will be paid or turned over to the holders of Senior Indebtedness to the extent
necessary to pay the Senior Indebtedness in full, and the Company may be unable
to make all payments due under the Notes. Additionally, in such event, Holders
may recover less ratably than general creditors of the Company or the general
creditors of the Company's Subsidiaries to whom the Notes are structurally
subordinated.
CERTAIN COVENANTS
Limitation on Restricted Payments. Until such time as the Notes are rated
Investment Grade, the Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, (i) declare or pay any dividend on, or
make any distribution in respect of, the Company's or any of its Subsidiaries'
Capital Stock
39
<PAGE>
or other Equity Interests, except to the extent any such dividend or
distribution is actually received by the Company or a Subsidiary thereof; (ii)
purchase, redeem or otherwise acquire or retire for consideration any Capital
Stock or other Equity Interests of the Company or any of its Subsidiaries
(other than Equity Interests of the Company's Wholly-owned Subsidiaries); or
(iii) voluntarily purchase, redeem or otherwise acquire or retire for
consideration, prior to a scheduled mandatory sinking fund payment date or
maturity date (including, but not limited to, by substantive or legal
defeasance), any Indebtedness of the Company that is junior in right of payment
to the Notes other than in connection with the refinancing of such Indebtedness
to the extent permitted by the Indenture and certain intercompany Indebtedness
(each such declaration, distribution, purchase, redemption, acquisition or
retirement being referred to as a "Restricted Payment") if, at the time of such
action, or after giving effect to such Restricted Payment, (a) an Event of
Default or a Default shall have occurred and be continuing; (b) such Restricted
Payment, together with the aggregate amount of all other Restricted Payments
declared or made after March 15, 1993, exceeds the sum of: (A) 50% of the
cumulative Consolidated Net Income (including any gains or losses attributable
to Asset Sales, net of related tax costs or tax benefits, as the case may be,
during the applicable reference period, but excluding non-cash charges
resulting from the adoption by the Company of SFAS 121 and/or other new
accounting standards consistent with GAAP), for the period commencing on March
1, 1993 through the last day of the fiscal quarter immediately preceding such
proposed Restricted Payment (or if Consolidated Net Income shall be a deficit,
minus 100% of such deficit); (B) the aggregate net cash proceeds and the fair
market value (as determined in good faith by the Board of Directors) of
marketable securities and other property, if any, received by the Company
(other than from a Subsidiary of the Company) from the issuance and sale of
either Capital Stock (other than Redeemable Stock) or Indebtedness that is
convertible into Capital Stock, to the extent such Indebtedness is converted
into Capital Stock after March 15, 1993; (C) the fair market value (as
determined in good faith by the Board of Directors) of any shares of Capital
Stock (other than Redeemable Stock) of the Company issued after March 15, 1993,
pursuant to a plan or other arrangement approved by the Compensation Committee
of the Board of Directors, to or for the benefit of any employee of the Company
or any of its Subsidiaries or to or by any employee stock ownership plan or
similar trust for the benefit of any such employee, in each case to the extent
such value is includable as compensation expense in the computation of
Consolidated Net Income; and (D) $45,000,000; or (c) the Company could not
incur $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to the Limitation on Additional Indebtedness covenant described below.
The foregoing will not prohibit, so long as no Default or Event of Default
shall have occurred and be continuing, (i) the payment of any dividend within
60 days after the date of the declaration, if at the date of declaration
thereof, such payment would comply with such provisions; (ii) the declaration
or payment of any dividend on shares of Capital Stock payable solely in shares
of Capital Stock of the Company (other than Redeemable Stock); or (iii) the
declaration or payment of a regular quarterly dividend in respect of the
Capital Stock of the Company at a rate not to exceed to $0.10 per share.
Repurchase upon Change of Control. See "Change of Control" above.
Limitation on Other Senior Subordinated Debt. The Indenture provides that
until such time as the Notes are rated Investment Grade, the Company will not
incur, create, assume, guarantee or otherwise become liable for any
Indebtedness that is contractually subordinated in right of payment to any
Senior Indebtedness and contractually senior in right of payment to the Notes.
Limitation on Additional Indebtedness. Until such time as the Notes are rated
Investment Grade, the Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable with respect to
(collectively, an "incurrence") any Indebtedness, including, without
limitation, Acquired Indebtedness, but excluding Permitted Indebtedness;
provided, however, that the Company or any Subsidiary thereof shall be
permitted to incur any Indebtedness if (i) no Default or Event of Default shall
have occurred and be continuing after giving effect to the incurrence of such
Indebtedness and (ii) after giving pro forma effect thereto, the Consolidated
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<PAGE>
Cash Flow/Fixed Charge Coverage Ratio for the four full fiscal quarters ending
immediately prior to the date of the incurrence of such additional Indebtedness
is at least 2.0 to 1.0.
Limitation on Indebtedness of Subsidiaries. In addition to the limitations
described in the Limitation on Additional Indebtedness covenant, until such
time as the Notes are rated Investment Grade, the Company will not permit its
Subsidiaries to incur any Indebtedness (other than Acquired Indebtedness) that
is subordinated to Senior Indebtedness in an amount in excess of $25,000,000 in
the aggregate at any time outstanding, unless such Indebtedness is also
contractually subordinated to the Notes.
Limitation on Liens. Until such time as the Notes are rated Investment Grade,
the Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien on
any of their respective assets, now owned or hereafter acquired, or any
properties or any income therefrom securing any Indebtedness that is pari passu
with or contractually subordinated in right of payment to the Notes other than
(i) Liens outstanding immediately prior to the date of the Indenture, including
Liens securing or arising under or in connection with Existing Indebtedness,
(ii) Permitted Liens, (iii) any extension, renewal or replacement (or
successive extensions, renewals or replacements) of Liens permitted by this
covenant; provided that the terms and conditions of any such extension, renewal
or replacement (or successive extension, renewal or replacement) are not less
favorable to the holders of the Notes than those relating to the Liens so
extended, renewed or replaced and no additional property or assets are
encumbered as a result of such extension, renewal or replacement (or successive
extension, renewal or replacement), (iv) the Lien granted to the Trustee
pursuant to the Indenture, and (v) Liens securing Acquired Indebtedness;
provided that such Liens attach solely to the assets of the acquired entity and
do not extend to or cover any assets of the Company or its Subsidiaries.
Payments for Consent. Neither the Company nor any of its Subsidiaries will,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of the Indenture or the Notes unless such consideration is offered
to be paid or agreed to be paid to all holders of the Notes which so consent,
waive or agree to amend in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement.
Provision of Reports and Other Information. The Indenture provides that at
all times while any Note is outstanding, the Company will file with the
Commission all such reports and other information as would be required by
Section 13 or 15(d) of the Exchange Act. Within 15 days after the same are
filed with the Commission, the Company will file with the Trustee and supply to
each holder of the Notes, without cost, copies of such reports or other
information.
MERGER, CONSOLIDATION OR SALE OF SUBSTANTIALLY ALL OF THE ASSETS
The Company will not consolidate with or into any Person or permit any Person
to merge with or into it or directly or indirectly transfer (by lease,
assignment, sale, conveyance or otherwise) all or substantially all of its
properties and assets, in a single transaction or through a series of related
transactions, to another Person or group of affiliated Persons or permit a
Subsidiary of the Company to enter into any such transaction or transactions if
such transaction or transactions would result in a direct or indirect transfer
(by lease, assignment, sale, conveyance or otherwise) of all or substantially
all of the assets of the Company and its Subsidiaries on a consolidated basis,
unless: (i) the Company shall be the continuing Person, or the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or to which the properties and assets of the Company, substantially as
an entirety, are transferred shall be a corporation organized and existing
under the laws of the United States or any State thereof or the District of
Columbia and shall expressly assume, by a supplemental indenture, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all of the
obligations of the Company under the Notes and Indenture; (ii) immediately
before and immediately after giving effect to such transaction, no Event of
Default and no Default shall have occurred and be continuing; (iii) immediately
after giving effect to such transaction on a
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pro forma basis, the Consolidated Net Worth of the surviving entity is at least
equal to the Consolidated Net Worth of the Company immediately prior to such
transaction; and (iv) until such time as the Notes are rated Investment Grade,
the surviving entity, after giving pro forma effect to such transaction, could
incur $1.00 of additional Indebtedness pursuant to the Limitation on Additional
Indebtedness covenant.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in payment of interest on the Notes; (ii)
default in payment when due of principal of or premium or Liquidated Damages,
if any, on the Notes, whether at maturity, or upon acceleration, redemption or
otherwise; (iii) failure by the Company to comply in any respect with any of
its other agreements in the Indenture or the Notes and such Default continues
for 45 days after receipt of a written notice from the Trustee or holders of at
least 25% of the aggregate principal amount of the Notes then outstanding,
specifying such Default and requiring that it be remedied; (iv) default under
any mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Subsidiaries (or the payment of which is guaranteed
by the Company or any of its Subsidiaries), whether such Indebtedness is
existing on the date of the Indenture or thereafter created (other than
Indebtedness of the Company or any of its Subsidiaries to the Company or
between such Subsidiaries), if as a result of such default the maturity of such
Indebtedness has been accelerated prior to its express maturity, the Trustee
has received notice of such acceleration from the Company or any holder of the
Notes or has otherwise obtained actual knowledge thereof and the principal
amount of such Indebtedness, together with the principal amount of any other
such Indebtedness the maturity of which has been accelerated, aggregates
$25,000,000 or more; (v) final judgments for the payment of money which in the
aggregate exceed $25,000,000 shall be rendered against the Company or any
Subsidiary thereof and shall remain unstayed or undischarged for a period of 60
days and the Trustee shall receive notice thereof from the Company or any
holder of the Notes or shall otherwise obtain actual knowledge thereof; and
(vi) certain events of bankruptcy or insolvency with respect to the Company.
If an Event of Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each holder of the Notes notice of the Event
of Default within 90 days after it becomes known to the Trustee, unless such
Event of Default has been cured or waived. Except in the case of an Event of
Default in the payment of principal of, premium or Liquidated Damages, if any,
or interest on any Note, the Trustee may withhold the notice if and so long as
its Board of Directors, the executive committee of its Board of Directors or a
committee of Trust Officers in good faith determines that withholding the
notice is in the interest of the holders of the Notes.
If an Event of Default (other than an Event of Default resulting from
bankruptcy, insolvency or reorganization) occurs and is continuing, the Trustee
or the holders of at least 25% of the principal amount of the Notes then
outstanding may, by written notice to the Company (and to the Trustee if such
notice is given by such holders) (the "Acceleration Notice"), and the Trustee
at the request of such holders shall, declare all unpaid principal of, premium
and Liquidated Damages, if any, and accrued interest on such Notes to be due
and payable immediately. If an Event of Default resulting from certain events
of bankruptcy, insolvency or reorganization occurs, then all unpaid principal
of, premium and Liquidated Damages, if any, and accrued interest on the Notes
then outstanding shall ipso facto become and be immediately due and payable
without any declaration, notice or other act on the part of the Trustee or any
holder. Subject to the subordination provisions described above, the holders of
at least a majority in principal amount of the Notes by notice to the Trustee
may rescind an acceleration and its consequences, except an acceleration due to
default in payment of principal or interest on the Notes upon conditions
provided in the Indenture. Subject to certain restrictions set forth in the
Indenture, the holders of at least a majority in principal amount of the
outstanding Notes by notice to the Trustee may waive an existing Default or
Event of Default and its consequences, except a Default in the payment of
principal of, premium or Liquidated Damages, if any, or interest on, such Notes
or a Default under a provision which requires consent of all holders to amend.
When
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a Default or Event of Default is waived, it is cured and ceases. A holder of
Notes may not pursue any remedy with respect to the Indenture or the Notes
unless: (i) the holder gives to the Trustee written notice of a continuing
Event of Default; (ii) the holders of at least 25% in principal amount of such
Notes outstanding make a written request to the Trustee to pursue the remedy;
(iii) such holder or holders offer to the Trustee indemnity or security
satisfactory to the Trustee against any loss, liability or expense; (iv) the
Trustee does not comply with the request within 30 days after receipt of the
request and the offer of indemnity or security; and (v) during such 30-day
period the holders of a majority in principal amount of the outstanding Notes
do not give the Trustee a direction which is inconsistent with the request.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default to deliver a statement to the
Trustee specifying such Default or Event of Default.
DEFEASANCE AND DISCHARGE OF THE INDENTURE AND THE EXCHANGE NOTES
If the Company irrevocably deposits, or causes to be deposited with the
Trustee or the Paying Agent, at any time prior to the stated maturity of the
Notes, as trust funds in trust, money or direct noncallable obligations of or
guaranteed by the United States of America in amounts (including interest, but
without consideration of any reinvestment of such interest) and maturities
sufficient to pay timely and discharge the entire principal of the then
outstanding Notes and all interest then due in cash, the Indenture shall cease
to be of further effect as to all outstanding Notes (except, among other
things, as to (i) remaining rights of registration of transfer and substitution
and exchange of the Notes, (ii) rights of holders to receive payment of
principal of and interest on the Notes, and (iii) the rights, obligations and
immunities of the Trustee).
TRANSFER AND EXCHANGE
A holder may transfer or exchange Notes in accordance with the Indenture. The
Registrar may require a holder, among other things, to furnish appropriate
endorsements and transfer documents, and to pay any taxes and fees required by
law or permitted by the Indenture.
The registered holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the Indenture or the Notes may be amended or
supplemented with the consent of the holders of at least a majority in
aggregate principal amount of the Notes then outstanding, and any existing
default or compliance with any provision may be waived (other than a continuing
Default or Event of Default in the payment of principal or interest on any
Note) with the consent of the holders of a majority in principal amount of the
then outstanding Notes.
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting holder of Notes) (i) reduce
the percentage of principal amount of the Notes whose holders must consent to
an amendment or waiver, (ii) change the fixed maturity of the principal of,
premium or Liquidated Damages, if any, or any interest on, any Note or alter
the redemption provisions with respect thereto, (iii) make any change in the
subordination provisions of the Indenture that adversely affects the rights of
any holders of the Notes or any change to any other section of the Indenture
that adversely affects the rights of any holder of the Notes under the
subordination provisions of the Indenture, (iv) waive a default in the payment
of the principal of, premium or Liquidated Damages, if any, or interest on, any
Note, (v) make any change to the Repurchase Upon Change of Control covenant of
the Indenture or (vi) make any change in the foregoing.
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Notwithstanding the foregoing, without the consent of any holder of the
Notes, the Company and the Trustee may amend or supplement the Indenture or the
Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to holders of the Notes
in the case of a merger or consolidation, to make any change that does not
adversely affect the rights of any holder of the Notes or to comply with any
requirement of the Commission in connection with the qualification of the
Trustee under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; however, if it acquires any conflicting interest it must
eliminate such conflict within 90 days, or apply to the Commission for
permission to continue or resign.
The holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any of the holders of the Notes, unless they shall have
offered to the Trustee security or indemnity satisfactory to it against any
loss, liability or expense.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth below, the Notes will be represented by one or more
permanent global certificates in definitive, fully registered form (each a
"Global Note"). Each Global Note will be deposited with, or on behalf of, the
Depositary and registered in the name of Cede & Co., as nominee of the
Depositary (such nominee being referred to herein as the "Global Note Holder").
See "The Exchange Offer--Book-Entry Transfer."
Notes that are issued as described below under "Certificated Securities" to a
holder of Notes (a "Non-Global Purchases"), will be issued in the form of
registered definitive certificates (the "Certificated Securities"). Upon the
transfer to a "qualified institutional buyer" (as defined in Rule 144A under
the Securities Act) of Certificated Securities initially issued to a Non-Global
Purchaser, such Certificated Securities may, unless the Global Note has
previously been exchanged for Certificated Securities, be exchanged for an
interest in the Global Note representing the principal amount of Notes being
transferred.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the
"Participants" or the "Depositary's Participants") and to facilitate the
clearance and settlement of transactions in such securities between
Participants through electronic book-entry changes in accounts of its
Participants. The Depositary's Participants include securities brokers and
dealers (including the Initial Purchaser), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depositary's system
is also available to other entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants" or the "Depositary's
Indirect Participants") that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly. Persons who are not
Participants may beneficially own securities held by or on behalf of the
Depositary only through the Depositary's Participants or the Depositary's
Indirect Participants.
The Company expects that pursuant to procedures established by the Depositary
(i) upon deposit of the Global Note, the Depositary will credit the accounts of
Participants designated by the Initial Purchaser with portions of the principal
amount of the Global Note and (ii) ownership of the Notes evidenced by the
Global
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Note will be shown on, and the transfer of ownership thereof will be effected
only through, records maintained by the Depositary (with respect to the
interests of the Depositary's Participants), the Depositary's Participants and
the Depositary's Indirect Participants. Prospective purchasers are advised that
the laws of some states require that certain persons take physical delivery in
definitive form of securities that they own. Consequently, the ability to
transfer Notes evidenced by the Global Note will be limited to such extent.
So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder under the Indenture of
any Notes evidenced by the Global Note. Beneficial owners of Notes evidenced by
the Global Note will not be considered the owners or Holders thereof under the
Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. Neither the
Company nor the Trustee will have any responsibility or liability for any
aspect of the records of the Depositary or for maintaining, supervising or
reviewing any records of the Depositary relating to the Notes.
Payments in respect of the principal of, premium and Liquidated Damages, if
any, and interest on any Notes registered in the name of the Global Note Holder
on the applicable record date will be payable by the Trustee to or at the
direction of the Global Note Holder in its capacity as the registered Holder
under the Indenture. Under the terms of the Indenture, the Company and the
Trustee may treat the persons in whose names Notes, including the Global Note,
are registered as the owners thereof for the purpose of receiving such
payments. Consequently, neither the Company nor the Trustee has or will have
any responsibility or liability for the payment of such amounts to beneficial
owners of Notes (including principal, premium and Liquidated Damages, if any,
and interest). The Company believes, however, that it is currently the policy
of the Depositary to immediately credit the accounts of the relevant
Participants with such payments, in amounts proportionate to their respective
holdings of beneficial interests in the relevant security as shown on the
records of the Depositary. Payments by the Depositary's Participants and the
Depositary's Indirect Participants to the beneficial owners of Notes will be
governed by standing instructions and customary practice and will be the
responsibility of the Depositary's Participants or the Depositary's Indirect
Participants.
CERTIFICATED SECURITIES
Subject to certain conditions, any person having a beneficial interest in the
Global Note may, upon request to the Trustee, exchange such beneficial interest
for Notes in the form of Certificated Securities. Upon any such issuance, the
Trustee is required to register such Certificated Securities in the name of,
and cause the same to be delivered to, such person or persons (or the nominee
of any thereof). In addition, if (i) the Company notifies the Trustee in
writing that the Depositary is no longer willing or able to act as a depositary
and the Company is unable to locate a qualified successor within 90 days or
(ii) the Company, at its option, notifies the Trustee in writing that it elects
to cause the issuance of Notes in the form of Certificated Securities under the
Indenture, then, upon surrender by the Global Note Holder of its Global Note,
Notes in such form will be issued to each person that the Global Note Holder
and the Depositary identify as being the beneficial owner of the related Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
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CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference is
made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person (i) assumed in
connection with an acquisition of assets or properties from such Person or (ii)
existing at the time such Person becomes a Subsidiary of any other Person (in
each case other than any Indebtedness incurred in connection with, or in
contemplation of, such acquisition or such Person becoming such a Subsidiary).
