<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: March 13, 1998
Date of earliest event reported: March 4, 1998
----------------
Newcor, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-5985 38-0865770
--------------- ------------- -------------------
(State or other (Commission (IRS Employer
jurisdiction of incorporation) File Number) Identification No.)
1825 S. Woodward Avenue, Suite 240, Bloomfield Hills, MI 48302
- -------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (248) 253-2400
----------
- -----------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
On March 4, 1998, Newcor, Inc. (the "Company") purchased the stock of Grand
Machining Company, Deco Technologies, Inc. and Deco International, Inc.
collectively, ("Deco") for $54.85 million in cash, subject to certain net
book value adjustments. Deco manufactures high volume, precision machined
components and assemblies for the medium and heavy duty truck and automotive
industries. Deco's products include rocker arm components and assemblies,
transmission shafts, axle shafts and thrust plates. Deco has production
facilities located in Royal Oak, Michigan and Troy, Michigan.
On March 4, 1998, the Company also purchased the stock of Turn-Matic, Inc.
("Turn-Matic") for $17.0 million in cash, subject to certain net book value
adjustments. Contingent consideration of up to $3.5 million may be paid if
profitability achieves certain levels over the next five years. Turn-Matic
manufactures high volume, precision machined components and assemblies for the
automotive industry. Turn-Matic's products include oil filter adapters, main
bearing caps and intake and exhaust manifolds. Turn-Matic has a production
facility located in Clinton Township, Michigan.
See the press release dated March 5, 1998, filed as Exhibit 99(b), for
additional information on the previously reported Machine Tool & Gear, Inc.
("MT&G"), acquisition, the Deco and Turn-Matic acquisitions and the effect of
the acquisitions on the Company.
All of the acquisitions were financed with the proceeds of the Notes described
below. The prices for the acquisitions were determined by negotiation.
ITEM 5 OTHER EVENTS-SENIOR SUBORDINATED NOTES OFFERING
See the press release dated February 27, 1998, filed as Exhibit 99(a),
announcing that the Company had entered into an agreement to privately place
$125 million principal amount of its 9.875% Senior Subordinated Notes
due 2008 (the "Notes").
The Company completed the Notes offering on March 4, 1998.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS:
The following financial statements, pro forma financial information and exhibits
are filed as a part of this report.
(a) Financial statements of the businesses acquired:
<TABLE>
<CAPTION>
ITEM PAGE
<S> <C>
Financial statements of Deco
Report of Independent Accountants 4
Combined Balance Sheets as of December 31, 1996, 1995 and 1994 5
Combined Balance Sheet as of September 30, 1997 6
Combined Statements of Income and Retained Earnings for the years ended December 31,
1996, 1995 and 1994 7
Combined Statements of Income and Retained Earnings for the nine-months ended
September 30, 1996 and 1995 8
Combined Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 9
Condensed Combined Statements of Cash Flows for the nine-months ended September 30,
1997 and 1996 10
Notes to Financial Statements 11
Financial statements of Turn-Matic, Inc.
Report of Independent Accountants 16
Balance Sheets as of September 30, 1997 and December 31, 1997 17
Statements of Income and Retained Earnings for the year ended September 30, 1997 and
for the three months ended December 31, 1997 and 1996 18
Statements of Cash Flows for the year ended September 30, 1997 and for the three months
ended December 31, 1997 and 1996 19
Notes to Financial Statements 20
(b) Pro forma financial information:
ITEM
Unaudited Pro Forma Condensed Consolidated Financial Data:
Unaudited Pro Forma Consolidated Statement of Income 23
Unaudited Pro Forma Condensed Consolidated Balance Sheet 24
Notes to Unaudited Pro Forma Condensed Consolidated Financial Data 25
</TABLE>
The unaudited pro forma consolidated statement of income for the fiscal year
ended October 31, 1997 gives pro forma effect to the MT&G (for further
information on MT&G, see Form 8-K dated January 6, 1998 and Form 8-K/A dated
March 6, 1998.), Deco and Turn-Matic acquisitions and the issuance of the
Notes, as if they occurred on November 1, 1996, and the results for the MT&G,
Deco and Turn-Matic acquisitions were included for the twelve
2
<PAGE> 3
months ended September 30, 1997. The unaudited pro forma condensed consolidated
balance sheet gives pro forma effect to the MT&G, Deco and Turn-Matic
acquisitions and the issuance of the Notes as if they had occurred on October
31, 1997. Each of the acquisitions will be accounted for by the purchase method
of accounting.
The pro forma financial statements do not purport to be indicative of the
results of operations or financial position that actually would have occurred
had the MT&G, Deco and Turn-Matic acquisitions been completed as of the assumed
dates and for the period presented, or which may be obtained in the future. The
pro forma financial statements should be read in conjunction with the historical
financial statements of Newcor, Inc. and the historical financial statements of
MT&G, Deco and Turn-Matic.
(c) Exhibits in accordance with the provisions of Item 601 of
Regulation S-K:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
1. Purchase Agreement dated February 27, 1998 among the Company, the subsidiary guarantors (as defined
therein), and the initial purchasers of the Notes
4.(a) Indenture dated as of March 4, 1998 between the Company, the subsidiary guarantors (as defined
therein), and First Trust National Association as trustee, relating to the Notes (including forms of
Notes).
4.(b) A/B Exchange Registration Rights Agreement dated as of March 4, 1998 between the Company, the
subsidiary guarantors (as defined therein), and the initial purchasers of the Notes.
10.(a) Stock Purchase Agreement between Stephen Grand, Individually and as Trustee of the Stephen Grand
Revocable Trust dated July 5, 1979 and the Stephen M. Grand Property Trust dated January 22, 1992
and Newcor, Inc. dated December 9, 1997 incorporated herein by reference from Exhibit 10(l) to
report on Form 10-K for the fiscal year ended October 31, 1997 (Commission file no. 1-5985).
10.(b) Amendment to Stock Purchase Agreement between Stephen Grand,
Individually and as Trustee of the Stephen Grand Revocable Trust
dated July 5, 1979 and the Stephen M. Grand Property Trust dated
January 22, 1992 and Newcor, Inc., dated March 4, 1998.
10.(c) Stock Purchase Agreement by and among each of the Shareholders of Turn-matic, Inc. and Newcor, Inc.
dated January 16, 1998 incorporated herein by reference from Exhibit 10(m) to report on Form 10-K
for the fiscal year ended October 31, 1997 (Commission file no. 1-5985).
10.(d) Employment Agreement with Keith Hale dated March 4, 1998.
99.(a) Press release dated February 27, 1998 announcing that the Company has entered into an agreement to
privately place $125 million principal amount of its 9.875% Senior Subordinated Notes due 2008.
99.(b) Press release dated March 5, 1998 announcing the completion of the Deco and Turn-Matic
acquistions, and the financing of those transactions and MT&G.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Newcor, Inc.
------------
(Registrant)
/s/ John Garber
Date March 13, 1998 ----------------------
John Garber
Vice President-Finance
3
<PAGE> 4
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of Grand Machining Company and
Deco Technologies, Inc., "The Deco Group":
We have audited the accompanying combined balance sheets of Grand Machining
Company and Deco Technologies, Inc. ("the Deco Group") as of December 31, 1996,
1995 and 1994 and the related combined statements of income and retained
earnings, and cash flows for the years then ended. 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 financial position of the Deco Group as of
December 31, 1996, 1995 and 1994 and the results of operations and cash flows
for the years then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
December 10, 1997
4
<PAGE> 5
THE DECO GROUP
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 4,678,857 $ 7,616,441 $ 2,327,224
Marketable securities............................... 7,415,571 6,418,244 6,758,899
Accounts receivable, trade.......................... 6,773,906 6,398,508 8,528,653
Inventories......................................... 2,299,291 2,248,910 2,679,099
Prepaid expenses and other receivables.............. 99,169 119,291 148,070
Loans receivable, affiliates........................ -- 121,331 --
----------- ----------- -----------
Total current assets............................. 21,266,794 22,922,725 20,441,945
Property, plant and equipment, net.................... 8,727,182 10,955,374 12,014,401
----------- ----------- -----------
Total assets..................................... $29,993,976 $33,878,099 $32,456,346
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable, current portion...................... $ 111,808 $ 99,224 $ 88,057
Loans payable, affiliates........................... 52,516 -- 58,023
Accounts payable, trade............................. 1,869,151 3,863,245 3,896,511
Accrued expenses.................................... 2,292,231 2,057,873 2,866,849
----------- ----------- -----------
Total current liabilities........................ 4,325,706 6,020,342 6,909,440
Notes payable, stock redemption agreement............. 20,017 131,825 231,049
----------- ----------- -----------
Total liabilities................................ 4,345,723 6,152,167 7,140,489
Shareholders' equity:
Common stock........................................ 16,408 16,408 16,408
Additional paid in capital.......................... 10,534,242 8,734,242 7,334,242
Retained earnings................................... 14,010,834 18,080,094 18,156,893
Unrealized net holding gain (loss) on marketable
securities....................................... 1,086,769 895,188 (191,686)
----------- ----------- -----------
Total shareholders' equity....................... 25,648,253 27,725,932 25,315,857
----------- ----------- -----------
Total liabilities and shareholders' equity....... $29,993,976 $33,878,099 $32,456,346
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
THE DECO GROUP
COMBINED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
1997
-------------
(UNAUDITED)
<S> <C>
Current assets:
Cash and cash equivalents................................. $ 4,014,968
Marketable securities..................................... 8,797,723
Accounts receivable, trade................................ 6,946,133
Inventories............................................... 2,115,274
Prepaid expenses and other receivables.................... 59,913
-----------
Total current assets................................... 21,934,011
Property, plant and equipment, net.......................... 7,910,487
-----------
Total assets........................................... $29,844,498
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable, stock redemption agreement................. $ 49,232
Loans payable, affiliates................................. 145,338
Accounts payable, trade................................... 2,752,949
Accrued expenses.......................................... 2,386,469
-----------
Total liabilities...................................... 5,333,988
Shareholders' equity:
Common stock.............................................. 16,408
Additional paid in capital................................ 10,534,242
Retained earnings......................................... 11,355,497
Unrealized net holding gain on marketable securities...... 2,604,363
-----------
Total shareholders' equity............................. 24,510,510
-----------
Total liabilities and shareholders' equity............. $29,844,498
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
THE DECO GROUP
COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Net sales............................................. $74,122,960 $77,632,368 $79,576,975
Cost of sales......................................... 59,967,536 63,635,554 63,040,655
----------- ----------- -----------
Gross margin........................................ 14,155,424 13,996,814 16,536,320
Selling, general and administrative expenses.......... 13,091,555 13,861,869 12,229,691
----------- ----------- -----------
Operating income.................................... 1,063,869 134,945 4,306,629
Other income, net, principally investment earnings.... 1,101,871 739,256 714,856
----------- ----------- -----------
Net income.......................................... 2,165,740 874,201 5,021,485
Retained earnings, beginning of year.................. 18,080,094 18,156,893 17,624,340
Distributions to shareholders......................... 6,235,000 951,000 4,488,932
----------- ----------- -----------
Retained earnings, end of year........................ $14,010,834 $18,080,094 $18,156,893
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
THE DECO GROUP
COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
FOR THE NINE-MONTHS ENDED
SEPTEMBER 30,
-------------------------
1997 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Net sales................................................... $56,689,387 $56,635,571
Cost of sales............................................... 46,431,514 46,645,304
----------- -----------
Gross margin.............................................. 10,257,873 9,990,267
Selling, general and administrative expenses................ 9,686,225 9,563,468
----------- -----------
Operating income.......................................... 571,648 426,799
Other income, net, principally investment earnings.......... 543,742 846,214
----------- -----------
Net income................................................ 1,115,390 1,273,013
Retained earnings, beginning of year........................ 14,010,834 18,080,094
Distributions to shareholders............................... 3,770,727 2,282,900
----------- -----------
Retained earnings, end of year.............................. $11,355,497 $17,070,207
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 9
THE DECO GROUP
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------
1996 1995 1994
----------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income......................................... $ 2,165,740 $ 874,201 $ 5,021,485
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation.................................... 2,994,311 2,804,530 2,501,042
Gain on sale of investments..................... (607,090) (419,100) (255,555)
Changes in operating assets and liabilities:
Accounts receivable........................... (375,398) 2,130,145 (2,202,120)
Inventories................................... (50,381) 430,189 39,027
Prepaid expenses and other receivables........ 20,122 28,779 302,494
Accounts payable and accrued expenses......... (1,759,736) (842,242) 430,855
----------- ----------- ------------
Total adjustments............................... 221,828 4,132,301 815,743
----------- ----------- ------------
Net cash provided by operating activities....... 2,387,568 5,006,502 5,837,228
Cash flows from investing activities:
Investment in property and equipment............... (766,119) (1,745,503) (2,216,136)
Investments in marketable securities............... (7,339,042) (7,409,729) (22,736,789)
Proceeds from sale of marketable securities........ 7,140,386 9,256,358 20,111,287
Advances from (payments to) affiliates, net........ 173,847 (179,354) (1,951,436)
----------- ----------- ------------
Net cash used in investing activities........... (790,928) (78,228) (6,793,074)
Cash flows from financing activities:
Payments of debt obligations....................... (99,224) (88,057) (78,146)
Distributions to shareholders...................... (6,235,000) (951,000) (4,488,932)
Shareholders' capital contributions................ 1,800,000 1,400,000 3,200,500
----------- ----------- ------------
Net cash provided by (used in) financing
activities.................................... (4,534,224) 360,943 (1,366,578)
----------- ----------- ------------
Net increase (decrease) in cash and cash
equivalents........................................ (2,937,584) 5,289,217 (2,322,424)
Cash and cash equivalents, beginning of year......... 7,616,441 2,327,224 4,649,648
----------- ----------- ------------
Cash and cash equivalents, end of year............... $ 4,678,857 $ 7,616,441 $ 2,327,224
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 10
THE DECO GROUP
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE NINE-MONTHS ENDED
SEPTEMBER 30,
-------------------------
1997 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 1,115,390 $ 1,273,013
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation........................................... 2,062,029 2,297,660
Gain on sale of investments............................ (240,632) (569,913)
Net changes in operating assets and liabilities........ 1,029,082 (2,451,615)
----------- -----------
Total adjustments......................................... 2,850,479 (723,868)
----------- -----------
Net cash provided by operating activities................. 3,965,869 549,145
Cash flows from investing activities:
Investment in property and equipment...................... (1,245,334) (715,369)
Investments in marketable securities...................... (4,134,746) (5,780,873)
Proceeds from sale of marketable securities............... 4,510,820 5,712,309
Advances from affiliates, net............................. 92,822 68,544
----------- -----------
Net cash used in investing activities.................. (776,438) (715,389)
Cash flows from financing activities:
Payments of debt obligations.............................. (82,593) (81,853)
Distributions to shareholders............................. (3,770,727) (2,282,900)
Shareholders' capital contributions....................... -- 1,800,000
----------- -----------
Net cash used in financing activities.................. (3,853,320) (564,753)
----------- -----------
Net decrease in cash and cash equivalents................... (663,889) (730,997)
Cash and cash equivalents, beginning of year................ 4,678,857 7,616,441
----------- -----------
Cash and cash equivalents, end of year...................... $ 4,014,968 $ 6,885,444
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 11
THE DECO GROUP
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Nature of Business: The Deco Group ("the Company") is a manufacturer of
high volume, precision machined components and assemblies for the medium and
heavy truck and automotive industries of which over 50 percent of such products
are sold to one customer. The Company's products include rocker arms and
assemblies, transmission shafts, axle shafts and thrust plates.
b. Basis of Presentation: The financial statements represent the combined
financial operations of Grand Machining Company and Deco Technologies, Inc.,
corporations under common control. All significant intercompany balances and
transactions have been eliminated. Deco International, Inc., another affiliated
company under common control, is immaterial and experienced insignificant
business activity during the periods presented and has not been combined in
these financial statements.
c. Interim Financial Information: The unaudited interim basic financial
statements included herein as of September 30, 1997 and for the nine-month
periods ended September 30, 1997 and 1996, include, in the opinion of
management, all adjustments (consisting of normal recurring adjustments)
necessary to present fairly the Company's financial position, results of
operations, and cash flows. Operating results for the nine-months ended
September 30, 1997 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1997.
d. Cash and Cash Equivalents: Cash and cash equivalents are defined as
short-term, highly liquid investments with original maturities of three months
or less.
e. Marketable Securities: Marketable securities are carried at their fair
value. The cost of marketable securities used in determining realized gains and
losses upon sale is in accordance with the specific identification method.
f. Inventories: Inventories are stated at the lower of cost or net
realizable value. Cost is determined on the first-in, first-out basis.
g. Property, Plant and Equipment: Property, plant and equipment is stated
at cost and is depreciated using principally the straight-line method over the
assets estimated useful lives. The general range of lives is thirty-one to
thirty-nine years for buildings and building improvements and five to ten years
for machinery and equipment, furniture and fixtures and vehicles. Maintenance
and repairs are charged to expense as incurred. Upon sale or retirement, the
cost of the assets and related accumulated depreciation are eliminated from the
respective accounts, and the resulting gain or loss is included in income.
h. Income Taxes: There is no provision for federal income taxes due to the
Company being taxed as an "S" Corporation. As such, all items of income,
deductions, credits, etc. are passed through to the shareholders and taxed at
the shareholder level.
i. Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
11
<PAGE> 12
THE DECO GROUP
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
2. MARKETABLE SECURITIES:
At December 31, 1996, 1995 and 1994, the marketable securities of the
Company were classified as available for sale. Accordingly, the securities are
carried at fair value with unrealized gains and losses excluded from income and
reported as a separate component of shareholders' equity.
The cost and fair values of the securities at December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
UNREALIZED UNREALIZED
AMORTIZED HOLDING HOLDING FAIR
COST GAIN LOSS VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Corporate bonds......................... $1,205,295 $ 13,850 $ 0 $1,219,145
Mutual stock funds...................... 2,319,933 325,577 0 2,645,510
Other securities, primarily common
stocks................................ 2,803,574 747,342 0 3,550,916
---------- ---------- -------- ----------
$6,328,802 $1,086,769 $ 0 $7,415,571
========== ========== ======== ==========
</TABLE>
The cost and fair values of the securities at December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
UNREALIZED UNREALIZED
AMORTIZED HOLDING HOLDING FAIR
COST GAIN LOSS VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Corporate bonds......................... $ 940,534 $ 0 $ 18,849 $ 921,685
Mutual stock funds...................... 2,057,051 429,237 0 2,486,288
Other securities, primarily common
stocks................................ 2,525,471 484,800 0 3,010,271
---------- ---------- -------- ----------
$5,523,056 $ 914,037 $ 18,849 $6,418,244
========== ========== ======== ==========
</TABLE>
The cost and fair values of the securities at December 31, 1994 are as
follows:
<TABLE>
<CAPTION>
UNREALIZED UNREALIZED
AMORTIZED HOLDING HOLDING FAIR
COST GAIN LOSS VALUE
--------- ---------- ---------- -----
<S> <C> <C> <C> <C>
Corporate bonds......................... $2,360,817 $ 0 $ 44,468 $2,316,349
Mutual stock funds...................... 2,473,608 0 58,254 2,415,354
Other securities, primarily common
stocks................................ 2,116,160 0 88,964 2,027,196
---------- ---------- -------- ----------
$6,950,585 $ 0 $191,686 $6,758,899
========== ========== ======== ==========
</TABLE>
For the years ended December 31, 1996, 1995 and 1994, adjustments to the
cost basis of debt securities to recognize discount or premium between the
original cost of the securities and their face value were immaterial.
12
<PAGE> 13
THE DECO GROUP
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
3. PROPERTY, PLANT AND EQUIPMENT:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Land.......................................... $ 68,346 $ 68,346 $ 68,346
Buildings..................................... 511,553 511,553 511,553
Building Improvements......................... 294,021 294,021 294,021
Furniture and fixtures........................ 698,359 649,540 700,454
Machinery and equipment....................... 21,751,848 21,253,919 19,716,078
Vehicles...................................... 101,554 101,554 67,165
Deposits...................................... -- 186,005 463,653
----------- ----------- -----------
23,425,681 23,064,938 21,821,270
Less: accumulated depreciation.............. 14,698,499 12,109,564 9,806,869
----------- ----------- -----------
Net property, plant and equipment........ $ 8,727,182 $10,955,374 $12,014,401
=========== =========== ===========
</TABLE>
4. STOCK REDEMPTION NOTES PAYABLE:
In 1988, final stock redemption agreements with two shareholders were
entered into, resulting in promissory notes of $353,164 payable to each
shareholder. These notes are payable in monthly installments of $5,067,
including interest at the rate of 12 percent per annum. These notes are required
to be paid in full by April 1, 1998. The balance of the notes is $131,825,
$231,049 and $319,106 as of December 31, 1996, 1995 and 1994, respectively.
Principal payments are due as follows on these notes for the years ended
December 31:
<TABLE>
<S> <C>
1997........................................................ $111,808
1998........................................................ 20,017
--------
$131,825
========
</TABLE>
5. COMMON STOCK:
The authorized share capital of Grand Machining Company consists of 500
$100 par value common shares. The issued and outstanding shares at December 31,
1996, 1995 and 1994 were 163.086 shares.
The authorized share capital of Deco Technologies, Inc. consists of 60,000
no par value common shares. At December 31, 1996, 1995 and 1994, 100 common
share were issued and outstanding.
6. EMPLOYEE BENEFIT PLANS:
a. Profit Sharing Contributions: A profit sharing contribution is made
annually as determined by the Board of Directors subject to limitations based
upon current operating profits and participant's compensation. The amount of
contributions expensed for 1996, 1995 and 1994, was $186,065, $213,110 and
$238,440, respectively.
b. Pension Plans: Substantially all employees are covered by defined
benefit pension plans. Plan benefits under the hourly employees' pension plan
are based primarily on years of service. The benefit level used to compute
pension costs and related disclosures under SFAS No. 87 was $12.00 per month for
1996 and $9.50 per month for 1995 and 1994. The Plan benefits under the salaried
employees' pension plan is a function of years of service and employee's
compensation near retirement. Plan assets for both plans consist primarily of
short-term funds, commercial paper, and common stock. The Company's funding
policy is to contribute the amount of maximum tax deduction allowed.
13
<PAGE> 14
THE DECO GROUP
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
6. EMPLOYEE BENEFIT PLANS -- CONTINUED
The actuarially computed pension cost for 1996, 1995 and 1994 included the
following components:
<TABLE>
<CAPTION>
1996 1995 1994
SALARIED SALARIED SALARIED
AND HOURLY AND HOURLY AND HOURLY
---------- ---------- ----------
<S> <C> <C> <C>
Service cost..................................... $ 136,373 $ 121,225 $ 107,516
Interest cost on projected benefit obligation.... 116,851 86,281 67,274
Actual return on assets.......................... (82,038) (101,205) (10,039)
Net amortization and deferral.................... (34,400) (4,622) (90,824)
---------- ---------- ----------
Total pension cost............................. $ 136,786 $ 101,679 $ 73,927
========== ========== ==========
</TABLE>
The following table presents the funded status of the plans and
significant assumptions as of December 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
1996 1995 1994
SALARIED AND SALARIED AND SALARIED AND
HOURLY HOURLY HOURLY
------------ ------------ ------------
<S> <C> <C> <C>
Actuarial present value of vested benefit
obligation...................................... $ 890,573 $ 803,540 $ 667,957
========== ========== ==========
Accumulated benefit obligation (vested and
nonvested)...................................... $1,146,068 $ 897,737 721,861
========== ========== ==========
Actuarial present value of projected benefit
obligation...................................... $1,476,396 $1,147,350 927,244
Plan assets at fair value......................... 1,465,367 1,276,777 1,100,834
---------- ---------- ----------
Plan assets in excess of (less than) projected
benefit obligation.............................. (11,029) 129,427 173,590
Unamortized net assets at transition.............. (288,358) (308,942) (329,526)
Unrecognized prior service costs and net gain..... 248,897 144,274 146,893
---------- ---------- ----------
Accrued pension liability....................... $ (50,490) $ (35,241) $ (9,043)
========== ========== ==========
Discount rate..................................... 8.5% 8.5% 8.5%
Long-term rate of return:
Salaried........................................ 7.75% 7.75% 7.75%
Hourly.......................................... 7.5% 7.5% 7.5%
Rate of Increase in compensation level (salaried)
per annum....................................... 5% 5% 5%
</TABLE>
c. Self-Insured Workers' Compensation: In January 1990, the Company elected
to operate a self-insured program for costs incurred pursuant to the Workers'
Compensation Laws of the State of Michigan. The Company entered into a contract
with a service agent who supervises and administers claims as well as a contract
with an insurance company for excess liability coverage.
The Company recognizes expense for the self-insured program as claims are
paid. The amount of estimated incurred but not paid claims at each balance sheet
date is immaterial to net worth.
d. Self-Insured Health Care Benefits: The Company operates a self-insured
health care program for the benefit of all of its employees. The Company has a
contract with a service provider who supervises and processes claims under the
program. The Company recognizes expense for the self-insured program as claims
are paid. The amount of estimated incurred but not reported claims at each
balance sheet date is immaterial to net worth.
14
<PAGE> 15
THE DECO GROUP
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
7. LEASE AGREEMENTS:
Grand Machining Company leases space from one of its shareholders. The
lease provides for annual rental payments of $318,800 through 2001. Deco
Technologies, Inc. leases a building under an operating lease from a third party
which expires in 1998 but contains options to extend the term. In addition, the
Company pays real and personal property taxes and all repairs and maintenance
costs on the leased premises. Total combined rent expense for the years ended
December 31, 1996, 1995, and 1994 was $518,233, $510,900, and $510,900,
respectively.
8. CONTINGENCIES:
Various claims arising during the normal course of business are pending
against the Company. Management does not reasonably expect that the ultimate
liability, if any, of these matters will have a material effect on future
financial statements.
9. SUBSEQUENT EVENT:
In December 1997, the Company signed a definitive agreement to sell the
common stock of the Company to Newcor, Inc. The sale is expected to be completed
in early 1998. Newcor, Inc. designs and manufacturers precision machined
components and assemblies and custom rubber and plastic products primarily for
the automotive and agricultural vehicle markets.
15
<PAGE> 16
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Turn-Matic, Inc.:
We have audited the accompanying balance sheet of Turn-Matic, Inc. as of
September 30, 1997 and the related statements of income and retained earnings,
and cash flows for the year then ended. 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Turn-Matic, Inc. as of
September 30, 1997 and the results of operations and cash flows for the year
then ended in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Detroit, Michigan
December 5, 1997 except as to
Note 10 for which the date is January 19, 1998.
16
<PAGE> 17
TURN-MATIC, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1997
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 3,217,568 $ 2,926,691
Accounts receivable, trade................................ 1,790,765 2,005,951
Notes receivable, officer/shareholder..................... 248,454 766,891
Inventory................................................. 899,844 884,392
Prepaid expenses.......................................... 98,793 63,740
----------- -----------
Total current assets................................... 6,255,424 6,647,665
Property, plant and equipment, net.......................... 5,253,416 5,135,911
Cash surrender value of officers' life insurance............ 306,342 306,342
----------- -----------
Total assets........................................... $11,815,182 $12,089,918
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long-term debt, current portion........................... $ 541,167 $ 541,167
Accounts payable.......................................... 754,845 541,858
Accrued expenses.......................................... 259,797 122,225
Federal income tax payable................................ 147,653 319,747
----------- -----------
Total current liabilities.............................. 1,703,462 1,524,997
Long-term debt, noncurrent portion.......................... 2,040,285 1,904,994
Deferred federal income tax................................. 600,665 602,300
----------- -----------
Total liabilities...................................... 4,344,412 4,032,291
Shareholders' equity:
Common stock, $1.00 par value:
Authorized:
50,000 shares
Issued and outstanding: 30,000 shares.................. 30,000 30,000
Retained earnings......................................... 7,440,770 8,027,627
----------- -----------
Total shareholders' equity............................. 7,470,770 8,057,627
----------- -----------
Total liabilities and shareholders' equity............. $11,815,182 $12,089,918
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE> 18
TURN-MATIC, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
YEAR ENDED ENDED ENDED
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1997 1996
------------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Sales................................................ $15,796,477 $3,504,566 $4,615,910
Cost of sales........................................ 11,291,823 2,388,699 2,968,483
----------- ---------- ----------
Gross profit....................................... 4,504,654 1,115,867 1,647,427
Selling, general and administration expenses......... 1,946,300 360,638 417,607
Interest expense, net of interest income of $68,606,
$38,914, and $6,807, respectively.................. 173,111 40,432 57,445
----------- ---------- ----------
Income before nonrecurring gain and federal income
taxes........................................... 2,385,243 714,797 1,172,375
Nonrecurring gain on sale of machinery and
equipment.......................................... 440,810 -- 133,000
Other income*........................................ -- 196,872 --
Federal income taxes................................. (970,000) (324,812) (442,184)
----------- ---------- ----------
Net income......................................... 1,856,053 586,857 863,191
Retained earnings, beginning of year................. 5,584,717 7,440,770 5,584,717
----------- ---------- ----------
Retained earnings, end of year....................... $ 7,440,770 $8,027,627 $6,447,908
=========== ========== ==========
</TABLE>
* Represents the agreed upon repayment by an officer/shareholder of disallowed
fiscal year 1996 compensation resulting from an IRS examination.