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. A Person shall be deemed to "control"
(including the correlative meanings, the terms "controlling," "controlled by,"
and "under common control with") another Person if the controlling Person (a)
possesses, directly or indirectly, the power to direct, or cause the direction
of, the management or policies of the controlled Person, whether through
ownership of voting securities, by agreement or otherwise, or (b) owns,
directly or indirectly, 10% or more of any class of the issued and outstanding
equity securities of the controlled Person.
"Asset Sale" means, with respect to any Person, the sale, lease, conveyance,
disposition or other transfer by such Person of any of its businesses
(including by way of a sale-and-leaseback and including the sale or other
transfer of any of the Capital Stock of any Subsidiary of such Person), in a
single transaction or through a series of related transactions, for aggregate
consideration received by such Person or a Subsidiary of such Person, net of
the out-of-pocket costs relating thereto (including, without limitation, legal,
accounting and investment banking fees and sales commissions), in excess of
$50,000,000. For purposes of this definition, consideration shall include,
without limitation, any indebtedness for borrowed money of such Person or such
Subsidiary that is assumed by the transferee of any assets or any such
indebtedness of any Subsidiary of the Company whose stock is purchased by the
transferee.
"Average Life" means, as of the date of determination, with respect to any
debt security, the quotient obtained by dividing (i) the sum of the products of
the numbers of years from the date of determination to the dates of each
successive scheduled principal payment (assuming the exercise by the obligor of
such debt security of all unconditional (other than as to the giving of notice)
extension options of each such scheduled payment date) of such debt security
multiplied by the amount of such principal payment by (ii) the sum of all such
principal payments.
"Capital Lease Obligation" means, at the time any determination thereof is to
be made, the amount of the liability in respect of a capital lease which would
at such time be so required to be capitalized on the balance sheet in
accordance with GAAP.
"Capital Stock" means any and all shares, interests, participation, rights or
other equivalents (however designated) of corporate stock (including common and
preferred stock) or partnership interests.
"Cash Equivalents" means (i) Marketable Equity Securities and (ii) Investment
Grade Securities.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the sum of, without duplication, (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) Consolidated Income Tax Expense and (iv) depreciation
and amortization expenses, all as determined on a consolidated basis in
accordance with GAAP consistently applied.
"Consolidated Cash Flow/Fixed Charge Coverage Ratio" means, with respect to
any Person for any period, the ratio of Consolidated Cash Flow to Consolidated
Fixed Charges.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum of (i) Consolidated Interest Expense and (ii) all cash
preferred dividends.
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"Consolidated Income Tax Expense" means, with respect to any Person for any
period, the provision for federal, state, local and foreign income taxes of
such Person and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP consistently applied.
"Consolidated Interest Expense" means, with respect to any Person for any
period, without duplication, the sum of (i) the interest expense of such Person
and its Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP consistently applied, including, without limitation, (a)
any amortization of debt discount, (b) the net cost of Interest Rate Protection
Obligations (including any amortization of discounts), (c) the interest portion
of any deferred payment obligation, (d) all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing and (e) all accrued interest, and (ii) the interest component of
Capital Lease Obligations paid, accrued and/or scheduled to be paid or accrued
by such Person and its Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP consistently applied.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate net income (or loss) of such Person and its Subsidiaries for such
period, before extraordinary items and the cumulative effect of a change in
accounting principles (as each such term is defined under GAAP) of such Person
and its Subsidiaries, on a consolidated basis, determined in accordance with
GAAP consistently applied, adjusted by excluding (i) any net gains or losses in
respect of disposition of assets other than in the ordinary course of business;
(ii) any gains or losses from currency exchange transactions; (iii) any gains
or losses realized upon the termination of any employee pension benefit plan;
(iv) any gains or losses realized upon the refinancing of any of such Person's
Indebtedness; (v) any settlements or judgments with respect to any litigation
not in the ordinary course of business; (vi) any gains or losses arising from
the destruction of property due to fire or other casualty; (vii) any gains or
losses arising from the revaluation of property or assets; (viii) the net
income (or loss) accounted for by the equity method of accounting, except for
dividends or other distributions actually received by such Person or its
Subsidiaries (provided that for purposes of any calculation of the Consolidated
Cash Flow/Fixed Charge Coverage Ratio, Consolidated Net Income for such Person
and its Subsidiaries shall exclude the net income (or loss) otherwise included
pursuant to clause (viii) hereof); and (ix) the net income of any Subsidiary of
such Person to the extent that such net income has any restrictions or
encumbrances on making distributions to such Person.
"Consolidated Net Worth" means, at any date of determination, the sum of the
Capital Stock and additional paid-in capital plus retained earnings (or minus
accumulated deficit) of any Person and its Subsidiaries on a consolidated
basis, excluding amounts attributable to Redeemable Stock and excluding charges
to net worth due to the prepayment of the Credit Agreement, each item to be
determined in accordance with GAAP consistently applied.
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Credit Agreement" means the $650,000,000 Credit and Guarantee Agreement,
dated as of November 2, 1994, as amended from time to time, by and among the
Company, certain Subsidiaries of the Company, as Guarantors, Bank of America
National Trust and Savings Association, as administrative agent and bid agent,
and the banks and other financial institutions that are signatories thereto,
and any refinancings or replacements thereof providing for Indebtedness of up
to $700,000,000, less, in the case of any such refinancings or replacements,
the amount of all permanent reductions thereunder; provided, however, under no
circumstances will such permanent reductions reduce the amount of Indebtedness
permitted under clause (ii) of the definition of "Permitted Indebtedness" below
$500,000,000.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
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"Domestic Credit Facilities" means any U.S.-dollar denominated credit
facilities providing for extensions of credit to the Company or any domestic
Subsidiary thereof in an aggregate amount not exceeding the credit line
originally available under the Credit Agreement, less the amount of all
permanent commitment reductions under the Credit Agreement.
"8 3/4% Notes" means the Company's 8 3/4% Senior Subordinated Notes due April
1, 2003.
"8 3/4% Note Indenture" means the Indenture, dated as of March 15, 1993,
between the Company and Citibank, N.A., as trustee, pursuant to which the 8
3/4% Notes were issued.
"Equity Interest" means Capital Stock, warrants, options or other rights, to
acquire Capital Stock (but excluding any debt security which is convertible
into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries in existence on the date of this Indenture.
"Foreign Credit Facilities" means any foreign-currency denominated credit
facilities providing for extensions of credit to the Company or any Subsidiary
thereof or U.S.-dollar denominated extensions of credit to any foreign
Subsidiary of the Company, in amounts not exceeding, in the aggregate, the
credit lines of such facilities existing on the date of this Indenture but in
no event greater than $100,000,000.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
from time to time.
"Indebtedness" of any person means any indebtedness, contingent or otherwise,
in respect of borrowed money (whether or not the recourse of the lender is to
the whole of the assets of such Person or only to a portion thereof), or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement obligations with respect thereto) or representing the
balance deferred and unpaid of the purchase price of any property (including
pursuant to Capital Lease Obligations), if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP (except that any such balance that
constitutes a trade payable and/or an accrued liability arising in the ordinary
course of business shall not be considered Indebtedness), and shall also
include, to the extent not otherwise included, any Capital Lease Obligations,
the maximum fixed repurchase price of any Redeemable Stock, indebtedness
secured by a Lien to which the property or assets owned or held by such Person
is subject, whether or not the obligations secured thereby shall have been
assumed, guarantees of items that would be included within this definition to
the extent of such guarantees (exclusive of whether such items would appear
upon such balance sheet), and net liabilities in respect of Interest Rate
Protection Obligations. For purposes of the preceding sentence, the maximum
fixed repurchase price of any Redeemable Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Stock as if such Redeemable Stock were repurchased on any date on
which Indebtedness shall be required to be determined pursuant to the
Indenture, provided that if such Redeemable Stock is not then permitted to be
repurchased, the repurchase price shall be the book value of such Redeemable
Stock. The amount of Indebtedness of any person at any date shall be, without
duplication, (i) the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability of any such contingent
obligations at such date and (ii) in the case of Indebtedness of others secured
by a Lien to which the property or assets owned or held by such Person is
subject, the lesser of the fair market value at such date of any asset subject
to a Lien securing the Indebtedness of others and the amount of the
Indebtedness secured.
"Interest Rate Protection Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest
on a stated notional
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amount in exchange for periodic payments made by such Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include without limitation, interest rate swaps, caps, floors, collars
and similar agreements.
"Investment Grade" means a rating by S&P of BBB- or higher or by Moody's of
Baa3 or the equivalent thereof by S&P or Moody's.
"Investment Grade Securities" means (i) any evidence of indebtedness,
maturing not more than 180 days after the date of acquisition, issued or fully
guaranteed or insured by the United States of America, or an instrumentality or
agency thereof (provided that the full faith and credit of the United States of
America is pledged in support thereof), (ii) any certificate of deposit,
overnight bank deposit or bankers acceptance, maturing not more than 180 days
after the date of acquisition, issued by, or time deposit of, a commercial
banking institution which has capital and surplus in excess of $500,000,000
rated, at the time as of which any investment therein is made, A-1 or better by
S&P or P-1 or better by Moody's or the equivalent of such rating by a successor
rating agency, (iii) commercial paper, maturing not more than 90 days after the
date of acquisition, issued by a corporation (other than an Affiliate or
Subsidiary of the Company) organized and existing under the laws of the United
States of America or any State thereof or the District of Columbia which is
rated, at the time as of which any Investment therein is made, P-1 or better by
Moody's or A-1 or better by S&P or the equivalent of such rating by a successor
rating agency, (iv) money market funds issued or offered by any domestic
commercial bank which has capital and surplus in excess of $500,000,000 and (v)
any other debt instrument rated, at the time as of which any investment therein
is made, BBB- or better by S&P or Baa-3 or better by Moody's or the equivalent
of such rating by a successor rating agency.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give any security interest in and any filing or other agreement to give
any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
"Permitted Indebtedness" means (i) prior to any refinancing or replacement of
the Credit Agreement as in effect on March 5, 1996, (a) Indebtedness under the
Domestic Credit Facilities or any refinancing or replacement thereof and (b)
Indebtedness under the Foreign Credit Facilities or any refinancing or
replacement thereof; (ii) subsequent to any refinancings or replacements of the
Credit Agreement as in effect on March 5, 1996, Indebtedness under such
refinancings or replacements; (iii) Existing Indebtedness; (iv) Indebtedness
represented by the Notes; (v) Interest Rate Protection Obligations covering
Indebtedness (which Indebtedness (A) bears interest at fluctuating interest
rates and (B) is otherwise permitted to be incurred under the Limitation on
Additional Indebtedness covenant) to the extent that the notional principal
amount of such Interest Rate Protection Obligations does not exceed the
principal amount of the Indebtedness to which such Interest Rate Protection
Obligations relate; (vi) Indebtedness of any Subsidiary of the Company to the
Company or any other Subsidiary of the Company and Indebtedness of the Company
to any Subsidiary of the Company of which, at the time such Indebtedness is
created or incurred, the Company owns or controls, directly or indirectly, at
least 66 2/3% of the combined voting power of all of such Subsidiary's then
outstanding Capital Stock; (vii) Indebtedness arising from guarantees of
Indebtedness incurred in the ordinary course of business to suppliers,
licensees, franchisees or customers; (viii) Indebtedness arising from
performance bonds provided by the Company in the ordinary course of business;
(ix) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in
the case of daylight overdrafts) drawn against funds in the ordinary course of
business; provided, however, that such Indebtedness is extinguished within five
days of incurrence; (x) Indebtedness represented by letters of credit issued in
the ordinary course of business, and not issued pursuant to the Domestic Credit
Facilities or the Foreign Credit Facilities, or any refinancings thereof, or
subsequent to any refinancing or replacement of the Credit Agreement as in
effect on March 5, 1996, pursuant to such refinancings or replacements, in an
aggregate principal amount not to exceed $50,000,000 at any time; (xi) other
Indebtedness
49
<PAGE>
in an amount not to exceed $65,000,000 at any time; and (xii) Indebtedness, the
proceeds of which are used to redeem, refund, replace, reduce, extend,
discharge or otherwise retire for value or refinance any Indebtedness of the
Company or a Subsidiary thereof (such new Indebtedness being "Refinancing
Indebtedness") not to exceed the amount (or, if such Refinancing Indebtedness
is issued at a price less than the principal amount thereof, with an original
issue price) so refinanced (plus accrued interest, premium, if any, and
reasonable fees and expenses related thereto); provided, however, that (a) such
Refinancing Indebtedness shall rank in right of payment to the Notes at least
to the same extent as the Indebtedness to be refinanced, (b) such Refinancing
Indebtedness shall have an Average Life and stated maturity equal to, or
greater than, the Average Life and stated maturity of the Indebtedness to be
refinanced and (c) the proceeds of such Refinancing Indebtedness, if incurred
by a Subsidiary of the Company, shall not be used to refinance (x) Indebtedness
of the Company or (y) Indebtedness of another Subsidiary of the Company that is
subordinated to Senior Indebtedness.
"Permitted Liens" means, with respect to any Person, (i) pledges or deposits
by such Person under workmen's compensation laws, unemployment insurance laws
or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness) or leases to
which such Person is a party, or deposits to secure public or statutory
obligations of such Person or deposits of cash or United States Government
bonds to secure surety or appeal bonds to which such Person is a party, or
deposits as security for contested taxes or for the payment of rent, (ii) Liens
(as defined) imposed by law, such as carriers', warehousemen's and mechanics'
liens, and bankers' liens, (iii) Liens for taxes not yet subject to penalties
for non-payment or which are being contested in good faith and by appropriate
proceedings, if adequate reserves, as may be required by GAAP, shall have been
made therefor, (iv) Liens upon specific items of inventory or other goods and
proceeds of any Person securing the Person's obligations in respect of banker's
acceptances issued or created for the account of such Person to facilitate the
shipping or storage of such inventory or other goods, (v) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods, (vi) Liens arising
out of consignment or similar arrangements for the sale of goods entered into
by the Company or any of its Subsidiaries in the ordinary course of business in
accordance with the past practices of the Company, and each of its
Subsidiaries, (vii) Liens arising from filing UCC financing statements
regarding leases (other than capital leases), (viii) Liens arising in
connection with or out of any commercial letters of credit, (ix) such other
nonconsensual Liens as may arise in the ordinary course of business of the
Company or any of its Subsidiaries and as do not materially impair the use of
the property subject thereto in the course of such business, (x) Liens in favor
of issuers of surety bonds (other than to satisfy or stay any judgment or
judgments in excess of $1,000,000 individually or $3,000,000 in the aggregate)
issued pursuant to the request of and for the account of such Person in the
course of its business, (xi) Liens in connection with any legal proceedings
(including legal proceedings instituted by the Company or any of its
Subsidiaries) which are being contested in good faith and by appropriate
proceedings, including appeals of judgments as to which a stay of execution
shall have been issued, provided that adequate reserves have been established
with respect thereto in accordance with GAAP and no property of the Company or
any of its Subsidiaries is in imminent danger of being lost or forfeited as a
result thereof, and (xii) survey exceptions, encumbrances, easements or
reservations of, or rights of others for, rights of way, sewers, electric
lines, telegraph and telephone lines and other similar purposes, or zoning or
other restrictions as to the use of real properties or Liens incidental to the
conduct of the business of such Person or to the ownership of its properties.
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"Redeemable Stock" means any Equity Interest which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable before the stated maturity of the Notes), or upon the happening of
any event, matures or is mandatorily redeemable, in whole or in part, prior to
the stated maturity of the Notes.
50
<PAGE>
"Senior Indebtedness" means the principal of, premium, if any, and interest
on any Indebtedness of the Company, whether outstanding on the date of the
Indenture or thereafter created, incurred, assumed or guaranteed, unless, in
the case of any particular Indebtedness, the instrument under which such
Indebtedness is created, incurred, assumed or guaranteed expressly provides
that such Indebtedness shall not be senior or superior in right of payment to
the Notes. Without limiting the generality of the foregoing, "Senior
Indebtedness" shall include the principal of, premium, if any, and interest on
all obligations of every nature of the Company from time to time owed to the
lenders under the Credit Agreement, including, without limitation, principal of
and interest on, and all fees and expenses payable under the Credit Agreement.
Notwithstanding anything to the contrary contained in this Indenture or the
Notes, "Senior Indebtedness" shall not include any Indebtedness represented by
the 8 3/4% Notes.
"SFAS 121" means Statement No. 121--Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of--issued in March 1995
by the Financial Accounting Standards Board.
"Subsidiary" means any corporation, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"Wholly-owned Subsidiary" of any Person means any Subsidiary of such Person
to the extent the entire voting share capital of such Subsidiary is owned by
such Person (either directly or indirectly through Wholly-owned Subsidiaries).
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of Private Notes for Exchange Notes,
but does not purport to be a complete analysis of all potential tax effects.
The discussion is based upon the Internal Revenue Code of 1986, as amended,
Treasury regulations, Internal Revenue Service rulings and pronouncements and
judicial decisions now in effect, all of which are subject to change at any
time by legislative, judicial or administrative action. Any such changes may be
applied retroactively in a manner that could adversely affect a holder of the
Exchange Notes. The description does not consider the effect of any applicable
foreign, state, local or other tax laws or estate or gift tax considerations.
EACH HOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR
TAX CONSEQUENCES TO IT OF EXCHANGING PRIVATE NOTES FOR EXCHANGE NOTES,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
The exchange of Private Notes for Exchange Notes should not be an exchange or
otherwise a taxable event to a holder for federal income tax purposes.
Accordingly, a holder should have the same adjusted issue price, adjusted basis
and holding period in the Exchange Notes as it had in the Private Notes
immediately before the exchange.
51
<PAGE>
PLAN OF DISTRIBUTION
Based on an interpretation by the staff of the Commission set forth in no-
action letters issued to third parties, the Company believes that the Exchange
Notes issued pursuant to the Exchange Offer in exchange for Private Notes may
be offered for resale, resold and otherwise transferred by a holder thereof
(other than (i) an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act, (ii) a broker-dealer who acquired Private Notes
directly from the Company to resell pursuant to Rule 144A or any other
available exemption under the Securities Act or (iii) a broker-dealer who
acquired Private Notes as a result of market making or other trading
activities), without compliance with the registration and prospectus delivery
requirements of the Securities Act; provided that the holder is acquiring
Exchange Notes in the ordinary course of its business and is not participating,
and has no arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes. Holders of Private Notes wishing to accept
the Exchange Offer must represent to the Company, as required by the
Registration Rights Agreement, that such conditions have been met. The Company
believes that none of the registered holders of the Private Notes is an
affiliate (as such term is defined in Rule 405 under the Securities Act) of the
Company.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Private Notes must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Private Notes, where such Private Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities. The Company has agreed to make this Prospectus (as it
may be amended or supplemented) available to any broker-dealer, upon request,
for use in connection with any such resale, for a period of one year after the
Registration Statement is declared effective by the Commission or until such
earlier date on which all the Exchange Notes are freely tradeable. However, any
broker-dealer who acquired the Notes directly from the Company may not fulfill
its prospectus delivery requirements with this Prospectus, but must comply with
the registration and prospectus delivery requirements of the Securities Act.