The accompanying notes are an integral part of the financial statements.
18
<PAGE> 19
TURN-MATIC, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
YEAR ENDED ENDED ENDED
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1997 1997 1996
------------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income........................................... $ 1,856,053 $ 586,857 $ 863,191
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation...................................... 1,002,002 257,505 242,259
Gain on sale of property and equipment............ (440,810) -- (133,000)
Deferred income taxes............................. 85,467 1,635 18,120
Other income...................................... -- (196,872) --
Changes in operating assets and liabilities:
Accounts receivable............................... 1,079,002 (215,186) 89,559
Inventory......................................... (26,058) 15,452 (41,331)
Prepaid expenses.................................. 13,075 35,053 7,100
Cash surrender value.............................. (47,408) -- (8,830)
Accounts payable.................................. (62,205) (212,987) 217,794
Accrued expenses.................................. (12,370) (137,572) (24,398)
Federal income tax payable........................ (211,612) 172,094 156,919
----------- ---------- ----------
Net cash provided by operating activities....... 3,235,136 305,979 1,387,383
----------- ---------- ----------
Cash flows from investing activities:
Expenditures for property, plant and equipment....... (1,175,810) (140,000) (699,456)
Proceeds from sale of property, plant and
equipment......................................... 448,000 -- 133,000
----------- ---------- ----------
Net cash used in investing activities........... (727,810) (140,000) (566,456)
----------- ---------- ----------
Cash flows from financing activities:
Net payments/(borrowings) note receivable,
officer/shareholder............................... (1,659) (321,565) 2,502
Principal payments on long-term debt................. (541,167) (135,291) (180,389)
----------- ---------- ----------
Net cash used in financing activities........... (542,826) (456,856) (177,887)
----------- ---------- ----------
Net increase (decrease) in cash and cash
equivalents.................................. 1,964,500 (290,877) 643,040
Cash and cash equivalents at beginning of year......... 1,253,068 3,217,568 1,253,068
----------- ---------- ----------
Cash and cash equivalents at end of year............... $ 3,217,568 $2,926,691 $1,896,108
=========== ========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the year for interest............... $ 243,301
-----------
Cash paid during the year for federal income taxes... $ 1,096,145
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE> 20
TURN-MATIC, INC.
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Nature of Business: Turn-Matic, Inc. (the "Company") is a manufacturer
of high volume, precision machined close tolerance components and assemblies for
the automotive industry of which nearly 80 percent is sold to one customer.
b. Interim Financial Information: The unaudited interim basic financial
statements included herein as of December 31, 1997 and for the three-month
periods ended December 31, 1997 and 1996 include, in the opinion of management,
all adjustments (consisting of normal recurring adjustments) necessary to
present fairly the Company's financial position, results of operations, and cash
flows. Operating results for the three-months ended December 31, 1997 are not
necessarily indicative of the results that may be expected for the year ended
September 30, 1998.
c. Revenue Recognition/Accounts Receivable: Revenue from sale of
manufactured products is recognized upon passage of title to the customer, which
generally coincides with physical delivery.
d. Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
e. Inventory: Inventory is stated at the lower of cost or market, with cost
being determined by actual purchased material, processing and labor costs
incurred against specific jobs, plus an allocated portion of factory burden.
f. Property, Plant and Equipment: Property, plant and equipment are
recorded at cost. The Company provides for depreciation using the straight line
method at rates based on the estimated service lives as indicated below:
<TABLE>
<S> <C>
Leasehold improvements...................................... 5-31 years
Machinery and equipment..................................... 5-12 years
Furniture and fixtures...................................... 5-10 years
</TABLE>
Assets retired or disposed of are removed from the asset and accumulated
depreciation accounts, and the net amount, less proceeds from disposal, is
charged or credited to income. Normal repairs and maintenance are charged to
expense when incurred.
g. Cash and Cash Equivalents: For purposes of reporting cash flows, the
Company considers all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents.
2. NOTE RECEIVABLE, SHAREHOLDER:
At September 30, 1997, the Company has an unsecured 6 percent demand note
receivable in the amount of $248,454 from Raymond B. Dorris, Sr., a shareholder
of the Company.
3. INVENTORY:
Inventory at September 30, 1997 is summarized as follows:
<TABLE>
<S> <C>
Material, tooling and outside processing.................... $848,598
Direct labor and factory burden............................. 51,246
--------
$899,844
========
</TABLE>
20
<PAGE> 21
TURN-MATIC, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
4. NOTE PAYABLE, BANK, LINE OF CREDIT:
The Company has a revolving line of credit aggregating $2,000,000 with a
bank bearing interest at the prime interest rate. Accounts receivable, inventory
and machinery and equipment serve as collateral for borrowings under the line.
The line was unused at September 30, 1997.
5. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consists of the following:
<TABLE>
<S> <C>
Leasehold improvements...................................... $ 454,165
Machinery and equipment..................................... 10,599,677
Furniture and fixtures...................................... 96,004
-----------
11,149,846
Accumulated depreciation.................................... (5,896,430)
-----------
Property, plant and equipment, net.......................... $ 5,253,416
===========
</TABLE>
6. LONG-TERM DEBT:
The Company's long-term debt at September 30, 1997 is summarized as
follows:
<TABLE>
<CAPTION>
CURRENT NONCURRENT
PORTION PORTION TOTAL
------- ---------- -----
<S> <C> <C> <C>
Bank loan dated September 14, 1995, due May 14,
2002. The loan in the original amount of
$2,748,012 is payable in monthly installments of
$34,323 plus interest at the prime rate. All the
assets of the Company serve as collateral........ $411,881 $1,512,369 $1,924,250
Bank loan dated September 28, 1995, due September
28, 2002. The loan in the original amount of
$905,000 is payable in monthly installments of
$10,774 plus interest at the prime rate. All the
assets of the Company serve as collateral........ 129,286 527,916 657,202
-------- ---------- ----------
$541,167 $2,040,285 $2,581,452
======== ========== ==========
</TABLE>
Principal payments on long-term debt during the next five years are due as
follows:
<TABLE>
<S> <C>
Year ended September 30:
1998...................................................... $ 541,167
1999...................................................... 541,167
2000...................................................... 541,167
2001...................................................... 541,167
2002...................................................... 416,784
----------
$2,581,452
==========
</TABLE>
21
<PAGE> 22
TURN-MATIC, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
7. FEDERAL INCOME TAX EXPENSE:
Federal income tax expense at September 30, 1997 is summarized as follows:
<TABLE>
<S> <C>
Current..................................................... $884,533
Deferred.................................................... 85,467
--------
$970,000
========
</TABLE>
The deferred federal income tax liability is a result of temporary
differences due to the utilization of accelerated depreciation methods for tax
purposes.
8. LEASE AGREEMENTS:
The Company leased a building located in Clinton Township, Michigan from
Raymond B. Dorris, Sr. and Marie E. Dorris, shareholders of the Company. The
month to month lease agreement was for the Company to pay monthly rent of $4,500
plus taxes, insurance, maintenance and utilities. The lease was terminated on
September 30, 1997.
The Company leases two buildings located in Clinton Township, Michigan from
a related partnership. The 5-year lease agreements dated April 1, 1995 are for
the Company to pay monthly rent of $10,000 and $24,000, respectively, plus
taxes, insurance, maintenance and utilities. The mortgages held by the
partnership are guaranteed by the Company.
Total rental expense, net of sublease rental income of $19,800 and
exclusive of taxes, insurance, maintenance and utilities for the year ended
September 30, 1997 was $442,220.
9. PROFIT SHARING PLAN:
The Company has a profit sharing plan for all eligible employees. Eligible
employees are defined as those completing one year of service and have reached
the age of 21. The amount of contribution to the plan each year is discretionary
and is determined by the Company based on eligible employees compensation not to
exceed the maximum allowable as a deduction to the Company under the provisions
of the Internal Revenue Code. Profit sharing plan expense for the year ended
September 30, 1997 was $152,158.
10. SUBSEQUENT EVENT:
In January 1998 the Company signed a definitive agreement to sell all of
the common stock of the Company to Newcor, Inc. The sale is expected to be
completed in early 1998. Newcor, Inc. designs and manufacturers precision
machined components and assemblies and custom rubber and plastic products
primarily for the automotive and agricultural vehicle markets.
22
<PAGE> 23
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
PRO FORMA
NEWCOR MT&G DECO TURN-MATIC CONSOLIDATED
OCTOBER 1, 1996 OCTOBER 1, 1996
YEAR ENDED THROUGH THROUGH YEAR ENDED YEAR ENDED
OCTOBER 31, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, PRO FORMA OCTOBER 31,
1997 1997 1997 1997 ADJUSTMENTS 1997
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Sales $ 130,848 $ 21,787 $ 74,177 $ 15,797 $ -- $ 242,609
Cost of sales 107,083 17,445 59,754 11,292 (2,747)(1) 192,827
--------- --------- --------- --------- -------- ---------
Gross profit 23,765 4,342 14,423 4,505 2,747 49,782
Selling, general and
administrative expense 14,880 3,224 13,214 1,947 (9,096)(2) 24,169
Amortization expense 879 -- -- -- 3,646 (3) 4,525
Nonrecurring (income) expense (297) -- -- (441) 441 (4) (297)
--------- --------- --------- --------- -------- ---------
Operating income 8,303 1,118 1,209 2,999 7,756 21,385
Interest expense (2,070) (397) (173) (11,237)(5) (13,877)
Other income (expense) (224) (781) 799 -- 781 (6) (224)
-- -- -- (799)(7)
--------- --------- --------- --------- -------- ---------
Income (loss) before
income taxes 6,009 (60) 2,008 2,826 (3,499) 7,284
Provision (benefit) for
income taxes 2,119 -- -- 970 (363)(8) 2,726
--------- --------- --------- --------- -------- ---------
Net income (loss) $ 3,890 $ (60) $ 2,008 $ 1,856 $ (3,136) $ 4,558
========= ========= ========= ========= ======== =========
Earnings per share $ 0.79 $ 0.92
========= =========
</TABLE>
See notes to unaudited pro forma consolidated statement of income.
23
<PAGE> 24
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
NEWCOR MT&G (1) DECO (1) TURN-MATIC (1)
OCTOBER 31, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, PRO FORMA PRO FORMA
1997 1997 1997 1997 ADJUSTMENTS CONSOLIDATED
(DOLLARS IN THOUSANDS)
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Current Assets:
Cash and investments $ 34 $ -- $ 12,813 $ 3,217 $ 1,700 (2) $ 1,899
(471)(2)
(12,813)(3)
(2,581)(4)
Receivables 22,523 2,530 6,946 1,791 -- 33,790
Inventories 8,084 1,983 2,115 900 -- 13,082
Prepaid expenses and other 8,672 2,594 60 348 (249)(3) 8,942
(2,483)(2)
--------- --------- --------- --------- -------- ---------
Total current assets 39,313 7,107 21,934 6,256 (16,897) 57,713
Property, plant and equipment, net 28,119 6,084 7,910 5,253 6,353 (3) 53,719
Goodwill 16,080 -- -- -- 72,928 (3) 89,008
Other long-term assets 7,371 -- -- 306 4,500 (2) 9,371
(306)(3)
(2,500)(2)
--------- --------- --------- --------- -------- ---------
Total assets $ 90,883 $ 13,191 $ 29,844 $ 11,815 $ 64,078 $ 209,811
========= ========= ========= ========= ======== =========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term
debt $ 833 $ 4,252 $ -- $ 541 $ (4,793)(4) $ 833
Accounts payable 14,874 2,048 2,753 755 -- 20,430
Accrued expenses and other liabilities 5,668 124 2,581 407 1,405 (3) 10,185
--------- --------- --------- --------- --------- ---------
Total current liabilities 21,375 6,424 5,334 1,703 (3,388) 31,448
Long-term debt 32,267 3,428 -- 2,040 125,000 (5) 140,267
(22,468)(4)
Postretirement benefits 6,338 -- -- -- -- 6,338
Pension liability and other 3,488 -- -- 601 254 (3) 4,343
--------- --------- --------- --------- --------- ---------
Total liabilities 63,468 9,852 5,334 4,344 99,398 182,396
Total shareholders' equity 27,415 3,339 24,510 7,471 (35,320)(3) 27,415
--------- --------- --------- --------- --------- ---------
Total liabilities and
shareholders' equity $ 90,883 $ 13,191 $ 29,844 $ 11,815 $ 64,078 $ 209,811
========= ========= ========= ========= ========= =========
</TABLE>
See notes to unaudited pro forma condensed consolidated balance sheet.
24
<PAGE> 25
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
For purposes of the unaudited pro forma consolidated statement of
income, it has been assumed that the results of operations of Machine Tool &
Gear, Inc. ("MT&G"), the three companies comprising The Deco Group ("Deco"), and
Turn-Matic, Inc. ("Turn-Matic") for the twelve months ended October 31, 1997
would be comparable to their results of operations for the twelve months ended
September 30, 1997 presented herein. The unaudited pro forma statement of income
data for the twelve months ended September 30, 1997 was derived from internal
financial information for MT&G and Deco since both had a December 31 year-end
and from audited financial statements for Turn-Matic.
(1) Comprised of the following:
<TABLE>
<CAPTION>
MT&G Deco Turn-Matic Total
<S> <C> <C> <C> <C>
Depreciation (a)...............................$ (6) $ (1,347) $ (263) $(1,616)
Capitalizable costs (b).............................(975) -- -- (975)
Rental (c)..................................... (50) -- (106) (156)
--------- --------- -------- -------
$(1,031) $ (1,347) $ (369) $(2,747)
======= ======== ======== =======
</TABLE>
(a) Decreased depreciation expense due to extended estimated useful
lives, primarily for machinery and equipment, net of additional
depreciation on fair value adjustments to property, plant and
equipment.
(b) Represents adjustments for tooling of $425 and for machinery and
equipment and plant construction costs of $300, all of which were
made to conform the accounting to Newcor's accounting practices,
and $250 of costs associated with closing a facility and moving
machinery and equipment to remaining operating facilities. This
facility was closed in early calendar 1997.
(c) For MT&G, reflects elimination of rental expense for a facility
leased by MT&G which Newcor acquired as part of the acquisition
offset in part by incremental rental expense for a facility MT&G
owned which Newcor did not acquire but is leasing. For Turn-Matic,
reflects elimination of rental expense for a facility Turn-Matic
did not use in operations and which Newcor did not acquire.
(2) Comprised of the following:
<TABLE>
<CAPTION>
MT&G Deco Turn-Matic Total
<S> <C> <C> <C> <C>
Elimination of selling shareholders'
salaries and benefits..........................$ (495) $ (6,713) $ (1,289) $ (8,497)
Elimination of nonrecurring consulting fees...... (108) (400) (91) (599)
------- -------- -------- --------
$ (603) $ (7,113) $ (1,380) $ (9,096)
======= ======== ======== ========
</TABLE>
(3) Represents the amortization of goodwill arising from the acquisitions,
which will be amortized on a straight-line basis over twenty years.
(4) Represents a nonrecurring gain on the sale of machinery and equipment
at Turn-Matic that has been eliminated to conform with purchase
accounting adjustments.
(5) Represents the net increase in interest expense to reflect: (i) the
increase in interest expense of $12,344 resulting from financing the
MT&G, Deco and Turn-Matic acquisitions and pay-off of existing MT&G
debt, at 9.875%, which represents the interest rate on the Senior
Subordinated Notes (the "Notes") closed on March 4, 1998; (ii) the
annual amortization of the Notes financing costs of $450; (iii) the
elimination of $987 of interest on existing Newcor debt to be repaid
from the proceeds from the Notes; and (iv) the elimination of $570 of
interest on the existing MT&G and Turn-Matic debt.
(6) Represents adjustment to eliminate charitable contributions in order to
conform to Newcor's charitable giving practice.
(7) Represents adjustments to eliminate investment earnings at Deco to
reflect that investments at Deco were not acquired.
(8) Calculated as the income (loss) before income taxes at MT&G and Deco
and the pro forma adjustments, excluding the impact of non deductible
goodwill amortization at Turn-Matic, multiplied by Newcor's incremental
tax rate of 34.0%.
25
<PAGE> 26
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(1) For purposes of the unaudited pro forma condensed consolidated balance
sheet, the financial condition of MT&G, Deco and Turn-Matic as of
September 30, 1997 has been assumed to be comparable to October 31,
1997. The September 30, 1997 balance sheet was derived from internal
financial information for MT&G and Deco since both had a December 31
year-end and from audited financial statements for Turn-Matic. Held
checks at MT&G that were distributed immediately subsequent to period
end were classified as accounts payable.
(2) Reflects the net borrowings to finance the acquisitions as follows:
<TABLE>
<CAPTION>
Newcor MT&G Deco Turn-Matic Total
<S> <C> <C> <C> <C> <C>
Acquisition $ -- $27,253 (a) $54,850 $17,471 (b) $ 99,574
Retirement of existing bank credit
facilities and other debt 17,000 5,197 (c) -- -- 22,197
Application of pre-closing cash
payment (2,500) -- -- -- (2,500)
Fees and expenses of the Notes 4,500 -- -- -- 4,500
Balance of Notes proceeds to cash 1,700 -- -- -- 1,700
------- ------- ------- ------- --------
$20,700 $32,450 $54,850 $17,471 $125,471
======= ======= ======= ======= ========
</TABLE>
(a) Includes repayment of $5,603 of Newcor revolving credit
borrowings incurred to finance the cash portion of the MT&G
acquisition (comprised of a $2,500 pre-closing cash payment made
prior to October 31, 1997 and recorded in other long-term assets
and a $3,103 pre-closing cash payment made subsequent to October
31, 1997) and repayment of the $21,650 MT&G note.
(b) The purchase price shown for Turn-Matic reflects a $471 purchase
price adjustment based on the value of Turn-Matic's net assets
at September 30, 1997. Such purchase price adjustment was funded
by a reduction in cash acquired.
(c) The $5,197 retirement of debt shown for MT&G reflects $7,680 of
existing debt at September 30, 1997 less a cash deposit of
$2,483 (included in prepaid expenses in MT&G's balance sheet)
that was returned upon Newcor's conversion of certain of MT&G's
capital equipment to an operating lease.
26
<PAGE> 27
(3) The MT&G, Deco and Turn-Matic acquisitions will be accounted for by the
purchase method of accounting, pursuant to which the purchase price is
allocated among the acquired tangible and intangible assets and assumed
liabilities in accordance with their estimated fair values on the date
of acquisition. The purchase price and preliminary adjustments to
historical book value as a result of the respective acquisitions are as
follows:
<TABLE>
<CAPTION>
MT&G Deco Turn-Matic Total
<S> <C> <C> <C> <C>
Elimination of cash and equity investments
not acquired................................. $ -- $(12,813) $ -- $(12,813)
Elimination of receivable from former
shareholder.................................. -- -- (249) (249)
Increase in property, plant and equipment to
estimated fair value......................... 2,016 3,590 747 6,353
Estimated goodwill............................. 22,398 40,368 10,162 72,928
Elimination of other long-term assets
not acquired................................. -- -- (306) (306)
------- -------- ------- --------
$24,414 $ 31,145 $10,354 $ 65,913
======= ======== ======= ========
Increase in accrued liabilities............... $ 500 $ 805 $ 100 $ 1,405
Note proceeds used to finance acquisitions.... 27,253 54,850 17,471 99,574
Increase in deferred tax liability for fair
value write-up of property and equipment.... -- -- 254 254
Elimination of historical shareholders'
equity as a result of purchase accounting... (3,339) (24,510) (7,471) (35,320)
------- -------- ------- -------
$24,414 $ 31,145 $10,354 $65,913
======= ======== ======= =======
</TABLE>
(4) Retirement of existing debt is derived from the following:
<TABLE>
<CAPTION>
Newcor MT&G Deco Turn-Matic Total
<S> <C> <C> <C> <C> <C>
Current $ -- $4,252 $ -- $ 541 (a) $ 4,793
Long-term 17,000 3,428 -- 2,040 (a) 22,468
------- ------ ----- ------ ---------
$17,000 $7,680 (b) $ -- $2,581 (a) $ 27,261
======= ====== ===== ====== ========
</TABLE>
(a) Assumed repaid from available Turn-Matic cash.
(b) The $7,680 retirement of existing debt at September 30, 1997 is
before application of a $2,483 cash deposit (included in prepaid
expenses in MT&G's balance sheet) that was returned upon
Newcor's conversion of certain of MT&G's capital equipment to an
operating lease.
(5) Reflects the issuance of the Notes.
27
<PAGE> 28
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
1. Purchase Agreement dated February 27, 1998 among the Company, the subsidiary guarantors (as defined
therein), and the initial purchasers of the Notes
4.(a) Indenture dated as of March 4, 1998 between the Company, the subsidiary guarantors (as defined
therein), and First Trust National Association as trustee, relating to the Notes (including forms of
Notes).
4.(b) A/B Exchange Registration Rights Agreement dated as of March 4, 1998 between the Company, the
subsidiary guarantors (as defined therein), and the initial purchasers of the Notes.
10.(a) Stock Purchase Agreement between Stephen Grand, Individually and as Trustee of the Stephen Grand
Revocable Trust dated July 5, 1979 and the Stephen M. Grand Property Trust dated January 22, 1992
and Newcor, Inc. dated December 9, 1997 incorporated herein by reference from Exhibit 10(l) to
report on Form 10-K for the fiscal year ended October 31, 1997 (Commission file no. 1-5985).
10.(b) Amendment to Stock Purchase Agreement between Stephen Grand,
Individually and as Trustee of the Stephen Grand Revocable Trust
dated July 5, 1979 and the Stephen M. Grand Property Trust dated
January 22, 1992 and Newcor, Inc., dated March 4, 1998.
10.(c) Stock Purchase Agreement by and among each of the Shareholders of Turn-matic, Inc. and Newcor, Inc.
dated January 16, 1998 incorporated herein by reference from Exhibit 10(m) to report on Form 10-K
for the fiscal year ended October 31, 1997 (Commission file no. 1-5985).
10.(d) Employment Agreement with Keith Hale dated March 4, 1998.
99.(a) Press release dated February 27, 1998 announcing that the Company has entered into an agreement to
privately place $125 million principal amount of its 9.875% Senior Subordinated Notes due 2008.
99.(b) Press release dated March 5, 1998 announcing the completion of the Deco and Turn-Matic
acquistions, and the financing of those transactions and MT&G.
</TABLE>
<PAGE> 1
EXHIBIT 1
NEWCOR, INC.
GRAND MACHINING COMPANY
DECO TECHNOLOGIES, INC.
DECO INTERNATIONAL, INC.
TURN-MATIC, INC.
ROCHESTER GEAR, INC.
PLASTRONICS PLUS, INC.
$125,000,000
9-7/8% Senior Subordinated Notes due 2008
Purchase Agreement
February 27, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MCDONALD & COMPANY SECURITIES, INC.
ING BARING (U.S.) SECURITIES, INC.
<PAGE> 2
$125,000,000
9-7/8% Senior Subordinated Notes due 2008
of NEWCOR, INC.
PURCHASE AGREEMENT
February 27, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
McDONALD & COMPANY SECURITIES, INC.
ING BARING (U.S.) SECURITIES, INC.
c/o DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10005
Dear Sirs:
Newcor, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ"), McDonald & Company Securities, Inc., and ING Baring (U.S.) Securities,
Inc. (each, an "Initial Purchaser" and, collectively, the "Initial Purchasers")
an aggregate of $125,000,000 in principal amount of its 9-7/8% Senior
Subordinated Notes due 2008 (the "Series A Notes"), subject to the terms and
conditions set forth herein. The Series A Notes are to be issued pursuant to the
provisions of an indenture (the "Indenture"), to be dated as of the Closing Date
(as defined below), among the Company, the Guarantors (as defined below) and
First Trust National Association, as trustee (the "Trustee"). The Series A Notes
and the Series B Notes (as defined below) issuable in exchange therefor are
collectively referred to herein as the "Notes." The Notes will be guaranteed
(the "Subsidiary Guarantees") by each of the entities listed on Schedule A,
hereto (each, a "Guarantor" and collectively the "Guarantors"). Capitalized
terms used but not defined herein shall have the meanings given to such terms in
the Offering Memorandum (as defined below).
1. OFFERING MEMORANDUM. The Series A Notes will be offered and
sold to the Initial Purchasers pursuant to one or more exemptions from the
registration requirements under the Securities Act of 1933, as amended (the
"Act"). The Company and the Guarantors have prepared a preliminary offering
memorandum, dated February 10, 1998 (the "Preliminary Offering Memorandum") and
a final offering memorandum, dated February 27, 1998 (the "Offering
Memorandum"), relating to the Series A Notes and the Subsidiary Guarantees.
<PAGE> 3
Upon original issuance thereof, and until such time as the
same is no longer required pursuant to the Indenture, the Series A Notes (and
all securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT) (A "QIB"), (B) IT HAS
ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION
D UNDER THE ACT (AN "IAI"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF THE ACT, (D) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE ACT, (E) TO AN IAI THAT,
PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE ACT, (F) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT (AND BASED UPON
AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION"
AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
2
<PAGE> 4
REGULATION S UNDER THE ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchasers, and the Initial Purchasers agree,
severally and not jointly, to purchase from the Company, an aggregate principal
amount of $125,000,000 of Series A Notes as set forth in Schedule C hereto at a
purchase price equal to 97% of the principal amount thereof (the "Purchase
Price").
3. TERMS OF OFFERING. The Initial Purchasers have advised the
Company that the Initial Purchasers will make offers (the "Exempt Resales") of
the Series A Notes purchased hereunder on the terms set forth in the Offering
Memorandum, as amended or supplemented, solely to (i) persons whom the Initial
Purchasers reasonably believe to be "qualified institutional buyers" as defined
in Rule 144A under the Act ("QIBs"), and (ii) to persons permitted to purchase
the Series A Notes in offshore transactions in reliance upon Regulation S under
the Act (each, a "Regulation S Purchaser") (such persons specified in clauses
(i) and (ii) being referred to herein as the "Eligible Purchasers"). The Initial
Purchasers will offer the Series A Notes to Eligible Purchasers initially at a
price equal to 100% of the principal amount thereof. Such price may be changed
at any time without notice.
Holders (including subsequent transferees) of the Series A
Notes will have the registration rights set forth in the registration rights
agreement (the "Registration Rights Agreement"), to be dated the Closing Date,
in substantially the form of Exhibit A hereto, for so long as such Series A
Notes constitute "Transfer Restricted Securities" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Company and the Guarantors will agree to file with the Securities and
Exchange Commission (the "Commission") under the circumstances set forth
therein, (i) a registration statement under the Act (the "Exchange Offer
Registration Statement") relating to the Company's 9.875% Series B Subordinated
Notes due 2008 (the "Series B Notes"), to be offered in exchange for the Series
A Notes (such offer to exchange being referred to as the "Exchange Offer") and
the Subsidiary Guarantees thereof and (ii) a shelf registration statement
pursuant to Rule 415 under the Act (the "Shelf Registration Statement" and,
together with the Exchange Offer Registration Statement, the "Registration
Statements") relating to the resale by certain holders of the Series A Senior
Notes and to use its best efforts to cause such Registration Statements to be
declared and remain effective and usable for the periods specified in the
Registration Rights Agreement and to consummate the Exchange Offer. This
Agreement, the Indenture, the Notes, the Subsidiary Guarantees and the
Registration Rights Agreement are hereinafter sometimes referred to collectively
as the "Operative Documents."