The Company will not receive any proceeds from any sale of the Exchange Notes
by broker-dealers or any other persons. Exchange Notes received by broker-
dealers for their own accounts pursuant to the Exchange Offer may be sold for
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes
or a combination of such methods of resale, at market prices prevailing at the
time of such resale, at prices related to such prevailing market prices or at
negotiated prices. Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer and/or purchasers of any
such Exchange Notes. Any broker-dealer that resells Exchange Notes that were
received by it for its own account pursuant to the Exchange Offer and any
broker or dealer that participates in the distribution of such Exchange Notes
may be deemed to be an "underwriter" within the meaning of the Securities Act
and any profit on any such resale of Exchange Notes and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
By acceptance of this Exchange Offer, each broker-dealer that receives
Exchange Notes pursuant to the Exchange Offer agrees that, upon receipt of
notice from the Company of the happening of any event which makes any statement
in the Prospectus untrue in any material respect or which requires the making
of any changes in the Prospectus in order to make the statements therein not
misleading (which notice the Company agrees to deliver promptly to such broker-
dealer), such broker-dealer will suspend use of the Prospectus until the
Company has amended or supplemented the Prospectus to correct such misstatement
or omission and
52
<PAGE>
has furnished copies of the amended or supplemented Prospectus to such broker-
dealer. If the Company shall give any such notice to suspend the use of the
Prospectus, it shall extend the one-year period referred to above by the number
of days during the period from and including the date of the giving of such
notice to and including the date when the broker-dealers shall have received
copies of the supplemented or amended Prospectus necessary to permit resales of
the Exchange Notes.
The Company has agreed to pay all expenses incident to the Company's
performance of, or compliance with, the Registration Rights Agreement and will
indemnify the holders (including any broker-dealers) and certain parties
related to the holders against certain liabilities, including liabilities under
the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Exchange Notes will
be passed upon for the Company by Stroock & Stroock & Lavan, New York, New
York, special counsel to the Company.
EXPERTS
The consolidated balance sheets of Mark IV Industries, Inc. and its
subsidiaries as of February 29, 1996 and February 28, 1995 and the consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended February 29, 1996, included in this Prospectus or
incorporated herein by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended February 29, 1996 have been examined by Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
53
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Audited Consolidated Financial Statements of Mark IV as of February
29, 1996:
Report of Independent Accountants.................................. F-2
Consolidated Balance Sheets........................................ F-3
Consolidated Statements of Income.................................. F-4
Consolidated Statements of Stockholders' Equity.................... F-5
Consolidated Statements of Cash Flows.............................. F-6
Notes to Consolidated Financial Statements......................... F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Mark IV Industries, Inc.
We have audited the accompanying consolidated balance sheets of Mark IV
Industries, Inc. and Subsidiaries as of February 29, 1996 and February 28,
1995, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended February 29,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Mark IV
Industries, Inc. and Subsidiaries as of February 29, 1996 and February 28,
1995, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended February 29, 1996, in
conformity with generally accepted accounting principles.
As discussed in Note 11 to the consolidated financial statements, the
Company changed its method of accounting for postretirement benefits other
than pensions.
Coopers & Lybrand L.L.P.
Rochester, New York
March 29, 1996
F-2
<PAGE>
MARK IV INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
LAST DAY OF FEBRUARY 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Current Assets:
Cash................................................. $ 900 $ 800
Accounts receivable.................................. 399,600 383,700
Inventories.......................................... 405,000 361,900
Other current assets................................. 68,300 58,600
---------- ----------
Total current assets............................... 873,800 805,000
Pension and other non-current assets................... 216,500 197,100
Property, plant and equipment, net..................... 553,700 487,900
Cost in excess of net assets acquired.................. 369,100 356,400
---------- ----------
TOTAL ASSETS....................................... $2,013,100 $1,846,400
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current maturities of debt......... $ 95,100 $ 67,300
Accounts payable..................................... 191,300 174,000
Compensation related liabilities..................... 71,300 70,400
Accrued interest..................................... 12,700 13,800
Other current liabilities ........................... 98,500 99,800
---------- ----------
Total current liabilities.......................... 468,900 425,300
---------- ----------
Long-Term Debt:
Senior debt.......................................... 136,100 352,700
Subordinated debt.................................... 506,400 258,000
---------- ----------
Total long-term debt............................... 642,500 610,700
---------- ----------
Other non-current liabilities.......................... 176,200 174,900
---------- ----------
Stockholders' Equity:
Common stock--$.01 par value; Authorized 100,000,000
shares; Issued 63,000,000 shares in 1996 and
62,900,000 shares in 1995........................... 600 600
Additional paid-in capital........................... 617,600 550,200
Retained earnings.................................... 109,700 90,800
Foreign currency translation adjustment ............. (2,400) (6,100)
---------- ----------
Total stockholders' equity......................... 725,500 635,500
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY........... $2,013,100 $1,846,400
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
MARK IV INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED THE LAST DAY OF FEBRUARY 1996, 1995 AND 1994
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net sales .................................. $2,088,500 $1,603,300 $1,244,200
---------- ---------- ----------
Operating costs:
Cost of products sold..................... 1,413,500 1,060,000 803,500
Selling and administration................ 347,200 292,700 236,300
Research and development.................. 48,400 34,800 30,900
Depreciation and amortization............. 66,800 51,500 41,700
---------- ---------- ----------
Total operating costs ................ 1,875,900 1,439,000 1,112,400
---------- ---------- ----------
Operating income.......................... 212,600 164,300 131,800
Interest expense............................ 61,200 53,900 50,100
---------- ---------- ----------
Income before provision for taxes......... 151,400 110,400 81,700
Provision for taxes......................... 59,000 42,500 30,600
---------- ---------- ----------
Income before extraordinary items and
accounting change........................ 92,400 67,900 51,100
Extraordinary loss from early extinguishment
of debt, net of tax benefit of $700 and
$12,300.................................... -- (1,100) (21,700)
Cumulative effect of a change in accounting
principle.................................. -- -- (26,000)
---------- ---------- ----------
NET INCOME............................ $ 92,400 $ 66,800 $ 3,400
========== ========== ==========
Net income per share of common stock:
Primary:
Income before extraordinary items....... $ 1.46 $ 1.33 $ 1.09
Extraordinary loss...................... -- (.02) (.46)
Cumulative effect of accounting change.. -- -- (.56)
---------- ---------- ----------
NET INCOME............................ $ 1.46 $ 1.31 $ .07
========== ========== ==========
Fully-diluted:
Income before extraordinary items....... $ 1.46 $ 1.23 $ .99
Extraordinary loss...................... -- (.02) (.39)
Cumulative effect of accounting change.. -- -- (.46)
---------- ---------- ----------
NET INCOME............................ $ 1.46 $ 1.21 $ .14
========== ========== ==========
Weighted average shares outstanding:
Primary .................................. 63,000 51,000 46,800
========== ========== ==========
Fully-diluted............................. 63,400 57,800 55,900
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
MARK IV INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED THE LAST DAY OF FEBRUARY 1996, 1995, AND 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOREIGN
ADDITIONAL CURRENCY
COMMON PAID-IN RETAINED TRANSLATION
STOCK CAPITAL EARNINGS ADJUSTMENT
------ ---------- -------- -----------
<S> <C> <C> <C> <C>
Balance at February 28, 1993........... $400 $219,300 $128,300 $(2,400)
Net income for fiscal 1994........... 3,400
Cash dividends of $.088 per share.... (4,200)
Stock dividend of 5%................. 38,900 (38,900)
Conversion of 6 1/4% Debentures...... 100
Restricted stock grants, net......... 800
Stock options activity, including
related tax benefits................ 2,400
Translation adjustment............... (2,700)
---- -------- -------- -------
Balance at February 28, 1994........... 400 261,500 88,600 (5,100)
Net income for fiscal 1995........... 66,800
Cash dividends of $.102 per share.... (5,600)
Stock dividend of 5%................. 59,000 (59,000)
Sale of Common Stock at $17.23 per
share, net of expenses.............. 100 114,400
Conversion of 6 1/4% Debentures, net
of expenses......................... 100 111,100
Restricted stock grants, net......... 1,600
Stock options activity, including
related tax benefits................ 2,600
Translation adjustment............... (1,000)
---- -------- -------- -------
Balance at February 28, 1995........... 600 550,200 90,800 (6,100)
Net income for fiscal 1996........... 92,400
Cash dividends of $.119 per share.... (7,500)
Stock dividend of 5%................. 66,000 (66,000)
Restricted stock amortization........ 1,300
Stock options activity, including
related tax benefits................ 100
Translation adjustment............... 3,700
---- -------- -------- -------
Balance at February 29, 1996........... $600 $617,600 $109,700 $(2,400)
==== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
MARK IV INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED THE LAST DAY OF FEBRUARY 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Income before extraordinary items............... $ 92,400 $ 67,900 $ 51,100
Items not affecting cash:
Depreciation and amortization.................. 66,800 51,500 41,700
Deferred income taxes.......................... 28,700 18,200 10,800
Pension income, net of other items............. (4,900) (11,100) (12,400)
-------- -------- --------
Net cash provided by earnings................ 183,000 126,500 91,200
Changes in assets and liabilities, net of
effects of acquired businesses:
Accounts receivable........................... (1,700) (20,900) (27,200)
Inventories................................... (38,400) (23,100) (7,700)
Other assets.................................. (25,500) (3,000) (5,700)
Accounts payable.............................. 8,500 33,700 (2,600)
Other liabilities............................. (36,200) (16,100) (7,300)
-------- -------- --------
Net cash provided by operations.............. 89,700 97,100 40,700
Extraordinary items, before deferred charges ... -- -- (30,100)
-------- -------- --------
Net cash provided by operating activities.... 89,700 97,100 10,600
-------- -------- --------
Cash flows from investing activities:
Acquisitions.................................... (28,200) (300,900) (65,000)
Divestitures and asset sales.................... 1,600 12,100 35,000
Purchase of plant and equipment, net............ (92,100) (49,600) (38,000)
-------- -------- --------
Net cash used in investing activities........ (118,700) (338,400) (68,000)
-------- -------- --------
Cash flows from financing activities:
Credit agreement borrowings, net................ (242,700) 111,200 18,400
Purchases of subordinated debt.................. -- -- (190,200)
Issuance of subordinated debt................... 248,400 -- 258,000
Other changes in long-term debt, net............ 3,400 900 (18,900)
Changes in short-term bank borrowings........... 27,500 19,500 (8,300)
Common stock transactions....................... 100 114,800 800
Cash dividends paid............................. (7,500) (5,100) (4,100)
-------- -------- --------
Net cash provided by financing activities ... 29,200 241,300 55,700
-------- -------- --------
Effect of exchange rate fluctuations............. (100) 300 (500)
-------- -------- --------
Net increase (decrease) in cash.............. 100 300 (2,200)
Cash and cash equivalents:
Beginning of the year........................... 800 500 2,700
-------- -------- --------
End of the year................................. $ 900 $ 800 $ 500
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
The Company
The Company is a diversified manufacturer of proprietary and other products,
with operations primarily in industrial and automotive power and fluid
transfer businesses.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and all of its subsidiaries. All significant intercompany transactions have
been eliminated. The consolidated financial statements have been prepared in
conformity with generally accepted accounting principles, which requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities as of the date of such financial statements, and the
reported amounts of revenues and expenses during the reporting periods. It
should be recognized that the actual results could differ from those
estimates.
Inventories
Inventories are stated at the lower of cost or market, with cost determined
primarily on the last-in, first-out (LIFO) method.
Property, Plant and Equipment
The Company provides for depreciation of plant and equipment primarily on
the straight-line method over its useful life. The cost of property, plant and
equipment retired or otherwise disposed of, and the accumulated depreciation
thereon, are eliminated from the asset and related accumulated depreciation
accounts, and any resulting gain or loss is reflected in income.
Cost in Excess of Net Assets Acquired
Cost in excess of net assets acquired ("goodwill") is amortized on the
straight-line method over 40 years. The Company continually evaluates the
existence of goodwill impairment on the basis of whether the goodwill is fully
recoverable from projected, undiscounted net cash flows of the related
business unit.
Foreign Currency
The assets and liabilities of the Company's foreign subsidiaries are
translated at year-end exchange rates, and resulting gains and losses are
accumulated in a separate component of stockholders' equity. Foreign currency
transactions are included in income as realized. The Company enters into
foreign currency forward contracts as a hedge for certain existing or
anticipated business transactions denominated in foreign currencies. Gains or
losses on contracts related to existing business transactions are deferred and
recognized as the related transaction is completed, while those related to
anticipated transactions are recognized as of the balance sheet date. The
Company does not hold or issue derivatives for trading purposes and is not a
party to leveraged derivatives transactions.
Net Income Per Share of Common Stock
Primary net income per share is calculated on the basis of the weighted
average number of shares outstanding, adjusted for subsequent stock
distributions. Common stock equivalents which would arise from the exercise of
stock options, using the treasury stock method, were not significant and have
not been included in the calculation.
F-7
<PAGE>
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Fully-diluted net income per share, in addition to the weighted average
determined above, includes common stock equivalents which would arise from the
exercise of stock options using the treasury stock method, and assumes the
conversion of the Company's 6-1/4% Debentures for the periods outstanding.
Consolidated Statements of Cash Flows
For purposes of cash flows, the Company considers overnight investments as
cash equivalents. The Company paid interest of approximately $64,000,000;
$56,000,000; and $52,900,000 in fiscal 1996, 1995 and 1994, respectively. The
Company paid income taxes of approximately $26,600,000; $21,900,000 and
$13,700,000 in fiscal 1996, 1995 and 1994, respectively.
New Accounting Pronouncement
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 121--Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of ("SFAS No. 121"). SFAS No. 121 requires
that long-lived assets and certain identifiable intangibles and goodwill
related to those assets be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. SFAS No. 121 is effective for the Company's fiscal year ending
February 28, 1997, and management is in the process of assessing its impact on
its financial statements. While it is anticipated that SFAS No. 121 will
require a non-cash charge to reduce the carrying value of certain of the
Company's fixed assets and goodwill values, the Company has not completed its
estimate at the present time.
2.ACQUISITIONS AND DIVESTITURES
In November 1994, the Company acquired substantially all of the stock of
Purolator Products Company ("Purolator") for a total cash purchase price,
including expenses, of approximately $286,300,000. Funding for the acquisition
was provided by borrowings under the Company's credit agreement. Purolator is
a manufacturer of a broad range of filtration products used principally in the
automotive aftermarket, and specialized industrial applications.
The acquisition has been accounted for under the purchase method, and
Purolator's results of operations have been consolidated with the Company's
results of operations as of the acquisition date. During fiscal 1996, the
Company made a final determination and allocation of the purchase price as of
the acquisition date, consisting of the following (dollars in thousands):
<TABLE>
<S> <C>
Accounts receivable................................................ $ 83,300
Inventories........................................................ 71,000
Other current assets............................................... 10,000
Accounts payable and other current liabilities..................... (104,200)
--------
Net working capital acquired..................................... 60,100
Fixed assets....................................................... 99,900
Cost in excess of net assets acquired.............................. 158,200
Long-term bank indebtedness........................................ (38,600)
Other non-current items, net....................................... 6,700
--------
Total purchase price, including expenses......................... $286,300
========
</TABLE>
The final changes to the preliminary purchase price determination and
allocation did not have a significant effect on the Company's results of
operations as previously reported.
F-8
<PAGE>
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
During fiscal 1994, the Company decided to sell certain of its non-core
business units, and accounted for them as discontinued operations. The sale of
certain of these operations generated proceeds of $12,100,000 and $35,000,000
in fiscal 1995 and 1994, respectively. At February 28, 1995, the Company's net
assets of its remaining discontinued operations amounted to approximately
$19,500,000. The Company did not sell such operations in fiscal 1996, and
determined it appropriate to reclassify them as continuing.
3.ACCOUNTS RECEIVABLE
Accounts receivable are reflected net of allowances for doubtful accounts of
$16,700,000 and $18,600,000 at February 29, 1996 and February 28, 1995,
respectively.
4.INVENTORIES
Inventories consist of the following at February 29, 1996 and February 28,
1995 (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Raw materials.............................................. $112,900 $103,500
Work-in-process............................................ 57,500 60,200
Finished goods............................................. 234,600 198,200
-------- --------
Total.................................................... $405,000 $361,900
======== ========
</TABLE>
As a result of the fair value determination of inventories required by the
purchase method of accounting for acquired companies as of their acquisition
date, LIFO costs exceed FIFO costs by approximately $40,000,000 and
$39,300,000 at February 29, 1996 and February 28, 1995, respectively.
5.PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and consist of the
following at February 29, 1996 and February 28, 1995 (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Land and land improvements................................ $ 43,400 $ 41,500
Buildings................................................. 155,300 145,300
Machinery and equipment................................... 547,700 451,600
-------- --------
Total property, plant and equipment....................... 746,400 638,400
Less accumulated depreciation............................. 192,700 150,500
-------- --------
Property, plant and equipment, net........................ $553,700 $487,900
======== ========
</TABLE>
Depreciation expense was approximately $53,300,000; $40,900,000; and
$33,200,000 in fiscal 1996, 1995 and 1994, respectively.
6.COST IN EXCESS OF NET ASSETS ACQUIRED
Cost in excess of net assets acquired is presented net of accumulated
amortization of approximately $39,300,000 and $29,700,000 at February 29, 1996
and February 28, 1995, respectively. Amortization expense was approximately
$9,600,000, $7,000,000 and $5,700,000 in fiscal 1996, 1995 and 1994,
respectively.
F-9
<PAGE>
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7.LONG-TERM DEBT
Long-term debt consists of the following at February 29, 1996 and February
28, 1995 (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Senior debt:
Credit agreement..................................... $ 97,300 $ --
Prior credit agreements.............................. -- 338,300
Other items.......................................... 46,700 23,000
---------- ----------
Total senior debt.................................. 144,000 361,300
Less current maturities.............................. (7,900) (8,600)
---------- ----------
Net senior debt ................................... 136,100 352,700
---------- ----------
Subordinated debt:
7 3/4% Senior Subordinated Notes..................... 248,400 --
8 3/4% Senior Subordinated Notes..................... 258,000 258,000
---------- ----------
Total subordinated debt............................ 506,400 258,000
---------- ----------
Total long-term debt................................. 642,500 610,700
Stockholders' equity................................. 725,500 635,500
---------- ----------
Total capitalization............................... $1,368,000 $1,246,200
========== ==========
Long-term debt as a percentage of total
capitalization.................................... 47.0% 49.0%
========== ==========
</TABLE>
On March 8, 1996, the Company entered into an Amended and Restated Credit
and Guarantee Agreement (the "Credit Agreement") with various financial
institutions. The Credit Agreement provides for a five year non-amortizing
revolving credit facility with borrowing availability of $400,000,000 under a
domestic facility (the "Domestic Credit Facility") and $100,000,000 under a
multi-currency facility (the "Multi-Currency Credit Facility"). The Multi-
Currency Credit Facility permits borrowings to be made in dollars as well as
specified foreign currencies. The proceeds of the initial borrowings under the
Credit Agreement were used to repay all amounts outstanding under the
Company's previously existing credit agreements. Borrowings outstanding under
the previous credit agreements as of February 29, 1996 are assumed to have
been replaced as of the balance sheet date with borrowings under the Credit
Agreement, as well as the proceeds from the sale of the 7 3/4% Notes, as
discussed below.