A portion all of the net proceeds of the Offering will be used
to finance a portion of the cash consideration for the Company's acquisitions of
Grand Machining Company, Deco Technologies, Inc. and Deco International, Inc.
(collectively the "Deco Entities") (the "Deco Acquisition") and Turn-Matic, Inc.
("Turn-Matic") (the "Turn-Matic Acquisition" and, together with the Deco
Acquisition, the "Acquisitions") and to repay indebtedness incurred in
connection
3
<PAGE> 5
with the Company's acquisition of substantially all of the assets of Machine
Tool & Gear, Inc. ("MT&G") The MT&G asset purchase and the Acquisitions have
been or will be made pursuant to an Asset Purchase Agreement between the Company
and MT&G, a Stock Purchase Agreement among the Company and Stephen Grand,
Individually and as Trustee of the Stephen Grand Revocable Trust Dated July 5,
1979 and the Stephen M. Grand Property Trust dated January 22, 1992, and a Stock
Purchase Agreement among the Company and each of the shareholders of Turn-Matic
(collectively the "Acquisition Agreements").
Immediately upon consummation of the Acquisitions, the Deco
Entities and Turn-Matic shall execute and deliver a counterpart of this
Agreement, the Registration Rights Agreement, the Indenture and their respective
Subsidiary Guarantees.
4. DELIVERY AND PAYMENT.
(a) Delivery of, and payment of the Purchase Price for, the
Series A Notes shall be made at the offices of Miller, Canfield, Paddock and
Stone, P.L.C., ("Miller Canfield") or such other location as may be mutually
acceptable. Such delivery and payment shall be made at 9:00 a.m. local time, on
March 4, 1998 or at such other time as shall be agreed upon by the Initial
Purchasers and the Company in writing. The time and date of such delivery and
the payment for the Series A Notes are herein called the "Closing Date."
(b) One or more of the Series A Notes in definitive global
form, registered in the name of Cede & Co., as nominee of The Depository Trust
Company ("DTC"), having an aggregate principal amount corresponding to the
aggregate principal amount of the Series A Notes (collectively, the "Global
Note"), shall be delivered by the Company to the Initial Purchasers (or as the
Initial Purchasers direct) in each case with any transfer taxes thereon duly
paid by the Company against payment by the Initial Purchasers of the Purchase
Price thereof by wire transfer in same day funds to the order of the Company.
The Global Note shall be made available to the Initial Purchasers for inspection
not later than 9:30 a.m., New York City time, on the business day immediately
preceding the Closing Date.
5. AGREEMENTS OF THE COMPANY AND THE GUARANTORS. Each of the
Company and the Guarantors hereby agrees with the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if
requested by the Initial Purchasers, confirm such advice in writing, (i) of the
issuance by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Series A Notes for offering
or sale in any jurisdiction designated by the Initial Purchasers pursuant to
Section 5(e) hereof, or the initiation of any proceeding by any state securities
commission or any other federal or state regulatory authority for such purpose
and (ii) of the happening of any event during the period referred to in Section
5(c) below that makes any statement of a material fact made in the Preliminary
Offering Memorandum or the Offering Memorandum untrue or that requires any
additions to or changes in the Preliminary Offering
4
<PAGE> 6
Memorandum or the Offering Memorandum in order to make the statements therein
not misleading. The Company and the Guarantors shall use their best efforts to
prevent the issuance of any stop order or order suspending the qualification or
exemption of any Series A Notes under any state securities or Blue Sky laws and,
if at any time any state securities commission or other federal or state
regulatory authority shall issue an order suspending the qualification or
exemption of any Series A Notes under any state securities or Blue Sky laws, the
Company and the Guarantors shall use their best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Company as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
or supplements thereto, as the Initial Purchasers may reasonably request for the
time period specified in Section 5(c). Subject to the Initial Purchasers'
compliance with their representations and warranties and agreements set forth in
Section 7 hereof, the Company consents to the use of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto required pursuant hereto, by the Initial Purchasers in connection with
Exempt Resales.
(c) During such period as in the opinion of counsel for the
Initial Purchasers an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers or during the 360 days
following the Closing Date, whichever is shorter, (i) not to make any amendment
or supplement to the Offering Memorandum of which the Initial Purchasers shall
not previously have been advised or to which the Initial Purchasers shall
reasonably object after being so advised and (ii) to prepare promptly upon the
Initial Purchasers' reasonable request, any amendment or supplement to the
Offering Memorandum which may be necessary or advisable in connection with such
Exempt Resales.
(d) If, during the period referred to in Section 5(c)
above, any event shall occur or condition shall exist as a result of which, in
the opinion of counsel to the Initial Purchasers, it becomes necessary to amend
or supplement the Offering Memorandum in order to make the statements therein,
in the light of the circumstances when such Offering Memorandum is delivered to
an Eligible Purchaser, not misleading, or if, in the opinion of counsel to the
Initial Purchasers, it is necessary to amend or supplement the Offering
Memorandum to comply with any applicable law, forthwith to prepare an
appropriate amendment or supplement to such Offering Memorandum so that the
statements therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such Offering
Memorandum will comply with applicable law, and to furnish to the Initial
Purchasers and such other persons as the Initial Purchasers may designate such
number of copies thereof as the Initial Purchasers may reasonably request.
(e) During the period specified in Section 5(c) hereof, to
cooperate with the Initial Purchasers and counsel to the Initial Purchasers in
connection with the registration or qualification of the Series A Notes for
offer and sale to the Initial Purchasers and pursuant to Exempt Resales under
the securities or Blue Sky laws of such jurisdictions as the Initial Purchasers
may request and to continue such registration or qualification in effect
throughout such period and to file such consents to service of process or other
documents as may
5
<PAGE> 7
be necessary in order to effect such registration or qualification; provided,
however, that neither the Company nor any Guarantor shall be required in
connection therewith to qualify as a foreign corporation in any jurisdiction in
which it is not now so qualified or to take any action that would subject it to
general consent to service of process or taxation other than as to matters and
transactions relating to the Preliminary Offering Memorandum, the Offering
Memorandum or Exempt Resales, in any jurisdiction in which it is not now so
subject.
(f) So long as the Notes are outstanding, (i) to mail and
make generally available as soon as practicable after the end of each fiscal
year to the record holders of the Notes a financial report of the Company and
its subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
the Company's independent public accountants and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly period (except
for the last quarterly period of each fiscal year) to such holders, a
consolidated balance sheet, a consolidated statement of operations and a
consolidated statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any) as of the end of and for such period, and
for the period from the beginning of such year to the close of such quarterly
period, together with comparable information for the corresponding periods of
the preceding year.
(g) So long as the Notes are outstanding, to furnish to the
Initial Purchasers as soon as available copies of all reports or other
communications furnished by the Company or any of the Guarantors to its security
holders or furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company or any of the
Guarantors is listed and such other publicly available information concerning
the Company and/or its subsidiaries as the Initial Purchasers may reasonably
request.
(h) So long as any of the Series A Notes remain outstanding
and during any period in which the Company and the Guarantors are not subject to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to make available to any holder of Series A Notes in connection
with any sale thereof and any prospective purchaser of such Series A Notes from
such holder, the information ("Rule 144A Information") required by Rule
144A(d)(4) under the Act.
(i) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of the obligations of the Company
and the Guarantors under this Agreement, including: (i) the fees, disbursements
and expenses of counsel to the Company and the Guarantors and accountants of the
Company and the Guarantors in connection with the sale and delivery of the
Series A Notes to the Initial Purchasers and pursuant to Exempt Resales, and all
other fees and expenses in connection with the preparation, printing, filing and
distribution of the Preliminary Offering Memorandum, the Offering Memorandum and
all amendments and supplements to any of the foregoing (including financial
statements), including the mailing and delivering of copies thereof to the
Initial Purchasers and persons designated by it in the quantities
6
<PAGE> 8
specified herein, (ii) all costs and expenses related to the transfer and
delivery of the Series A Notes to the Initial Purchasers and pursuant to Exempt
Resales, including any transfer or other taxes payable thereon, (iii) all costs
of printing or producing this Agreement, the other Operative Documents and any
other agreements or documents in connection with the offering, purchase, sale or
delivery of the Series A Notes, (iv) all expenses in connection with the
registration or qualification of the Series A Notes and the Subsidiary
Guarantees for offer and sale under the securities or Blue Sky laws of the
several states and all costs of printing or producing any preliminary and
supplemental Blue Sky memoranda in connection therewith (including the filing
fees and fees and disbursements of counsel for the Initial Purchasers in
connection with such registration or qualification and memoranda relating
thereto), (v) the cost of printing certificates representing the Series A Notes
and the Subsidiary Guarantees, (vi) all expenses and listing fees in connection
with the application for quotation of the Series A Notes in the National
Association of Securities Dealers, Inc. ("NASD") Automated Quotations System -
Portal ("PORTAL") market, (vii) the fees and expenses of the Trustee and the
Trustee's counsel in connection with the Indenture, the Notes and the Subsidiary
Guarantees, (viii) the costs and charges of any transfer agent, registrar and/or
depositary (including DTC), (ix) any fees charged by rating agencies for the
rating of the Notes, (x) all costs and expenses of the Exchange Offer and any
Registration Statement, as set forth in or contemplated by the Registration
Rights Agreement, and (xi) and all other costs and expenses incident to the
performance of the obligations of the Company and the Guarantors hereunder for
which provision is not otherwise made in this Section.
(j) To use its best efforts to effect the inclusion of the
Series A Notes in PORTAL and to maintain the listing of the Series A Notes on
PORTAL for so long as the Series A Notes are outstanding.
(k) To obtain the approval of DTC for "book-entry" transfer
of the Notes, and to comply with all of its agreements set forth in the
representation letters of the Company and the Guarantors to DTC relating to the
approval of the Notes by DTC for "book-entry" transfer.
(l) During the period beginning on the date hereof and
continuing to and including the date that is 180 days after the Closing Date,
not to offer, sell, contract to sell or otherwise transfer or dispose of any
debt securities of the Company or any Guarantor or any warrants, rights or
options to purchase or otherwise acquire debt securities of the Company or any
Guarantor substantially similar to the Notes and the Subsidiary Guarantees
(other than (i) the Notes and the Subsidiary Guarantees and (ii) commercial
paper issued in the ordinary course of business), without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation.
(m) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Series A Notes to the Initial
Purchasers or pursuant to Exempt Resales in a manner that would require the
registration of any such sale of the Series A Notes under the Act.
7
<PAGE> 9
(n) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of any
Notes and the related Subsidiary Guarantees.
(o) To cause the Exchange Offer to be made in the
appropriate form to permit Series B Notes and guarantees thereof by the
Guarantors registered pursuant to the Act to be offered in exchange for the
Series A Notes and the Subsidiary Guarantees and to comply with all applicable
federal and state securities laws in connection with the Exchange Offer.
(p) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(q) Immediately upon consummation of the Acquisitions, to
cause the Deco Entities and Turn-Matic to execute and deliver a counterpart of
this Agreement, the Registration Rights Agreement, the Indenture and their
respective Subsidiary Guarantees, so that the Deco Entities and Turn-Matic
become Guarantors for all purposes hereof and thereof.
(r) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by it prior
to the Closing Date and to satisfy all conditions precedent to the delivery of
the Series A Notes and the Subsidiary Guarantees.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY
AND THE GUARANTORS. As of the date hereof, each of the Company and the
Guarantors, jointly and severally, represents and warrants to, and agrees with,
the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and the Offering
Memorandum do not, and any supplement or amendment to them will not, contain any
untrue statement of a material fact or omit to state any 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, except that the
representations and warranties contained in this paragraph (a) shall not apply
to statements in or omissions from the Preliminary Offering Memorandum or the
Offering Memorandum (or any supplement or amendment thereto) based upon
information relating to the Initial Purchasers furnished to the Company in
writing by the Initial Purchasers expressly for use therein. No stop order
preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum, or any amendment or supplement thereto, or any order asserting that
any of the transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued.
(b) Each of the Company, its subsidiaries, the Deco
Entities and Turn-Matic has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction of incorporation
and has the corporate power and authority to carry on its business as described
in the Preliminary Offering Memorandum and the Offering Memorandum and to own,
lease and operate its properties, and each is duly qualified and is in good
standing as a foreign corporation authorized to do business in each jurisdiction
in which the nature of its business or its ownership or leasing of property
requires such qualification, except where the
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<PAGE> 10
failure to be so qualified would not have a material adverse effect on the
business, prospects, financial condition or results of operations of the Company
and its subsidiaries (including for purposes of this subsection, the Deco
Entities and Turn-Matic), taken as a whole, or draw into question the validity
of this Agreement or the other Operative Documents (a "Material Adverse
Effect").
(c) All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid, non-assessable
and not subject to any preemptive or similar rights.
(d) The entities listed on Schedule B hereto are the only
subsidiaries, direct or indirect, of the Company. All of the outstanding shares
of capital stock of each of the Company's subsidiaries, the Deco Entities and
Turn-Matic have been duly authorized and validly issued and are fully paid and
non-assessable, and are (in the case of the Company's subsidiaries) or upon
consummation of the Acquisitions will be (in the case of the Deco Entities and
Turn-Matic) owned by the Company, directly or indirectly through one or more
subsidiaries, free and clear of any security interest, claim, lien, encumbrance
or adverse interest of any nature (each, a "Lien").
(e) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors, except the Deco Entities
and Turn-Matic. Upon consummation of the Acquisitions, this Agreement will be
duly authorized, executed and delivered by each of the Deco Entities and
Turn-Matic.
(f) The Indenture has been duly authorized by the Company
and each of the Guarantors, except the Deco Entities and Turn-Matic, and, on the
Closing Date, will have been validly executed and delivered by the Company and
each of the Guarantors, except the Deco Entities and Turn-Matic. Upon
consummation of the Acquisitions, the Indenture will be duly authorized,
executed and delivered by the Deco Entities and Turn-Matic. When the Indenture
has been duly executed and delivered by the Company and each of the Guarantors,
the Indenture will be a valid and binding agreement of the Company and each
Guarantor, enforceable against the Company and each Guarantor in accordance with
its terms except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date, the
Indenture will conform in all material respects to the requirements of the Trust
Indenture Act of 1939, as amended (the "TIA" or "Trust Indenture Act"), and the
rules and regulations of the Commission applicable to an indenture which is
qualified thereunder.
(g) The Series A Notes have been duly authorized and, on
the Closing Date, will have been validly executed and delivered by the Company.
When the Series A Notes have been issued, executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid for by
the Initial Purchasers in accordance with the terms of this Agreement, the
Series A Notes will be entitled to the benefits of the Indenture and will be
valid and binding obligations of the Company, enforceable in accordance with
their terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting
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<PAGE> 11
creditors' rights generally and (ii) rights of acceleration and the availability
of equitable remedies may be limited by equitable principles of general
applicability. On the Closing Date, the Series A Notes will conform as to legal
matters to the description thereof contained in the Offering Memorandum.
(h) On the Closing Date, the Series B Notes will have been
duly authorized by the Company. When the Series B Notes are issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Series B Notes will be entitled to the benefits of the Indenture
and will be the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability.
(i) The Subsidiary Guarantee to be endorsed on the Series A
Notes by each Guarantor has been duly authorized by each such Guarantor, except
the Deco Entities and Turn-Matic, and, on the Closing Date, will have been duly
executed and delivered by each such Guarantor, except the Deco Entities and
Turn-Matic. Upon consummation of the Acquisitions, the Subsidiary Guarantee will
be duly authorized, executed and delivered by each of the Deco Entities and
Turn-Matic. When the Series A Notes have been issued, executed and authenticated
in accordance with the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, the Subsidiary
Guarantee of each Guarantor, including the Deco Entities and Turn-Matic,
endorsed thereon will be entitled to the benefits of the Indenture and will be
the valid and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms, except as (i) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability. On the Closing Date, the Subsidiary Guarantees to be endorsed on
the Series A Notes will conform as to legal matters to the description thereof
contained in the Offering Memorandum.
(j) The Subsidiary Guarantee to be endorsed on the Series B
Notes by each Guarantor has been duly authorized by each such Guarantor, except
the Deco Entities and Turn-Matic. Upon consummation of the Acquisitions, the
Deco Entities and Turn-Matic will duly authorize such Subsidiary Guarantee. When
issued, the Series B Notes will have been duly executed and delivered by each
such Guarantor. When the Series B Notes have been issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Subsidiary Guarantee of each Guarantor endorsed thereon will be
entitled to the benefits of the Indenture and will be the valid and binding
obligation of such Guarantor, enforceable against such Guarantor in accordance
with its terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability. When the Series B
Notes are issued, authenticated and delivered, the Subsidiary Guarantees to be
endorsed on the Series B Notes will conform as to legal matters to the
description thereof in the Offering Memorandum.
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<PAGE> 12
(k) The Registration Rights Agreement has been duly
authorized by the Company and each of the Guarantors, except the Deco Entities
and Turn-Matic, and, on the Closing Date, will have been duly executed and
delivered by the Company and each of the Guarantors, except the Deco Entities
and Turn-Matic. Upon consummation of the Acquisitions, the Registration Rights
Agreement will be duly authorized, executed and delivered by the Deco Entities
and Turn-Matic. When the Registration Rights Agreement has been duly executed
and delivered, the Registration Rights Agreement will be a valid and binding
agreement of the Company and each of the Guarantors, enforceable against the
Company and each Guarantor in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally, (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability, (iii) rights to indemnity and contribution thereunder may
be limited by federal or state securities laws or principles of public policy.
On the Closing Date, the Registration Rights Agreement will conform as to legal
matters to the description thereof in the Offering Memorandum.
(l) Neither the Company nor any of its subsidiaries, nor
any of the Deco Entities or Turn-Matic is in violation of its respective charter
or by-laws or in default in the performance of any obligation, agreement,
covenant or condition contained in any indenture, loan agreement, mortgage,
lease or other agreement or instrument that is material to the Company and its
subsidiaries (including, for purposes of this subsection, the Deco Entities and
Turn-Matic), taken as a whole, to which the Company or any of its subsidiaries,
any Deco Entity or Turn-Matic is a party or by which the Company or any of its
subsidiaries or their respective property is bound.
(m) The execution, delivery and performance of this
Agreement and the other Operative Documents by the Company and each of the
Guarantors, compliance by the Company and each of the Guarantors with all
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the charter or
by-laws of the Company, any of its subsidiaries, any Deco Entity or Turn-Matic
or any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company and its subsidiaries (including, for
purposes of this subsection, the Deco Entities and Turn-Matic), taken as a
whole, to which the Company, any of its subsidiaries, any Deco Entity or
Turn-Matic is a party or by which the Company, any of its subsidiaries, any Deco
Entity or Turn-Matic or their respective property is bound, (iii) violate or
conflict with any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having jurisdiction over
the Company, any of its subsidiaries, any Deco Entity or Turn-Matic or their
respective property, (iv) result in
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<PAGE> 13
the imposition or creation of (or the obligation to create or impose) a Lien
under, any agreement or instrument to which the Company, any of its
subsidiaries, any Deco Entity or Turn-Matic is a party or by which the Company,
any of its subsidiaries, any Deco Entity or Turn-Matic or their respective
property is bound, or (v) result in the termination, suspension or revocation of
any Authorization (as defined below) of the Company, any of its subsidiaries,
any Deco Entities or Turn-Matic or result in any other impairment of the rights
of the holder of any such Authorization.
(n) Except as may be described in the Offering Memorandum,
there are no legal or governmental proceedings pending or threatened to which
the Company or any of its subsidiaries, any Deco Entity or Turn-Matic is or
could be a party or to which any of their respective property is or could be
subject, which might result, singly or in the aggregate, in a Material Adverse
Effect.
(o) Neither the Company nor any of its subsidiaries, any
Deco Entity or Turn-Matic has violated any foreign, federal, state or local law
or regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), any provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or any provisions of the
Foreign Corrupt Practices Act or the rules and regulations promulgated
thereunder, except for such violations which, singly or in the aggregate, would
not have a Material Adverse Effect.
(p) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any Authorization, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a Material Adverse Effect.
(q) Each of the Company, its subsidiaries, the Deco Entities
and Turn-Matic has such permits, licenses, consents, exemptions, franchises,
authorizations and other approvals (each, an "Authorization") of, and has made
all filings with and notices to, all governmental or regulatory authorities and
self-regulatory organizations and all courts and other tribunals, including
without limitation, under any applicable Environmental Laws, as are necessary to
own, lease, license and operate its respective properties and to conduct its
business, except where the failure to have any such Authorization or to make any
such filing or notice would not, singly or in the aggregate, have a Material
Adverse Effect. Each such Authorization is valid and in full force and effect
and each of the Company, its subsidiaries, the Deco Entities and Turn-Matic is
in compliance with all the terms and conditions thereof and with the rules and
regulations of the authorities and governing bodies having jurisdiction with
respect thereto; and no event has occurred (including, without limitation, the
receipt of any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse of
time or both, would result in any other impairment of the rights of the holder
of any such Authorization; and such Authorizations contain no restrictions that
are burdensome to the Company, any of its subsidiaries, any Deco Entity or
Turn-Matic; except where such failure to be valid and in full force and effect
or to be in compliance, the occurrence of any such event or the
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<PAGE> 14
presence of any such restriction would not, singly or in the aggregate, have a
Material Adverse Effect.
(r) The accountants, Coopers & Lybrand L.L.P., that have
certified the financial statements and supporting schedules included in the
Preliminary Offering Memorandum and the Offering Memorandum are independent
public accountants with respect to the Company and the Guarantors, as required
by the Act and the Exchange Act. The historical financial statements, together
with related schedules and notes, set forth in the Preliminary Offering
Memorandum and the Offering Memorandum comply as to form in all material
respects with the requirements applicable to registration statements on Form S-1
under the Act.
(s) The historical financial statements, together with
related schedules and notes forming part of the Offering Memorandum (and any
amendment or supplement thereto), present fairly the consolidated financial
position, results of operations and changes in financial position of (i) the
Company and its subsidiaries, (ii) MT&G, (iii) the Deco Entities and (iv)
Turn-Matic on the basis stated in the Offering Memorandum at the respective
dates or for the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein; and the other financial and statistical
information and data set forth in the Offering Memorandum (and any amendment or
supplement thereto) are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company and its subsidiaries and of MT&G, the Deco Entities and
Turn-Matic, as the case may be.
(t) The pro forma financial statements included in the
Preliminary Offering Memorandum and the Offering Memorandum have been prepared
on a basis consistent with the historical financial statements of the Company
and its subsidiaries and of MT&G, the Deco Entities and Turn-Matic and give
effect to assumptions used in the preparation thereof on a reasonable basis and
in good faith and present fairly the historical and proposed transactions
contemplated by the Preliminary Offering Memorandum and the Offering Memorandum;
and such pro forma financial statements comply as to form in all material
respects with the requirements applicable to pro forma financial statements
included in registration statements on Form S-1 under the Act. The other pro
forma financial and statistical information and data included in the Offering
Memorandum are, in all material respects, accurately presented and prepared on a
basis consistent with the pro forma financial statements.
(u) Neither the Company nor any of its subsidiaries nor any
of the Deco Entities nor Turn-Matic is, nor after giving effect to the offering
and sale of the Series A Notes and the application of the net proceeds thereof
as described in the Offering Memorandum, will be, an "investment company," as
such term is defined in the Investment Company Act of 1940, as amended.
(v) There are no contracts, agreements or understandings
between the Company or any Guarantor and any person granting such person the
right to require the Company or such Guarantor to file a registration statement
under the Act with respect to any securities of the Company or such Guarantor or
to require the Company or such Guarantor to include such
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<PAGE> 15
securities with the Notes and Subsidiary Guarantees registered pursuant to any
Registration Statement.
(w) Neither the Company, any of its subsidiaries, any Deco
Entity or Turn-Matic, nor any agent thereof acting on the behalf of them has
taken, and none of them will take, any action that might cause this Agreement or
the issuance or sale of the Series A Notes to violate Regulation G (12 C.F.R.
Part 207), Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221)
or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal
Reserve System.
(x) No "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under the
Act (i) has imposed (or has informed the Company or any Guarantor that it is
considering imposing) any condition (financial or otherwise) on the Company's or
any Guarantor's retaining any rating assigned to the Company or any Guarantor,
any securities of the Company or any Guarantor or (ii) has indicated to the
Company or any Guarantor that it is considering (a) the downgrading, suspension,
or withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (b) any change in
the outlook for any rating of the Company, any Guarantor or any securities of
the Company or any Guarantor.
(y) Since the respective dates as of which information is
given in the Offering Memorandum other than as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there has not occurred any material adverse change
or any development involving a prospective material adverse change in the
condition, financial or otherwise, or the earnings, business, management or
operations of the Company and its subsidiaries (including, for purposes of this
subsection, the Deco Entities and Turn-Matic), taken as a whole, (ii) there has
not been any material adverse change or any development involving a prospective
material adverse change in the capital stock or in the long-term debt of the
Company, any of its subsidiaries, any Deco Entity or Turn-Matic and (iii) the
Company and its subsidiaries, the Deco Entities and Turn-Matic have not incurred
any material liability or obligation, direct or contingent.
(z) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, contains all the information specified in,
and meeting the requirements of, Rule 144A(d)(4) under the Act.
(aa) When the Series A Notes and the Subsidiary Guarantees
are issued and delivered pursuant to this Agreement, neither the Series A Notes
nor the Subsidiary Guarantees will be of the same class (within the meaning of
Rule 144A under the Act) as any security of the Company or the Guarantors that
is listed on a national securities exchange registered under Section 6 of the
Exchange Act or that is quoted in a United States automated inter-dealer
quotation system.
(bb) No form of general solicitation or general advertising
(as defined in Regulation D under the Act) was used by the Company, the
Guarantors or any of their respective representatives (other than the Initial
Purchasers, as to whom the Company and the Guarantors
14
<PAGE> 16
make no representation) in connection with the offer and sale of the Series A
Notes contemplated hereby, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Series A Notes have been issued and sold by
the Company within the six-month period immediately prior to the date hereof.
(cc) Prior to the effectiveness of any Registration
Statement, the Indenture is not required to be qualified under the TIA.
(dd) None of the Company, the Guarantors nor any of their
respective affiliates or any person acting on its or their behalf (other than
the Initial Purchasers, as to whom the Company and the Guarantors make no
representation) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S under the Act ("Regulation S") with respect
to the Series A Notes or the Subsidiary Guarantees.
(ee) Except for offers and sales you may make on behalf of
the Company as contemplated by this Agreement, none of the Company, the
Guarantors nor any of their respective affiliates or any person acting on its or
their behalf has taken or will take any action with respect to any offer or sale
of the Notes to any non-U.S. Person (as defined in Regulation S).
(ff) The sale of the Series A Notes by the Initial
Purchasers pursuant to Regulation S is not part of a plan or scheme on the part
of the Company or any of its Subsidiaries to evade the registration provisions
of the Act.
(gg) No registration under the Act of the Series A Notes or
the Subsidiary Guarantees is required for the sale of the Series A Notes and the
Subsidiary Guarantees to the Initial Purchasers as contemplated hereby or for
the Exempt Resales assuming the accuracy of the Initial Purchasers'
representations and warranties and agreements set forth in Section 7 hereof.
(hh) Each certificate signed by any officer of the Company
or any Guarantor and delivered to the Initial Purchasers or counsel for the
Initial Purchasers shall be deemed to be a representation and warranty by the
Company or such Guarantor to the Initial Purchasers as to the matters covered
thereby.
(ii) The MT&G Acquisition Agreement has been duly
authorized, executed and delivered by each of the Company and MT&G and
constitutes the valid and binding agreement of the Company and MT&G, enforceable
against the Company and MT&G in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy,
15
<PAGE> 17
fraud, insolvency, fraudulent conveyance, reorganization, moratorium, or other
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles.
(jj) Prior to the Closing Date, the Deco and Turn-Matic
Acquisition Agreements will be duly and validly authorized and, no later than
the Closing Date, will be duly and validly executed and delivered by the Company
and the Deco Entities and Turn-Matic, respectively, and, assuming due
authorization, execution and delivery, will constitute the valid and binding
agreements of the Company and the Deco Entities and Turn-Matic, respectively, in
accordance with their terms except as the enforcement thereof may be limited by
bankruptcy, fraud, insolvency, fraudulent conveyance, reorganization,
moratorium, or other similar laws affecting the enforcement of creditors' rights
generally and general equitable principles.
The Company acknowledges that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section 9
hereof, counsel to the Company and the Guarantors and counsel to the Initial
Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
7. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each Initial
Purchaser, severally and not jointly, represents and warrants to the Company and
the Guarantors, and agrees that:
(a) Such Initial Purchaser is either a QIB or an Accredited
Institution, in either case, with such knowledge and experience in financial and
business matters as is necessary in order to evaluate the merits and risks of an
investment in the Series A Notes.
(b) Such Initial Purchaser (A) is not acquiring the Series A Notes
with a view to any distribution thereof or with any present intention of
offering or selling any of the Series A Notes in a transaction that would
violate the Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling the
Series A Notes only to (x) QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A, and (y) in offshore
transactions in reliance upon Regulation S under the Act.
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Series A Notes
pursuant hereto, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(d) Such Initial Purchaser agrees that, in connection with Exempt
Resales, such Initial Purchaser will solicit offers to buy the Series A Notes
only from, and will offer to sell the Series A Notes only to, Eligible
Purchasers. Each of the Initial Purchasers further agrees that it will offer to
sell the Series A Notes only to, and will solicit offers to buy the
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<PAGE> 18
Series A Notes only from (A) Eligible Purchasers that the Initial Purchaser
reasonably believe are QIBs, (B) Regulation S Purchasers, in each case, that
agree that (x) the Series A Notes purchased by them may be resold, pledged or
otherwise transferred within the time period referred to under Rule 144(k)
(taking into account the provisions of Rule 144(d) under the Act, if applicable)
under the Act, as in effect on the date of the transfer of such Series A Notes,
only (i) to the Company or any of its subsidiaries, (ii) to a person whom the
seller reasonably believes is a QIB purchasing for its own account or for the
account of a QIB in a transaction meeting the requirements of Rule 144A under
the Act, (iii) in an offshore transaction (as defined in Rule 902 under the Act)
meeting the requirements of Rule 904 of the Act, (iv) in a transaction meeting
the requirements of Rule 144 under the Act, (v) to an Accredited Institution
that, prior to such transfer, furnishes the Trustee a signed letter containing
certain representations and agreements relating to the registration of transfer
of such Series A Note (the form of which is attached to the Indenture) and an
opinion of counsel acceptable to the Company that such transfer is in compliance
with the Act, (vi) in accordance with another exemption from the registration
requirements of the Act (and based upon an opinion of counsel acceptable to the
Company) or (vii) pursuant to an effective registration statement and, in each
case, in accordance with the applicable securities laws of any state of the
United States or any other applicable jurisdiction and (y) they will deliver to
each person to whom such Series A Notes or an interest therein is transferred a
notice substantially to the effect of the foregoing.
(e) None of such Initial Purchasers nor any of their
affiliates or any person acting on its or their behalf has engaged or will
engage in any directed selling efforts within the meaning of Regulation S with
respect to the Series A Notes or the Subsidiary Guarantees.
(f) The Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S have been and will be
offered and sold only in offshore transactions.
(g) The sale of the Series A Notes offered and sold by such
Initial Purchaser pursuant hereto in reliance on Regulation S is not part of a
plan or scheme to evade the registration provisions of the Act. All offers and
sales of the Series A Notes by such Initial Purchaser prior to the expiration of
the restricted period specified in Rule 903(c)(2) of Regulation S will be made
only: (i) in accordance with the provisions of Rule 903 or 904, (ii) pursuant to
registration of the Series A Notes under the Act or (iii) pursuant to an
available exemption from the registration requirements of the Act.
(h) Such Initial Purchaser further represents and agrees
that (i) it has not offered or sold and will not offer or sell any Series A
Notes to persons in the United Kingdom prior to the expiration of the period of
six months from the issue date of the Series A Notes, except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their business or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995, (ii) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Series A Notes in, from or otherwise
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<PAGE> 19
involving the United Kingdom and (iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issuance of the Series A Notes to a person who is of a kind
described in Article 11(3) of the Financial Services Act of 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom the document may
otherwise lawfully be issued or passed on.
(i) Such Initial Purchaser agrees that it will not offer,
sell or deliver any of the Series A Notes in any jurisdiction outside the United
States except under circumstances that will result in compliance with the
applicable laws thereof, and that it will take at its own expense whatever
action is required to permit its purchase and resale of the Series A Notes in
such jurisdictions. Such Initial Purchaser understands that no action has been
taken to permit a public offering in any jurisdiction outside the United States
where action would be required for such purpose.
The Initial Purchasers acknowledge that the Company and the
Guarantors and, for purposes of the opinions to be delivered to each Initial
Purchaser pursuant to Section 9 hereof, counsel to the Company and the
Guarantors and counsel to the Initial Purchasers will rely upon the accuracy and
truth of the foregoing representations and the Initial Purchasers hereby consent
to such reliance.
8. INDEMNIFICATION.
(a) The Company and each Guarantor agree, jointly and
severally, to indemnify and hold harmless the Initial Purchasers, their
directors, their officers and each person, if any, who controls such Initial
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and judgments (including, without limitation, any legal or other expenses
incurred in connection with investigating or defending any matter, including any
action, that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Offering Memorandum (or any amendment or
supplement thereto), the Preliminary Offering Memorandum or any Rule 144A
Information provided by the Company or any Guarantor to any holder or
prospective purchaser of Series A Notes pursuant to Section 5(h) or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to an Initial Purchaser furnished in
writing to the Company by such Initial Purchaser; provided, however, that the
foregoing indemnity agreement with respect to any Preliminary Offering
Memorandum shall not inure to the benefit of any Initial Purchaser who failed to
deliver a Final Offering Memorandum (as then amended or supplemented, provided
by the Company to the several Initial Purchasers in the requisite quantity and
on a timely basis to permit proper delivery on or prior to the Closing date) to
the person asserting any losses, claims, damages and liabilities and judgments
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Memorandum, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if such material
misstatement or
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<PAGE> 20
omission or alleged material misstatement or omission was cured in the Final
Offering Memorandum.
(b) The Initial Purchasers agree to indemnify and hold
harmless the Company and the Guarantors, and their respective directors and
officers and each person, if any, who controls (within the meaning of Section 15
of the Act or Section 20 of the Exchange Act) the Company or the Guarantors, to
the same extent as the foregoing indemnity from the Company and the Guarantors
to the Initial Purchasers but only with reference to information relating to the
Initial Purchasers furnished in writing to the Company by the Initial Purchasers
expressly for use in the Preliminary Offering Memorandum or the Offering
Memorandum.
(c) In case any action shall be commenced involving any
person in respect of which indemnity may be sought pursuant to Section 8(a) or
8(b) (the "indemnified party"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), the Initial Purchasers shall not
be required to assume the defense of such action pursuant to this Section 8(c),
but may employ separate counsel and participate in the defense thereof, but the
fees and expenses of such counsel, except as provided below, shall be at the
expense of the Initial Purchasers). Any indemnified party shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party, and the indemnified party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all indemnified parties
and all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by Donaldson, Lufkin & Jenrette Securities
Corporation, in the case of the parties indemnified pursuant to Section 8(a),
and by the Company, in the case of parties indemnified pursuant to Section 8(b).
The indemnifying party shall indemnify and hold harmless the indemnified party
from and against any and all losses, claims, damages, liabilities and judgments
by reason of any settlement of any action (i) effected with its written consent
or (ii) effected without its written consent if the settlement is entered into
more than twenty business days after the indemnifying party shall have received
a request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have
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<PAGE> 21
failed to comply with such reimbursement request. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could
have been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent the indemnification provided for in this
Section 8 is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors, on the one hand, and the Initial Purchasers on the
other hand from the offering of the Series A Notes or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors, on the one hand and the Initial Purchasers, on the other hand, shall
be deemed to be in the same proportion as the total net proceeds from the
offering of the Series A Notes (after underwriting discounts and commissions,
but before deducting expenses) received by the Company, and the total discounts
and commissions received by the Initial Purchasers bear to the total price to
investors of the Series A Notes, in each case as set forth in the table on the
cover page of the Offering Memorandum. The relative fault of the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand,
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 any
Guarantor, on the one hand, or the Initial Purchasers, on the other hand, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Company, the Guarantors and the Initial Purchasers agree that
it would not be just and equitable if contribution pursuant to this Section 8(d)
were determined by pro rata allocation even if the Initial Purchasers were
treated as one entity for such purpose, or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such indemnified party in connection with investigating or defending any
matter, including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section
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<PAGE> 22
8, the Initial Purchasers shall not be required to contribute any amount
in excess of the amount by which the total discounts and commissions received by
such Initial Purchasers exceeds the amount of any damages which the Initial
Purchasers have otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. 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. The Initial Purchasers' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective
principal amount of Series A Notes purchased by each of the Initial Purchasers
hereunder and not joint.
(e) The remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
9. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations of
the Initial Purchasers to purchase the Series A Notes under this Agreement are
subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company and the
Guarantors contained in this Agreement shall be true and correct on the Closing
Date with the same force and effect as if made on and as of the Closing Date.
(b) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any notice have
been given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a possible
change that does not indicate the direction of the possible change in, any
rating of the Company or any Guarantor or any securities of the Company or any
Guarantor (including, without limitation, the placing of any of the foregoing
ratings on credit watch with negative or developing implications or under review
with an uncertain direction) by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under the
Act, (ii) there shall not have occurred any change, nor shall any notice have
been given of any potential or intended change, in the outlook for any rating of
the Company or any Guarantor or any securities of the Company or any Guarantor
by any such rating organization and (iii) no such rating organization shall have
given notice that it has assigned (or is considering assigning) a lower rating
to the Notes than that on which the Notes were marketed.
(c) Since the respective dates as of which information is given
in the Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there shall not have occurred any change or any development
involving a prospective change in the condition, financial or otherwise, or the
earnings, business, management or operations of the Company and its subsidiaries
(including, for purposes of this subsection, the Deco Entities and Turn-Matic),
taken as a whole, (ii) there shall not have been any change or any development
involving a prospective change in the capital stock or in the long-term debt of
the Company, any of its subsidiaries, any of the Deco Entities or Turn-Matic and
(iii) neither the Company nor any of its subsidiaries, nor any Deco Entity or
Turn-Matic shall have incurred any liability or obligation,
21
<PAGE> 23
direct or contingent, the effect of which, in any such case described in clause
9(c)(i), 9(c)(ii) or 9(c)(iii), in the judgment of Donaldson, Lufkin & Jenrette
Securities Corporation, is material and adverse and, in the judgment of
Donaldson, Lufkin & Jenrette Securities Corporation, makes it impracticable to
market the Series A Notes on the terms and in the manner contemplated in the
Offering Memorandum.
(d) You shall have received on the Closing Date certificates
dated the Closing Date, signed by Officers of the Company and each of the
Guarantors, confirming the matters set forth in Sections 6(y), 9(a) and 9(b) and
stating that each of the Company and the Guarantors has complied with all the
agreements and satisfied all of the conditions herein contained and required to
be complied with or satisfied on or prior to the Closing Date.
(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Miller Canfield, counsel for the Company and the Guarantors, to the
effect that:
(i) Each of the Company, its subsidiaries, each Deco
Entity and Turn-Matic has been duly incorporated, is validly
existing as a corporation in good standing under the laws of
its jurisdiction of incorporation and has the corporate
power and authority to carry on its business and to own,
lease and operate its properties as described in the
Offering Memorandum.
(ii) Based solely on certificates of public officials,
each of the Company, its subsidiaries, each Deco Entity and
Turn-Matic is duly qualified and is in good standing as a
foreign corporation authorized to do business in the states
set forth in such opinion or an exhibit thereto.
(iii) All of the outstanding shares of capital stock of
each of the Company's subsidiaries have been duly authorized
and validly issued and are fully paid and non-assessable,
and are owned by the Company, free and clear of any Lien,
except that such counsel need express no opinion as to the
capital stock of either the Deco Entities or Turn-Matic.
(iv) The Series A Notes have been duly authorized and,
when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by
the Initial Purchasers in accordance with the terms of this
Agreement, will be entitled to the
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<PAGE> 24
benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable in accordance with
their terms except as (x) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (y) equitable principles of
general applicability (regardless of whether enforceability
is considered in a proceeding at law or in equity).
(v) The Subsidiary Guarantees have been duly authorized
by each Guarantor, except the Deco Entities and Turn-Matic,
and will be duly authorized by the Deco Entities and
Turn-Matic immediately upon consummation of the
Acquisitions. When the Series A Notes are executed and
authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement,
the Subsidiary Guarantees endorsed thereon will be entitled
to the benefits of the Indenture and will be valid and
binding obligations of the Guarantors, enforceable in
accordance with their terms except as (x) the enforceability
thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (y) equitable
principles of general applicability (regardless of whether
enforceability is considered in a proceeding at law or in
equity).
(vi) The Indenture has been duly authorized, executed
and delivered by the Company and each Guarantor (except the
Deco Entities and Turn-Matic) and is a valid and binding
agreement of the Company and each Guarantor (except the Deco
Entities and Turn-Matic), enforceable against the Company
and each Guarantor (except Deco and Turn-Matic) in
accordance with its terms except as (x) the enforceability
thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (y) equitable
principles of general applicability (regardless of whether
enforceability is considered in a proceeding at law or in
equity); the Indenture will be duly authorized, executed and
delivered by the Deco Entities and Turn-Matic immediately
upon consummation of the Acquisitions.
(vii) This Agreement has been duly authorized, executed
and delivered by the Company and the Guarantors (except the
Deco Entities and Turn-Matic); this Agreement will be duly
authorized, executed and delivered by the Deco Entities and
Turn-Matic immediately upon consummation of the
Acquisitions.
(viii) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and each
of the Guarantors (except the Deco Entities and Turn-Matic)
and is a valid and binding agreement of the Company and each
Guarantor (except the Deco Entities and Turn-Matic),
enforceable against the Company and each Guarantor (except
the Deco Entities and Turn-Matic) in accordance with
23
<PAGE> 25
its terms, except as (x) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (y) equitable principles of
general applicability (regardless of whether enforceability
is considered in a proceeding at law or in equity); the
Registration Rights Agreement will be duly authorized,
executed and delivered by the Deco Entities and Turn-Matic
immediately upon consummation of the Acquisitions.
(ix) The Series B Notes have been duly authorized.
(x) The statements under the captions "The
Acquisitions," "Management," "Description of Notes,"
"Description of Other Debt" and "Plan of Distribution"
(other than such statements concerning the Deco Entities'
agreement with DLJ) in the Offering Memorandum, insofar as
such statements constitute a summary of the legal matters or
documents referred to therein, fairly present in all
material respects such legal matters, documents and
proceedings.
(xi) The execution, delivery and performance of this
Agreement and the other Operative Documents by the Company
and each of the Guarantors, the compliance by the Company
and each of the Guarantors with all provisions hereof and
thereof and the consummation of the transactions described
herein and therein will not (i) require any consent,
approval, authorization or other order of, or qualification
with, any court or governmental body or agency (except such
as may be required under the securities or Blue Sky laws of
the various states), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default
under, the charter or by-laws of the Company or any of its
subsidiaries or any indenture, loan agreement, mortgage,
lease or other agreement or instrument to which the Company,
any of its subsidiaries, any Deco Entity or Turn-Matic is a
party or by which the Company, any of its subsidiaries, any
Deco Entity or Turn-Matic or their respective property is
bound, and which is either (A) identified on a schedule or
exhibit to one of the Acquisition Agreements or (B) filed or
incorporated by reference as an exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 1997 (any of the foregoing, an "Other Contract"), (iii)
violate or conflict with any applicable law, rule, or
regulation, or any judgment, order or decree known to such
counsel of any court or any governmental body or agency
having jurisdiction over the Company, any of its
subsidiaries, any Deco Entity or Turn-Matic or their
respective property, (iv) result in the imposition or
creation of (or the obligation to create or impose) a Lien
under, any Other Contract.
(xii) Such counsel does not know of any legal or
governmental proceedings pending or threatened to which the
Company, any of its subsidiaries, any Deco Entity or
Turn-Matic is or could be a party or to
24
<PAGE> 26
which any of their respective property is or could be
subject, other than any disclosed in the Offering Memorandum
or a schedule or exhibit to one of the Acquisition
Agreements (it being understood that such counsel has not
conducted any search of any court docket or other
governmental records in connection therewith).
(xiii) Neither the Company nor any of its subsidiaries
is nor, after giving effect to the offering and sale of the
Series A Notes and the application of the net proceeds
thereof as described in the Offering Memorandum, will be, an
"investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(xiv) To the best of such counsel's knowledge, there are
no contracts, agreements or understandings between the
Company or any Guarantor and any person granting such person
the right to require the Company or such Guarantor to file a
registration statement under the Act with respect to any
securities of the Company or such Guarantor or to require
the Company or such Guarantor to include such securities
with the Notes and Subsidiary Guarantees registered pursuant
to any Registration Statement.
(xv) The Indenture complies as to form in all material
respects with the requirements of the TIA, and the rules and
regulations of the Commission applicable to an indenture
which is qualified thereunder. It is not necessary in
connection with the offer, sale and delivery of the Series A
Notes to the Initial Purchasers in the manner contemplated
by this Agreement or in connection with the Exempt Resales
to qualify the Indenture under the TIA.
(xvi) No registration under the Act of the Series A
Notes is required for the sale of the Series A Notes to the
Initial Purchasers as contemplated by this Agreement or for
the Exempt Resales assuming that (i) each Initial Purchaser
is a QIB or an Accredited Institution, (ii) the accuracy of,
and compliance with, the Initial Purchasers' representations
and agreements contained in Section 7 of this Agreement, and
(iii) the accuracy of the representations of the Company and
the Guarantors set forth in Sections 5(h) and 6(bb), (dd)
and (ee) of this Agreement.
(xvii) Such counsel has no reason to believe that, as of
the date of the Offering Memorandum or as of the Closing
Date, the Offering Memorandum, as amended or supplemented,
if applicable (except for the financial statements and other
financial data included therein, as to which such counsel
need not express any belief) contains any untrue statement
of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
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<PAGE> 27
The opinion of Miller Canfield described in Section 9(e) above
shall be rendered to you at the request of the Company and the Guarantors and
shall so state therein. Such opinion may be limited to the laws of the State of
Michigan, United States federal law and the General Corporation Law of the State
of Delaware and, for purposes of the enforceability opinion, may assume that New
York law is identical to Michigan law. In giving such opinion with respect to
the matters covered by Section 9(e)(xx), Miller Canfield may state that their
opinion and belief are based upon their participation in the preparation of the
Offering Memorandum and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification except as specified.
(f) The Initial Purchasers shall have received on the
Closing Date an opinion, dated the Closing Date, of Latham & Watkins, counsel
for the Initial Purchasers, in form and substance reasonably satisfactory to the
Initial Purchasers.
(g) The Initial Purchasers shall have received on the
Closing Date an opinion, dated the Closing Date and addressed to the Company,
which expressly permits the Initial Purchasers to rely thereon, of Honigman,
Miller, Schwartz & Cohen, counsel to the Deco Entities, relating to the Deco
Acquisition.
(h) The Initial Purchasers shall have received on the
Closing Date an opinion, dated the Closing Date and addressed to the Company,
which expressly permits the Initial Purchasers to rely thereon, of Cox, Hodgman
& Giarmarco, P.C., counsel to Turn-Matic, relating to the Turn-Matic
Acquisition.
(i) The Initial Purchasers shall have received, at the
time this Agreement is executed and at the Closing Date, letters dated the date
hereof or the Closing Date, as the case may be, in form and substance
satisfactory to the Initial Purchasers from Coopers & Lybrand, L.L.P.,
independent public accountants, containing the information and statements of the
type ordinarily included in accountants' "comfort letters" to the Initial
Purchasers with respect to the financial statements and certain financial
information contained in the Offering Memorandum (including with respect to
MT&G, the Deco Entities and Turn-Matic).
(j) The Series A Notes shall have been approved by the
NASD for trading and duly listed in PORTAL.
(k) The Initial Purchasers shall have received a
counterpart, conformed as executed, of the Indenture which shall have been
entered into by the Company, the Guarantors (except the Deco Entities and
Turn-Matic) and the Trustee; the Initial Purchasers shall have received
signature pages of the Indenture for delivery immediately upon consummation of
the Acquisitions from the Deco Entities and Turn-Matic.
(l) The Company and the Guarantors (except the Deco
Entities and Turn-Matic) shall have executed the Registration Rights Agreement
and the Initial Purchasers shall have received an original copy thereof, duly
executed by the Company and the Guarantors (except the Deco Entities and
Turn-Matic); the Initial Purchasers shall have received signature
26
<PAGE> 28
pages of the Registration Rights Agreement for delivery immediately upon
consummation of the Acquisitions from the Deco Entities and Turn-Matic.
(m) Neither the Company nor the Guarantors shall have
failed at or prior to the Closing Date to perform or comply with any of the
agreements herein contained and required to be performed or complied with by the
Company or the Guarantors, as the case may be, at or prior to the Closing Date.
(n) The Company and the Guarantors (except the Deco
- -Entities and Turn-Matic) shall have executed this Agreement and the Initial
Purchasers shall have received an original copy thereof, duly executed by the
Company and the Guarantors (except the Deco Entities and Turn-Matic); the
Initial Purchasers shall have received signature pages of this Agreement for
delivery immediately upon consummation of the Acquisitions from the Deco
Entities and Turn-Matic.
(o) Prior to or on the Closing Date all conditions to
the consummation of the Acquisitions shall have been satisfied (or, with respect
to any condition to the Company's obligations, waived with the permission of
Donaldson, Lufkin & Jenrette Securities Corporation) and the parties to the
Acquisition Agreements shall be, in the reasonable judgment of the Initial
Purchasers, prepared to close immediately, in each case on substantially the
same terms as described in the Offering Memorandum.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This
Agreement shall become effective upon the execution and delivery of this
Agreement by the parties hereto.
This Agreement may be terminated at any time on or prior to
the Closing Date by the Initial Purchasers by written notice to the Company if
any of the following has occurred: (i) any outbreak or escalation of hostilities
or other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Initial Purchasers' judgment, is material and adverse and, in the Initial
Purchasers' judgment, makes it impracticable to market the Series A Notes on the
terms and in the manner contemplated in the Offering Memorandum, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the NASDAQ National Market or limitation on prices for securities or other
instruments on any such exchange or the NASDAQ National Market, (iii) the
suspension of trading of any securities of the Company or any Guarantor on any
exchange or in the over-the-counter market, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your opinion
materially and adversely affects, or will materially and adversely affect, the
business, prospects, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole, (v) the declaration of a banking
moratorium by either federal or New York State authorities or (vi) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in your opinion has a material adverse effect
on the financial markets in the United States.
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<PAGE> 29
If on the Closing Date any one or more of the Initial
Purchasers shall fail or refuse to purchase the Series A Notes which it or they
have agreed to purchase hereunder on such date and the aggregate principal
amount of the Series A Notes which such defaulting Initial Purchasers or Initial
Purchasers, as the case may be, agreed but failed or refused to purchase is not
more than one-tenth of the aggregate principal amount of the Series A Notes to
be purchased on such date by all Initial Purchasers, each non-defaulting Initial
Purchasers shall be obligated severally, in the proportion which the principal
amount of the Series A Notes set forth opposite its name in Schedule B bears to
the aggregate principal amount of the Series A Notes which all the
non-defaulting Initial Purchasers, as the case may be, have agreed to purchase,
or in such other proportion as you may specify, to purchase the Series A Notes
which such defaulting Initial Purchasers or Initial Purchasers, as the case may
be, agreed but failed or refused to purchase on such date; provided that in no
event shall the aggregate principal amount of the Series A Notes which any
Initial Purchasers has agreed to purchase pursuant to Section 2 hereof be
increased pursuant to this Section 10 by an amount in excess of one-ninth of
such principal amount of the Series A Notes without the written consent of such
Initial Purchasers. If on the Closing Date any Initial Purchasers or Initial
Purchasers shall fail or refuse to purchase the Series A Notes and the aggregate
principal amount of the Series A Notes with respect to which such default occurs
is more than one-tenth of the aggregate principal amount of the Series A Notes
to be purchased by all Initial Purchasers and arrangements satisfactory to the
Initial Purchasers and the Company for purchase of such the Series A Notes are
not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Initial Purchasers and the
Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Offering Memorandum or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Initial Purchasers from liability in respect of any
default of any such Initial Purchasers under this Agreement.
11. MISCELLANEOUS. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company or any
Guarantor, to Newcor, Inc., 1825 S. Woodward, Suite 240, Bloomfield Hills, MI,
48302, (248) 253-2400, and (ii) if to the Initial Purchasers, Donaldson, Lufkin
& Jenrette Securities Corporation, 277 Park Avenue, New York, New York 10172,
Attention: Syndicate Department, or in any case to such other address as the
person to be notified may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, the Guarantors
and the Initial Purchasers set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the Series A Notes, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of the Initial
Purchasers, the officers or directors of the Initial Purchasers, any person
controlling the Initial Purchasers, the Company, any Guarantor, the officers or
directors of the Company or any Guarantor, or any person controlling the Company
or any Guarantor, (ii) acceptance of the Series A Notes and payment for them
hereunder and (iii) termination of this Agreement.
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<PAGE> 30
If for any reason the Series A Notes are not delivered by or
on behalf of the Company as provided herein (other than as a result of any
termination of this Agreement pursuant to Section 10), the Company and each
Guarantor, jointly and severally, agree to reimburse the Initial Purchasers for
all out-of-pocket expenses (including the fees and disbursements of counsel)
incurred by them. Notwithstanding any termination of this Agreement, the Company
shall be liable for all expenses which it has agreed to pay pursuant to Section
5(i) hereof. The Company and each Guarantor also agree, jointly and severally,
to reimburse the Initial Purchasers and its officers, directors and each person,
if any, who controls such Initial Purchasers within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act for any and all fees and expenses
(including without limitation the fees and expenses of counsel) incurred by them
in connection with enforcing their rights under this Agreement (including
without limitation its rights under this Section 8).
Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Guarantors, the Initial Purchasers, the Initial Purchasers' directors and
officers, any controlling persons referred to herein, the directors of the
Company and the Guarantors and their respective successors and assigns, all as
and to the extent provided in this Agreement, and no other person shall acquire
or have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include a purchaser of any of the Series A Notes from the
Initial Purchasers merely because of such purchase.
This Agreement shall be governed and construed in accordance
with the laws of the State of New York.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Guarantors and the Initial Purchasers.
Very truly yours,
NEWCOR, INC.
By: /s/ W. John Weinhardt
---------------------------
Name: W. John Weinhardt
Title: President and CEO
/s/ John Garber
---------------------------
Name: John Garber
Title: VP and CFO
29
<PAGE> 31
GRAND MACHINING COMPANY
By: /s/ John Garber
-----------------------------------
Name: John Garber
Title: Treasurer
DECO TECHNOLOGIES, INC.
By: /s/ John Garber
------------------------------------
Name: John Garber
Title: Treasurer
DECO INTERNATIONAL, INC.
By: /s/ John Garber
------------------------------------
Name: John Garber
Title: Treasurer
ROCHESTER GEAR, INC.
By: /s/ John Garber
------------------------------------
Name: John Garber
Title: Treasurer
30
<PAGE> 32
PLASTRONICS PLUS, INC.
By: /s/ John Garber
-------------------------------
Name: John Garber
Title: Treasurer
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ David Philip Costanzo
---------------------------------
Name: David Philip Costanzo
Title: Vice President
McDONALD & COMPANY SECURITIES, INC.
By: /s/ Edward S. Pentecost
---------------------------------
Name: Edward S. Pentecost
Title: Senior Vice President
ING BARING (U.S.) SECURITIES, INC.
By: /s/ Ellen G. Itskovitz
---------------------------------
Name: Ellen G. Itskovitz
Title: VP
31
<PAGE> 33
TURN-MATIC, INC.