Borrowings under the Domestic Credit Facility bear interest at an annual
rate equal to, at the Company's option, either (i) the greater of (a) the
reference rate of the agent acting on behalf of the various banks or (b) the
Federal Funds Rate plus 0.50% or (ii) LIBOR plus a margin (the "Applicable
Margin") ranging from 0.225% to 0.35% depending upon the Company's
consolidated leverage ratio, as determined on a quarterly basis. Borrowings
under the Multi-Currency Credit Facility bear interest at the LIBOR rate for
the currency of each loan plus the Applicable Margin. The Company is also
required to pay a commitment fee at an annual rate ranging from 0.125% to
0.20% of the total borrowing availability under the Credit Agreement (the
"Facility Fee Rate"), determined on the basis of the same consolidated
leverage ratio. Based upon the Company's consolidated leverage ratio as of
February 29, 1996, the Applicable Margin and Facility Fee Rate are 0.225% and
0.15% respectively. The Credit Agreement contains customary covenants,
including those requiring the maintenance of specified consolidated interest
coverage and leverage ratios and amounts of consolidated net worth. Borrowings
under the Credit Agreement are guaranteed by the Company's significant
domestic subsidiaries and are collateralized by a pledge of the capital stock
of each of such subsidiaries.
On March 11, 1996, the Company completed the private placement of
$250,000,000 principal amount of its 7 3/4% Senior Subordinated Notes due 2006
(the "7 3/4% Notes") at a purchase price of 99.36% of their face amount. The
net proceeds from the sale of the 7 3/4% Notes were used to reduce outstanding
indebtedness under
F-10
<PAGE>
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
the Credit Agreement. The 7 3/4% Notes are general unsecured obligations of
the Company and are subordinated in right of payment to all existing and
future senior indebtedness, and rank the same in right of payment as the
Company's 8 3/4% Notes. The related Indenture limits the payment of dividends
and the repurchase of the Company's Common Stock, and includes certain other
restrictions and limitations customary with subordinated indebtedness of this
type. The Company has agreed to make an offer to exchange the 7 3/4% Notes
(the "Exchange Offer") for a new issue of debt securities registered under the
Securities Act of 1933 (as amended), with substantially identical terms. The
Company is in the process of registering the Exchange Offer.
In fiscal 1994, the Company completed a public offering of $258,000,000
principal amount of its 8 3/4% Senior Subordinated Notes due April 2003 (the
"8 3/4% Notes"). The 8 3/4% Notes are not redeemable until April 1998, when
they are redeemable at 104.375% of principal amount, and thereafter at an
annually declining premium over par until April 2001 when they are redeemable
at par. In fiscal 1994, the Company also recognized an extraordinary loss, net
of tax, of approximately $21,700,000 as a result of the extinguishment of
$190,000,000 of its 13 3/8% Subordinated Debentures.
At February 29, 1996, the Company had interest rate swap agreements in an
aggregate notional amount of approximately $133,000,000. Such agreements
effectively convert the variable rates of interest payable by the Company on
such amount of its indebtedness to fixed annual rates of interest. As a result
of such agreements, the Company is currently paying an effective fixed annual
rate of interest of approximately 5.70% on $100,000,000 of indebtedness, and
12% on $33,000,000 of indebtedness denominated in Italian Lira. The agreements
are scheduled to expire at various dates through 2000.
Based on market quotes and interest rates currently available to the Company
for debt with similar terms and remaining maturities, the aggregate fair value
of total long-term debt at February 29, 1996 and February 28, 1995 was
approximately $652,200,000 and $601,700,000, respectively.
After giving consideration to the Company's new Credit Agreement in March
1996, annual maturities of long-term debt for the next five fiscal years are
approximately: 1997--$7,900,000; 1998--$3,000,000; 1999-- $2,700,000; 2000--
$2,200,000; and 2001--$99,400,000.
8.LEASES
The Company has operating leases which expire at various dates through 2010
with, in some instances, cost escalation and renewal privileges. Total rental
expense under operating leases was approximately $19,100,000; $18,300,000; and
$15,900,000 in fiscal 1996, 1995 and 1994, respectively. Minimum rental
payments under operating leases are approximately: 1997--$18,800,000; 1998--
$16,500,000; 1999--$14,500,000; 2000-- $10,400,000; 2001--$8,400,000; 2002 and
thereafter $24,500,000.
F-11
<PAGE>
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9.INCOME TAXES
Income before provision for taxes and the related provision for taxes for
fiscal 1996, 1995 and 1994 consists of the following (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- -------
<S> <C> <C> <C>
Income before provision for taxes:
United States............................... $ 95,100 $ 69,500 $45,800
Foreign..................................... 56,300 40,900 35,900
-------- -------- -------
Total................................... $151,400 $110,400 $81,700
======== ======== =======
Provision for taxes:
Currently payable:
United States............................. $ 15,300 $ 12,500 $14,500
Foreign................................... 15,000 11,800 5,300
-------- -------- -------
Total currently payable................. 30,300 24,300 19,800
-------- -------- -------
Deferred:
United States............................. 16,500 7,600 3,600
Foreign................................... 12,200 10,600 7,200
-------- -------- -------
Total deferred.......................... 28,700 18,200 10,800
-------- -------- -------
Total provision for taxes............... $ 59,000 $ 42,500 $30,600
======== ======== =======
The provision for taxes for fiscal 1996, 1995, and 1994 differs from the
amount computed using the United States statutory income tax rate as follows
(dollars in thousands):
<CAPTION>
1996 1995 1994
-------- -------- -------
<S> <C> <C> <C>
Expected tax at United States statutory income
tax rate..................................... $ 53,000 $ 38,600 $28,600
Permanent differences......................... 1,600 2,100 1,200
State and local income taxes.................. 2,600 1,900 1,200
Tax credits, net.............................. (250) (700) (500)
Foreign tax rate differences.................. 2,050 600 100
-------- -------- -------
Total provision for taxes............... $ 59,000 $ 42,500 $30,600
======== ======== =======
</TABLE>
F-12
<PAGE>
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The tax effects of temporary differences which give rise to a significant
portion of deferred tax assets (liabilities) consist of the following at
February 29, 1996 and February 28, 1995 (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Current:
Accounts receivable................................... $ 6,500 $ 7,300
Inventories........................................... (5,100) (5,000)
Compensation related.................................. 7,800 8,000
Tax credit carryforwards.............................. 4,000 2,000
Other items........................................... (8,000) (600)
-------- --------
Net current asset................................... $ 5,200 $ 11,700
======== ========
Non-current:
Fixed and intangible assets........................... $(41,000) $(52,100)
Tax credits........................................... 17,000 21,000
Capital loss carryforwards............................ -- 11,000
All other items....................................... (9,100) 23,300
-------- --------
Total non-current asset (liability)................. (33,100) 3,200
Valuation allowance................................... -- (14,100)
-------- --------
Net non-current liability........................... $(33,100) $(10,900)
======== ========
</TABLE>
The non-current valuation allowance in fiscal 1995 related primarily to
capital loss carryforwards which were available to use substantially through
fiscal 1996.
Based on the Company's history of prior operating earnings and its
expectations for the future, management of the Company has determined that it
is more likely than not that operating income will be sufficient to utilize
the tax credits in their carryforward periods, which run substantially through
fiscal 2007. The undistributed earnings of the Company's foreign subsidiaries
have been reinvested in each country, and are not expected to be remitted back
to the parent Company.
10.PENSION AND PROFIT SHARING PLANS
The Company has defined benefit pension plans covering both union and non-
union employees. Under the union plans, employee benefits are computed based
on a dollar amount multiplied by the number of years of service. Benefits
under the non-union plans are computed in a similar manner for certain plans,
and based on the employees' earnings in other plans.
The funded status of the Company's defined benefit plans consists of the
following at February 29, 1996 and February 28, 1995 (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested............................................. $(283,500) $(259,400)
--------- ---------
Accumulated........................................ $(289,600) $(264,500)
--------- ---------
Projected.......................................... $(303,100) $(273,700)
Plan assets at fair value............................ 366,400 335,400
--------- ---------
Plan assets in excess of projected benefit
obligations......................................... 63,300 61,700
Unrecognized net loss and differences in
assumptions......................................... 48,800 49,100
Unrecognized prior service costs .................... 7,500 2,700
--------- ---------
Prepaid pension cost recognized in the consolidated
balance sheets...................................... $ 119,600 $ 113,500
========= =========
</TABLE>
F-13
<PAGE>
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The plans' assets consist of corporate and government bonds, listed common
stocks, guaranteed investment contracts, and real estate investments. Included
in the plans' assets are $37,700,000 of the Company's securities at February
29, 1996.
Net pension income for the defined benefit pension plans in fiscal 1996,
1995, and 1994 includes the following components (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Service cost-benefits earned during the period..... $(3,700) $(3,600) $(2,900)
Interest cost on projected benefit obligation...... (22,400) (19,500) (18,200)
Actual return on assets............................ 68,600 4,300 32,100
Net amortization and deferral...................... (36,000) 31,300 2,500
------- ------- -------
Net pension income............................... $ 6,500 $12,500 $13,500
======= ======= =======
</TABLE>
The assumptions utilized to measure net pension income and the projected
benefit obligations are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Discount rate............................................ 7.50% 8.75% 7.75%
Expected long-term rate of return........................ 11.50% 11.50% 12.00%
Average increase in compensation......................... 4.00% 4.00% 5.00%
</TABLE>
The Company also has defined contribution pension plans for a significant
number of its employees. The Company's contributions to these plans are based
on various percentages of compensation, and in some instances are based upon
the amount of the employees' contributions to the plans. The annual cost of
these plans, the substantial part of which is funded currently, amounted to
approximately $10,600,000; $8,100,000; and $6,700,000 in fiscal 1996, 1995 and
1994, respectively.
11.POST-RETIREMENT BENEFITS
The Company currently provides health and life insurance benefits to a
number of existing retirees from certain of its operations under the
provisions of a number of different plans. Contributions currently required to
be paid by the retirees towards the cost of such plans range from zero to
100%. The Company also has a number of active employees who might receive such
benefits upon their retirement. The Company recognized a $40,000,000 liability
for the cost of these plans, referred to as the accumulated post-retirement
benefit obligation (APBO), entirely in fiscal 1994 in accordance with
Statement of Financial Accounting Standards No. 106. The resulting net of tax
charge of $26,000,000 ($.46 per fully diluted share) was included as the
cumulative effect of a change in accounting principle in the consolidated
statement of income for fiscal 1994.
The following table sets forth the amount included with other non-current
liabilities in the consolidated balance sheets at February 29, 1996 and
February 28, 1995 (dollars in thousands)
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Accumulated post-retirement benefit obligation:
Retirees and beneficiaries receiving benefits............ $68,300 $56,200
Active employees, fully eligible for benefits............ 6,500 5,700
Active employees, not fully eligible for benefits........ 9,300 7,800
------- -------
Total accumulated benefit obligation................... 84,100 69,700
Unrecognized net loss.................................. (13,500) (1,800)
------- -------
Post-retirement benefit liability recognized in the
consolidated balance sheets........................... $70,600 $67,900
======= =======
</TABLE>
F-14
<PAGE>
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company's post-retirement benefit expense for fiscal 1996, 1995 and 1994
includes the following components (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost-benefits earned during the period......... $ 600 $ 500 $ 400
Interest cost on the APBO.............................. 6,000 4,600 3,400
Amortization expense................................... 100 -- --
------ ------ ------
Total expense........................................ $6,700 $5,100 $3,800
====== ====== ======
</TABLE>
The APBO was calculated using a discount rate of 7.50% at February 29, 1996,
and 8.75% at February 28, 1995. The APBO determinations assume an initial
health care cost trend rate of approximately 8.0%, trending down rateably to
an ultimate rate of 4.5% in 2002. The impact of a one-percentage-point
increase in such trend rate would be to increase the APBO at February 29, 1996
by approximately $1,400,000 and increase annual expense by approximately
$100,000.
12. LEGAL PROCEEDINGS
The Company is involved in various legal and environmental related issues.
In the opinion of the Company's management, the ultimate cost to resolve these
matters will not have a material adverse effect on the Company's financial
position, results of operations or cash flows.
13.STOCKHOLDERS' EQUITY AND STOCK OPTIONS
In fiscal 1996, the Company's Board of Directors adopted a Shareholders'
Rights Plan under which Rights were distributed as a dividend at a rate of one
Right for each share of Common Stock held. Each Right entitles the holder to
buy one one-hundredth of a newly-issued share of the Company's Series A Junior
Participating Preferred Stock at an exercise price of $80.00 per share. If an
acquiring person beneficially owns 20% or more of the Company's Common Stock
or the Company is a party to a business combination which is not approved by
the Company's Board of Directors, each Right (other than those held by the
acquiring person) will entitle the holder to receive, upon exercise, shares of
Common Stock of the Company or of the surviving company with a value equal to
two times the exercise price of the Right.
The Company's Board of Directors declared five percent stock dividends which
were distributed in April 1996, 1995 and 1994. All share amounts have been
presented as if the stock distributions had occurred at the beginning of
fiscal 1994. As of February 29, 1996, the Company continues to be authorized
to repurchase approximately 7,000,000 shares, of its outstanding Common Stock.
The Company is also authorized to issue 10,000,000 shares of Preferred
Stock, and there are no shares outstanding at the present time.
The Company's qualified Incentive Stock Option Plan provides for granting
key employees options to purchase the Company's Common Stock at an exercise
price equal to 100% of the market price on the date of grant. The options may
be exercised in cumulative annual increments of 25% commencing one year after
the date of grant, and have a maximum duration of ten years. There were
approximately 350,000 and 1,000,000 shares reserved for the future granting of
options at February 29, 1996 and February 28, 1995, respectively.
As a result of the Company's acquisition of Purolator, certain holders of
Purolator non-qualified stock options converted their options into options to
acquire the Company's Common Stock at an exercise price that would give them
the same built-in gain as they had in the Purolator options. As a result,
Purolator options were converted into non-qualified options to acquire
approximately 351,300 shares of the Company's Common Stock at an average
exercise price of $12.19 per share. The Company's common stock and additional
paid in capital were increased by approximately $2,000,000 to recognize the
issuance of these "in-the-money" stock options.
F-15
<PAGE>
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following table summarizes the status of all of the Company's stock
option transactions for fiscal 1996, 1995 and 1994 (shares amounts in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------------- -------------- -------------
AVERAGE AVERAGE AVERAGE
-------------- -------------- -------------
OPTION OPTION OPTION OPTION OPTION OPTION
SHARES PRICE SHARES PRICE SHARES PRICE
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of year........ 1,429 $12.50 627 $ 8.14 813 $ 6.94
Activity during the year:
Granted........................... 678 $17.87 914 $14.71 15 $17.50
Exercised......................... (322) $11.22 (105) $ 5.70 (184) $ 3.52
Canceled.......................... (32) $14.02 (7) $10.94 (17) $ 8.74
----- ----- ----
Balance at end of year:
Outstanding....................... 1,753 $14.78 1,429 $12.50 627 $ 8.14
----- ----- ----
Exercisable....................... 618 $10.64 677 $10.00 281 $ 6.50
===== ===== ====
</TABLE>
The Company granted restricted stock awards with respect to 23,100 shares in
fiscal 1995 and 370,700 shares in fiscal 1994, at $.01 par value per share.
The fair market value of the awards as of the date of grant is being
recognized as it is earned over the restriction period, with $1,300,000;
$1,600,000 and $800,000 recognized as an expense in fiscal 1996, 1995, and
1994, respectively. As of February 29, 1996, approximately 263,000 shares
remain available for issuance under the Company's Restricted Stock Plan.
14.INDUSTRY SEGMENTS AND GEOGRAPHIC AREAS
During fiscal 1996, the Company reorganized what had been identified as its
primary business segment, Power and Fluid Transfer, into separately managed
and market-focused businesses. As a result, the Company has reclassified the
operations of that segment and its former Professional Audio segment into the
following two business segments (and information for the prior years has been
restated accordingly):
(i) Automotive, which includes the design, manufacture and distribution of
fuel, power transmission, and fluid handling systems and components,
and filters and filtration systems for the global automotive
aftermarket and original equipment manufacturers ("OEM") market.
(ii) Industrial, which includes the design, manufacture and distribution of
power transmission, fluid handling, and filtration components and
systems for industrial OEM and industrial distribution markets
worldwide. The Industrial segment also includes the Company's
Transportation Products and Professional Audio business units.
F-16
F-16
<PAGE>
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Information concerning the Company's business segments for fiscal 1996, 1995
and 1994 is as follows (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
NET SALES TO CUSTOMERS
Automotive........................... $1,004,300 $ 718,900 $ 532,600
Industrial........................... 1,084,200 884,400 711,600
---------- ---------- ----------
Total net sales to customers..... $2,088,500 $1,603,300 $1,244,200
========== ========== ==========
OPERATING INCOME
Automotive........................... $ 110,600 $ 79,300 $ 66,300
Industrial........................... 119,400 100,900 80,400
---------- ---------- ----------
Total operating income........... 230,000 180,200 146,700
General corporate expense............ (17,400) (15,900) (14,900)
Interest expense .................... (61,200) (53,900) (50,100)
---------- ---------- ----------
Income before provision for taxes.. $ 151,400 $ 110,400 $ 81,700
========== ========== ==========
IDENTIFIABLE ASSETS
Automotive........................... $1,030,000 $ 922,700 $ 481,500
Industrial........................... 929,200 869,700 743,300
General corporate ................... 53,900 54,000 57,500
---------- ---------- ----------
Total identifiable assets........ $2,013,100 $1,846,400 $1,282,300
========== ========== ==========
DEPRECIATION AND AMORTIZATION
Automotive........................... $ 33,100 $ 23,100 $ 15,400
Industrial........................... 30,100 24,700 23,700
General corporate.................... 3,600 3,700 2,600
---------- ---------- ----------
Total depreciation and
amortization.................... $ 66,800 $ 51,500 $ 41,700
========== ========== ==========
CAPITAL OUTLAYS
Automotive........................... $ 57,600 $ 29,100 $ 25,200
Industrial........................... 37,900 21,700 16,200
---------- ---------- ----------
Total capital outlays............ $ 95,500 $ 50,800 $ 41,400
========== ========== ==========
</TABLE>
The Company's foreign operations are located primarily in Europe, and to a
lesser extent in Canada and the Far East. Information concerning the Company's
operations by geographic area for fiscal 1996, 1995 and 1994 is as follows
(dollars in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
NET SALES TO CUSTOMERS
United States............................ $1,460,300 $1,115,600 $ 884,500
Foreign ................................. 628,200 487,700 359,700
---------- ---------- ----------
Total net sales to customers......... $2,088,500 $1,603,300 $1,244,200
========== ========== ==========
OPERATING INCOME
United States............................ $ 161,500 $ 126,400 $ 105,700
Foreign.................................. 68,500 53,800 41,000
---------- ---------- ----------
Total operating income............... $ 230,000 $ 180,200 $ 146,700
========== ========== ==========
IDENTIFIABLE ASSETS
United States............................ $1,421,400 $1,350,100 $ 898,700
Foreign.................................. 591,700 496,300 383,600
---------- ---------- ----------
Total identifiable assets............ $2,013,100 $1,846,400 $1,282,300
========== ========== ==========
</TABLE>
F-17
<PAGE>
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The net sales to customers reflect the sales of the operating units in each
geographic area to unaffiliated customers. Export sales from the United States
to unaffiliated customers were $115,900,000, $92,900,000, and $71,300,000 in
fiscal 1996, 1995, and 1994, respectively. Inter-segment sales are not
material. Sales between geographic areas are accounted for at prices which are
competitive with prices charged to unaffiliated customers.