By: /s/ John Garber
----------------------------
Name: John Garber
Title: Treasurer
32
<PAGE> 34
SCHEDULE A
GUARANTORS
Rochester Gear, Inc.
Plastronics Plus, Inc.
Upon consummation of the Deco Acquisition and the Turn-Matic Acquisition:
Grand Machining Company
Deco Technologies, Inc.
Deco International, Inc.
Turn-Matic, Inc.
<PAGE> 35
SCHEDULE B
SUBSIDIARIES
Rochester Gear, Inc.
Plastronics Plus, Inc.
Upon consummation of the Deco Acquisition and the Turn-Matic Acquisition:
Grand Machining Company
Deco Technologies, Inc.
Deco International, Inc.
Turn-Matic, Inc.
<PAGE> 36
SCHEDULE C
<TABLE>
<CAPTION>
Principal Amount
Initial Purchasers of Notes
------------------ ----------------
<S> <C>
Donaldson, Lufkin & Jenrette
Securities Corporation................................ $75,000,000
McDonald & Company Securities, Inc. ...................... $31,250,000
ING Baring (U.S.) Securities, Inc......................... $18,750,000
Total............................................ $125,000,000
</TABLE>
<PAGE> 37
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE> 1
EXHIBIT 4.(a)
- --------------------------------------------------------------------------------
NEWCOR, INC., as Issuer
and
THE SUBSIDIARY GUARANTORS
(defined herein)
SERIES A AND SERIES B
9-7/8% SENIOR SUBORDINATED NOTES DUE 2008
INDENTURE
------------------
Dated as of March 4, 1998
------------------
First Trust National Association
Trustee
- --------------------------------------------------------------------------------
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
310 (a)(1)................................................................................................7.10
(a)(2) ...................................................................................................7.10
(a)(3)....................................................................................................N.A.
(a)(4)....................................................................................................N.A.
(a)(5)....................................................................................................7.10
(i)(b)....................................................................................................7.10
(ii)(c)...................................................................................................N.A.
311(a)....................................................................................................7.11
(b).......................................................................................................7.11
(iii(c)...................................................................................................N.A.
312 (a)...................................................................................................2.05
(b).......................................................................................................12.03
(iv)(c)...................................................................................................12.03
313(a)....................................................................................................7.06
(b)(2)....................................................................................................7.07
(v)(c)....................................................................................................7.06;
12.02
(vi)(d)...................................................................................................7.06
314(a)....................................................................................................4.03;
12.02
(c)(1)....................................................................................................12.04
(c)(2)....................................................................................................12.04
(c)(3)....................................................................................................N.A.
(vii)(e)..................................................................................................12.05
(f).......................................................................................................NA
315 (a)...................................................................................................7.01
(b).......................................................................................................7.05,
12.02
(A)(c)....................................................................................................7.01
(d).......................................................................................................7.01
(e).......................................................................................................6.11
316 (a)(last sentence)....................................................................................2.09
(a)(1)(A).................................................................................................6.05
(a)(1)(B).................................................................................................6.04
(a)(2)....................................................................................................N.A.
(b).......................................................................................................6.07
(B)(c)....................................................................................................2.12
317 (a)(1)................................................................................................6.08
(a)(2)....................................................................................................6.09
(b).......................................................................................................2.04
318 (a)...................................................................................................12.01
(b).......................................................................................................N.A.
(c).......................................................................................................12.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
</TABLE>
<PAGE> 3
INDENTURE dated as of March 4, 1998 between Newcor, Inc., a
Delaware corporation (the "Company"), the Subsidiary Guarantors (as defined
herein) and First Trust National Association, as trustee (the "Trustee").
The Company, the Subsidiary Guarantors and the Trustee agree as
follows for the benefit of each other and for the equal and ratable benefit of
the Holders of the 9-7/8% Senior Subordinated Notes due 2008 (the "Series A
Notes") and the 9-7/8% Series B Senior Subordinated Notes due 2008 (the
"Exchange Notes" and, together with the Series A Notes, the "Notes"):
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS
"144A Global Note" means a global note in the form of Exhibit A1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"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. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business (provided that the sale, lease, conveyance or other
<PAGE> 4
disposition of all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole will be governed by the provisions of this
Indenture described in Sections 4.15 and/or 5.01 hereof and not by the
provisions of Section 4.10 hereof), and (ii) the issue or sale by the Company or
any of its Subsidiaries of Equity Interests of any of the Company's
Subsidiaries, in the case of either clause (i) or (ii), whether in a single
transaction or a series of related transactions (a) that have a fair market
value in excess of $1.0 million or (b) for net proceeds in excess of $1.0
million. Notwithstanding the foregoing, the following items shall not be deemed
to be Asset Sales: (i) a transfer of assets by the Company to a Wholly Owned
Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to the Company
or to another Wholly Owned Restricted Subsidiary, (ii) an issuance of Equity
Interests by a Wholly Owned Restricted Subsidiary to the Company or to another
Wholly Owned Restricted Subsidiary, and (iii) a Restricted Payment that is
permitted by Section 4.07 hereof.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company,
or any authorized committee of the Board of Directors.
"Borrowing Base" means, as of any date, an amount equal to the sum
of (a) 85% of the face amount of all accounts receivable owned by the Company
and its Subsidiaries as of such date that are not more than 60 days past due,
and (b) 50% of the book value of all inventory owned by the Company and its
Subsidiaries as of such date, calculated on a consolidated basis and in
accordance with GAAP. To the extent that information is not available as to the
amount of accounts receivable or inventory as of a specific date, the Company
may utilize the most recent available information for purposes of calculating
the Borrowing Base.
"Business Day" means any day other than a Legal Holiday.
"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
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership (whether general or limited) or membership
interests and
<PAGE> 5
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof (provided that the
full faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any domestic commercial bank having capital and surplus in excess of $500
million and a Thompson Bank Watch Rating of "B" or better, (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in clause (iii)
above, (v) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Corporation and in each case
maturing within six months after the date of acquisition, (vi) money market
funds at least 95% of the assets of which constitute Cash Equivalents of the
kinds described in clauses (i)-(v) of this definition, and (vii) with respect to
Investments by Foreign Subsidiaries, the local currency of such Foreign
Subsidiary.
"Cedel" means Cedel Bank, SA.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act), (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above) becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act, except that a person shall be deemed to have "beneficial ownership" of all
securities that such person has the right to acquire, whether such right is
currently exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 35% of the Voting Stock of the
Company (measured by voting power rather than number of shares), (iv) the
Company consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, the Company, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock of the
Company is converted into or exchanged for cash, securities or other property,
other than any such transaction where the Voting Stock of the Company
outstanding immediately prior to such transaction is converted into or exchanged
for Voting Stock (other than Disqualified Stock) of the surviving or transferee
Person constituting a majority of the outstanding shares of such Voting Stock of
such surviving or transferee Person (immediately after giving effect to such
issuance).
"Company" means Newcor, Inc., and any and all successors thereto.
3
<PAGE> 6
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations, but excluding
amortization of debt issuance costs), to the extent that any such expense was
deducted in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (excluding any such non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Subsidiaries for such period to the extent that
such depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, minus (v) non-cash items increasing such
Consolidated Net Income for such period, in each case, on a consolidated basis
and determined in accordance with GAAP. Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation and
amortization and other non-cash expenses of, a Subsidiary of the referent Person
shall be added to Consolidated Net Income to compute Consolidated Cash Flow only
to the extent that a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Subsidiary
thereof that is a Guarantor, (ii) the Net Income of any Restricted Subsidiary
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a
pooling of interest transaction for any period prior to the date of such
4
<PAGE> 7
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded, and (v) the Net Income (but not loss)
of any Unrestricted Subsidiary shall be excluded, whether or not distributed to
the Company or one of its Subsidiaries.
"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 this 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.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 12.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"Credit Agreement" means that certain Third Amended and Restated
Revolving Credit Agreement, dated as of January 15, 1998, as amended, by and
between the Company and Comerica Bank, providing for up to $50.0 million of
revolving credit borrowings and $10.0 million of term Indebtedness, including
any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time.
"Credit Facilities" means, with respect to the Company, one or
more debt facilities (including, without limitation, the Credit Agreement) or
commercial paper facilities with banks or other institutional lenders providing
for revolving credit loans, term loans, receivables financing (including through
the sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time. Indebtedness under Credit Facilities
outstanding on the date on which Notes are first issued and authenticated under
the Indenture shall be deemed to have been incurred on such date in reliance on
the exception provided by clause (i) of the definition of Permitted Debt.
"Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Default" means any event that is or with the passage of time or
the giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name
of the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A1 or A2 hereto except that such Note shall not bear the Global
Note Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to
5
<PAGE> 8
the Notes, and any and all successors thereto appointed as depositary hereunder
and having become such pursuant to the applicable provision of this Indenture.
"Designated Senior Debt" means (i) any Indebtedness outstanding
under the Credit Agreement or otherwise owned by the Company or any of its
Subsidiaries to Comerica Bank and (ii) any other Senior Debt permitted under
this Indenture the principal amount of which is, on the date of designation,
$25.0 million or more and that has been designated by the Company at "Designated
Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible, or for which it
is exchangeable, at the option of the holder thereof), or upon the happening of
any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
Change of Control or an Asset Sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that the Company may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with Section 4.07 hereof.
"Equity Interests" means Capital Stock and all warrants, options
or other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Notes issued in the Exchange Offer
pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set forth
in the Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the date of the Indenture, until such amounts are repaid including, without
limitation, a $6.1 million reimbursement obligation to Comerica Bank by
Rochester Gear, Inc. and the Company's guaranty thereof.
"Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted
6
<PAGE> 9
Subsidiaries for such period, whether paid or accrued (including, without
limitation, original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations, but excluding
amortization of debt issuance costs) and (ii) the consolidated interest of such
Person and its Restricted Subsidiaries that was capitalized during such period,
and (iii) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries (whether or
not such Guarantee or Lien is called upon) and (iv) the product of (a) all
dividend payments, whether or not in cash, on any series of preferred stock of
such Person or any of its Restricted Subsidiaries, other than dividend payments
on Equity Interests payable solely in Equity Interests of the Company (other
than Disqualified Stock) or to the Company or a Restricted Subsidiary of the
Company, times (b) a fraction, the numerator of which is one and the denominator
of which is one minus the then current combined federal, state and local
statutory tax rate of such Person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the referent
Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees or
redeems any Indebtedness (other than revolving credit borrowings) or issues or
redeems preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the date on
which the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect (to the extent permitted by Regulation S-X)
to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Company or any of its Subsidiaries, including through mergers
or consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income, and (ii) the
Consolidated Cash Flow attributable to discontinued operation, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
7
<PAGE> 10
"Foreign Subsidiary" means any Subsidiary not organized and
validly existing under the laws of the United States or any state thereof or the
District of Columbia.
"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 have been approved by a significant segment
of the accounting profession, which are in effect on the date of this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A1 hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America, and the payment for
which the United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, by way of a
pledge of assets or through letters of credit or reimbursement agreements in
respect thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements; (ii) other agreements
or arrangements designed to protect such Person against fluctuations in interest
rates; and (iii) agreements or arrangements designed to protect such Person
against fluctuations in the value of foreign currency.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the global note in the form of Exhibit A1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depository or
its nominee that may be issued after the date hereof, upon request by the
Company, in a denomination equal to the outstanding principal amount of the
Notes transferred to Institutional Accredited Investors.
"Indebtedness" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
excepting from the foregoing any such balance that constitutes an accrued
expense
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<PAGE> 11
or trade payable, if and to the extent any of the foregoing (other than
letters of credit and Hedging Obligations) would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP, as well as all
Indebtedness of others secured by a Lien on any asset of such Person (whether or
not such Indebtedness is assumed by such Person) and, to the extent not
otherwise included, the Guarantee by such Person of any indebtedness of any
other Person. The amount of any Indebtedness outstanding as of any date shall be
(i) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount, and (ii) the principal amount thereof, together with
any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is
an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Investments" means, with respect to any Person, all investments
by such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Subsidiary of the Company sells or otherwise disposes of
any Equity Interest of any direct or indirect Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue on such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed,
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<PAGE> 12
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 a security interest in and any filing
of or agreement to give any financing statement under the Uniform Commercial
Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions),
or (b) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries, and (ii) any extraordinary or nonrecurring gain
(but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Senior Debt secured by a Lien on the asset or assets that were
the subject of such Asset Sale and any reserve for adjustment in respect of the
sale price of such asset or assets established in accordance with GAAP.
"Non-recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as guarantor or
otherwise), or (c) constitutes the lender, and (ii) as to which the lenders have
been notified in writing that they will not have any recourse to the stock or
assets of the Company or any of its Restricted Subsidiaries. "Non-U.S. Person"
means a Person who is not a U.S. Person.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
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<PAGE> 13
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of
the Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Participating Broker-Dealer" means any Broker-Dealer registered
under the Exchange Act that exchanges Series A Notes for Exchange Notes pursuant
to the Exchange Offer and is required to deliver a prospectus in connection with
a resale of such Exchange Notes, as contemplated by the Registration Rights
Agreement.
"Permitted Business" means (a) any business in which the Company
and its Subsidiaries are engaged on the date of the Indenture or any reasonable
extension or expansion of such business and (b) any business similar or related
to the manufacture, design, marketing, distribution or resale of automotive
parts or plastic products, parts, components or assemblies.
"Permitted Investments" means (a) any Investment in the Company or
in a Wholly Owned Restricted Subsidiary of the Company that is a Subsidiary
Guarantor; (b) any Investment in Cash Equivalents; (c) any Investment by the
Company or any Restricted Subsidiary of the Company in a Person, if as a result
of such investment (i) such Person becomes a Wholly Owned Restricted Subsidiary
of the Company and a Subsidiary Guarantor or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Wholly Owned
Restricted Subsidiary of the Company that is a Subsidiary Guarantor and that is
engaged in the same or a similar line of business as the Company and its
Subsidiaries were engaged in on the date hereof; (d) any Investment made as a
result of the receipt of non-cash consideration from an Asset Sale that was made
pursuant to and in compliance with Section 4.10 hereof (e) any acquisition of
assets solely in exchange for the issuance of Equity Interests (other than
Disqualified Stock) of the Company; (f) Investments in Unrestricted
Subsidiaries, when taken together with all other Investments made pursuant to
this clause (f) that that are at the time outstanding, having an aggregate fair
market value (measured on the date such Investment was made without giving
effect to subsequent changes in value) not to exceed $15.0 million; and (g)
other Investments in any Person having an aggregate fair market
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<PAGE> 14
value (measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (g) that are at the time outstanding,
not to exceed $10.0 million.
"Permitted Junior Securities" means Equity Interests in the
Company or any Subsidiary Guarantor or debt securities that are subordinated to
all Senior Debt (and any debt securities issued in exchange for Senior Debt) to
substantially the same extent as, or to a greater extent than, the Notes are
subordinated to Senior Debt pursuant to Article X hereof.
"Permitted Liens" means (a) Liens on assets of the Company or any
of its Subsidiaries securing Indebtedness under Credit Facilities that are
permitted by the terms of the Indenture to be incurred; (b) Liens in favor of
the Company; (c) Liens on property of a Person existing at the time such Person
is merged into or consolidated with the Company or any Subsidiary of the
Company; provided that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets other than those
of the Person merged into or consolidated with the Company; (d) Liens on
property existing at the time of acquisition thereof by the Company or any
Subsidiary of the Company, provided that such Liens were in existence prior to
the contemplation of such acquisition; (e) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (f)
Liens to secure Indebtedness (including Capital Lease Obligations) permitted by
clause (iv) of the second paragraph of Section 4.09 hereof covering only the
assets acquired with such Indebtedness; (g) Liens existing on the date of this
Indenture; (h) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (i) Liens on assets of the
Company or any Restricted Subsidiary to secure Senior Debt that was permitted by
this Indenture to be incurred; (j) Liens on assets of Unrestricted Subsidiaries
that secure Non-Recourse Debt of Unrestricted Subsidiaries; (k) Liens incurred
or deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (l)
easements, rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
interfere with the ordinary course of business of the Company or any of the
Restricted Subsidiaries; (m) Liens encumbering property or assets under
construction arising from progress or partial payments by a customer of the
Company or its Restricted Subsidiaries relating to such property or assets; (n)
any interest or title of a lessor in the property subject to any Capitalized
Lease or operating lease; (o) Liens arising from filing Uniform Commercial Code
financing statements regarding leases; (p) 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; (q) Liens encumbering customary
initial deposits and margin deposits, and other Liens that are either within the
general parameters customary in the industry and incurred in the ordinary course
of business, in each case securing Hedging Obligations; (r) Liens arising out of
conditional sale, title retention, consignment or similar arrangements for the
sale of goods entered into by the Company or any of the Restricted
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<PAGE> 15
Subsidiaries in the ordinary course of business in accordance with the past
practices of the Company and the Restricted Subsidiaries prior to the date on
which the Notes are issued; and (s) Liens incurred in the ordinary course of
business of the Company or any Subsidiary of the Company with respect to
obligations that do not exceed $5.0 million at any one time outstanding and that
(i) are not incurred in connection with the borrowing of money or the obtaining
of advances or credit (other than trade credit in the ordinary course of
business) and (ii) do not in the aggregate materially detract from the value of
the property or materially impair the use thereof in the operation of business
by the Company or such Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in connection therewith); (ii) such Permitted Refinancing Indebtedness has a
final maturity date later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of payment
to, the Senior Notes on terms at least as favorable the Holders of Senior Notes
as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such
Indebtedness is incurred either by the Company or by the Subsidiary who is the
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of March 4, 1998, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
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"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a global Note in the form of
Exhibit A2 hereto bearing the Private Placement Legend and deposited with or on
behalf of the Depositary and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Notes sold in reliance on Rule 903 or Rule 904 of Regulation S (initially
zero dollars).
"Representative" means the indenture trustee or other trustee,
agent or representative for any Senior Debt.
"Responsible Officer," when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means any Investment other than a
Permitted Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means (i) all Indebtedness outstanding under Credit
Facilities and all Hedging Obligations with respect thereto, (ii) any other
Indebtedness permitted to be incurred by the Company or any Subsidiary Guarantor
(including any Indebtedness under Credit Facilities or Hedging Obligations), as
applicable, under the terms of this Indenture, unless the instrument under which
such Indebtedness is incurred expressly provides that it is on a parity with or
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<PAGE> 17
subordinated in right of payment to the Notes and (iii) all Obligations with
respect to the foregoing. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (v) any liability for federal, state,
local or other taxes owed or owing by the Company, (w) any Indebtedness of the
Company to any of its Subsidiaries or other Affiliates, (x) any Indebtedness of
the Company which is classified as nonrecourse in accordance with GAAP or any
secured claim arising in respect thereof by reason of the application of section
1111(b)(1) of the United States bankruptcy code, (y) any trade payables or (z)
any Indebtedness that is incurred in violation of this Indenture.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article I, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Stated Maturity" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such Indebtedness, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) 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
such Person or one or more of the other Subsidiaries of such Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means the Guarantee by each Guarantor of
the Company's payment obligations under this Indenture and the Notes, executed
pursuant to the provisions of this Indenture.
"Subsidiary Guarantor" means each of (i) Grand Machining Company,
Deco Technologies, Inc., Deco International, Inc., Turn-Matic, Inc., Rochester
Gear, Inc., and Plastronics Plus, Inc. and (ii) any other Subsidiary that
executes a Subsidiary Guarantee in accordance with the provisions of this
Indenture, and their respective successors and assigns.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Section 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA.
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"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes
that do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note in the
form of Exhibit A1 attached hereto that bears the Global Note Legend and that
has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means (i) any Subsidiary that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interest or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries; and (e) has at least one
director on its board of directors that is not a director or executive officer
of the Company or any of its Restricted Subsidiaries and has at least one
executive officer that is not a director or executive officer of the Company or
any of its Restricted Subsidiaries. Any such designation by the Board of
Directors shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by Section 4.07 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof the Company shall be in
default of such covenant). The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under Section 4.09 hereof calculated on a pro forma
basis as if such designation had occurred at the beginning of the four-quarter
reference period, and (ii) no Default or Event of Default would be in existence
following such designation.
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"U.S. Person" means a U.S. person as defined in Rule 902(o) under
the Securities Act.
"Voting Stock" of any Person as of any date means the Capital
Stock of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Subsidiaries of such Person or by such Person and one or more Wholly Owned
Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS
Defined in
Term Section
"Affiliate Transaction"......................................4.11
"Asset Sale Offer"...........................................3.09
"Authentication Order".......................................2.02
"Bankruptcy Law".............................................4.01
"Change of Control Offer"....................................4.15
"Change of Control Payment"..................................4.15
"Change of Control Payment Date" ............................4.15
"Covenant Defeasance"........................................8.03
"Event of Default"...........................................6.01
"Excess Proceeds"............................................4.10
"incur"......................................................4.09
"Legal Defeasance" ..........................................8.02
"Offer Amount"...............................................3.09
"Offer Period"...............................................3.09
"Paying Agent"...............................................2.03
"Permitted Debt".............................................4.09
"Purchase Date"..............................................3.09
"Registrar"..................................................2.03
"Restricted Payments"........................................4.07
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SECTION 1.03. TRUST INDENTURE ACT DEFINITIONS. Whenever this Indenture refers to
a provision of the TIA, the provision is incorporated by reference in and made a
part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the Notes and the Subsidiary Guarantees means the
Company and the Subsidiary Guarantors, respectively, and any successor obligor
upon the Notes and the Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION
Unless the context otherwise requires:
(1) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(2) words in the singular include the plural, and in
the plural include the singular;
(3) provisions apply to successive events and
transactions; and
(4) references to sections of or rules under the
Securities Act shall be deemed to include
substitute, replacement of successor sections or
rules adopted by the SEC from time to time.
ARTICLE II.
THE NOTES
SECTION 2.01. FORM AND DATING
(a) General. The Notes and the Trustee's certificate of authentication
shall be
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substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, the
Subsidiary Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Note conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and
be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in the
form of Exhibit A1 or A2 attached hereto (including the Global Note Legend
thereon and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A1 attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
(c) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in Global Notes that are held by Participants through
Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION
Two duly authorized Officers shall sign the Notes for the Company by
manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
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The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or liquidated damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
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SECTION 2.05. HOLDER LISTS
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at
least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
the Holders of Notes and the Company shall otherwise comply with TIA
Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary. All Global Notes will be exchanged by the
Company for Definitive Notes if (i) the Company delivers to the Trustee notice
from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred
to Persons who take delivery thereof in the form of a beneficial
interest in the same Restricted Global Note in accordance with the
transfer restrictions set forth in the Private Placement Legend;
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<PAGE> 24
provided, however, that prior to the expiration of the Restricted
Period, transfers of beneficial interests in the Regulation S Global
Note may not be made to a U.S. Person or for the account or benefit of
a U.S. Person (other than an Initial Purchaser). Beneficial interests
in any Unrestricted Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note. Except as may be required in connection with
the IAI Global Note, no written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers
described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above,
the transferor of such beneficial interest must deliver to the
Registrar either (A) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to credit or cause to be
credited a beneficial interest in another Global Note in an amount
equal to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be credited
with such increase or (B) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary
to the Registrar containing information regarding the Person in whose
name such Definitive Note shall be registered to effect the transfer or
exchange referred to in (1) above. Upon consummation of an Exchange
Offer by the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained
in the Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes. Upon satisfaction of all of
the requirements for transfer or exchange of beneficial interests in
Global Notes contained in this Indenture and the Notes or otherwise
applicable under the Securities Act, the Trustee shall adjust the
principal amount of the relevant Global Note(s) pursuant to Section
2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form
of a beneficial interest in the 144A Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form
of a beneficial
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<PAGE> 25
interest in the Regulation S Global Note, then
the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2)
thereof.
(C) if the transferee will take delivery in the form
of a beneficial interest in the IAI Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications and certificates and
Opinion of Counsel required by item (3) thereof, if
applicable.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted
Global Note. A beneficial interest in any Restricted Global Note may be
exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Note or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note if the exchange or transfer complies with the requirements of
Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3)
a Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial
interest in a Restricted Global Note
proposes to exchange such beneficial
interest for a beneficial interest
in an Unrestricted Global Note, a
certificate from such holder in the
form of Exhibit C hereto, including
the certifications in item (1)(a)
thereof; or
(2) if the holder of such beneficial
interest in a Restricted Global Note
proposes to transfer such beneficial
interest to a Person who shall take
delivery thereof in the form of a
beneficial interest in an
Unrestricted Global Note, a
certificate from such holder in the
form of Exhibit B hereto, including
the certifications in item (4)
thereof;
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<PAGE> 26
and, in each such case set forth in this subparagraph
(D), if the Registrar so requests or if the
Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and
that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer
required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item (2)(a)
thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule
904 under the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (3)(a) thereof;
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<PAGE> 27
(E) if such beneficial interest is being transferred
to an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the Securities
Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B
hereto, including the certifications, certificates and Opinion
of Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred
to the Company or any of its Subsidiaries, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(c)
thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive
Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(c) shall be registered in
such name or names and in such authorized denomination or denominations
as the holder of such beneficial interest shall instruct the Registrar
through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes
to the Persons in whose names such Notes are so registered. Any
Definitive Note issued in exchange for a beneficial interest in a
Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear
the Private Placement Legend and shall be subject to all restrictions
on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the
case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating
in the distribution of the Exchange Notes or (3) a Person who
is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant
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to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial
interest in a Restricted Global Note
proposes to exchange such beneficial
interest for a Definitive Note that
does not bear the Private Placement
Legend, a certificate from such
holder in the form of Exhibit C
hereto, including the certifications
in item (1)(b) thereof; or
(2) if the holder of such beneficial
interest in a Restricted Global Note
proposes to transfer such beneficial
interest to a Person who shall take
delivery thereof in the form of a
Definitive Note that does not bear
the Private Placement Legend, a
certificate from such holder in the
form of Exhibit B hereto, including
the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest
in an Unrestricted Global Note proposes to exchange such beneficial
interest for a Definitive Note or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Definitive
Note, then, upon satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly pursuant
to Section 2.06(h) hereof, and the Company shall execute and the
Trustee shall authenticate and deliver to the Person designated in the
instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant
to this Section 2.06(c)(iii) shall be registered in such name or names
and in such authorized denomination or denominations as the holder of
such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) shall not bear the Private Placement Legend.
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<PAGE> 29
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive Notes
to a Person who takes delivery thereof in the form of a beneficial
interest in a Restricted Global Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(2)(b) thereof;
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1)
thereof;
(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(E) if such Restricted Definitive Note is being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration requirements of
the Securities Act other than those listed in subparagraphs
(B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable;
(F) if such Restricted Definitive Note is being
transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(c) thereof,
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<PAGE> 30
the Trustee shall cancel the Restricted Definitive Note, increase or
cause to be increased the aggregate principal amount of, in the case of
clause (A) above, the appropriate Restricted Global Note, and in the
case of clause (B) above, the 144A Global Note, in the case of clause
(C) above, the Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration
Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive
Notes proposes to exchange such
Notes for a beneficial interest in
the Unrestricted Global Note, a
certificate from such Holder in the
form of Exhibit C hereto, including
the certifications in item (1)(c)
thereof; or
(2) if the Holder of such Definitive
Notes proposes to transfer such
Notes to a Person who shall take
delivery thereof in the form of a
beneficial interest in the
Unrestricted Global Note, a
certificate from such Holder in the
form of Exhibit B hereto, including
the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
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<PAGE> 31
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note at any time. Upon receipt of a request for
such an exchange or transfer, the Trustee shall cancel the applicable
Unrestricted Definitive Note and increase or cause to be increased the
aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive
Notes. Any Restricted Definitive Note may be transferred to and
registered in the name of Persons who take delivery thereof in the form
of a Restricted Definitive Note if the Registrar receives the
following:
(A) if the transfer will be made pursuant to Rule
144A under the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903
or Rule 904, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in
item (2) thereof; and
(C) if the transfer will be made pursuant to any
other exemption from the registration requirements of the
Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications,
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<PAGE> 32
certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person
or Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted
Definitive Notes proposes to
exchange such Notes for an
Unrestricted Definitive Note, a
certificate from such Holder in the
form of Exhibit C hereto, including
the certifications in item (1)(d)
thereof; or
(2) if the Holder of such Restricted
Definitive Notes proposes to
transfer such Notes to a Person who
shall take delivery thereof in the
form of an Unrestricted Definitive
Note, a certificate from such Holder
in the form of Exhibit B hereto,
including the certifications in item
(4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note. Upon receipt of a request to register
such a transfer, the Registrar shall register the Unrestricted
Definitive Notes pursuant to the instructions from the Holder thereof.
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<PAGE> 33
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not
broker-dealers, (y) they are not participating in a distribution of the Exchange
Notes and (z) they are not affiliates (as defined in Rule 144) of the Company,
and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend
(A) Except as permitted by subparagraph (B) below,
each Global Note and each Definitive Note (and all Notes
issued in exchange therefor or substitution thereof) shall
bear the legend in substantially the following form.
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT) (A "QIB"), (B) IT HAS
ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION
D UNDER THE ACT (AN "IAI"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE
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ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE
903 OR 904 OF THE ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION"
AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv),
(c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f)
to this Section 2.06 (and all Notes issued in exchange
therefor or substitution thereof) shall not bear the Private
Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF
THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT
IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL
NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
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SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
NEWCOR, INC."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes
and Definitive Notes upon the Company's order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive
Note for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15
and 9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such registration
of transfer or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period
beginning at the opening of business 15 days before the day of any
selection of Notes for redemption under Section 3.02 hereof and
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ending at the close of business on the day of selection, (B) to
register the transfer of or to exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of any
Note being redeemed in part or (c) to register the transfer of or to
exchange a Note between a record date and the next succeeding Interest
Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and
none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02
hereof.
(viii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this
Section 2.06 to effect a registration of transfer or exchange may be
submitted by facsimile.
(ix) After the Exchange Offer, if there is any subsequent
exchange permitted by this Indenture of a beneficial interest in a
Restricted Global Note or of a Restricted Definitive Note for a
beneficial interest in an Unrestricted Global Note, or transfer to a
Person taking a beneficial interest in an Unrestricted Global Note in
accordance with this Indenture, then such beneficial interest may in
each case be represented by a beneficial interest in any Unrestricted
Global Note representing the Exchange Notes.
SECTION 2.07. REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon receipt of an Authentication Order, shall authenticate a replacement Note
if the Trustee's requirements are met. If required by the Trustee or the
Company, an indemnity bond must be supplied by the Holder that is sufficient in
the judgment of the Trustee and the Company to protect the Company, the Trustee,
any Agent and any authenticating agent from any loss that any of them may suffer
if a Note is replaced. The Company may charge for its expenses in replacing a
Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Note effected
by the Trustee in accordance with the provisions hereof, and
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those described in this Section as not outstanding. Except as set forth in
Section 2.09 hereof, a Note does not cease to be outstanding because the Company
or an Affiliate of the Company holds the Note; however, Notes held by the
Company or a Subsidiary of the Company shall not be deemed to be outstanding for
purposes of Section 3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee knows are so owned
shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES
Until certificates representing Notes are ready for delivery,
the Company may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of certificated Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act).
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Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
ARTICLE III.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed or purchased
in an offer to purchase at any time, the Trustee shall select the Notes to be
redeemed or purchased among the Holders of the Notes in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot
or in accordance with any other method the Trustee considers fair and
appropriate. In the event of partial redemption by lot, the particular Notes to
be redeemed shall be selected, unless otherwise provided herein, not less than
30 nor more than 60 days prior to the redemption date by the Trustee from the
outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall
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be redeemed. Except as provided in the preceding sentence, provisions of this
Indenture that apply to Notes called for redemption also apply to portions of
Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
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SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART
Upon surrender of a Note that is redeemed in part, the Company
shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to March 1, 2003. Thereafter, the Notes will be subject to redemption at
any time at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on March 1 of the years
indicated below:
YEAR PERCENTAGE
2003...................................... 104.938%
2004...................................... 103.292%
2005...................................... 101.646%
2006 and thereafter....................... 100.000%
(b) Notwithstanding the foregoing, at any time prior to March 1, 2001,
the Company
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may on any one or more occasions redeem up to 35% of the aggregate
principal amount of Notes originally issued under this Indenture at a redemption
price of 109.875% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the redemption date, with
the net cash proceeds of one or more public offerings of common stock of the
Company; provided that at least 65% of the aggregate principal amount of Notes
remain outstanding immediately after the occurrence of such redemption
(excluding the Notes held by the Company and its Subsidiaries); and provided,
further, that such redemption shall occur within 45 days of the date of the
closing of such public offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders. The notice
shall contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be
made to all Holders. The notice, which shall govern the terms of the Asset Sale
Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
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(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of
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the Note surrendered. Any Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall publicly
announce the results of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE IV.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date
money deposited by the Company in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on overdue principal at the rate
equal to 1% per annum in excess of the then applicable interest rate on the
Notes to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest (without regard to any applicable grace period) at the same rate to the
extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY
The Company shall maintain in the Borough of Manhattan, the City
of New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company
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shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. REPORTS
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company
were required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" that describes the
financial condition and results of operations of the Company and its
consolidated Subsidiaries (showing in reasonable detail, either on the face of
the financial statements or in the footnotes thereto and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
financial condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Company) and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if the Company were required to file such reports, in each
case, within the time periods specified in the SEC's rules and regulations. For
all reporting periods ending on or prior to January 31, 1999, the Company shall
include in each Form 10-Q and Form 10-K a presentation, which need not be
audited, of sales, operating income, interest expense, depreciation and
amortization, and capital expenditures for such operating period and the twelve
months ended on the last day of such reporting period, on a pro forma basis. In
addition, following consummation of the Exchange Offer, whether or not required
by the rules and regulations of the SEC, the Company shall file a copy of all
such information and reports with the SEC for public availability within the
time periods specified in the SEC's rules and regulations (unless the SEC will
not accept such a filing) and make such information available to securities
analysts and prospective investors upon request. The Company shall at all times
comply with TIA Sections. 314(a).
(b) For so long as any Notes remain outstanding, the Company and the
Subsidiary Guarantors shall furnish to the Holders and to securities analysts
and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE
(a) The Company and each Subsidiary Guarantor (to the extent that such
Subsidiary Guarantor is so required under the TIA) shall deliver to the Trustee,
within 90 days after the end of each fiscal year, an Officers' Certificate
stating that a review of the activities of the Company and its Subsidiaries
during the preceding fiscal year has been made under the supervision of the
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signing Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions of this Indenture (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action the Company is taking or proposes to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action the Company is taking
or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article IV or Article V hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding, deliver
to the Trustee, forthwith upon any Officer becoming aware of any Default or
Event of Default, an Officers' Certificate specifying such Default or Event of
Default and what action the Company is taking or proposes to take with respect
thereto.
SECTION 4.05. TAXES
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS
The Company and each of the Subsidiary Guarantors covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Indenture;
and the Company and each of the Subsidiary Guarantors (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power
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herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company or
any of its Restricted Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or to the Company or a
Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value (including without limitation, in connection with
any merger or consolidation involving the Company) any Equity Interests of the
Company; (iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated to the Notes, except a payment of interest or principal at Stated
Maturity; or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof;
(b) the Company would at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period have been permitted to incur
at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in Section 4.09(i).
(c) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by the Company and its Subsidiaries after the date of
this Indenture (excluding Restricted Payments permitted by clauses (ii), (iii)
and (iv) of the next succeeding paragraph), is less than the sum, without
duplication, of (i) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the beginning of the first fiscal
quarter commencing after the date of this Indenture to the end of the Company's
most recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such deficit), plus (ii) 100%
of the aggregate net cash proceeds received by the Company since the date of
this Indenture as a contribution to its common equity capital or from the issue
or sale of Equity Interests of the Company (other than Disqualified Stock) or
from the issue or sale of Disqualified Stock or debt securities of the Company
that have been converted into such Equity Interests (other than Equity Interests
(or Disqualified Stock or convertible debt securities) sold to a Subsidiary of
the Company), plus (iii) to the extent that any Restricted Investment that was
made after the date of this Indenture is sold for cash or otherwise liquidated
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or repaid for cash, the lesser of (A) the cash return of capital with respect to
such Restricted Investment (less the cost of disposition, if any) and (B) the
initial amount of such Restricted Investment plus (iv) 50% of any dividends
received by the Company or a Wholly Owned Restricted Subsidiary that is a
Subsidiary Guarantor after the date of the Indenture from an Unrestricted
Subsidiary of the Company, to the extent that such dividends were not otherwise
included in Consolidated Net Income of the Company for such period, plus (v) to
the extent that any Unrestricted Subsidiary is redesignated as a Restricted
Subsidiary after the date of the Indenture, the lesser of (A) the fair market
value of the Company's investment in such Subsidiary as of the date of such
redesignation or (B) such fair market value as of the date on which such
Subsidiary was originally designated as an Unrestricted Subsidiary.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of, other Equity Interests of
the Company (other than any Disqualified Stock); provided that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause
(c)(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase
or other acquisition of subordinated Indebtedness with the net cash proceeds
from an incurrence of Permitted Refinancing Indebtedness; (iv) the payment of
any dividend by a Subsidiary of the Company to the holders of its common Equity
Interests on a pro rata basis; and (v) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Subsidiary of the Company held by any member of the Company's (or any of its
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option agreement in effect as of the date of the Indenture;
provided that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $250,000 in any
twelve-month period and no Default or Event of Default shall have occurred and
be continuing immediately after such transaction; (vi) Investments in securities
not constituting cash or Cash Equivalents and received in connection with an
Asset Sale made pursuant to the provisions of Section 4.10 hereof or any other
disposition of assets not constituting an Asset Sale by reason of the threshold
contained in the definition thereof; and (vii) repurchases of Equity Interests
deemed to occur upon exercise of stock options if such Equity Interests
represent a portion of the exercise price of such options.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this Section 4.07. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
fair market value of such Investments at the time of such designation. Such
designation will only be permitted if
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such Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the Board
of Directors whose resolution with respect thereto shall be delivered to the
Trustee, such determination to be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $1.0 million. Not later than five Business Days after
making any Restricted Payment, the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section
4.07 were computed, together with a copy of any fairness opinion or appraisal
required by this Indenture.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a)(i) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (A) on its Capital Stock or
(B) with respect to any other interest or participation in, or measured by, its
profits or (ii) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (b) make loans or advances to the Company or any of its
Restricted Subsidiaries or (c) transfer any of its properties or assets to the
Company or any of its Restricted Subsidiaries. However, the foregoing
restrictions will not apply to encumbrances or restrictions existing under or by
reasons of (i) Existing Indebtedness as in effect on the date hereof, (ii) the
Credit Agreement as in effect on the date hereof and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements and refinancings are no more restrictive, taken as a whole, with
respect to such dividend and other payment restrictions than those contained in
the Credit Agreement as of the date hereof, (iii) this Indenture and the Notes,
(iv) applicable law, (v) any instrument governing Indebtedness or Capital Stock
of a Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired, provided that in the case of Indebtedness, such
Indebtedness is permitted by the terms of this Indenture to be incurred, (vi)
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (vii) purchase money
obligations for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (c) above on the property so
acquired, (viii) any agreement for the sale of a Restricted Subsidiary that
restricts distributions by
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that Restricted Subsidiary pending its sale, (ix) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive, taken
as a whole, than those contained in the agreements governing the Indebtedness
being refinanced, (x) secured Indebtedness otherwise permitted to be incurred
pursuant to the provisions of Section 4.12 hereof that limit the right of the
debtor to dispose of the assets securing such Indebtedness, (xi) provisions with
respect to the disposition or distribution of assets or property in an Asset
Sale (or in a transaction which, but for its size, would be an Asset Sale), or
in joint venture agreements and other similar agreements entered into in the
ordinary course of business and (xii) restrictions on cash or other deposits or
net worth imposed by customers under contracts entered into in the ordinary
course of business.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock and any Subsidiary Guarantor may incur Indebtedness or issue
preferred stock if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock or preferred stock is issued
would have been at least 2.0 to 1, if such incurrence or issuance is on or prior
to March 1, 2000, or 2.5 to 1, if such incurrence or issuance is after March 1,
2000, in each case determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock or preferred stock had been issued,
as the case may be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this Section 4.09 shall not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Company and the Subsidiary Guarantors of (A)
revolving credit Indebtedness and letters of credit pursuant to Credit
Facilities; provided that the aggregate principal amount of all revolving
credit Indebtedness (with letters of credit being deemed to have a principal
amount equal to the maximum potential liability of the Company and its
Restricted Subsidiaries thereunder) at any time outstanding under all Credit
Facilities after giving effect to such incurrence does not exceed an amount
equal to the greater of (x) $50.0 million of such Indebtedness less the
aggregate amount of all Net Proceeds of Assets Sales applied to permanently
reduce commitments with respect to Credit Facilities pursuant to the
covenant described in Section 4.10 hereof and (y) the Borrowing Base; and
(B) term Indebtedness under Credit Facilities, provided that the aggregate
principal amount of all term Indebtedness outstanding under all Credit
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Facilities after giving effect to such incurrence does not exceed $10.0
million less the aggregate amount of all Net Proceeds of Asset Sales
that have been applied since the date of the Indenture to repay term
Indebtedness under a Credit Facility pursuant to Section 4.10 hereof;
(ii) the incurrence by the Company and the Subsidiary
Guarantors of the Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness
represented by the Notes and the incurrence by the Subsidiary
Guarantors of the Subsidiary Guarantees;
(iv) the incurrence by the Company or the Subsidiary
Guarantors of Indebtedness represented by Capital Lease Obligations,
mortgage financing or purchase money obligations in each case incurred
for the purpose of financing all or any part of the purchase price or
cost of construction or improvement of property, plant or equipment
used in the business of the Company of a Subsidiary Guarantor, in an
aggregate principal amount not to exceed $5.0 million at any time
outstanding;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund, refinance or replace
Indebtedness (other than intercompany Indebtedness) that was permitted
by this Indenture to be incurred pursuant to the first paragraph of
this Section 4.09 or clause (ii) or (iii) of this paragraph;
(vi) the incurrence by the Company or any of the Subsidiary
Guarantors of Intercompany Indebtedness between or among the Company
and any of the Subsidiary Guarantors or between or among Wholly Owned
Restricted Subsidiaries; provided, however, that (a) if the Company is
the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations
then due with respect to the Notes and (b) (A) any subsequent issuance
or transfer of Equity Interest that results in any such Indebtedness
being held by a Person other than the Company or a Subsidiary Guarantor
and (B) any sale or other transfer of any such Indebtedness to a Person
that is not either the Company or a Subsidiary Guarantor shall be
deemed, in each case, to constitute an incurrence of such Indebtedness
by the Company or such Subsidiary Guarantor, as the case may be, that
was not permitted by this clause (vi);
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose
of fixing or hedging (a) interest rate risk with respect to any
floating rate Indebtedness that is permitted by the terms of this
Indenture to be outstanding; (b) the value of foreign currencies
purchased or received by Company in the ordinary course of business, or
(c) commodities purchased in the ordinary course of business for use in
a Permitted Business and not for speculation;
(viii) the guarantee by the Company or any of the Subsidiary
Guarantors of
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Indebtedness of the Company or a Subsidiary Guarantor that was
permitted to be incurred by another provision of this Section 4.09;
(ix) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal
amount (or accreted value, as applicable) at any time outstanding,
including all Permitted Refinancings Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause
(ix), not to exceed $15.0 million;
(x) the incurrence by the Company or any of its Unrestricted
Subsidiaries of Non-Recourse Debt (excluding Indebtedness owed by such
Unrestricted Subsidiary to the Company), provided, however, that if any
such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
Subsidiary, such event shall be deemed to constitute an incurrence of
Indebtedness by a Restricted Subsidiary of the Company that was not
permitted by this clause (x);
(xi) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness incurred in respect of performance, surety
and similar bonds provided by the Company and the Restricted
Subsidiaries in the ordinary course of business, and refinancings
thereof;
(xii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness for letters of credit relating to workers'
compensation claims and self-insurance or similar requirements in the
ordinary course of business; and
(xiii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness arising from guarantees of Indebtedness of
the Company or any Restricted Subsidiary or other agreements of the
Company or a Subsidiary providing for indemnification, adjustment of
purchase price or similar obligations, in each case, incurred or
assumed in connection with the disposition of any business, assets or
Subsidiary, other than guarantees of Indebtedness incurred by any
person acquiring all or any portion of such business, assets or
Subsidiary for the purpose of financing such acquisition, provided that
the maximum aggregate liability in respect of all such indebtedness
shall at no time exceed the gross proceeds actually received by the
Company and its Subsidiaries in connection with such disposition.
For purposes of determining compliance with this Section 4.09,
in the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Debt described in clauses (i) through (xiii) above
or is entitled to be incurred pursuant to the first paragraph of this Section
4.09, the Company shall, in its sole discretion, classify such item of
Indebtedness in any manner that complies with this Section 4.09. Accrual of
interest, accretion or amortization of original issue discount, the payment of
interest on any Indebtedness in the form of additional Indebtedness with the
same terms, and the payment of dividends on Disqualified Stock, in the form of
additional shares of the same class of Disqualified Stock will
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not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified
Stock for purposes of this Section 4.09; provided, in each such case, that the
amount thereof is included in Fixed Charges of the Company as accrued.
SECTION 4.10. ASSET SALES
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an officers' certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash;
provided that the amount of (x) any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet), of the Company or any
Restricted Subsidiary (other than contingent liabilities and liabilities that
are by their terms subordinated to the Notes or any guarantee thereof) that are
assumed by the transferee of any such assets pursuant to a customary novation
agreement that releases the Company or such Restricted Subsidiary from further
liability and (y) any securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that are
contemporaneously (subject to ordinary settlement periods) converted by the
Company or such Restricted Subsidiary into cash (to the extent of the cash
received), shall be deemed to be cash for purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds, at its option (a) to permanently
reduced Senior Debt (or, if such Senior Debt is revolving Indebtedness under a
Credit Facility, to permanently reduce any related commitments of lenders under
the Senior Debt) (provided that such reductions shall have no effect on the
amount of Indebtedness permitted to be incurred pursuant to clause (i)(A)(y) of
Section 4.09 hereof), or (b) to the acquisition of a majority of the assets of,
or a majority of the Voting Stock of, another Permitted Business, the making of
a capital expenditure or the acquisition of other assets that are not classified
as current assets under GAAP and are used or useful in a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce revolving credit borrowing or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company
shall make an offer (pro rata in proportion to the principal amount (or accreted
value, if applicable) outstanding in respect of any assets sale offer required
by the terms of any pari passu Indebtedness incurred in accordance with the
Indenture) to all Holders of Notes (an "Asset Sale Offer") to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the date of purchase, in accordance with the procedures set forth
herein. To the extent that any Excess Proceeds remain after consummation of an
Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not
otherwise prohibited by this
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Indenture. If the aggregate principal amount of Notes tendered into such Asset
Sale Offer surrendered by Holders thereof (and any pari passu Indebtedness, as
aforesaid) exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES
The Company shall not, and shall not permit any of its Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each of the
foregoing, an "Affiliate Transaction"), unless (a) such Affiliate Transaction is
on terms that are no less favorable to the Company or the relevant Subsidiary
than those that would have been obtained in a comparable transaction by the
Company or such Subsidiary with an unrelated Person and (b) the Company delivers
to the Trustee (i) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of $1
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (a)
above and that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (ii) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5 million, an opinion as to the fairness
to the Holders of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing. Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (i) any employment agreement entered into by the
Company or any of its Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Subsidiary, (ii)
transactions between or among the Company and/or its Restricted Subsidiaries,
(iii) payment of reasonable directors' fees to Persons who are not otherwise
Affiliates of the Company, (iv) Restricted Payments that are permitted by the
provisions of Section 4.07 hereof and (v) provision of officers' and directors'
indemnification and insurance in the ordinary course of business to the extent
permitted by applicable law.
SECTION 4.12. LIENS
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
securing Indebtedness or trade payables on any asset now owned or hereafter
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom, except Permitted Liens.
SECTION 4.13. LINE OF BUSINESS
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in any business other than Permitted Businesses, except to such extent as
would not be material to the Company and its Subsidiaries taken as a whole.
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SECTION 4.14. CORPORATE EXISTENCE
Subject to Article V hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL
(a) Upon the occurrence of a Change of Control, each Holder of Notes shall
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within 10 days following any Change of Control,
the Company shall mail a notice to each Holder stating: (1) that the Change of
Control Offer is being made pursuant to this Section 4.15 and that all Notes
tendered will be accepted for payment; (2) the purchase price and the purchase
date, which shall be no later than 30 business days from the date such notice is
mailed (the "Change of Control Payment Date"); (3) that any Note not tendered
will continue to accrue interest; (4) that, unless the Company defaults in the
payment of the Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date; (5) that Holders electing to have any Notes
purchased pursuant to a Change of Control Offer will be required to surrender
the Notes, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Notes completed, 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; (6) that Holders will be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the second Business Day preceding the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the name
of the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have the Notes
purchased; and (7) 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, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof. The Company shall 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 in connection with a
Change of Control.
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(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided, that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
(c) Prior to complying with the provisions in this Section 4.15, but in
any event within 90 days following a Change of Control, the Company shall either
repay all outstanding Senior Debt or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt to permit the repurchase
of Notes required by this Section 4.15.
(d) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in this
Section 4.15 and Section 3.09 hereof and purchases all Notes validly tendered
and not withdrawn under such Change of Control Offer.
SECTION 4.16. NO SENIOR SUBORDINATED DEBT
Notwithstanding the provisions of Section 4.09 hereof, (i) the
Company shall not incur, create, issue, assume guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment to
any Senior Debt and senior in any respect in right of payment to the Notes, and
(ii) no Subsidiary Guarantor shall incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to Guarantees of Senior Debt or to Senior Debt of such
Subsidiary Guarantor and senior in any respect in right of payment to the
Subsidiary Guarantees.
SECTION 4.17. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company may enter into a sale and leaseback transaction if (i) the Company
could have (a) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof and
(b) incurred a Lien to secure such Indebtedness pursuant to the provisions of
Section 4.12 hereof, (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair
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market value (as determined in good faith by the Board of Directors and set
forth in an Officers' Certificate delivered to the Trustee) of the property that
is the subject of such sale and leaseback transaction and (iii) the transfer of
assets in such sale and leaseback transaction is permitted by, and the Company
applies the proceeds of such transaction in compliance with, Section 4.10
hereof.
SECTION 4.18. PAYMENTS FOR CONSENT
Neither the Company nor any of its Restricted Subsidiaries shall,
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
is paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 4.19. ADDITIONAL SUBSIDIARY GUARANTEES
If the Company or any of its Restricted Subsidiaries shall acquire
or create another Restricted Subsidiary, which has not been properly designated
as an Unrestricted Subsidiary in accordance with Section 4.07 hereof for as long
as it continues to constitute an Unrestricted Subsidiary, after the date hereof,
then such newly acquired or created Restricted Subsidiary shall become a
Subsidiary Guarantor and execute a Supplemental Indenture and deliver an Opinion
of Counsel, in accordance with the terms of this Indenture; provided, that (i)
the Subsidiary Guarantee of such Subsidiary Guarantor may be subordinated to
Senior Debt of such Subsidiary Guarantor, and (ii) such Restricted Subsidiary
shall not be required to issue a Subsidiary Guarantee if such Restricted
Subsidiary is a Foreign Subsidiary and such Foreign Subsidiary has not
guaranteed and does not guarantee any other Indebtedness of the Company or any
other Restricted Subsidiary of the Company.
ARTICLE V.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS
The Company shall not consolidate or merge with or into (whether or
not the Company is the surviving corporation) or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to, another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia, (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the
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obligations of the Company under the Registration Rights Agreement, the Notes
and this Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee, (iii) immediately after such transaction, no
Default or Event of Default exists and (iv) except in the case of a merger of
the Company into a Wholly Owned Subsidiary of the Company, the Company or the
entity or Person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made shall, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in clause (a) of the first paragraph of Section
4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the same
effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of the Company's assets that meets the requirements of Section
5.01 hereof.
ARTICLE VI.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT
Each of the following constitutes an "Event of Default":
(a) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (whether or not prohibited by the
Article X hereof);
(b) default in payment when due of the principal of or premium, if any,
on the Notes (whether or not prohibited by Article X hereof);
(c) failure by the Company or any of its Restricted Subsidiaries to
comply with the provisions described under Sections 4.07, 4.09, 4.10, 4.15 or
5.01;
(d) failure by the Company or any of its Restricted Subsidiaries for 60
days after notice to comply with any of its other agreements in this Indenture
or the Notes;
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(e) 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 or guarantee now exists, or is created after the date
hereof, which default (a) is caused by a failure to pay principal of or premium,
if any, or interest on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a "Payment
Default") or (b) results in the acceleration of such Indebtedness prior to its
stated maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more;
(f) failure by the Company or any of its Subsidiaries to pay final
judgments aggregating in excess of $5.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days;
(g) except as permitted herein, any Subsidiary Guarantee shall be held
in any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Subsidiary Guarantor, or any Person
acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its
obligations under its Subsidiary Guarantee;
(h) the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole would constitute a Significant Subsidiary,
pursuant to or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors,
or
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant
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Subsidiary or for all or substantially all of the property of the
Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
SECTION 6.02. ACCELERATION
If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, if an Event of Default specified in clause (g) or (h) of Section 6.01
hereof occurs with respect to the Company, any of its Significant Subsidiaries
or any group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary, all outstanding Notes shall be due and payable
immediately without further action or notice. The Holders of the Notes may not
enforce this Indenture or the Notes except as provided herein. Except as
otherwise provided in this Indenture, Holders of a majority in principal amount
of the then outstanding Notes may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
If an Event of Default occurs on or after March 1, 2003 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to March 1, 2003
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on March 1 of the years
set forth below, as set forth below (expressed as a percentage of the principal
amount to the date of payment that would otherwise be due but for the provisions
of this sentence):
YEAR PERCENTAGE
---- ----------
1998...............................................113.168%
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1999...............................................111.522%
2000...............................................109.876%
2001...............................................108.230%
2002...............................................106.584%
The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under this Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes.
The Company shall deliver to the Trustee annually a statement regarding
compliance with the terms hereof, and the Company shall upon becoming aware of
any Default of Event of Default, deliver to the Trustee a statement specifying
such Default or Event of Default.
SECTION 6.03 OTHER REMEDIES
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04 WAIVER OF PAST DEFAULTS
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
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SECTION 6.05 CONTROL BY MAJORITY
Subject to Article VII hereof, holders of a majority in principal
amount of the then outstanding Notes may direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture that the
Trustee determines may be unduly prejudicial to the rights of other Holders of
Notes or that may involve the Trustee in personal liability.
SECTION 6.06 LIMITATION ON SUITS
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a continuing
Event of Default;
(b) the Holders of at least 25% in principal amount of the then outstanding
Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal amount
of the then outstanding Notes do not give the Trustee a direction inconsistent
with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08 COLLECTION SUIT BY TRUSTEE
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if
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any, and interest remaining unpaid on the Notes and interest on overdue
principal and, to the extent lawful, interest and such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10 PRIORITIES
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
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Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11 UNDERTAKING FOR COSTS
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE VII.
TRUSTEE
SECTION 7.01 DUTIES OF TRUSTEE
(a) If an Event of Default has occurred and is continuing, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
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(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by it
except as the Trustee may agree in writing with the Company. Money held in trust
by the Trustee need not be segregated from other funds except to the extent
required by law.