15. QUARTERLY FINANCIAL DATA AND INFORMATION (UNAUDITED)
The following table sets forth the unaudited quarterly results of operations
for each of the fiscal quarters in the years ended February 29, 1996 and
February 28, 1995 (dollars in thousands, except per share data):
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
FISCAL 1996 QUARTER QUARTER QUARTER QUARTER YEAR
----------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Net sales................. $518,500 $509,500 $525,500 $535,000 $2,088,500
Gross profit (a).......... $172,700 $164,900 $166,700 $170,700 $ 675,000
Net income................ $ 24,600 $ 24,100 $ 23,000 $ 20,700 $ 92,400
Income per share (b):
Primary:
Income before
extraordinary items.. $ .39 $ .38 $ .36 $ .33 $ 1.46
Extraordinary items... -- -- -- -- --
-------- -------- -------- -------- ----------
Net income.......... $ .39 $ .38 $ .36 $ .33 $ 1.46
======== ======== ======== ======== ==========
Fully-diluted:
Continuing operations... $ .39 $ .38 $ .36 $ .33 $ 1.46
Extraordinary items..... -- -- -- -- --
-------- -------- -------- -------- ----------
Net income.......... $ .39 $ .38 $ .36 $ .33 $ 1.46
======== ======== ======== ======== ==========
FISCAL 1995
-----------
Net sales................. $363,800 $357,200 $397,300 $485,000 $1,603,300
Gross profit (a).......... $127,700 $124,700 $135,600 $155,300 $ 543,300
Income before
extraordinary items...... $ 17,100 $ 16,700 $ 16,500 $ 17,600 $ 67,900
Extraordinary items....... -- -- (1,100) -- (1,100)
-------- -------- -------- -------- ----------
Net income.......... $ 17,100 $ 16,700 $ 15,400 $ 17,600 $ 66,800
======== ======== ======== ======== ==========
Income per share (b)(c):
Primary:
Income before
extraordinary items.. $ .36 $ .35 $ .33 $ .30 $ 1.33
Extraordinary items... -- -- (.02) -- (.02)
-------- -------- -------- -------- ----------
Net income.......... $ .36 $ .35 $ .31 $ .30 $ 1.31
======== ======== ======== ======== ==========
Fully-diluted:
Income before
extraordinary items.... $ .32 $ .32 $ .31 $ .29 $ 1.23
Extraordinary items..... -- -- (.02) -- (.02)
-------- -------- -------- -------- ----------
Net income.......... $ .32 $ .32 $ .29 $ .29 $ 1.21
======== ======== ======== ======== ==========
</TABLE>
- --------
(a) Excluding depreciation expense.
(b) Restated to reflect the 5% stock dividend issued in April 1996.
(c) The sum of the quarterly amounts do not equal the total as a result of
Common Stock transactions during the year, as well as rounding
differences.
F-18
<PAGE>
MARK IV INDUSTRIES, INC.
THE EXCHANGE AGENT
FOR THE EXCHANGE OFFER IS
FLEET NATIONAL BANK
All tendered Private Notes, executed Letters of Transmittal and other related
documents should be directed to the Exchange Agent at any of the following
addresses:
BY FACSIMILE:
(401) 621-8088
(For Eligible Institutions Only)
CONFIRM BY TELEPHONE:
(401) 865-7132
BY INSURED OVERNIGHT CARRIER:
Fleet National Bank
Corporate Trust Department
125 Dupont Drive-RI/OP/317
Providence, RI 02907
BY REGISTERED MAIL:
Fleet National Bank
Corporate Trust Department
P.O. Box 366-RI/OP/317
Providence, RI 02901-0366
NEW YORK DROP:
Fleet National Bank
c/o First Chicago Trust Company
14 Wall Street
6th Floor, Window 2
New York, NY 10005
Requests for assistance and for additional copies of the Prospectus, the
Letter of Transmittal and other related documents should be directed to the
Exchange Agent at the following address:
Fleet National Bank
Corporate Trust Department
Mail Stop: RI/MO/199
111 Westminster Street
Providence, RI 02903
Attention: Stephen Maceroni
Telephone: (401) 278-3768
Facsimile: (401) 751-9706
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Ninth of the Company's Certificate of Incorporation entitles
officers, directors and controlling persons of the Company to indemnification
to the full extent permitted by Section 145 of the Delaware General Corporation
Law (the "DGCL") as the same may be supplemented or amended from time to time.
Section 145 of the DGCL provides in relevant part that a corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that such person is or was
a director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding if such person acted in good faith and in
a manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful.
In addition, Section 145 provides that a corporation may indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that such person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection with the defense or settlement of such
action or suit if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnify for such expenses which the Delaware Court of Chancery or
such other court shall deem proper. Delaware law further provides that nothing
in the above-described provisions shall be deemed exclusive of any other rights
to indemnification or advancement of expenses to which any person may be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise.
Article Ninth of the Company's Certificate of Incorporation was amended in
August 1986 to provide that no director shall have any personal liability to
the Company or its stockholders for any monetary damages for breach of
fiduciary duty as a director, provided that such provision does not limit or
eliminate the liability of any director (i) for breach of such director's duty
or loyalty to the Company 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 the DGCL (involving certain unlawful dividends
or stock repurchases) or (iv) for any transaction from which such director
derived an improper personal benefit. The provisions of such article do not
limit or eliminate the liability of any director for any act or omission
occurring prior to the effective time of such amendment.
Reference is made to Section 8 of the Registration Rights Agreement included
in Exhibit 4.3 hereto which provides certain indemnification rights to the
directors and officers of the Company.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<C> <S>
4.1 --Indenture dated as of March 15, 1993 between the Company and Citibank,
N.A., as Trustee (including the form of 8 3/4% Senior Subordinated
Notes due April 1, 2003) (incorporated by reference to Exhibit 4.1 to
the Company's Current Report on Form 8-K dated March 29, 1993).
4.2 --Indenture dated as of March 11, 1996 between the Company and Fleet
National Bank, as Trustee (including the forms of the 7 3/4% Senior
Subordinated Notes due April 1, 2006) (incorporated by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K dated March 21,
1996, as amended by the Company's Current Report on Form 8-K/A dated
March 27, 1996).
4.3 --Registration Rights Agreement dated as of March 11, 1996 between the
Company and Bear,
Stearns & Co. Inc.
*5 --Opinion of Stroock & Stroock & Lavan as to the legality of the
Exchange Notes.
10.1 --Amended and Restated Credit Agreement dated as of March 8, 1996 among
the Company, as Borrower, Dayco PTI S.p.A., as Subsidiary Borrower,
certain other subsidiaries of the Company named therein, as Guarantors,
various banks and other financial institutions named therein, Chemical
Bank, as Administrative and Bid Agent, Bank of America National Trust
and Savings Association, as Documentation Agent, and BA Securities,
Inc. and Chemical Securities Inc., as Arrangers (incorporated by
reference to Exhibit 10.1 to the Company's Current Report on Form
8-K dated March 21, 1996).
12.1 --Statement Regarding Computation of Ratios of Earnings to Fixed
Charges.
12.2 --Statement Regarding Computation of Pro Forma Ratios of Earnings to
Fixed Charges.
*23.1 --Consent of Stroock & Stroock & Lavan (included in Exhibit 5).
23.2 --Consent of Coopers & Lybrand L.L.P.
23.3 --Deleted
*24 --Powers of attorney.
*25 --Statement on Form T-1 of Eligibility of Trustee.
99.1 --Form of Letter of Transmittal.
*99.2 --Form of Notice of Guaranteed Delivery.
*99.3 --Form of Letter to Nominees.
*99.4 --Form of Letter to Clients.
*99.5 --Form of Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
</TABLE>
- --------
* Previously filed.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(b) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
II-2
<PAGE>
(2) For the purpose of determining any liability under the Securities
Act, 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.
(c) The undersigned registrant hereby undertakes that insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the 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.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Amherst, State of New
York, on May 21, 1996.
MARK IV INDUSTRIES, INC.
/s/ Richard L. Grenolds
By___________________________________
Richard L. Grenolds
Vice President and Chief Accounting
Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Sal H. Alfiero* Chairman of the Board and May 21, 1996
____________________________________ Chief Executive Officer
Sal H. Alfiero
William P. Montague* President and Chief May 21, 1996
____________________________________ Operating Officer and
William P. Montague Director
Gerald S. Lippes* Secretary and Director May 21, 1996
____________________________________
Gerald S. Lippes
John J. Byrne* Vice President and Chief May 21, 1996
____________________________________ Financial Officer
John J. Byrne
/s/ Richard L. Grenolds Vice President and Chief May 21, 1996
____________________________________ Accounting Officer
Richard L. Grenolds
Clement R. Arrison* Director May 21, 1996
____________________________________
Clement R. Arrison
Director May , 1996
____________________________________
Joseph G. Donohoo
Director May , 1996
____________________________________
Herbert Roth, Jr.
*By: /s/ Richard L. Grenolds
-------------------------------
Richard L. Grenolds,
as Attorney-in-Fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION NO.
------- ----------- ----
<C> <S> <C>
4.1 --Indenture dated as of March 15, 1993 between the Company and
Citibank, N.A., as Trustee (including the form of 8 3/4%
Senior Subordinated Notes due April 1, 2003) (incorporated by
reference to Exhibit 4.1 to the Company's Current Report on
Form 8-K dated March 29, 1993)................................
4.2 --Indenture dated as of March 11, 1996 between the Company and
Fleet National Bank, as Trustee (including the forms of the 7
3/4% Senior Subordinated Notes due April 1, 2006)
(incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated March 21, 1996, as amended by
the Company's Current Report on Form 8-K/A dated March 27,
1996). .......................................................
4.3 --Registration Rights Agreement dated as of March 11, 1996
between the Company and Bear,
Stearns & Co. Inc. ...........................................
*5 --Opinion of Stroock & Stroock & Lavan as to the legality of
the Exchange Notes............................................
10.1 --Amended and Restated Credit Agreement dated as of March 8,
1996 among the Company, as Borrower, Dayco PTI S.p.A., as
Subsidiary Borrower, certain other subsidiaries of the Company
named therein, as Guarantors, various banks and other
financial institutions named therein, Chemical Bank, as
Administrative and Bid Agent, Bank of America National Trust
and Savings Association, as Documentation Agent, and BA
Securities, Inc. and Chemical Securities Inc., as Arrangers
(incorporated by reference to Exhibit 10.1 to the Company's
Current Report on Form 8-K dated March 21, 1996)..............
12.1 --Statement Regarding Computation of Ratios of Earnings to
Fixed Charges.................................................
12.2 --Statement Regarding Computation of Pro Forma Ratios of
Earnings to Fixed Charges.....................................
*23.1 --Consent of Stroock & Stroock & Lavan (included in Exhibit 5).
23.2 --Consent of Coopers & Lybrand L.L.P. .........................
23.3 --Deleted......................................................
*24 --Powers of attorney. .........................................
*25 --Statement on Form T-1 of Eligibility of Trustee. ............
99.1 --Form of Letter of Transmittal. ..............................
*99.2 --Form of Notice of Guaranteed Delivery. ......................
*99.3 --Form of Letter to Nominees. .................................
*99.4 --Form of Letter to Clients. ..................................
*99.5 --Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9. ................
</TABLE>
- --------
* Previously filed.
II-5
<PAGE>
=========================================================================
MARK IV INDUSTRIES, INC.
$250,000,000 of
7 3/4% Senior Subordinated Notes due 2006
Registration Rights Agreement
March 11, 1996
BEAR, STEARNS & CO. INC.
===============================================================================
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
---------
into as of March 11, 1996 by and between Mark IV Industries, Inc., a Delaware
corporation (the "Company"), and Bear, Stearns & Co. Inc. (the "Initial
------- -------
Purchaser"), which has agreed to purchase the Company's 7 3/4% Senior
- ---------
Subordinated Notes due 2006 (the "Series A Senior Notes") pursuant to the
---------------------
Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated March 5,
1996 (the "Purchase Agreement"), by and between the Company and the Initial
------------------
Purchaser. In order to induce the Initial Purchaser to purchase the Series A
Senior Notes, the Company has agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchaser set forth in Section 8 of
the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
---
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
-------------
Closing Date: The date of this Agreement.
------------
Commission: The Securities and Exchange Commission.
----------
Consummate: A Registered Exchange Offer shall be deemed "Consummated" for
----------
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Senior Notes to be issued in the Exchange Offer, (ii)
the maintenance of such Registration Statement continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof, and (iii) the delivery by the Company
to the Registrar under the Indenture of Series B Senior Notes in the same
aggregate principal amount as the aggregate principal amount of Series A Senior
Notes that were tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Senior Notes, each
--------------------
Interest Payment Date.
Effectiveness Target Date: As defined in Section 5.
-------------------------
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Exchange Offer: The registration by the Company under the Act of the
--------------
Series B Senior Notes pursuant to a Registration Statement pursuant to which the
Company offers the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
by such Holders for Series B Senior Notes in an aggregate principal amount equal
to the aggregate principal amount of the Transfer Restricted Securities tendered
in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement relating
-------------------------------------
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchaser proposes
--------------
to sell the Series A Senior Notes to certain "qualified institutional buyers,"
as such term is defined in Rule 144A under the Act, and to certain institutional
"accredited investors," as such term is defined in Rule 501(a)(1), (2), (3) and
(7) of Regulation D under the Act ("Accredited Institutions").
-----------------------
<PAGE>
Holders: As defined in Section 2(b) hereof.
-------
Indemnified Holder: As defined in Section 8(a) hereof.
------------------
Indenture: The Indenture, dated as of March 11, 1996, by and between the
---------
Company and Fleet National Bank, N.A., as trustee (the "Trustee"), pursuant to
-------
which the Senior Notes are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
Initial Purchaser: As defined in the preamble hereto.
-----------------
Interest Payment Date: As defined in the Indenture and the Senior Notes.
---------------------
NASD: National Association of Securities Dealers, Inc.
----
Person: An individual, partnership, corporation, trust or unincorporated
------
organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, as
----------
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date relating to Senior
-------------
Notes, each Person who is a Holder of Senior Notes on the record date with
respect to the Interest Payment Date on which such Damages Payment Date shall
occur.
Registration Default: As defined in Section 5 hereof.
--------------------
Registration Statement: Any registration statement of the Company relating
----------------------
to (a) an offering of Series B Senior Notes pursuant to an Exchange Offer or (b)
the registration for resale of Transfer Restricted Securities pursuant to the
Shelf Registration Statement, which is filed pursuant to the provisions of this
Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
Senior Notes: The Series A Senior Notes and the Series B Senior Notes.
------------
Series B Senior Notes: The Company's new 7 3/4% Senior Subordinated Notes
---------------------
due 2006 to be issued pursuant to the Indenture in the Exchange Offer.
Shelf Filing Deadline: As defined in Section 4 hereof.
---------------------
Shelf Registration Statement: As defined in Section 4 hereof.
----------------------------
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
---
in effect on the date of the Indenture.
Transfer Restricted Securities: (i) Each Series A Senior Note, until the
------------------------------
earliest to occur of (a) the date on which such Series A Senior Note is
exchanged in the Exchange Offer for a Series B Senior Note that is entitled to
be resold to the public by the Holder thereof without complying with the
prospectus delivery requirements of the Act, (b) the date on which such Series A
Senior Note has been effectively registered under the Act and disposed of in
accordance with a Shelf Registration Statement and (c) the date on which such
Series A Senior Note is distributed to the public pursuant to Rule 144 under the
Act; and (ii) each Series B Senior Note issued pursuant to the Exchange Offer to
a Broker-Dealer, until the date on which such Series B Senior Note is freely
tradeable such that it may be sold by a Broker-Dealer pursuant to the "Plan of
-2-
<PAGE>
Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein).
Underwritten Registration or Underwritten Offering: A registration in
------------------------- ---------------------
which securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
------------------------------
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to be a
-----------------------------------------
holder of Transfer Restricted Securities (each, a "Holder") whenever such Person
------
is the record owner of Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), the Company shall (i) cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 30 days after the Closing Date, a Registration Statement under the Act
relating to the Series B Senior Notes and the Exchange Offer, (ii) use its best
efforts to cause such Registration Statement to become effective at the earliest
possible time, but in no event later than 120 days after the Closing Date, (iii)
in connection with the foregoing, file (A) all pre-effective amendments to such
Registration Statement as may be necessary in order to cause such Registration
Statement to become effective, (B) if applicable, a post-effective amendment to
such Registration Statement pursuant to Rule 430A under the Act and (C) cause
all necessary filings in connection with the registration and qualification of
the Series B Senior Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Registration Statement, commence the
Exchange Offer. The Exchange Offer shall be on the appropriate form permitting
registration of the Series B Senior Notes to be offered in exchange for the
Transfer Restricted Securities and to permit resales of Senior Notes held by
Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall cause the Exchange Offer Registration Statement to
be effective continuously and shall keep the Exchange Offer open for a period of
not less than the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; provided, however, that in no
event shall such period be less than 20 business days. The Company shall cause
the Exchange Offer to comply with all applicable federal and state securities
laws. No securities other than the Senior Notes shall be included in the
Exchange Offer Registration Statement. The Company shall use its best efforts
to cause the Exchange Offer to be Consummated on the earliest practicable date
after the Exchange Offer expires, but in no event later than 30 business days
after the Exchange Offer Registration Statement has become effective.
(c) The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who holds Series A Senior Notes that are
Transfer Restricted Securities and that were acquired for its own account as a
result of market-making activities or other trading activities (other than
Transfer Restricted Securities acquired directly from the Company), may exchange
such Series A Senior Notes pursuant to the Exchange Offer; however, such Broker-
Dealer may be deemed to be an "underwriter" within the meaning of the Act and
must, therefore, deliver a prospectus meeting the requirements of the Act in
connection with any resales of the Series B Senior Notes received by such
Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may
be satisfied by the delivery by such Broker-Dealer of the Prospectus contained
in the Exchange Offer Registration
-3-
<PAGE>
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such resales by Broker-Dealers that the Commission
may require in order to permit such resales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Senior Notes held by any such Broker-Dealer except to the extent required by the
Commission as a result of a change in policy after the date of this Agreement.
The Company shall use its best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for resales of Series B Senior Notes issued in
exchange for Series A Senior Notes acquired by Broker-Dealers for their own
accounts as a result of market-making activities or other trading activities,
and to ensure that it conforms with the requirements of this Agreement, the Act
and the policies, rules and regulations of the Commission as announced from time
to time, for a period of one year from the date on which the Exchange Offer
Registration Statement is declared effective or until such earlier date on which
all such Series B Senior Notes are freely tradeable.