SECTION 7.02 RIGHTS OF TRUSTEE
(a) The Trustee may conclusively rely upon any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to take
in good faith that it believes to be authorized or within the rights or powers
conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers
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vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes; it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture; it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee; and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event
described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are
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listed in accordance with TIA Section 313(d). The Company shall promptly
notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
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SECTION 7.08. REPLACEMENT OF TRUSTEE
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
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SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections. 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE VIII.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article VIII.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the
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expense of the Company, shall execute proper instruments acknowledging the
same), except for the following provisions which shall survive until otherwise
terminated or discharged hereunder: (a) the rights of Holders of outstanding
Notes to receive solely from the trust fund described in Section 8.04 hereof,
and as more fully set forth in such Section, payments in respect of the
principal of, premium, if any, and interest on such Notes when such payments are
due, (b) the Company's obligations with respect to such Notes under Article II
and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in connection therewith
and (d) this Article VIII. Subject to compliance with this Article VIII, the
Company may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.03, 4.04, 4.07, 4.08,
4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19, and 5.01 hereof with
respect to the outstanding Notes on and after the date the conditions set forth
in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the
Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(c) through 6.01(f) hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders, cash in United States dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of
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independent public accountants, to pay the principal of, premium, if any, and
interest and Liquidated Damages on the outstanding Notes on the stated date for
payment thereof or on the applicable redemption date, as the case may be and the
Company must specify whether the Notes are being defeased to maturity or to a
particular redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company shall
have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing on
the date of such deposit (other than a Default or Event of Default resulting
from the borrowing of funds to be applied against such deposit) or insofar as
Sections 6.01(g) or 6.01(h) hereof is concerned, at any time in the period
ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an opinion of counsel to
the effect that, assuming no intervening bankruptcy of the Company between the
date of deposit and the 91st day following the deposit and assuming no Holder of
Notes is an insider of the Company, after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Company shall have delivered to the Trustee an officers' certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
(h) the Company shall have delivered to the Trustee an officers' certificate
and an
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Opinion of Counsel, each stating that all conditions precedent provided
for or relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article VIII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be
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less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE IX.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES
Notwithstanding Section 9.02 of this Indenture, the Company, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture,
the Subsidiary Guarantees or the Notes without the consent of any Holder of a
Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article II hereof (including
the related definitions) in a manner that does not materially adversely affect
any Holder;
(c) to provide for the assumption of the Company's or a Subsidiary
Guarantor's obligations to the Holders of the Notes by a successor to the
Company or a Subsidiary Guarantor pursuant to Article V or Article X hereof;
(d) to make any change that would provide any additional rights or benefits
to the Holders of the Notes or that does not adversely affect the legal rights
hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA; or
(f) to allow any Subsidiary Guarantor to execute a supplemental indenture
and/or a Subsidiary Guarantee with respect to the Notes.
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Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Subsidiary
Guarantors in the execution of any amended or supplemental Indenture authorized
or permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee shall
not be obligated to enter into such amended or supplemental Indenture that
affects its own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and
4.15 hereof), the Subsidiary Guarantees and the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any
existing Default or Event of Default (other than a Default or Event of Default
in the payment of the principal of, premium, if any, or interest on the Notes,
except a payment default resulting from an acceleration that has been rescinded)
or compliance with any provision of this Indenture, the Subsidiary Guarantees or
the Notes may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes voting as a single class
(including consents obtained in connection with a tender offer or exchange offer
for, or purchase of, the Notes). Section 2.08 hereof shall determine which Notes
are considered to be "outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended
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or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof,
the Holders of a majority in aggregate principal amount of the Notes then
outstanding voting as a single class may waive compliance in a particular
instance by the Company with any provision of this Indenture or the Notes.
However, without the consent of each Holder affected, an amendment or waiver
under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes, except as
provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;
(c) reduce the rate of or change the time for payment of interest on any
Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the Notes and a waiver of the payment default that resulted from such
acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to waivers
of past Defaults or the rights of Holders of Notes to receive payments of
principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note except as provided
above with respect to Section 3.09, 4.10 and 4.15 hereof;
(h) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions; or
(i) release any Subsidiary Guarantor from any of its obligations under its
Subsidiary Guarantee or this Indenture, except in accordance with the terms of
this Indenture.
Notwithstanding anything to the contrary contained herein, any
amendment to the provisions of Article X of this Indenture shall require the
consent of the Holders of at least 75% in aggregate principal amount of the
Notes then outstanding if such amendment would adversely affect the rights of
the Holders of Notes.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
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SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05 NOTATION ON OR EXCHANGE OF NOTES
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article IX if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental Indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
11.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE X.
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE
The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Notes is subordinated in right of payment, to
the extent and in the manner provided in this Article X, to the prior payment in
full of all Senior Debt (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt.
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SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(1) holders of Senior Debt shall be entitled to receive payment in full
of all Obligations due in respect of such Senior Debt (including interest after
the commencement of any such proceeding at the rate specified in the applicable
Senior Debt) before Holders of the Notes shall be entitled to receive any
payment with respect to the Notes (except that Holders may receive (i) Permitted
Junior Securities and (ii) payments and other distributions made from any
defeasance trust created pursuant to Section 8.01 hereof); and
(2) until all Obligations with respect to Senior Debt (as provided in
subsection (1) above) are paid in full, any distribution to which Holders would
be entitled but for this Article X shall be made to holders of Senior Debt
(except that Holders of Notes may receive (i) Permitted Junior Securities and
(ii) payments and other distributions made from any defeasance trust created
pursuant to Section 8.01 hereof), as their interests may appear.
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT
The Company may not make any payment or distribution to the Trustee or
any Holder in respect of Obligations with respect to the Notes and may not
acquire from the Trustee or any Holder any Notes for cash or property (other
than (i) Permitted Junior Securities and (ii) payments and other distributions
made from any defeasance trust created pursuant to Section 8.01 hereof) until
all principal and other Obligations with respect to the Designated Senior Debt
have been paid in full if:
(i) a default in the payment of any principal or other Obligations with
respect to Designated Senior Debt occurs and is continuing beyond any
applicable grace period in the agreement, indenture or other document
governing such Designated Senior Debt; or
(ii) a default, other than a payment default, on Designated Senior Debt
occurs and is continuing that then permits holders of the Designated Senior
Debt to accelerate its maturity and the Trustee receives a notice of the
default (a "Payment Blockage Notice") from a Person who may give it pursuant
to Section 10.11 hereof. If the Trustee receives any such Payment Blockage
Notice, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section unless and until (i) at least 360 days shall have
elapsed since the effectiveness of the immediately prior Payment Blockage
Notice and (ii) all scheduled payments of principal, premium, if any, and
interest on the Notes that have come due have been paid in full in cash. No
nonpayment default that existed or was continuing on the date of delivery of
any Payment Blockage Notice to the Trustee shall be, or be made, the basis
for a subsequent Payment Blockage Notice unless such default
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shall have been waived for a period of not less than 180 days.
The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(1) the date upon which the default is cured or waived, or
(2) in the case of a default referred to in Section 10.03(ii) hereof,
179 days pass after notice is received if the maturity of such Designated Senior
Debt has not been accelerated,
if this Article X otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 10.04. ACCELERATION OF NOTES
If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when the Trustee or such Holder,
as applicable, has actual knowledge that such payment is prohibited by Section
10.03 hereof, such payment shall be held by the Trustee or such Holder, in trust
for the benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Debt as their interests may appear or their
Representative under the indenture or other agreement (if any) pursuant to which
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior Debt
remaining unpaid to the extent necessary to pay such Obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article X, and no implied covenants or obligations with respect to
the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article X, except if such payment is made as a result
of the willful misconduct or gross negligence of the Trustee.
SECTION 10.06. NOTICE BY COMPANY
The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to the Company that would cause a payment of any
Obligations with respect to the Notes
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to violate this Article X, but failure to give such notice shall not affect the
subordination of the Notes to the Senior Debt as provided in this Article X.
SECTION 10.07. SUBROGATION
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article X to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Notes.
SECTION 10.08. RELATIVE RIGHTS
This Article X defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the obligation
of the Company, which is absolute and unconditional, to pay principal of and
interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and creditors of the
Company other than their rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Debt to receive distributions and payments
otherwise payable to Holders of Notes.
If the Company fails because of this Article X to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
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Upon any payment or distribution of assets of the Company referred to
in this Article X, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article X.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT
Notwithstanding the provisions of this Article X or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article X. Only the Company or a
Representative may give the notice. Nothing in this Article X shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article X, and appoints the Trustee to act as such Holder's attorney-in-fact for
any and all such purposes. If the Trustee does not file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
6.09 hereof at least 30 days before the expiration of the time to file such
claim, the representatives of the Designated Senior Debt are hereby authorized
to file an appropriate claim for and on behalf of the Holders of the Notes.
SECTION 10.13. AMENDMENTS
The provisions of this Article X shall not be amended or modified
without the written consent of the holders of all Senior Debt.
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ARTICLE XI.
SUBSIDIARY GUARANTEES
SECTION 11.01. SUBSIDIARY GUARANTEES
Subject to this Article XI, each of the Subsidiary Guarantors hereby,
jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of this Indenture,
the Notes or the obligations of the Company hereunder or thereunder, that: (a)
the principal of and interest on the Notes will be promptly paid in full when
due, whether at maturity, by acceleration, redemption or otherwise, and interest
on the overdue principal of and interest on the Notes, if any, if lawful, and
all other obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Subsidiary Guarantors shall
be jointly and severally obligated to pay the same immediately. Each Subsidiary
Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.
The Subsidiary Guarantors hereby agree that their obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a Subsidiary
Guarantor. Each Subsidiary Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenant that this
Subsidiary Guarantee shall not be discharged except by complete performance of
the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Subsidiary Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Subsidiary Guarantors, any amount paid by either to the Trustee or such
Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall
be reinstated in full force and effect.
Each Subsidiary Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Subsidiary Guarantor further agrees that, as between the Subsidiary
Guarantors, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the obligations guaranteed hereby may be accelerated as
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provided in Article VI hereof for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such obligations as provided in
Article VI hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Subsidiary Guarantors for the purpose of
this Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to
seek contribution from any non-paying Subsidiary Guarantor so long as the
exercise of such right does not impair the rights of the Holders under the
Subsidiary Guarantee.
SECTION 11.02. SUBORDINATION OF SUBSIDIARY GUARANTEES
The Obligations of each Subsidiary Guarantor under its Subsidiary
Guarantee pursuant to this Article XI shall be junior and subordinated to the
Senior Debt of such Subsidiary Guarantor on the same basis as the Notes are
junior and subordinated to Senior Debt of the Company. For the purposes of the
foregoing sentence, the Trustee and the Holders shall have the right to receive
and/or retain payments by any of the Subsidiary Guarantors only at such times as
they may receive and/or retain payments in respect of the Notes pursuant to this
Indenture, including Article X hereof.
SECTION 11.03. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY
Each Subsidiary Guarantor, and by its acceptance of Notes, each Holder,
hereby confirms that it is the intention of all such parties that the Subsidiary
Guarantee of such Subsidiary Guarantor not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to
the extent applicable to any Subsidiary Guarantee and not constitute any
improper distribution under, or be otherwise prohibited by, applicable state
law. To effectuate the foregoing intention, the Trustee, the Holders and the
Subsidiary Guarantors hereby irrevocably agree that the obligations of any such
Subsidiary Guarantor under its Subsidiary Guarantee and this Article XI shall be
limited to the maximum amount as will, after giving effect to such maximum
amount and all other contingent and fixed liabilities of such Subsidiary
Guarantor and all other matters that are relevant under such laws, and, to the
extent relevant, after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
this Article XI, result in the obligations of such Subsidiary Guarantor under
its Subsidiary Guarantee not constituting a fraudulent transfer or conveyance or
being improper or prohibited under applicable state law.
SECTION 11.04. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES
To evidence its Subsidiary Guarantee set forth in Section 11.01, each
Subsidiary Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit E shall be endorsed by an Officer
of such Subsidiary Guarantor on each Note
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authenticated and delivered by the Trustee and that this Indenture shall be
executed on behalf of such Subsidiary Guarantor by its President or one of its
Vice Presidents.
Each Subsidiary Guarantor hereby agrees that its Subsidiary Guarantee
set forth in Section 11.01 shall remain in full force and effect notwithstanding
any failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall
be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set
forth in this Indenture on behalf of the Subsidiary Guarantors.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.19 hereof,
the Company shall cause such Subsidiaries to execute supplemental indentures to
this Indenture and Subsidiary Guarantees in accordance with Section 4.19 hereof
and this Article XI, to the extent applicable.
SECTION 11.05. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS
Subject to Section 11.06 hereof, no Subsidiary Guarantor may
consolidate with or merge with or into (whether or not such Subsidiary Guarantor
is the surviving Person) another Corporation, Person or entity whether or not
affiliated with such Subsidiary Guarantor unless:
(a) subject to this Section 11.05 hereof, the Person formed by or surviving
any such consolidation or merger (if other than such Subsidiary Guarantor)
assumes all the obligations of such Subsidiary Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture, the Registration Rights Agreement and
the Subsidiary Guarantees;
(b) immediately after giving effect to such transaction, no Default or Event
of Default exists; and
(c) the Company would be permitted, by virtue of the Company's pro forma
Fixed Charge Coverage Ratio, immediately after giving effect to such
transaction, to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.09 hereof.
In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the
Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this
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Indenture to be performed by the Subsidiary Guarantor, such successor Person
shall succeed to and be substituted for the Subsidiary Guarantor with the same
effect as if it had been named herein as a Subsidiary Guarantor. Such successor
Person thereupon may cause to be signed any or all of the Subsidiary Guarantees
to be endorsed upon all of the Notes issuable hereunder which theretofore shall
not have been signed by the Company and delivered to the Trustee. All the
Subsidiary Guarantees so issued shall in all respects have the same legal rank
and benefit under this Indenture as the Subsidiary Guarantees theretofore and
thereafter issued in accordance with the terms of this Indenture as though all
of such Subsidiary Guarantees had been issued at the date of the execution
hereof.
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS
In the event of a sale or other disposition of all of the assets of any
Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale or
other disposition of all of the capital stock of any Subsidiary Guarantor, then
such Subsidiary Guarantor (in the event of a sale or other disposition, by way
of merger, consolidation or otherwise, of all of the capital stock of such
Subsidiary Guarantor) or the corporation acquiring the property (in the event of
a sale or other disposition of all or substantially all of the assets of such
Subsidiary Guarantor) will be released and relieved of any obligations under its
Subsidiary Guarantee; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with the applicable provisions of this
Indenture, including without limitation Section 4.10 hereof. Upon delivery by
the Company to the Trustee of an Officers' Certificate and an Opinion of Counsel
to the effect that such sale or other disposition was made by the Company in
accordance with the applicable provisions of this Indenture, including without
limitation Section 4.10 hereof, the Trustee shall execute any documents
reasonably required in order to evidence the release of any Subsidiary Guarantor
from its obligations under its Subsidiary Guarantee.
Any Subsidiary Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Subsidiary Guarantor
under this Indenture as provided in this Article XI.
ARTICLE XII.
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 12.02. NOTICES
Any notice or communication by the Company, any Subsidiary Guarantor or
the Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class
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mail (registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, to the others' address
If to the Company and/or any Subsidiary Guarantor:
Newcor, Inc.
1825 South Woodward, Suite 240
Bloomfield Hills, Michigan 48302
Telecopier No.: (248) 253-2413
Attention: John Garber
With a copy to:
Miller, Canfield, Paddock and Stone, P.C.
150 West Jefferson, Suite 2500
Detroit, Michigan 48226
Telecopier No.: (313) 496-8451
Attention: Kent E. Shafer
If to the Trustee:
First Trust National Association
Buhl Building, Suite 740
535 Griswold Street
Detroit, MI 48226
Telecopier No: (313) 963-9428
Attention: James D. Khami
The Company, any Subsidiary Guarantor or the Trustee, by
notice to the others may designate additional or different addresses for
subsequent notices or communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA Section 313(c), to the extent required
by the TIA. Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
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If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES
Holders may communicate pursuant to TIA Section. 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section. 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section. 314(a)(4)) shall comply with the provisions
of TIA section. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
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SECTION 12.06. RULES BY TRUSTEE AND AGENTS
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS
No past, present or future director, officer, employee,
incorporator or stockholder of the Company or any Subsidiary Guarantor, as such,
shall have any liability for any obligations of the Company or such Subsidiary
Guarantor under the Notes, the Subsidiary Guarantees or this Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.
SECTION 12.08. GOVERNING LAW
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 12.10. SUCCESSORS
All agreements of the Company in this Indenture and the Notes
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 12.11. SEVERABILITY
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 12.12. COUNTERPART ORIGINALS
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
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SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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SIGNATURES
Dated as of March 4, 1998
NEWCOR, INC.
By: /s/ W. John Weinhardt
--------------------------------
Name: W. John Weinhardt
Title: President and CEO
By: /s/ John Garber
--------------------------------
Name: John Garber
Title: Vice President and
Chief Financial Officer
ROCHESTER GEAR, INC.
By: /s/ John Garber
--------------------------------
Name: John Garber
Title: Treasurer
PLASTRONICS PLUS, INC.
By: /s/ John Garber
--------------------------------
Name: John Garber
Title: Treasurer
GRAND MACHINING COMPANY
By: /s/ John Garber
--------------------------------
Name: John Garber
Title: Treasurer
DECO TECHNOLOGIES, INC.
By: /s/ John Garber
--------------------------------
Name: John Garber
Title: Treasurer
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DECO INTERNATIONAL, INC.
By: /s/ John Garber
---------------------------------
Name: John Garber
Title: Treasurer
TURN-MATIC, INC.
By: /s/ John Garber
---------------------------------
Name: John Garber
Title: Treasurer
ENC CORP.
By: /s/ John Garber
---------------------------------
Name: John Garber
Title: Treasurer
FIRST TRUST NATIONAL ASSOCIATION, as
Trustee
By: /s/ James D. Khami
---------------------------------
Name: James D. Khami
Title: Vice President
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EXHIBIT A1
(FACE OF 144A/RESTRICTED GLOBAL NOTE)
================================================================================
(a) CUSIP/CINS __________
9-7/8% Senior Subordinated Notes due 2008
No. [ ] [$ ]
NEWCOR, INC.
promises to pay to ____________________
or registered assigns,
the principal sum of [$ ]
Dollars on March 1, 2008.
Interest Payment Dates: March 1 and September 1
Record Dates: February 15 and August 15
DATED: MARCH 4, 1998
NEWCOR, INC.
BY:________________________________
Name:
Title:
(SEAL)
This is one of the 9-7/8% Senior
Subordinated Notes due 2008 referred to
in the within-mentioned Indenture:
First Trust National Association,
as Trustee
By:___________________________________
A1-1
<PAGE> 91
================================================================================
(Back of Note)
9-7/8% Senior Subordinated Notes due 2008
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER
ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS
HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE,
(II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART
PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE
MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF NEWCOR, INC.1
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET
___________________________
(1) This paragraph should be included only if the Note is issued in global
form.
A1-2
<PAGE> 92
FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT) (A "QIB"), (B) IT HAS
ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION
D UNDER THE ACT (AN "IAI"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF THE ACT, (D) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE ACT, (E) TO AN IAI THAT,
PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE ACT, (F) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT (AND BASED UPON
AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION"
AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE ACT. THE INDENTURE CONTAINS A
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PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS NOTE IN VIOLATION OF THE FOREGOING.2
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Newcor, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
9-7/8% per annum from March 4, 1998 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Company will pay interest and Liquidated Damages
semi-annually on March 1 and September 1 of each year, or if any such day is not
a Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). 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 the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be September 1, 1998. The Company shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the
Notes (except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the February 15 or
August 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest 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 and Liquidated Damages may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Company or the Paying
Agent. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
________________________
(2) This legend should be removed upon the exchange of Notes for Exchange
Notes in the Exchange Offer or upon the registration of the Notes
pursuant to the terms of the Registration Rights Agreement.
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3. PAYING AGENT AND REGISTRAR. Initially, First Trust
National Association, the Trustee under the Indenture, will act as Paying Agent
and Registrar. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an
Indenture dated as of March 4, 1998 ("Indenture") between the Company, the
Subsidiary Guarantors (as defined therein) and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code
Sections 77aaa-77bbbb). The Notes are subject to all such terms, and Holders
are referred to the Indenture and such Act for a statement of such terms. To
the extent any provision of this Note conflicts with the express provisions of
the Indenture, the provisions of the Indenture shall govern and be controlling.
The Notes are obligations of the Company limited to $125,000,000 million in
aggregate principal amount, plus amounts, if any, issued to pay Liquidated
Damages on outstanding Notes as set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION
(a) Except as set forth in subparagraph (b) of this
Paragraph 5, the Company shall not have the option to redeem the Notes prior to
March 1, 2003. Thereafter, the Notes will be subject to redemption at any time
at the option of the Company, in whole or in part, upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on March 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003............................................... 104.938%
2004............................................... 103.292%
2005............................................... 101.646%
2006 and thereafter................................ 100.000%
</TABLE>
(b) Notwithstanding the foregoing, at any time prior to
March 1, 2001, the Company may on any one or more occasions redeem up to 35% of
the aggregate principal amount of Notes originally issued under the Indenture at
a redemption price of 109.875% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated damages thereon, if any, to the redemption date,
with the net cash proceeds of one or more public offerings of common stock of
the Company; provided that at least 65% of the aggregate principal amount of
Notes remain outstanding immediately after the occurrence of such redemption
(excluding the Notes held by the Company and its Subsidiaries); and provided,
further, that such redemption shall occur within 45 days of the date of the
closing of such public offering.
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6. MANDATORY REDEMPTION
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER
(a) If there is a Change of Control, the Company shall be
required to make an offer (a "Change of Control Offer") to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at
a purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase (the "Change of Control Payment"). Within 10 days following any
Change of Control, the Company shall mail a notice to each Holder setting forth
the procedures governing the Change of Control Offer as required by the
Indenture.
(b) If the Company or a Subsidiary consummates any Asset
Sales, when the aggregate amount of Excess Proceeds exceeds $10.0 million, the
Company shall commence an offer to all Holders of Notes (as "Asset Sale Offer")
pursuant to Section 3.09 of the Indenture to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase, in accordance with the procedures set forth in the Indenture. To
the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use
such deficiency for general corporate purposes. If the aggregate principal
amount of Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased on a pro rata
basis. Holders of Notes that are the subject of an offer to purchase will
receive an Asset Sale Offer from the Company prior to any related purchase date
and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Company need not exchange
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<PAGE> 96
or register the transfer of any Notes for a period of 15 days before a selection
of Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
10. SUBORDINATION. The Notes are subordinated in right of
payment, to the extent and in the manner provided in Article 10 of the
Indenture, to the prior payment in full in cash or Cash Equivalents of all
Senior Debt. To the extent provided in the Indenture, Senior Debt must be paid
before the Notes may be paid. The Company agrees and each Holder of Notes by
accepting a Note consents and agrees to the subordination provided in the
Indenture and authorizes the Trustee to give its consent.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note
may be treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture, the Subsidiary Guarantees or the Notes may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the then outstanding Notes voting as a single class, and any
existing default or compliance with any provision of the Indenture, the
Subsidiary Guarantees or the Notes may be waived with the consent of the Holders
of a majority in principal amount of the then outstanding Notes voting as a
single class. Without the consent of any Holder of a Note, the Indenture, the
Subsidiary Guarantees or the Notes may be amended or supplemented 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 or Subsidiary Guarantor's obligations to Holders of the Notes in
case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act, or to allow
any Subsidiary Guarantor to execute a supplemental indenture to the Indenture
and/or a Subsidiary Guarantee with respect to the Notes.
13. DEFAULTS AND REMEDIES. Events of Default include: (i)
default for 30 days in the payment when due of interest or Liquidated Damages on
the Notes; (ii) default in payment when due of principal of or premium, if any,
on the Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company or any of its Restricted Subsidiaries to comply with Section
4.07, 4.09, 4.10, 4.15 or 5.01 of the Indenture; (iv) failure by the Company or
any of its Restricted Subsidiaries for 60 days after notice to comply with
certain other agreements in the Indenture or the Notes; (v) default under
certain other agreements relating to Indebtedness of the Company which default
results in the acceleration of such Indebtedness prior to its express maturity;
(vi) certain final judgments for the payment of money that remain undischarged
for a period of 60 days; (vii) certain events of bankruptcy or insolvency with
respect to the Company or any of its Material Subsidiaries; and (viii) except as
permitted by the Indenture, any Subsidiary Guarantee shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease
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for any reason to be in full force and effect or any Subsidiary Guarantor or
any Person acting on its behalf shall deny or disaffirm its obligations under
such Subsidiary Guarantor's Subsidiary Guarantee. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes will become due and payable without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. Except as otherwise provided in the Indenture, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. 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 to the Trustee a statement specifying such Default or Event of Default.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. A director, officer,
employee, incorporator or stockholder, of the Company or any of the Subsidiary
Guarantors, as such, shall not have any liability for any obligations of the
Company or such Subsidiary Guarantor under the Notes, the Subsidiary Guarantees
or the Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
16. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES
AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders
of Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the
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<PAGE> 98
rights set forth in the A/B Exchange Registration Rights Agreement dated as of
March __, 1998, between the Company and the parties named on the signature pages
thereof (the "Registration Rights Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated
by the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Newcor, Inc.
1825 S. Woodward, Suite 240
Bloomfield Hills, MI 48302
Attention: John Garber
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<PAGE> 99
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:______________________
Your Signature:
(Sign exactly as your name appears on the
face of this Note)
SIGNATURE GUARANTEE.
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<PAGE> 100
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state
the amount you elect to have purchased: $________
Date:______________ Your Signature:________________________________
(Sign exactly as your name appears on the Note)
Tax Identification No:_________________________
Signature Guarantee.
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<PAGE> 101
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of [at maturity] of
decrease in increase in this Global Note Signature of
Principal Amount Principal Amount following such authorized
[at maturity] of [at maturity] of decrease (or officer of
Date of this Global Note this Global Note increase) Trustee or Note
Exchange ---------------- Custodian
-------- ----------------- ----------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
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<PAGE> 102
EXHIBIT A2
(Face of Regulation S Global Note)
================================================================================
CUSIP/CINS _______
9-7/8% Senior Subordinated Notes due 2008
No. ___ [$ ]
NEWCOR, INC.
promises to pay to ______________________________________________
or registered assigns,
the principal sum of [$ ]
Dollars on March 1, 2008.
Interest Payment Dates: March 1, and September 1
Record Dates: February 15, and August 15
Dated: March 4, 1998
NEWCOR, INC.
By:_________________________
Name:
Title:
[(SEAL)]
This is one of the 9-7/8% Senior Subordinated
Notes due 2008 referred to in the
within-mentioned Indenture:
First Trust National Association,
as Trustee
By:____________________________________
================================================================================
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<PAGE> 103
(Back of Regulation S Temporary Global Note)
9-7/8% Senior Subordinated Notes due 2008
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF NEWCOR, INC.1
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
___________________________
(1) This paragraph should be included only if the Note is issued in global
form.
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<PAGE> 104
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE ACT) (A "QIB"), (B) IT HAS ACQUIRED THIS NOTE IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE ACT OR (C) IT
IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) OF REGULATION D UNDER THE ACT (AN "IAI"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN
AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE ACT,
(D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE ACT, (E) TO
AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF
THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR
(G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.2
________________________
(2) This legend should be removed upon the exchange of Notes for Exchange
Notes in the Exchange Offer or upon the registration of the Notes
pursuant to the terms of the Registration Rights Agreement.
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<PAGE> 105
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Newcor, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
9-7/8% per annum from March 4, 1998 until maturity and shall pay the Liquidated
Damages payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Company will pay interest and Liquidated Damages
semi-annually on March 1 and September 1 of each year, or if any such day is not
a Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). 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 the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to on
the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be September 1, 1998. The Company shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for
one or more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Senior Subordinated Notes under the Indenture.
2. METHOD OF PAYMENT. The Company will pay interest on the
Notes (except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the February 15 or
August 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest 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 and Liquidated Damages may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of which
shall have provided wire transfer instructions to the Company or the Paying
Agent. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.
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<PAGE> 106
3. PAYING AGENT AND REGISTRAR. Initially, First Trust
National Association, the Trustee under the Indenture, will act as Paying Agent
and Registrar. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Notes under an
Indenture dated as of March 4, 1998 ("Indenture") between the Company, the
Subsidiary Guarantors (as defined therein) and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code
Section 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and
be controlling. The Notes are obligations of the Company limited to
$125,000,000 million in aggregate principal amount, plus amounts, if any,
issued to pay Liquidated Damages on outstanding Notes as set forth in
Paragraph 2 hereof.