The Company shall provide sufficient copies of the latest version of such
Prospectus to Broker-Dealers promptly upon request at any time during such one-
year period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
------------------
Exchange Offer Registration Statement or to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or Commission
policy (after the procedures set forth in Section 6(a) below have been complied
with) or (ii) any Holder of Transfer Restricted Securities shall notify the
Company within 20 business days of the Consummation of the Exchange Offer (A)
that such Holder is prohibited by applicable law or Commission policy from
participating in the Exchange Offer, or (B) that such Holder may not resell the
Series B Senior Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder, or (C) that such Holder is a Broker-Dealer and holds Series A Senior
Notes acquired directly from the Company or one of its affiliates, then the
Company shall:
(x) cause to be filed a shelf registration statement pursuant to Rule
415 under the Act, which may be an amendment to the Exchange Offer
Registration Statement (in either event, the "Shelf Registration
------------------
Statement") on or prior to the earliest to occur of (1) the 30th day after
the date on which the Company determines that it is not required to file
the Exchange Offer Registration Statement, (2) the 30th day after the date
on which the Company receives notice from a Holder of Transfer Restricted
Securities as contemplated by clause (ii) above, and (3) the 120th day
after the Closing Date (such earliest date being the "Shelf Filing
------------
Deadline"), which Shelf Registration Statement shall provide for resales of
all Transfer Restricted Securities the Holders of which shall have provided
the information required pursuant to Section 4(b) hereof; and
(y) use its best efforts to cause such Shelf Registration Statement
to be declared effective by the Commission on or before the 90th day after
the Shelf Filing Deadline.
The Company shall use its best efforts to keep such Shelf Registration Statement
continuously effective, supplemented and amended as required by the provisions
of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for resales of Senior Notes by the Holders of Transfer Restricted
Securities entitled to the benefit of this Section 4(a), and to ensure that it
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least three years following the Closing Date or until such earlier
date on which all such Senior Notes are freely tradeable. Notwithstanding
anything to the contrary herein, the Company shall not be required to file more
than one Shelf Registration Statement hereunder.
-4-
<PAGE>
(b) Provision by Holders of Certain Information in Connection with the
------------------------------------------------------------------
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
- ----------------------------
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 business days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have used its best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf Registration Statement
is being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement is not
filed with the Commission on or prior to the date specified for such filing in
this Agreement, (ii) any of such Registration Statements has not been declared
effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the
-------------------------
Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded immediately by a post-
effective amendment to such Registration Statement that cures such failure and
that is itself immediately declared effective (each such event referred to in
clauses (i) through (iv), a "Registration Default"), the Company hereby agrees
--------------------
to pay liquidated damages to each Holder of Transfer Restricted Securities with
respect to the first 90-day period immediately following the occurrence of such
Registration Default, in an amount equal to $.05 per week per $1,000 principal
amount of Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues. The amount of the
liquidated damages shall increase by an additional $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of liquidated damages of $.50 per week per $1,000 principal
amount of Transfer Restricted Securities. All accrued liquidated damages shall
be paid to Record Holders by the Company by wire transfer of immediately
available funds or by federal funds check on each Damages Payment Date, as
provided in the Indenture. Following the cure of all Registration Defaults
relating to any particular Transfer Restricted Securities, the accrual of
liquidated damages with respect to such Transfer Restricted Securities will
cease.
All obligations of the Company set forth in the preceding paragraph that
are outstanding with respect to any Transfer Restricted Security at the time
such security ceases to be a Transfer Restricted Security shall survive until
such time as all such obligations with respect to such Security shall have been
satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
-------------------------------------
Exchange Offer, the Company shall comply with all of the provisions of Section
6(c) below, shall use its best efforts to effect such exchange to permit the
sale of Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof, and shall comply with all of
the following provisions:
(i) If in the reasonable opinion of counsel to the Company there is a
question as to whether the Exchange Offer is permitted by applicable law,
the Company hereby agrees to seek a no-action letter or other favorable
decision from the Commission allowing the Company to Consummate an Exchange
Offer for such Series A Senior Notes. The Company hereby agrees to pursue
the issuance of such a decision to the Commission staff level but shall not
be required to take commercially
-5-
<PAGE>
unreasonable action to effect a change of Commission policy. The Company
hereby agrees, however, to (A) participate in telephonic conferences with
the Commission, (B) deliver to the Commission staff an analysis prepared by
counsel to the Company setting forth the legal bases, if any, upon which
such counsel has concluded that such an Exchange Offer should be permitted
and (C) diligently pursue a resolution (which need not be favorable) by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation thereof, a written representation to the Company (which may be
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an affiliate of
the Company, (B) it is not engaged in, and does not intend to engage in,
and has no arrangement or understanding with any person to participate in,
a distribution of the Series B Senior Notes to be issued in the Exchange
Offer and (C) it is acquiring the Series B Senior Notes in its ordinary
course of business. In addition, all such Holders of Transfer Restricted
Securities shall otherwise cooperate in the Company's preparations for the
Exchange Offer. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to participate
in a distribution of the securities to be acquired in the Exchange Offer
(1) could not under Commission policy as in effect on the date of this
Agreement rely on the position of the Commission enunciated in Morgan
------
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
--------------------- ----------------------
Corporation (available May 13, 1988), as interpreted in the Commission's
-----------
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including any no-action letter obtained pursuant to clause (i)
above), and (2) must comply with the registration and prospectus delivery
requirements of the Act in connection with a secondary resale transaction
and that such a secondary resale transaction should be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K
if the resales are of Series B Senior Notes obtained by such Holder in
exchange for Series A Senior Notes acquired by such Holder directly from
the Company.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the
Commission (A) stating that the Company is registering the Exchange Offer
in reliance on the position of the Commission enunciated in Exxon Capital
-------------
Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc.
-------------------- ----------------------------
(available June 5, 1991) and, if applicable, any no-action letter obtained
pursuant to clause (i) above and (B) including a representation that the
Company has not entered into any arrangement or understanding with any
Person to distribute the Series B Senior Notes to be received in the
Exchange Offer and that, to the best of the Company's information and
belief, each Holder participating in the Exchange Offer is acquiring the
Series B Senior Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the Series B Senior Notes received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf
----------------------------
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) below and shall use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof, and pursuant
thereto the Company will, in accordance with Section 4(a)(x), prepare and file
with the Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof.
(c) General Provisions. In connection with any Registration Statement and
------------------
any Prospectus required by this Agreement to permit the sale or resale of
Transfer Restricted Securities (including, without limitation, any Registration
Statement and the related Prospectus required to permit resales of Senior Notes
by Broker-Dealers), the Company shall:
-6-
<PAGE>
(i) use its best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements
(including, if required by the Act or any regulation thereunder, financial
statements of its subsidiaries) for the period specified in Section 3 or 4
of this Agreement, as applicable; upon the occurrence of any event that
would cause any such Registration Statement or the Prospectus contained
therein (A) to contain a material misstatement or omission or (B) not to be
effective and usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Company shall file promptly an
appropriate amendment to such Registration Statement, in the case of clause
(A), correcting any such misstatement or omission, and, in the case of
either clause (A) or (B), use its best efforts to cause such amendment to
be declared effective and such Registration Statement and the related
Prospectus to become usable for their intended purpose(s) as soon as
practicable thereafter;
(ii) prepare and file with the Commission such amendments and post-
effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, as applicable, or such shorter period as
will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Act, and to comply fully with
the applicable provisions of Rules 424 and 430A under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders promptly
and, if requested by such Persons, to confirm such advice in writing, (A)
when the Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to any Registration Statement
or any post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or
for additional information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for any of the preceding purposes, (D) of the existence of
any fact or the happening of any event that makes any statement of a
material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes
in the Registration Statement or the Prospectus in order to make the
statements therein not misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities
or Blue Sky laws, the Company shall use its best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) furnish to each of the selling Holders and each of the
underwriter(s), if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any amendments
or supplements to any such Registration Statement or Prospectus (including
all documents incorporated by reference in such Registration Statement),
which documents will be subject to the review of such Holders and
underwriter(s), if any, for a period of at least five business days, and
the Company will not file any such Registration Statement or Prospectus or
any amendment or supplement to any such Registration Statement or
Prospectus (including all such documents incorporated by reference) to
which a selling Holder of Transfer Restricted Securities covered by such
Registration Statement or the underwriter(s), if any, shall reasonably
object within five business days after the receipt thereof. A selling
Holder or underwriter, if any, shall be deemed to have reasonably
-7-
<PAGE>
objected to such filing if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed, contains
a material misstatement or omission;
(v) concurrently with the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s), if any, make the Company's representatives available for
discussion of such document and other customary due diligence matters, and
include such information in such document as such selling Holders or
underwriter(s), if any, reasonably may request;
(vi) upon request, make available at reasonable times for inspection
by the selling Holders, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney or accountant
retained by such selling Holders or any of the underwriter(s), all material
financial and other records, pertinent corporate documents and properties
of the Company and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Holder,
underwriter, attorney or accountant in connection with such Registration
Statement subsequent to the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the underwriter(s), if
any, promptly incorporate in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriter(s), if any, may
reasonably request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer
Restricted Securities, information with respect to the principal amount of
Transfer Restricted Securities being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the offering of
the Transfer Restricted Securities to be sold in such offering; and make
all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating agencies, if
so requested by the Holders of a majority in aggregate principal amount of
Senior Notes covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the underwriter(s),
if any, without charge, at least one copy of the Registration Statement, as
first filed with the Commission, and of each amendment thereto, including
all documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(x) deliver to each selling Holder and each of the underwriter(s), if
any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; the Company hereby consents to the use of
the Prospectus and any amendment or supplement thereto by each of the
selling Holders and each of the underwriter(s), if any, in connection with
the offering and the sale of the Transfer Restricted Securities covered by
the Prospectus or any amendment or supplement thereto;
(xi) enter into such customary agreements (including an underwriting
agreement), and make such representations and warranties, and take all such
other actions in connection therewith in order to expedite or facilitate
the disposition of the Transfer Restricted Securities pursuant to any
Registration Statement contemplated by this Agreement, all to such extent
as may be reasonably requested by the Initial Purchaser or by any Holder of
Transfer Restricted Securities or underwriter in connection with any sale
or resale pursuant to any Registration Statement contemplated by this
Agreement; and whether or not an underwriting agreement is entered into and
whether or not the registration is an Underwritten Registration, the
Company shall:
-8-
<PAGE>
(A) furnish to the Initial Purchaser, each selling Holder and
each underwriter, if any, in such substance and scope as they may
request and as are customarily made by issuers to underwriters in
primary underwritten offerings, upon the date of the Consummation of
the Exchange Offer and, if applicable, the effectiveness of the Shelf
Registration Statement:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed by the
Chairman or the President and a Vice President of the Company,
dated the date of its delivery, to the effect that the conditions
set forth in subsection (a) of Section 8 of the Purchase
Agreement have been satisfied, that the representations and
warranties of the Company set forth in Section 5 of the Purchase
Agreement are accurate and certifying as to such other matters as
such parties may reasonably request;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Company covering the matters set forth in paragraphs (b) and (c)
of Section 8 of the Purchase Agreement and such other matters as
such parties may reasonably request, and in any event including a
statement to the effect that such counsel has participated in
conferences with officers and other representatives of the
Company, representatives of the independent public accountants
for the Company, the Initial Purchaser's representatives and the
Initial Purchaser's counsel in connection with the preparation of
such Registration Statement and the related Prospectus and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the basis
of the foregoing (relying as to materiality to a large extent
upon facts provided to such counsel by officers and other
representatives of the Company and without independent check or
verification), no facts came to such counsel's attention that
caused such counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or any post-
effective amendment thereto became effective, and, in the case of
the Exchange Offer Registration Statement, as of the date of
Consummation, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that
the Prospectus contained in such Registration Statement as of its
date and, in the case of the opinion dated the date of
Consummation of the Exchange Offer, as of the date of
Consummation, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. Without limiting the foregoing,
such counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial statements,
notes and schedules and other financial data included in any
Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated as of the date of
Consummation of the Exchange Offer or the date of effectiveness
of the Shelf Registration Statement, as the case may be, from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters by underwriters in connection with primary underwritten
offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to Section 8(e) of the Purchase
Agreement, without exception;
-9-
<PAGE>
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
clause (A) above and with any customary conditions
contained in the underwriting agreement or other agreement entered
into by the Company pursuant to this clause (xi), if any.
If at any time the representations and warranties of the Company
contemplated in clause (A)(1) above cease to be true and correct, the
Company shall so advise the Initial Purchaser and the underwriter(s), if
any, and each selling Holder promptly and, if requested by such Persons,
shall confirm such advice in writing;
(xii) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification of
the Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as the selling Holders or underwriter(s) may request and
do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted Securities
covered by the Shelf Registration Statement; provided, however, that the
Company shall not be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that
would subject it to the service of process in suits or to taxation, other
than as to matters and transactions relating to the Registration Statement,
in any jurisdiction where it is not now so subject;
(xiii) shall issue, upon the request of any Holder of Series A Senior
Notes covered by the Shelf Registration Statement, Series B Senior Notes,
having an aggregate principal amount equal to the aggregate principal
amount of Series A Senior Notes surrendered to the Company by such Holder
in exchange therefor or being sold by such Holder; such Series B Senior
Notes to be registered in the name of such Holder or in the name of the
purchaser(s) of such Senior Notes, as the case may be; in return, the
Series A Senior Notes held by such Holder shall be surrendered to the
Company for cancellation;
(xiv) cooperate with the selling Holders and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and enable such Transfer Restricted Securities to be
in such denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least two business days prior to
consummation of any sale of Transfer Restricted Securities made by such
underwriter(s);
(xv) use its best efforts to cause the Transfer Restricted Securities
covered by the Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof or the underwriter(s), if any, to
consummate the disposition of such Transfer Restricted Securities, subject
to the proviso contained in clause (viii) above;
(xvi) if any fact or event contemplated by clause (c)(iii)(D) above
shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading;
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<PAGE>
(xvii) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of the Registration Statement and provide
the Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depositary Trust Company;
(xviii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its reasonable best efforts to cause such Registration
Statement to become effective and approved by such governmental agencies or
authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such Transfer
Restricted Securities;
(xix) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to
its security holders, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
for the twelve-month period (A) commencing at the end of any fiscal quarter
in which Transfer Restricted Securities are sold to underwriters in a firm
or best efforts Underwritten Offering or (B) if not sold to underwriters in
such an offering, beginning with the first month of the Company's first
fiscal quarter commencing after the effective date of the Registration
Statement;
(xx) cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement required by this
Agreement, and, in connection therewith, cooperate with the Trustee and the
Holders of Senior Notes to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the terms
of the TIA; and execute and use its best efforts to cause the Trustee to
execute, all documents that may be required to effect such changes and all
other forms and documents required to be filed with the Commission to
enable such Indenture to be so qualified in a timely manner;
(xxi) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed if requested by
the Holders of a majority in aggregate principal amount of Series A Senior
Notes or the managing underwriter(s), if any; and
(xxii) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 and
Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security
that such Holder will forthwith discontinue disposition of Transfer Restricted
Securities pursuant to the applicable Registration Statement upon receipt of any
notice from the Company of the existence of any fact of the kind described in
Section 6(c)(iii)(D) hereof, or, in the case of any Shelf Registration, if in
the good faith judgment of the Board of Directors of the Company, such
disposition would adversely affect a material proposed or pending acquisition,
merger or other similar corporate event to which the Company is or expects to be
a party, in each case, until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof, or
until it is advised in writing (the "Advice") by the Company that the use of the
------
Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If
so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the event
the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice to and including the date
when each selling Holder covered by such Registration Statement shall have
received the
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<PAGE>
copies of the supplemented or amended Prospectus contemplated by
Section 6(c)(xvi) hereof or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings made by any Initial
Purchaser or Holder with the NASD (and, if applicable, the fees and expenses of
any "qualified independent underwriter" and its counsel that may be required by
the rules and regulations of the NASD)); (ii) all fees and expenses of
compliance with federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing (including printing certificates for the Series B
Senior Notes to be issued in the Exchange Offer and printing of Prospectuses),
messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Company and subject to Section 7(b) below, the Holders of
Transfer Restricted Securities; (v) all application and filing fees in
connection with listing Senior Notes on a national securities exchange or an
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Company (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company will bear its internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any Person, including special experts, retained by the Company.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Initial Purchaser and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Latham & Watkins or such other counsel as may be chosen by the Holders of a
majority in principal amount of the Transfer Restricted Securities for whose
benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each Holder and each
person, if any, who controls any Holder within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act (each an "Indemnified Holder") against
------------------
any and all losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus, or in any supplement thereto or amendment thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company will not be liable in
any such case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Indemnified Holder expressly for
use therein; and provided, further, that the Company shall not be liable to the
Indemnified Holder (or any person controlling the Indemnified Holder) under the
indemnity agreement in this Section 8 with respect to any Registration
-12-
<PAGE>
Statement or Prospectus, to the extent that any such loss, liability, claim,
damage or expense of the Indemnified Holder (or any person controlling the
Indemnified Holder) results from the fact such Indemnified Holder sold Senior
Notes to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the Registration Statement
(excluding documents incorporated by reference) or of the Prospectus as then
amended or supplemented (excluding documents incorporated by reference) if the
Company has previously furnished copies thereof to the Indemnified Holder and
the loss, liability, claim, damage or expense of the Indemnified Holder (or such
person controlling the Indemnified Holder) results from an untrue statement,
alleged untrue statement, omission or alleged omission of a material fact
contained in the preliminary prospectus as amended or supplemented. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have, including without limitation, under this Agreement.
(b) The Indemnified Holder agrees to indemnify and hold harmless the
Company, each director of the Company, each of the officers of the Company who
shall have signed any Registration Statement and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any losses, liabilities, claims, damages and
expenses whatsoever (including but not limited to attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Indemnified Holder
expressly for use therein; provided, however, that in no case shall the
Indemnified Holder be liable or responsible for any amount in excess of the
amount such Indemnified Holder paid for its Senior Notes and the amount received
by such Holder upon the sale thereof. This indemnity will be in addition to any
liability which the Indemnified Holder may otherwise have, including under this
Agreement.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent that it has been prejudiced
in any material respect by such failure). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii)
such indemnified party or parties shall have reasonably concluded that there may
be defenses available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in which case the
indemnifying party or parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events such fees and expenses of counsel shall be borne by the indemnifying
parties. The indemnifying party under subsection (a) or (b) above shall only be
liable for the legal expenses of one counsel for all indemnified parties in each
jurisdiction in which any claim or action is
-13-
<PAGE>
brought; provided, however, that the indemnifying party shall be liable for
separate counsel for any indemnified party in a jurisdiction, if counsel to the
indemnified parties shall have reasonably concluded that there may be defenses
available to such indemnified party that are different from or additional to
those available to one or more of the other indemnified parties and that
separate counsel for such indemnified party is prudent under the circumstances.
Anything in this subsection to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent; provided, however, that such written consent was
not unreasonably withheld.
(d) In order to provide for contribution in circumstances in which the
indemnification provided for in Section 8 is for any reason held to be
unavailable, the Company and the Indemnified Holder shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Company, any contribution received by the Company from persons,
other than the Indemnified Holder, who may also be liable for contribution,
including persons who control the Company within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act) to which the Company and the
Indemnified Holder may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company and the Indemnified Holder
from the offering of the Senior Notes or, if such allocation is not permitted by
applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in Section 8, in such
proportion as is appropriate to reflect not only the relative benefits referred
to above but also the relative fault of the Company and the Indemnified Holder
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Indemnified Holder shall be deemed to be in the same proportion as (x) the total
proceeds from the offering of Senior Notes (net of discounts and commissions but
before deducting expenses) received by the Company and (y) the difference
between the amount such Indemnified Holder paid for its Senior Notes and the
amount received by such Holder upon the sale thereof. The relative fault of the
Company and of the Indemnified Holder shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Indemnified Holder and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Indemnified Holder agree
that it would not be just and equitable if contribution pursuant to this Section
8 were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to above.
Notwithstanding the provisions of this Section 8, (i) in no case shall the
Indemnified Holder be required to contribute any amount in excess of the amount
by which the difference between the amount such Indemnified Holder paid for its
Senior Notes and the amount received by such Holder upon the sale thereof
exceeds the amount of any damages which the Indemnified Holder has otherwise
been required to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person, if any, who
controls the Indemnified Holder within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, shall have the same rights to contribution as
the Indemnified Holder, and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
of the officers of the Company who shall have signed any Registration Statement
and each director of the Company shall have the same rights to contribution as
the Company, subject in each case to clauses (i) and (ii) of this Section 8. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 8, notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or
-14-
<PAGE>
claim settled without its written consent; provided, however,
that such written consent was not unreasonably withheld.
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
from such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder unless
such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under the terms of such
underwriting arrangements. Notwithstanding anything to the contrary herein, the
Company shall not be required to undertake more than one Underwritten Offering
hereunder.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Company agrees that monetary damages (including the
--------
liquidated damages contemplated hereby) would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after the date
--------------------------
of this Agreement enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not previously
entered into any agreement granting any registration rights with respect to its
securities to any Person, which rights remain exercisable at the date hereof.
The rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Company's
securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Senior Notes. The Company will not take any
--------------------------------------
action, or permit any change to occur, with respect to the Senior Notes that
would materially and adversely affect the ability of the Holders to Consummate
any Exchange Offer.
-15-
<PAGE>
(d) Amendments and Waivers. The provisions of this Agreement may not be
----------------------
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered.
(e) Notices. All communications hereunder, except as may be otherwise
-------
specifically provided herein, shall be in writing and, if sent to a Holder,
shall be mailed, physically delivered, telefaxed, telexed or telegraphed, and
confirmed in writing, to such Holder at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and if sent to the Company, shall be mailed, physically delivered,
telefaxed, telexed or telegraphed, and confirmed in writing, to Mark IV
Industries, Inc. One Towne Centre, 501 John James Audubon Parkway, Amherst, New
York 14226-0810 Attention: Chief Financial Officer, telecopy number: (716) 689-
6098, with a copy to Lippes, Silverstein, Mathias & Wexler LLP, 700 Guaranty
Building, 28 Church Street, Buffalo, New York 14202-3950, Attention: Gerald S.
Lippes, Esq., telecopy number: (716) 853-5199, and with a copy to Stroock &
Stroock & Lavan, Seven Hanover Square, New York, New York 10004-2696, Attention:
David L. Finkelman, Esq., telecopy number: (212) 806-6006; provided, however,
that any notice pursuant to Section 12 shall be mailed, delivered or telexed,
telegraphed or telecopied and confirmed in writing.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days alter being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telefaxed; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the State of New York.
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
-16-
<PAGE>
(k) Entire Agreement. This Agreement together with the other Operative
----------------
Documents (as defined in the Purchase Agreement) is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
[Signature page to follow]
-17-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
MARK IV INDUSTRIES, INC.
By:/s/ Richard L. Grenolds
--------------------------
Name: Richard L. Grenolds
Title: Vice President
Accepted and agreed to as of
the date first above written:
By: BEAR, STEARNS & CO. INC.
By:/s/ C. D. DeMarco
-----------------------------
Name: Christopher D. DeMarco
Title: Vice President
-18-
<PAGE>
EXHIBIT 12.1
MARK IV INDUSTRIES, INC.
STATEMENT REGARDING COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES (1)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED LAST DAY OF FEBRUARY
--------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Earnings
Income before provision for income
taxes............................ $ 43,900 $ 62,000 $ 81,700 $110,400 $151,400
Fixed charges, before
capitalized interest............ 69,254 55,668 54,309 58,588 66,187
Amortization of capitalized
interest........................ 191 133 210 247 265
-------- -------- -------- -------- --------
Earnings as adjusted........... $113,345 $117,801 $136,219 $169,235 $217,852
======== ======== ======== ======== ========
Fixed Charges
Interest expense, net............ $ 64,700 $ 51,600 $ 50,100 $ 53,900 61,200
Investment income (2)............ 700 300 400 284 396
-------- -------- -------- -------- --------
Total interest................. 65,400 51,900 50,500 54,184 61,596
Amortization of debt expense..... 1,544 1,383 1,424 1,659 1,726
Interest portion of rent
expense......................... 2,310 2,385 2,385 2,745 2,865
-------- -------- -------- -------- --------
Fixed Charges, before
capitalized interest.......... 69,254 55,668 54,309 58,588 66,187
Capitalized interest............. 450 632 195 335 703
-------- -------- -------- -------- --------
Fixed Charges.................. $ 69,704 $56,300 $ 54,504 $ 58,923 $ 66,890
======== ======== ======== ======== ========
Ratio of Earnings to Fixed
Charges....................... 1.63x 2.09x 2.50x 2.87x 3.26x
</TABLE>
- --------
(1) For the purpose of calculating the ratio of earnings to fixed charges, (i)
earnings consist of income from continuing operations before income taxes
plus fixed charges, exclusive of capitalized interest; and (ii) fixed
charges consist of interest expense incurred, amortization of debt expense,
15% of rental payments under operating leases (an amount estimated by
management to be the interest component of such rentals) and capitalized
interest.
(2) Represents investment income netted against interest expense; such
investment income is eliminated for purposes of calculating the ratios.
<PAGE>
EXHIBIT 12.2
MARK IV INDUSTRIES, INC.
STATEMENT REGARDING COMPUTATION OF PRO FORMA RATIO OF EARNINGS TO FIXED
CHARGES(1)
(DOLLARS IN THOUSANDS) (UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED
FEBRUARY 29, 1996
PRO FORMA
-----------------
<S> <C>
Earnings as adjusted (per Exhibit 12.1)...................... $217,852
========
Fixed charges before Pro Forma Adjustments (per Exhibit
12.1)....................................................... $ 66,890
Pro Forma Adjustments:
Interest expense of the 7 3/4% Private Notes (including am-
ortization of debt expense)............................... 19,965
Interest expense reduction attributable to the assumed re-
duction of indebtedness under the Credit Agreement........ (16,404)
--------
Pro Forma Fixed Charges.................................. $ 70,451
========
Pro Forma Ratio.......................................... 3.09x
========
</TABLE>
- --------
(1) The pro forma ratio of earnings to fixed charges reflects an increase in
fixed charges related to incremental interest expense that would have been
incurred on the 7 3/4% Private Notes, the net proceeds of which were used
to reduce outstanding indebtedness under the Company's 1994 Credit
Agreement. See "Use of Proceeds" and "Pro Forma Financial Information" in
the Prospectus.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 of our
report dated March 29, 1996, on our audits of the consolidated financial
statements of Mark IV Industries, Inc., and the incorporation by reference of
our report on the financial statement schedule, which report, dated March 29,
1996, is included in the Company's Annual Report on Form 10-K. We also consent
to the reference to our firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Rochester, New York
May 21, 1996
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
7 3/4% SENIOR SUBORDINATED NOTES DUE 2006
OF
MARK IV INDUSTRIES, INC.
PURSUANT TO THE PROSPECTUS DATED , 1996
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 1996 (THE "EXPIRATION DATE"), UNLESS THE
EXCHANGE OFFER IS EXTENDED, IN WHICH CASE THE TERM "EXPIRATION DATE" SHALL
MEAN THE LATEST DATE AND TIME TO WHICH THE EXCHANGE OFFER IS EXTENDED.
TENDERS MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY
TIME, ON THE EXPIRATION DATE.
The Exchange Agent is:
Fleet National Bank
By Insured Overnight By Registered Mail: New York Drop:
Carrier:
Fleet National Bank Fleet National Bank
Fleet National Bank Corporate Trust Department c/o First Chicago Trust
Corporate Trust P.O. Box 366-RI/OP/317 Company 14 Wall Street
Department Providence, RI 02901-0366 6th Floor, Window 2
125 Dupont Drive- New York, New York 10005
RI/OP/317
Providence, RI 02907
By Facsimile:
(401) 621-8088
(For Eligible Institutions Only)
Confirm by telephone:
(401) 865-7132
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
<PAGE>
The undersigned acknowledges receipt of the Prospectus dated , 1996
(the "Prospectus"), of Mark IV Industries, Inc., a Delaware corporation (the
"Company"), and this Letter of Transmittal (the "Letter of Transmittal"),
which together with the Prospectus constitutes the Company's offer (the
"Exchange Offer") to exchange $1,000 principal amount of its 7 3/4% Senior
Subordinated Notes due 2006 (the "Exchange Notes") for each $1,000 principal
amount of its 7 3/4% Senior Subordinated Notes due 2006 (the "Private Notes").
Recipients of the Prospectus should read the requirements described in such
Prospectus with respect to eligibility to participate in the Exchange Offer.
Capitalized terms used but not defined herein have the meaning given to them
in the Prospectus.
The undersigned hereby tenders the Private Notes described in the box
entitled "Description of Private Notes" below pursuant to the terms and
conditions described in the Prospectus and this Letter of Transmittal. The
undersigned is the registered owner of all the Private Notes and the
undersigned represents that it has received from each beneficial owner of
Private Notes ("Beneficial Owners") a duly completed and executed form of
"Instruction to Registered Holder from Beneficial Owner" accompanying this
Letter of Transmittal, instructing the undersigned to take the action
described in this Letter of Transmittal.
This Letter of Transmittal is to be used only by a holder of Private Notes
(i) if certificates representing Private Notes are to be forwarded herewith or
(ii) if delivery of Private Notes is to be made by book-entry transfer to the
Exchange Agent's account at The Depository Trust Company (the "Depository"),
pursuant to the procedures set forth in the section of the Prospectus entitled
"The Exchange Offer--Procedures for Tendering." If delivery of the Private
Notes is to be made by book-entry transfer to the account maintained by the
Exchange Agent at the Depository, this Letter of Transmittal need not be
manually executed; provided, however, that tenders of the Private Notes must
be effected in accordance with the procedures mandated by the Depository's
Automated Tender Offer Program and the procedures set forth in the Prospectus
under the caption "The Exchange Offer--Book-Entry Transfer."
Any beneficial owner whose Private Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder of Private Notes promptly and
instruct such registered holder of Private Notes to tender on behalf of the
beneficial owner. If such beneficial owner wishes to tender on its own behalf,
such beneficial owner must, prior to completing and executing this Letter of
Transmittal and delivering its Private Notes, either make appropriate
arrangements to register ownership of the Private Notes in such beneficial
owner's name or obtain a properly completed bond power from the registered
holder of Private Notes. The transfer of record ownership may take
considerable time.
In order to properly complete this Letter of Transmittal, a holder of
Private Notes must (i) complete the box entitled "Description of Private
Notes," (ii) if appropriate, check and complete the boxes relating to book-
entry transfer, guaranteed delivery, Special Issuance Instructions and Special
Delivery Instructions, (iii) sign the Letter of Transmittal by completing the
box entitled "Sign Here" and (iv) complete the Substitute Form W-9. Each
holder of Private Notes should carefully read the detailed instructions below
prior to completing the Letter of Transmittal.
Holders of Private Notes who desire to tender their Private Notes for
exchange and (i) whose Private Notes are not immediately available, (ii) who
cannot deliver their Private Notes and all other documents required hereby to
the Exchange Agent on or prior to the Expiration Date or (iii) who are unable
to complete the procedure for book-entry transfer on a timely basis, must
tender the Private Notes pursuant to the guaranteed delivery procedures set
forth in the section of the Prospectus entitled "The Exchange Offer--
Guaranteed Delivery Procedures." See Instruction 2 of the Instructions
beginning on page 8 hereof.
Holders of Private Notes who wish to tender their Private Notes for exchange
must, at a minimum, complete columns (1), (2), if applicable (see footnote 1
below), and (3) in the box below entitled "Description of Private Notes" and
sign the box on page 7 under the words "Sign Here." If only those columns are
completed, such holder of Private Notes will have tendered for exchange all
Private Notes listed in column (3) below. If the holder of Private Notes
wishes to tender for exchange less than all of such Private Notes, column (4)
must be completed in full. In such case, such holder of Private Notes should
refer to Instruction 5 on page 9.
2
<PAGE>
- --------------------------------------------------------------------------------
DESCRIPTION OF PRIVATE NOTES
- -------------------------------------------------------------------------------
(1) (2) (3) (4)
PRINCIPAL
AMOUNT
TENDERED FOR
EXCHANGE
NAME(S) AND ADDRESS(ES) OF (ONLY IF
REGISTERED HOLDER(S) OF PRIVATE PRIVATE NOTE DIFFERENT AMOUNT
NOTE(S), EXACTLY AS NAME(S) NUMBER(S)/1/ FROM COLUMN (3))
APPEAR(S) ON PRIVATE NOTE (ATTACH AGGREGATE (MUST BE IN
CERTIFICATE(S) SIGNED LIST PRINCIPAL INTEGRAL MULTIPLES
(PLEASE FILL IN, IF BLANK) IF NECESSARY) AMOUNT OF $1,000)/2/
- ---------------------------------------------------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
- ---------------------------------------------------------------------------
/1/Column (2) need not be completed by holders of Private Notes tendering
Private Notes for exchange by book-entry transfer. Please check the
appropriate box below and provide the requested information.
/2/Column (4) need not be completed by holders of Private Notes who wish to
tender for exchange the principal amount of Private Notes listed in Column
(3). Completion of column (4) will indicate that the holder of Private
Notes wishes to tender for exchange only the principal amount of Private
Notes indicated in column (4).
- --------------------------------------------------------------------------------
[_] CHECK HERE IF TENDERED PRIVATE NOTES ARE ENCLOSED HEREWITH.
[_] CHECK HERE IF TENDERED PRIVATE NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
DEPOSITORY AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS
HEREINAFTER DEFINED) ONLY):
Name of Tendering Institution: ___________________________________________
Account Number: __________________________________________________________
Transaction Code Number: _________________________________________________
[_] CHECK HERE IF TENDERED PRIVATE NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING
(FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name of Registered Holder of Private Note(s): _____________________________
Date of Execution of Notice of Guaranteed Delivery: _______________________
Window Ticket Number (if available): ______________________________________
Name of Institution with Guaranteed Delivery: _____________________________
Account Number (if delivered by book-entry transfer): _____________________
3
<PAGE>
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: _______________________________________________________________________
Address: ____________________________________________________________________
_____________________________________________________________________________
- -------------------------------------- ----------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8) (SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY (i) if the To be completed ONLY (i) if the
Exchange Notes issued in Exchange Notes issued in
exchange for Private Notes, exchange for Private Notes,
certificates for Private Notes certificates for Private Notes
in a principal amount not in a principal amount not
exchanged for Exchange Notes or exchanged for Exchange Notes or
Private Notes (if any) not Private Notes (if any) not
tendered for exchange, are to be tendered for exchange, are to be
issued in the name of someone mailed or delivered to someone
other than the undersigned or other than the undersigned, or
(ii) if Private Notes tendered (ii) to the undersigned at an
by book-entry transfer which are address other than the address
not exchanged are to be returned shown below the undersigned's
by credit to an account signature.
maintained at the Depository.
Issue to: Mail or deliver to:
Name ____________________________ Name ____________________________
(Please Print) (Please Print)
Address _________________________ Address _________________________
_________________________________ _________________________________
_________________________________ _________________________________
(Include Zip Code) (Include Zip Code)
_________________________________ _________________________________
(Tax Identification or Social (Tax Identification or Social
Security No.) Security No.)
Credit Private Notes not
exchanged and delivered by book-
entry transfer to the Depository
account set forth below:
_________________________________
(Account Number)
- -------------------------------------- ----------------------------------------
If delivery of Private Notes is to be made by book-entry transfer to the
account maintained by the Exchange Agent at the Depositary, then tenders of
Private Notes must be effected in accordance with the procedures mandated by
the Depository's Automated Tender Offer Program and the procedures set forth
in the Prospectus under the caption "The Exchange Offer--Book-Entry Transfer."
4
<PAGE>
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Pursuant to the offer by Mark IV Industries, Inc., a Delaware corporation
(the "Company"), upon the terms and subject to the conditions set forth in the
Prospectus dated , 1996 (the "Prospectus") and this Letter of Transmittal
(the "Letter of Transmittal"), which together with the Prospectus constitutes
the Company's offer (the "Exchange Offer") to exchange $1,000 principal amount
of its 7 3/4% Senior Subordinated Notes due 2006 (the "Exchange Notes") for
each $1,000 principal amount of its outstanding 7 3/4% Senior Subordinated
Notes due 2006 (the "Private Notes"), the undersigned hereby tenders to the
Company for exchange the Private Notes.
By executing this Letter of Transmittal and subject to and effective upon
acceptance for exchange of the Private Notes tendered for exchange herewith,
the undersigned (A) acknowledges and agrees that, except as set forth in the
Prospectus under the caption "The Exchange Offer--Termination of Certain
Rights," all of the rights of such undersigned pursuant to that certain
Registration Rights Agreement, dated as of March 11, 1996, between the Company
and the Initial Purchaser (as defined in the Prospectus), will have been
satisfied and extinguished in all respects and (B) will have irrevocably sold,
assigned, transferred and exchanged, to the Company, all right, title and
interest in, to and under all of the Private Notes tendered for exchange
hereby, and hereby appoints the Exchange Agent as the true and lawful agent
and attorney-in-fact (with full knowledge that the Exchange Agent also acts as
agent of the Company) of such holder of Private Notes with respect to such
Private Notes, with full power of substitution to (i) deliver certificates
representing such Private Notes, or transfer ownership of such Private Notes
on the account books maintained by the Depositary (together, in any such case,
with all accompanying evidences of transfer and authenticity), to the Company,
(ii) present and deliver such Private Notes for transfer on the books of the
Company and (iii) receive all benefits and otherwise exercise all rights and
incidents of beneficial ownership with respect to such Private Notes, all in
accordance with the terms of the Exchange Offer. The power of attorney granted
in this paragraph shall be deemed to be irrevocable and coupled with an
interest.
The undersigned hereby represents and warrants that (i) the undersigned is
the owner; (ii) has a net long position within the meaning of Rule 14e-4 under
the Securities Exchange Act of 1934, as amended ("Rule 14e-4"), equal to or
greater than the principal amount of Private Notes tendered hereby; (iii) the
tender of such Private Notes complies with Rule 14e-4 (to the extent that Rule
14e-4 is applicable to such exchange); (iv) the undersigned has full power and
authority to tender, exchange, assign and transfer the Private Notes; and (v)
that when such Private Notes are accepted for exchange by the Company, the
Company will acquire good and marketable title thereto, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claims. The undersigned will, upon receipt, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of the Private
Notes tendered for exchange hereby.
The undersigned hereby further represents to the Company that (i) the
Exchange Notes to be acquired by the undersigned in exchange for the Private
Notes tendered hereby and any beneficial owner(s) of such Private Notes in
connection with the Exchange Offer will be acquired by the undersigned and
such beneficial owner(s) in the ordinary course of business of the
undersigned, (ii) the undersigned (if not a broker-dealer referred to in the
last sentence of this paragraph) is not engaging and does not intend to engage
in the distribution of the Exchange Notes, (iii) the undersigned has no
arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, (iv) the undersigned and each beneficial
owner acknowledge and agree that any person participating in the Exchange
Offer for the purpose of distributing the Exchange Notes must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction of the Exchange Notes acquired
by such person and cannot rely on the position of the staff of the Commission
set forth in certain no-action letters, (v) the undersigned and each
beneficial owner understand that a secondary resale transaction described in
clause (iv) above and any resales of Exchange Notes
5
<PAGE>
obtained by the undersigned and such beneficial owner(s) in exchange for
Private Notes acquired by the undersigned directly from the Company should be
covered by an effective registration statement containing the selling security
holder information required by Item 507 or Item 508, as applicable, of
Regulation S-K of the Commission and (vi) neither the undersigned nor any
beneficial owner is an "affiliate" of the Company, as defined under Rule 405
under the Securities Act. If the undersigned is a broker-dealer, it
acknowledges that if it resells Exchange Notes that will be received by it for
its own account pursuant to the Exchange Offer or if it participates in the
distribution of such Exchange Notes, it may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange Notes and any commissions or concessions received by it may be deemed
to be underwriting compensation under the Securities Act. If the undersigned
is a broker-dealer that will receive Exchange Notes for its own account in
exchange for Private Notes that were acquired as a result of market making
activities or other trading activities, it acknowledges that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such Exchange Notes received in respect of such Private Notes
pursuant to the Exchange Offer. By so acknowledging and by delivering a
prospectus, any such broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For purposes of the Exchange Offer, the Company will be deemed to have
accepted for exchange, and to have exchanged, validly tendered Private Notes,
if, as and when the Company gives oral or written notice thereof to the
Exchange Agent. Tenders of Private Notes for exchange may be withdrawn at any
time prior to 5:00 p.m., New York City time, on the Expiration Date. See "The
Exchange Offer--Withdrawal of Tenders" in the Prospectus. Any Private Notes
tendered by the undersigned and not accepted for exchange will be returned to
the undersigned at the address set forth above unless otherwise indicated in
the box above entitled "Special Delivery Instructions."
The undersigned acknowledges that the Company's acceptance of Private Notes
validly tendered for exchange pursuant to any one of the procedures described
in the section of the Prospectus entitled "The Exchange Offer" and in the
instructions hereto will constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of
the Exchange Offer.
Unless otherwise indicated in the box entitled "Special Issuance
Instructions," please return any Private Notes not tendered for exchange in
the name(s) of the undersigned. Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail any certificates for
Private Notes not tendered or exchanged (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s). In the event that both "Special Issuance Instructions" and
"Special Delivery Instructions" are completed, please issue the certificates
representing the Exchange Notes issued in exchange for the Private Notes
accepted for exchange in the name(s) of, and return any Private Notes not
tendered for exchange or not exchanged to, the person(s) so indicated. The
undersigned recognizes that the Company has no obligation pursuant to the
"Special Issuance Instructions" and "Special Delivery Instructions" to
transfer any Private Notes from the name of the holder of Private Note(s)
thereof if the Company does not accept for exchange any of the Private Notes
so tendered for exchange or if such transfer would not be in compliance with
any transfer restrictions applicable to such Private Note(s).
IN ORDER TO VALIDLY TENDER PRIVATE NOTES FOR EXCHANGE, HOLDERS OF PRIVATE
NOTES MUST COMPLETE, EXECUTE, AND DELIVER THIS LETTER OR TRANSMITTAL.
Except as stated in the Prospectus, all authority herein conferred or agreed
to be conferred shall survive the death or incapacity of the undersigned, and
any obligation of the undesigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
otherwise stated in the Prospectus, this tender for exchange of Private Notes
is irrevocable.
6
<PAGE>
SIGN HERE
___________________________________________________________________________
(Signature(s) of Owner(s))
Date: , 1996
Must be signed by the registered holder(s) of Private Notes exactly as
name(s) appear(s) on certificate(s) representing the Private Notes or on a
security position listing or by person(s) authorized to become registered
Private Note holder(s) by certificates and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following
information. (See Instruction 6).
Name(s): __________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(Please Print)
Capacity (full title): ____________________________________________________
___________________________________________________________________________
___________________________________________________________________________
Address: __________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(Include Zip Code)
Area Code and Telephone No. ( ) _________________________________________
Tax Identification or Social Security Nos.: _______________________________
Please complete Substitute Form W-9
GUARANTEE OF SIGNATURE(S)
(SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 1)
Authorized Signature: _____________________________________________________
Dated: ____________________________________________________________________
Name and Title: ___________________________________________________________
(Please Print)
Name of Firm: _____________________________________________________________
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by an institution
which is an "eligible guarantor institution" within the meaning of Rule 17Ad-
15 under the Securities Exchange Act of 1934, as amended, which is a member of
one of the following recognized Signature Guarantee Programs (an "Eligible
Institution"):
a. The Securities Transfer Agents Medallion Program (STAMP)
b. The New York Stock Exchange Medallion Signature Program (MSP)
c. The Stock Exchange Medallion Program (SEMP)
Signatures on this Letter of Transmittal need not be guaranteed (i) if this
Letter of Transmittal is signed by the registered holder(s) of the Private
Notes tendered herewith and such registered holder(s) have not completed the
box entitled "Special Issuance Instructions" or the box entitled "Special
Delivery Instructions" on this Letter of Transmittal or (ii) if such Private
Notes are tendered for the account of an Eligible Institution. IN ALL OTHER
CASES, ALL SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
2. DELIVERY OF THIS LETTER OF TRANSMITTAL AND PRIVATE NOTES; GUARANTEED
DELIVERY PROCEDURE. This Letter of Transmittal is to be completed by holders
of Private Notes (i) if certificates are to be forwarded herewith or (ii) if
tenders are to be made pursuant to the procedures for tender by book-entry
transfer or guaranteed delivery set forth in the section of the Prospectus
entitled "the Exchange Offer." Certificates for all physically tendered
Private Notes or any confirmation of a book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth on the cover of this Letter of Transmittal prior to 5:00
p.m., New York City time, on the Expiration Date. Holders of Private Notes who
elect to tender Private Notes and (i) whose Private Notes are not immediately
available, (ii) who cannot deliver the Private Notes or other required
documents to the Exchange Agent prior to 5:00 p.m., New York City time on the
Expiration Date or (iii) who are unable to complete the procedure for book-
entry transfer on a timely basis, may have such tender effected if: (a) such
tender is made by or through an Eligible Institution; (b) prior to 5:00 p.m.,
New York time, on the Expiration Date, the Exchange Agent has received from
such Eligible Institution a properly completed and duly executed Letter of
Transmittal (or a facsimile hereof) and Notice of Guaranteed Delivery (by
telegram, telex, facsimile transmission, mail or hand delivery) setting forth
the name and address of the holder of such Private Notes, the certificate
number(s) of such Private Notes and the principal amount of Private Notes
tendered for exchange, stating that tender is being made thereby and
guaranteeing that, within five New York Stock Exchange trading days after the
Expiration Date, the certificates representing such Private Notes (or a Book-
Entry Confirmation), in proper form for transfer, and any other documents
required by this Letter of Transmittal, will be deposited by such Eligible
Institution with the Exchange Agent; and (c) certificates for all tendered
Private Notes, or a Book-Entry Confirmation, together with a copy of the
previously executed Letter of Transmittal (or facsimile thereof) and any other
documents required by this Letter of Transmittal are received by the Exchange
Agent within five New York Stock Exchange trading days after the Expiration
Date.
THE METHOD OF DELIVERY OF PRIVATE NOTES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDER
OF PRIVATE NOTES. EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. NEITHER THIS LETTER OF TRANSMITTAL NOR ANY PRIVATE
NOTES SHOULD BE SENT TO THE COMPANY.
8
<PAGE>
No alternative, conditional or contingent tenders will be accepted. All
tendering holders of Private Notes, by execution of this Letter of Transmittal
(or facsimile hereof, if applicable), waive any right to receive notice of the
acceptance of their Private Notes for exchange.
3. INADEQUATE SPACE. If the space provided in the box entitled "Description
of Private Notes" above is inadequate, the certificate numbers and principal
amounts of the Private Notes being tendered should be listed on a separate
signed schedule affixed hereto.
4. WITHDRAWALS. A tender of Private Notes may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration Date by delivery of
written notice of withdrawal to the Exchange Agent at the address set forth on
the cover of this Letter of Transmittal. To be effective, a notice of
withdrawal of Private Notes must (i) specify the name of the person who
tendered the Private Notes to be withdrawn (the "Depositor"), (ii) identify
the Private Notes to be withdrawn (including the certificate number or numbers
and aggregate principal amount of such Private Notes), (iii) be signed by the
holder of Private Notes in the same manner as the original signature on the
Letter of Transmittal by which such Private Notes were tendered (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the applicable transfer agent register the transfer of such
Private Notes into the name of the person withdrawing the tender. Withdrawals
of tenders of Private Notes may not be rescinded, and any Private Notes
withdrawn will thereafter be deemed not validly tendered for purposes of the
Exchange Offer and no Exchange Notes will be issued with respect thereto
unless the Private Notes so withdrawn are validly retendered. Properly
withdrawn Private Notes may be retendered by following one of the procedures
described in the section of the Prospectus entitled "The Exchange Offer--
Procedures for Tendering" at any time prior to 5:00 p.m., New York City time,
on the Expiration Date.
5. PARTIAL TENDERS. (Not applicable to holders of Private Notes who tender
Private Notes by book-entry transfer). Tenders of Private Notes will be
accepted only in integral multiples of $1,000 principal amount. If a tender
for exchange is to be made with respect to less than the entire principal
amount of any Private Notes, fill in the principal amount of Private Notes
which are tendered for exchange in column (4) of the box entitled "Description
of Private Notes" on page 3, as more fully described in the footnotes thereto.
In case of a partial tender for exchange, a new certificate, in fully
registered form, for the remainder of the principal amount of the Private
Notes, will be sent to the holders of Private Notes unless otherwise indicated
in the appropriate box on this Letter of Transmittal as promptly as
practicable after the expiration or termination of the Exchange Offer.
6. SIGNATURES ON THIS LETTER OF TRANSMITTAL, POWERS OF ATTORNEY AND
ENDORSEMENTS.
(a) The signature(s) of the holder of Private Notes on this Letter of
Transmittal must correspond with the name(s) as written on the face of the
Private Notes without alternation, enlargement or any change whatsoever.
(b) If tendered Private Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
(c) If any tendered Private Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate copies of this Letter of Transmittal and any necessary or
required documents as there are different registrations or certificates.
(d) When this Letter of Transmittal is signed by the holder of the Private
Notes listed and transmitted hereby, no endorsements of Private Notes or
separate powers of attorney are required. If, however, Private Notes not
tendered or not accepted, are to be issued or returned in the name of a person
other than the holder of Private Notes, then the Private Notes transmitted
hereby must be endorsed or accompanied by appropriate powers of attorney in a
form satisfactory to the Company, in either case signed exactly as the name(s)
of the holder of Private Notes appear(s) on the Private Notes. Signatures on
such Private Notes or powers of attorney must be guaranteed by an Eligible
Institution (unless signed by an Eligible Institution).
9
<PAGE>
(e) If this Letter of Transmittal or Private Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Company of their authority so to act must be submitted.
(f) If this Letter of Transmittal is signed by a person other than the
registered holder of Private Notes listed, the Private Notes must be endorsed
or accompanied by appropriate powers of attorney, in either case signed
exactly as the name(s) of the registered holder of Private Notes appear(s) on
the certificates. Signatures on such Private Notes or powers of attorney must
be guaranteed by an Eligible Institution (unless signed by an Eligible
Institution).
7. TRANSFER TAXES. Except as set forth in this Instruction 7, the Company
will pay all transfer taxes, if any, applicable to the transfer and exchange
of Private Notes pursuant to the Exchange Offer. If, however, issuance of
Exchange Notes is to be made to, or Private Notes not tendered for exchange
are to be issued or returned in the name of, any person other than the holder
of Private Notes, and satisfactory evidence of payment of such taxes or
exemptions from taxes therefrom is not submitted with this Letter of
Transmittal, the amount of any transfer taxes payable on account of the
transfer to such person will be imposed on and payable by the holder of
Private Notes tendering Private Notes for exchange prior to the issuance of
the Exchange Notes.
8. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If the Exchange Notes are to
be issued, or if any Private Notes not tendered for exchange are to be issued
or sent to someone other than the holder of Private Notes or to an address
other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Holders of Private Notes tendering Private
Notes by book-entry transfer may request that Private Notes not accepted be
credited to such account maintained at the Depository as such holder of
Private Notes may designate.
9. IRREGULARITIES. All questions as to the form of documents and the
validity, eligibility (including time of receipt), acceptance and withdrawal
of Private Notes will be determined by the Company, in its sole discretion,
whose determination shall be final and binding. The Company reserves the
absolute right to reject any or all tenders for exchange of any particular
Private Notes that are not in proper form, or the acceptance of which would,
in the opinion of the Company or its counsel, be unlawful. The Company
reserves the absolute right to waive any defect, irregularity or condition of
tender for exchange with regard to any particular Private Notes. The Company's
interpretation of the term of, and conditions to, the Exchange Offer
(including the instructions herein) will be final and binding. Unless waived,
any defects or irregularities in connection with the Exchange Offer must be
cured within such time as the Company shall determine. Neither the Company,
the Exchange Agent nor any other person shall be under any duty to give notice
of any defects or irregularities in Private Notes tendered for exchange, nor
shall any of them incur any liability for failure to give such notice. A
tender of Private Notes will not be deemed to have been made until all defects
and irregularities with respect to such tender have been cured or waived. Any
Private Notes received by the Exchange Agent that are not properly tendered
and as to which the defects or irregularities have not been cured or waived
will be returned by the Exchange Agent to the tendering holders, unless
otherwise provided in this Letter of Transmittal, as soon as practicable
following the Expiration Date.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive,
amend or modify certain of the specified conditions as described under "The
Exchange Offer--Conditions of the Exchange Offer" in the Prospectus in the
case of any Private Notes tendered (except as otherwise provided in the
Prospectus).
11. MUTILATED, LOST, STOLEN OR DESTROYED PRIVATE NOTES. If a holder of
Private Notes desires to tender Private Notes pursuant to the Exchange Offer,
but any of such Private Notes has been mutilated, lost, stolen or destroyed,
such holder of Private Notes should write to or telephone the Trustee at the
address listed below,
10
<PAGE>
concerning the procedures for obtaining replacement certificates for such
Private Notes, arranging for indemnification or any other matter that requires
handling by the Trustee:
Fleet National Bank
Mail Stop RI/MO/199
111 Westminster Street
Providence, Rhode Island 02903
Attention: Corporate Trust Administration
(Mark IV Industries, Inc.)
12. REQUESTS FOR INFORMATION OR ADDITIONAL COPIES. Requests for information
or for additional copies of the Prospectus and this Letter of Transmittal may
be directed to the Exchange Agent at the address set forth for Fleet National
Bank in Instruction 11, directing your inquiries to Stephen Maceroni, or by
calling Mr. Maceroni at (401) 278-3768 or by faxing to his attention at (401)
751-9706.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF, IF
APPLICABLE) TOGETHER WITH CERTIFICATES, OR CONFIRMATION OF BOOK-ENTRY OR THE
NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS MUST BE
RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under certain federal income tax laws, a holder of Private Notes whose
tendered Private Notes are accepted for exchange may be subject to backup
withholding unless the holder provides the Company (as payor), through the
Exchange Agent, with either (i) such holder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 attached hereto, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such holder of Private
Notes is awaiting a TIN) and that (A) the holder of Private Notes has not been
notified by the Internal Revenue Service that he or she is subject to backup
withholding as a result of a failure to report all interest or dividends or
(B) the Internal Revenue Service has notified the holder of Private Notes that
he or she is no longer subject to backup withholding; or (ii) an adequate
basis for exemption from backup withholding. If such holder of Private Notes
is an individual, the TIN is such holder's social security number. If the
Exchange Agent is not provided with the correct taxpayer identification
number, the holder of Private Notes may be subject to certain penalties
imposed by the Internal Revenue Service.
Certain holders of Private Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding
and reporting requirements. Exempt holders of Private Notes should indicate
their exempt status on Substitute Form W-9. A foreign individual may qualify
as an exempt recipient by submitting to the Exchange Agent a properly
completed Internal Revenue Service Form W-8 (the terms of which the Exchange
Agent will provide upon request) signed under penalty of perjury, attesting to
the holder's exempt status. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 (the "Guidelines") for
additional instructions.
If backup withholding applies, the Company is required to withhold 31% of
any payment made to the holder of Private Notes or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal
income tax liability of persons subject to backup withholding will be reduced
by the amount of tax withheld. If withholding results in an overpayment of
taxes, a refund may be obtained from the Internal Revenue Service.
The holder of Private Notes is required to give the Exchange Agent the TIN
(e.g., social security number or employer identification number) of the record
owner of the Private Notes. If the Private Notes are held in more than one
name or are not held in the name of the actual owner, consult the enclosed
Guidelines for additional guidance regarding which number to report.
11
<PAGE>
- --------------------------------------------------------------------------------
PAYER'S NAME:
- -------------------------------------------------------------------------------
PART 1--PLEASE PROVIDE YOUR ____________________
TIN IN THE BOX AT RIGHT AND Social Security
CERTIFY BY SIGNING AND DATING Number
BELOW
SUBSTITUTE OR
____________________
FORM W-9 Employer
Identification
DEPARTMENT OF Number
THE TREASURY
INTERNAL ---------------------------------------------------------
REVENUE SERVICE PART 2--Certification Under PART 3--
Penalties of Perjury, I
certify that:
(1) The number shown on this
form is my current Awaiting TIN [_]
taxpayer identification
number (or I am waiting
for a number to be issued
PAYER'S REQUEST FOR to me) and
TAXPAYER IDENTIFIC-
ATION NUMBER (TIN) (2) I am not subject to
backup withholding either
because I have not been
notified by the Internal
Revenue Service (the
"IRS") that I am subject
to backup withholding as
a result of a failure to
report all interest or
dividends, or the IRS has
notified me that I am no
longer subject to backup
withholding.
---------------------------------------------------------
CERTIFICATE INSTRUCTIONS--You must cross out item
(2) in Part 2 above if you have been notified by
the IRS that you are subject to backup withholding
because of underreporting interest or dividends on
your tax return. However, if after being notified
by the IRS that you are subject to backup
withholding you receive another notification from
the IRS stating that you are no longer subject to
backup withholding, do not cross out item (2).
SIGNATURE _________________________ DATE __________
NAME _______________________________________________
ADDRESS ____________________________________________
CITY _________________ STATE ZIP CODE _________
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECK THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
PAYOR'S NAME:
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a taxpayer identification number to
the appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver such an
application in the near future. I understand that if I do not provide a
taxpayer identification number with sixty (60) days, 31% of all reportable
payments made to me thereafter will be withheld until I provide such a
number.
__________________________________________ _______________________________
Signature Date
- --------------------------------------------------------------------------------
12