5. OPTIONAL REDEMPTION
(a) Except as set forth in subparagraph (b) of this
Paragraph 5, the Company shall not have the option to redeem the Notes prior to
March 1, 2003. Thereafter, the Notes will be subject to redemption at any time
at the option of the Company, in whole or in part, upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on March 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003.............................................. 104.938%
2004.............................................. 103.292%
2005.............................................. 101.646%
2006 and thereafter............................... 100.000%
</TABLE>
(b) Notwithstanding the foregoing, at any time prior to
March 1, 2001, the Company may on any one or more occasions redeem up to 35% of
the aggregate principal amount of Notes originally issued under the Indenture at
a redemption price of 109.875% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated damages thereon, if any, to the redemption date,
with the net cash proceeds of one or more public offerings of common stock of
the Company; provided that at least 65% of the aggregate principal amount of
Notes remain outstanding immediately after the occurrence of such redemption
(excluding the Notes held by the Company and its Subsidiaries); and provided,
further, that such redemption shall occur within 45 days of the date of the
closing of such public offering.
A2-5
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6. MANDATORY REDEMPTION
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER
(a) If there is a Change of Control, the Company shall be
required to make an offer (a "Change of Control Offer") to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at
a purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase (the "Change of Control Payment"). Within 10 days following any
Change of Control, the Company shall mail a notice to each Holder setting forth
the procedures governing the Change of Control Offer as required by the
Indenture.
(b) If the Company or a Subsidiary consummates any Asset
Sales, when the aggregate amount of Excess Proceeds exceeds $10.0 million, the
Company shall commence an offer to all Holders of Notes (as "Asset Sale Offer")
pursuant to Section 3.09 of the Indenture to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase, in accordance with the procedures set forth in the Indenture. To
the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Subsidiary) may use
such deficiency for general corporate purposes. If the aggregate principal
amount of Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased on a pro rata
basis. Holders of Notes that are the subject of an offer to purchase will
receive an Asset Sale Offer from the Company prior to any related purchase date
and may elect to have such Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Company need not exchange
A2-6
<PAGE> 108
or register the transfer of any Notes for a period of 15 days before a selection
of Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in
whole or in part for one or more Global Notes only (i) on or after the
termination of the 40-day restricted period (as defined in Regulation S) and
(ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if
applicable) required by Article II of the Indenture. Upon exchange of this
Regulation S Temporary Global Note for one or more Global Notes, the Trustee
shall cancel this Regulation S Temporary Global Note.
10. SUBORDINATION. The Notes are subordinated in right of
payment, to the extent and in the manner provided in Article 10 of the
Indenture, to the prior payment in full in cash or Cash Equivalents of all
Senior Debt. To the extent provided in the Indenture, Senior Debt must be paid
before the Notes may be paid. The Company agrees and each Holder of Notes by
accepting a Note consents and agrees to the subordination provided in the
Indenture and authorizes the Trustee to give its consent.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note
may be treated as its owner for all purposes.
12. 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 principal amount of the then
outstanding Notes, and any existing default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented 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 case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
13. DEFAULTS AND REMEDIES. Events of Default include: (i)
default for 30 days in the payment when due of interest or Liquidated Damages on
the Notes; (ii) default in payment when due of principal of or premium, if any,
on the Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company or any of its Restricted Subsidiaries to comply with Section
4.07, 4.09, 4.10, 4.15 or 5.01 of the Indenture; (iv) failure by the Company or
any of its Restricted Subsidiaries for 60 days after notice to comply with
certain other agreements in the Indenture or the Notes; (v) default under
certain other agreements relating to Indebtedness of the Company which default
results in the acceleration of such Indebtedness prior to its express
A2-7
<PAGE> 109
maturity; (vi) certain final judgments for the payment of money that remain
undischarged for a period of 60 days; (vii) certain events of bankruptcy or
insolvency with respect to the Company or any of its Material Subsidiaries; and
(viii) except as permitted by the Indenture, any Subsidiary Guarantee shall be
held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or any Subsidiary Guarantor or any
Person acting on its behalf shall deny or disaffirm its obligations under such
Subsidiary Guarantor's Subsidiary Guarantee. If any Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes will become
due and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Except as otherwise
provided in the Indenture, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest. The Holders of a majority in aggregate principal amount of
the Notes then outstanding by notice to the Trustee may on behalf of the Holders
of all of the Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest on, or the principal of, the Notes. 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 to the Trustee a statement specifying
such Default or Event of Default.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. A director, officer,
employee, incorporator or stockholder, of the Company or any of the Subsidiary
Guarantors, as such, shall not have any liability for any obligations of the
Company or such Subsidiary Guarantor under the Notes, the Subsidiary Guarantees
or the Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
16. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
A2-8
<PAGE> 110
18. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES
AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders
of Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the A/B Exchange
Registration Rights Agreement dated as of March __ 1998, between the Company and
the parties named on the signature pages thereof (the "Registration Rights
Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated
by the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Newcor, Inc.
1825 S. Woodward
Suite 240
Bloomfield Hills, MI 48302
Attention: John Garber
A2-9
<PAGE> 111
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date: ________________
Your Signature:___________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
A2-10
<PAGE> 112
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate
box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state
the amount you elect to have purchased: $___________
________________________________________________________________________________
Date: _______________ Your Signature:__________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.:__________________
Signature Guarantee.
A2-11
<PAGE> 113
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S
Temporary Global Note for an interest in another Global Note, or of other
Restricted Global Notes for an interest in this Regulation S Temporary Global
Note, have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of [at maturity] of
decrease in increase in this Signature of
Principal Amount Principal Amount Global Note authorized
[at maturity] of [at maturity] of following such officer of
Date of this Global Note this Global Note decrease (or Trustee or Note
Exchange ------------------- increase) Custodian
-------- ---------------- ------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
A2-12
<PAGE> 114
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Newcor, Inc.
1825 S. Woodward Ave., Suite 240
Bloomfield Hills, MI 48302
[Registrar address block]
Re: 9-7/8% Senior Subordinated Notes due 2008
Reference is hereby made to the Indenture, dated as of March
4, 1998 (the "Indenture"), between Newcor, Inc., as issuer (the "Company"), the
Subsidiary Guarantors (as defined therein) and First Trust National Association,
as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to
transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in
the principal amount of $___________ in such Note[s] or interests (the
"Transfer"), to __________ (the "Transferee"), as further specified in Annex A
hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Note for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and
such Person and each such account is a "qualified institutional buyer" within
the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A
and such Transfer is in compliance with any applicable blue sky securities laws
of any state of the United States. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the 144A Global Note
and/or the Definitive Note and in the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN
THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the
United States or (y) the transaction was
B-1
<PAGE> 115
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements of
Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Note and/or the
Definitive Note and in the Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION
OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes
and pursuant to and in accordance with the Securities Act and any applicable
blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) [ ] such Transfer is being effected pursuant to an
effective registration statement under the Securities Act and in compliance with
the prospectus delivery requirements of the Securities Act;
or
(d) [ ] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904,
and the Transferor hereby further certifies that it has not engaged in any
general solicitation within the meaning of Regulation D under the Securities Act
and the Transfer complies with the transfer restrictions applicable to
beneficial interests in a Restricted Global Note or Restricted Definitive Notes
and the requirements of the exemption claimed, which certification is supported
by (1) a certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) an Opinion of Counsel provided by the Transferor or the
Transferee (a copy of which the Transferor has attached to this certification),
to the effect that
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<PAGE> 116
such Transfer is in compliance with the Securities Act. Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the IAI Global
Note and/or the Definitive Notes and in the Indenture and the Securities Act.
4. [ ] Check if Transferee will take delivery of a beneficial interest in
an Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The
Transfer is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i)
The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities
laws of any state of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION.
(i) The Transfer is being effected pursuant to and in compliance with an
exemption from the registration requirements of the Securities Act other than
Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
State of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will not be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.
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<PAGE> 117
__________________________________
[Insert Name of Transferor]
By:_______________________________
Name:
Title:
Dated:____________, _____
B-4
<PAGE> 118
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ), or
(ii) [ ] Regulation S Global Note (CUSIP ), or
(iii) [ ] IAI Global Note (CUSIP ); or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ), or
(ii) [ ] Regulation S Global Note (CUSIP ), or
(iii) [ ] IAI Global Note (CUSIP ); or
(iv) [ ] Unrestricted Global Note (CUSIP ); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-5
<PAGE> 119
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Newcor, Inc.
1825 S. Woodward Ave., Suite 240
Bloomfield Hills, MI 48302
[Registrar address block]
Re: 9-7/8% Senior Subordinated Notes due 2008
(CUSIP______________)
Reference is hereby made to the Indenture, dated as of March
4, 1998 (the "Indenture"), between Newcor, Inc., as issuer (the "Company"), the
Subsidiary Guarantors (as defined therein) and First Trust National Association,
as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN
A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE.
In connection with the Exchange of the Owner's beneficial interest in a
Restricted Global Note for a beneficial interest in an Unrestricted Global Note
in an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Global Notes and pursuant to and in accordance with the United
States Securities Act of 1933, as amended (the "Securities Act"), (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the beneficial interest in an Unrestricted Global Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN
A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note
is being acquired for the Owner's own account without
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<PAGE> 120
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer contained
in the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Definitive Note is
being acquired in compliance with any applicable blue sky securities laws of any
state of the United States.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE
NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with
the Owner's Exchange of a Restricted Definitive Note for a beneficial interest
in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE
NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of
a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner
hereby certifies (i) the Unrestricted Definitive Note is being acquired for the
Owner's own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to Restricted Definitive
Notes and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Unrestricted Definitive Note is being acquired in compliance with
any applicable blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN
A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE
NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the
Exchange of the Owner's Restricted Definitive Note for a beneficial interest in
the [CHECK ONE] "144A Global
C-2
<PAGE> 121
Note,"Regulation S Global Note," IAI Global Note with an equal principal amount,
the Owner hereby certifies (i) the beneficial interest is being acquired for the
Owner's own account without transfer and (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, and in
compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Exchange in accordance with the
terms of the Indenture, the beneficial interest issued will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the relevant Restricted Global Note and in the Indenture and the Securities Act.
C-3
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This certificate and the statements
contained herein are made for your benefit and the benefit of the Company.
___________________________________
[Insert Name of Owner]
By:________________________________
Name:
Title:
Dated: ________________, ____
C-4
<PAGE> 123
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Newcor, Inc.
1825 S. Woodward Ave., Suite 240
Bloomfield Hills, MI 48302
[Registrar address block]
Re: 9-7/8% Senior Subordinated Notes due 2008
Reference is hereby made to the Indenture, dated as of March
4, 1998 (the "Indenture"), between Newcor, Inc., as issuer (the "Company"), the
Subsidiary Guarantors (as defined therein) and First Trust National Association,
as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
In connection with our proposed purchase of
$____________ aggregate principal amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of
the Notes or any interest therein is subject to certain restrictions and
conditions set forth in the Indenture and the undersigned agrees to be bound by,
and not to resell, pledge or otherwise transfer the Notes or any interest
therein except in compliance with, such restrictions and conditions and the
United States Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the
Notes have not been registered under the Securities Act, and that the Notes and
any interest therein may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any accounts
for which we are acting as hereinafter stated, that if we should sell the Notes
or any interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (c) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a U.S. broker-dealer) to you and to the
Company a signed letter substantially in the form of this letter and an Opinion
of Counsel in form reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act, (D) outside the United States
in accordance with Rule 904 of Regulation S under the Securities Act, (E)
pursuant to the provisions of Rule 144(k) under the Securities Act or (F)
D-1
<PAGE> 124
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of
the Notes or beneficial interest therein, we will be required to furnish to you
and the Company such certifications, legal opinions and other information as you
and the Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the Notes
purchased by us will bear a legend to the foregoing effect. We further
understand that any subsequent transfer by us of the Notes or beneficial
interest therein acquired by us must be effected through one of the Placement
Agents.
4. We are an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our investment in
the Notes, and we and any accounts for which we are acting are each able to bear
the economic risk of our or its investment.
5. We are acquiring the Notes or beneficial
interest therein purchased by us for our own account or for one or more accounts
(each of which is an institutional "accredited investor") as to each of which we
exercise sole investment discretion.
You and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.
_______________________________________
[Insert Name of Accredited Investor]
By: ___________________________________
Name:
Title:
Dated: __________________, ____
D-2
<PAGE> 125
EXHIBIT E
FORM OF NOTATION OF GUARANTEE
For value received, each Subsidiary Guarantor (which term
includes any successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and subject
to the provisions in the Indenture dated as of March 4, 1998 (the "Indenture")
among Newcor, Inc., the Subsidiary Guarantors listed on Schedule I thereto and
First Trust National Association, as trustee (the "Trustee"), (a) the due and
punctual payment of the principal of, premium, if any, and interest on the Notes
(as defined in the Indenture), whether at maturity, by acceleration, redemption
or otherwise, the due and punctual payment of interest on overdue principal and
premium, and, to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms of the Indenture and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Subsidiary
Guarantors to the Holders of Notes and to the Trustee pursuant to the Subsidiary
Guarantee and the Indenture are expressly set forth in Article XI of the
Indenture and reference is hereby made to the Indenture for the precise terms of
the Subsidiary Guarantee. Each Holder of a Note, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the
Trustee, on behalf of such Holder, to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Indenture and (c)
appoints the Trustee attorney-in-fact of such Holder for such purpose; provided,
however, that the Indebtedness evidenced by this Subsidiary Guarantee shall
cease to be so subordinated and subject in right of payment upon any defeasance
of this Note in accordance with the provisions of the Indenture.
GRAND MACHINING COMPANY
By:___________________________________
Name:
Title:
DECO TECHNOLOGIES, INC.
By:___________________________________
Name:
Title:
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<PAGE> 126
DECO INTERNATIONAL, INC.
By:___________________________________
Name:
Title:
TURN-MATIC, INC.
By:___________________________________
Name:
Title:
ROCHESTER GEAR, INC.
By:___________________________________
Name:
Title:
PLASTRONICS PLUS, INC.
By:___________________________________
Name:
Title:
ENC. CORP.
By:___________________________________
Name:
Title:
E-2
<PAGE> 127
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated
as of ________________, among __________________ (the "Guaranteeing
Subsidiary"), a subsidiary of Newcor, Inc. (or its permitted successor), a
Delaware corporation (the "Company"), the Company, the other Subsidiary
Guarantors (as defined in the Indenture referred to herein) and First Trust
National Association, as trustee under the indenture referred to below (the
"Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to
the Trustee an indenture (the "Indenture"), dated as of March 4, 1998 providing
for the issuance of an aggregate principal amount of up to $125,000,000 of
9-7/8% Senior Subordinated Notes due 2008 (the "Notes");
WHEREAS, the Indenture provides that under certain
circumstances the Guaranteeing Subsidiary shall execute and deliver to the
Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary
shall unconditionally guarantee all of the Company's Obligations under the Notes
and the Indenture on the terms and conditions set forth herein (the "Subsidiary
Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the
Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein
without definition shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Guaranteeing Subsidiary
hereby agrees as follows:
(a) Along with all Subsidiary Guarantors named in the
Indenture, to jointly and severally Guarantee to each
Holder of a Note authenticated and delivered by the
Trustee and to the Trustee and its successors and
assigns, irrespective of the validity and
enforceability of the Indenture, the Notes or the
obligations of the Company hereunder or thereunder,
that:
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<PAGE> 128
(i) the principal of and interest on the Notes
will be promptly paid in full when due,
whether at maturity, by acceleration,
redemption or otherwise, and interest on the
overdue principal of and interest on the
Notes, if any, if lawful, and all other
obligations of the Company to the Holders or
the Trustee hereunder or thereunder will be
promptly paid in full or performed, all in
accordance with the terms hereof and
thereof; and
(ii) in case of any extension of time of payment
or renewal of any Notes or any of such other
obligations, that same will be promptly paid
in full when due or performed in accordance
with the terms of the extension or renewal,
whether at stated maturity, by acceleration
or otherwise. Failing payment when due of
any amount so guaranteed or any performance
so guaranteed for whatever reason, the
Subsidiary Guarantors shall be jointly and
severally obligated to pay the same
immediately.
(b) The obligations hereunder shall be unconditional,
irrespective of the validity, regularity or
enforceability of the Notes or the Indenture, the
absence of any action to enforce the same, any waiver
or consent by any Holder of the Notes with respect to
any provisions hereof or thereof, the recovery of any
judgment against the Company, any action to enforce the
same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of
a guarantor.
(c) The following is hereby waived: diligence presentment,
demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the
Company, protest, notice and all demands whatsoever.
(d) This Subsidiary Guarantee shall not be discharged
except by complete performance of the obligations
contained in the Notes and the Indenture.
(e) If any Holder or the Trustee is required by any court
or otherwise to return to the Company, the Subsidiary
Guarantors, or any Custodian, Trustee, liquidator or
other similar official acting in relation to either the
Company or the Subsidiary Guarantors, any amount paid
by either to the Trustee or such Holder, this
Subsidiary Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and
effect.
(f) The Guaranteeing Subsidiary shall not be entitled to
any right of subrogation in relation to the Holders in
respect of any obligations
F-2
<PAGE> 129
guaranteed hereby until payment in full of all
obligations guaranteed hereby.
(g) As between the Subsidiary Guarantors, on the one hand,
and the Holders and the Trustee, on the other hand, (x)
the maturity of the obligations guaranteed hereby may
be accelerated as provided in Article VI of the
Indenture for the purposes of this Subsidiary
Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in
respect of the obligations guaranteed hereby, and (y)
in the event of any declaration of acceleration of such
obligations as provided in Article VI of the Indenture,
such obligations (whether or not due and payable) shall
forthwith become due and payable by the Subsidiary
Guarantors for the purpose of this Subsidiary
Guarantee.
(h) The Subsidiary Guarantors shall have the right to seek
contribution from any non-paying Subsidiary Guarantor
so long as the exercise of such right does not impair
the rights of the Holders under the Subsidiary
Guarantee.
(i) Pursuant to Section 11.03 of the Indenture, after
giving effect to any maximum amount and any other
contingent and fixed liabilities that are relevant
under any applicable Bankruptcy or fraudulent
conveyance laws, and, to the extent relevant, after
giving effect to any collections from, rights to
receive contribution from or payments made by or on
behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor
under Article XI of the Indenture, the Subsidiary
Guarantee shall not result in the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee
constituting a fraudulent transfer or conveyance or
being improper or prohibited under applicable state
law.
3 Execution and Delivery. Each Guaranteeing Subsidiary
agrees that the Note Guarantees shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.
4. Guaranteeing Subsidiary May Consolidate, Etc. on
Certain Terms
(a) The Guaranteeing Subsidiary may not consolidate with or merge
with or into (whether or not such Subsidiary Guarantor is the
surviving Person) another corporation, Person or entity
whether or not affiliated with such Subsidiary Guarantor
unless:
(i) subject to Section 11.05 of the Indenture, the Person
formed by or surviving any such consolidation or merger
(if other than a Subsidiary Guarantor or the Company)
unconditionally assumes all the obligations of such
Subsidiary Guarantor, pursuant to a supplemental
indenture in form and substance reasonably satisfactory
to the Trustee, under the Notes, the
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<PAGE> 130
Indenture and the Subsidiary Guarantee on the terms set
forth herein or therein; and
(ii) immediately after giving effect to such transaction, no
Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor corporation, by
supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of the Subsidiary
Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of the
Indenture to be performed by the Subsidiary Guarantor, such
successor corporation shall succeed to and be substituted for
the Subsidiary Guarantor with the same effect as if it had
been named herein as a Subsidiary Guarantor. Such successor
corporation thereupon may cause to be signed any or all of the
Subsidiary Guarantees to be endorsed upon all of the Notes
issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee. All the
Subsidiary Guarantees so issued shall in all respects have the
same legal rank and benefit under the Indenture as the
Subsidiary Guarantees theretofore and thereafter issued in
accordance with the terms of the Indenture as though all of
such Subsidiary Guarantees had been issued at the date of the
execution hereof.
(c) Except as set forth in Articles IV and V of the
Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in
the Indenture or in any of the Notes shall prevent any consolidation or merger
of a Subsidiary Guarantor with or into the Company or another Subsidiary
Guarantor, or shall prevent any sale or conveyance of the property of a
Subsidiary Guarantor as an entirety or substantially as an entirety to the
Company or another Subsidiary Guarantor.
5. Releases
(a) In the event of a sale or other disposition of all of the
assets of any Subsidiary Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of
all to the capital stock of any Subsidiary Guarantor, then
such Subsidiary Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of
all of the capital stock of such Subsidiary Guarantor) or the
corporation acquiring the property (in the event of a sale or
other disposition of all or substantially all of the assets of
such Subsidiary Guarantor) will be released and relieved of
any obligations under its Subsidiary Guarantee; provided that
the Net Proceeds of such sale or other disposition are applied
in accordance with the applicable provisions of the Indenture,
including without limitation Section 4.10 of the Indenture.
Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such
sale or other disposition was made by the Company in
accordance with
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the provisions of the Indenture, including without limitation
Section 4.10 of the Indenture, the Trustee shall execute any
documents reasonably required in order to evidence the release
of any Subsidiary Guarantor from its obligations under its
Subsidiary Guarantee.
(b) Any Subsidiary Guarantor not released from its obligations
under its Subsidiary Guarantee shall remain liable for the
full amount of principal of and interest on the Notes and for
the other obligations of any Subsidiary Guarantor under the
Indenture as provided in Article X of the Indenture.
6. No Recourse Against Others. No past, present or future
director, officer, employee, incorporator, stockholder or agent of the
Guaranteeing Subsidiary, as such, shall have any liability for any obligations
of the Company or any Guaranteeing Subsidiary under the Notes, any Subsidiary
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of the Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE
OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT
THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
8. Counterparts. The parties may sign any number of copies
of this Supplemental Indenture. Each signed copy shall be an original, but all
of them together represent the same agreement.
9. Effect of Headings. The Section headings herein are
for convenience only and shall not affect the construction hereof.
10 The Trustee. The Trustee shall not be responsible in
any manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiary and the
Company.
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<PAGE> 132
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
Dated:
________________________
By:______________________________
Name:
Title:
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By:______________________________
Name:
Title:
<PAGE> 133
SCHEDULE I
SCHEDULE OF SUBSIDIARY GUARANTORS
The following schedule lists each Subsidiary Guarantor under the Indenture as of
the Issue Date:
Grand Machining Company
Deco Technologies, Inc.
Deco International, Inc.
ENC Corp.
Turn-Matic, Inc.
Rochester Gear, Inc.
Plastronics Plus, Inc.
<PAGE> 134
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE.................................1
SECTION 1.01. DEFINITIONS........................................................1
SECTION 1.02. OTHER DEFINITIONS.................................................17
SECTION 1.03. TRUST INDENTURE ACT DEFINITIONS...................................18
SECTION 1.04. RULES OF CONSTRUCTION.............................................18
ARTICLE II. THE NOTES................................................................18
SECTION 2.01. FORM AND DATING...................................................18
SECTION 2.02. EXECUTION AND AUTHENTICATION......................................19
SECTION 2.03. REGISTRAR AND PAYING AGENT........................................20
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST...............................20
SECTION 2.05. HOLDER LISTS......................................................21
SECTION 2.06. TRANSFER AND EXCHANGE.............................................21
SECTION 2.07. REPLACEMENT NOTES.................................................34
SECTION 2.08. OUTSTANDING NOTES.................................................35
SECTION 2.09. TREASURY NOTES....................................................35
SECTION 2.10. TEMPORARY NOTES...................................................35
SECTION 2.11. CANCELLATION......................................................36
SECTION 2.12. DEFAULTED INTEREST................................................36
ARTICLE III. REDEMPTION AND PREPAYMENT...............................................36
SECTION 3.01. NOTICES TO TRUSTEE................................................36
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.................................36
SECTION 3.03. NOTICE OF REDEMPTION..............................................37
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION....................................38
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.......................................38
SECTION 3.06. NOTES REDEEMED IN PART............................................38
SECTION 3.07. OPTIONAL REDEMPTION...............................................38
SECTION 3.08. MANDATORY REDEMPTION..............................................39
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS...............39
ARTICLE IV. COVENANTS.............................................................. 41
SECTION 4.01. PAYMENT OF NOTES..................................................41
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY...................................41
SECTION 4.03. REPORTS...........................................................42
SECTION 4.04. COMPLIANCE CERTIFICATE............................................43
</TABLE>
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<TABLE>
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SECTION 4.05. TAXES.............................................................43
SECTION 4.06. STAY, EXTENSION AND USURY LAWS....................................43
SECTION 4.07. RESTRICTED PAYMENTS...............................................44
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES....46
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK........47
SECTION 4.10. ASSET SALES.......................................................50
SECTION 4.11. TRANSACTIONS WITH AFFILIATES......................................51
SECTION 4.12. LIENS.............................................................51
SECTION 4.13. LINE OF BUSINESS..................................................51
SECTION 4.14. CORPORATE EXISTENCE...............................................52
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL........................52
SECTION 4.16. NO SENIOR SUBORDINATED DEBT.......................................53
SECTION 4.17. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.....................53
SECTION 4.18. PAYMENTS FOR CONSENT..............................................54
SECTION 4.19. ADDITIONAL SUBSIDIARY GUARANTEES..................................54
ARTICLE V. SUCCESSORS................................................................54
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS..........................54
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.................................55
ARTICLE VI. DEFAULTS AND REMEDIES....................................................55
SECTION 6.01. EVENTS OF DEFAULT.................................................55
SECTION 6.02. ACCELERATION......................................................57
SECTION 6.03. OTHER REMEDIES....................................................58
SECTION 6.04. WAIVER OF PAST DEFAULTS...........................................58
SECTION 6.05. CONTROL BY MAJORITY...............................................59
SECTION 6.06. LIMITATION ON SUITS...............................................59
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.....................59
SECTION 6.08. COLLECTION SUIT BY TRUSTEE........................................59
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM..................................60
SECTION 6.10. PRIORITIES........................................................60
SECTION 6.11. UNDERTAKING FOR COSTS.............................................61
ARTICLE VII. TRUSTEE.................................................................61
SECTION 7.01. DUTIES OF TRUSTEE.................................................61
SECTION 7.02. RIGHTS OF TRUSTEE.................................................62
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE......................................63
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 7.04. TRUSTEE'S DISCLAIMER..............................................63
SECTION 7.05. NOTICE OF DEFAULTS................................................63
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES........................64
SECTION 7.07. COMPENSATION AND INDEMNITY........................................64
SECTION 7.08. REPLACEMENT OF TRUSTEE............................................65
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC..................................66
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.....................................66
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.................66
ARTICLE VIII. LEGAL DEFEASANCE AND COVENANT DEFEASANCE...............................66
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE..........66
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE....................................66
SECTION 8.03. COVENANT DEFEASANCE...............................................67
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE........................67
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS..........................69
SECTION 8.06. REPAYMENT TO COMPANY..............................................69
SECTION 8.07. REINSTATEMENT.....................................................70
ARTICLE IX. AMENDMENT, SUPPLEMENT AND WAIVER.........................................70
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES...............................70
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES..................................71
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT...............................72
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.................................73
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES..................................73
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC...................................73
ARTICLE X. SUBORDINATION.............................................................73
SECTION 10.01. AGREEMENT TO SUBORDINATE..........................................73
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY..............................74
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.................................74
SECTION 10.04. ACCELERATION OF NOTES.............................................75
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER...............................75
SECTION 10.06. NOTICE BY COMPANY.................................................75
SECTION 10.07. SUBROGATION.......................................................76
SECTION 10.08. RELATIVE RIGHTS...................................................76
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY......................76
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE..........................76
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT................................77
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.............................77
SECTION 10.13. AMENDMENTS........................................................77
ARTICLE XI. SUBSIDIARY GUARANTEES....................................................78
SECTION 11.01. SUBSIDIARY GUARANTEES.............................................78
SECTION 11.02. SUBORDINATION OF SUBSIDIARY GUARANTEES............................79
SECTION 11.03. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY......................79
SECTION 11.04. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES...................80
SECTION 11.05. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.....80
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS.................................81
ARTICLE XII. MISCELLANEOUS...........................................................81
SECTION 12.01. TRUST INDENTURE ACT CONTROLS......................................81
SECTION 12.02. NOTICES...........................................................82
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.....83
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT................83
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.....................83
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.......................................84
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS......................................................84
SECTION 12.08. GOVERNING LAW.....................................................84
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.....................84
SECTION 12.10. SUCCESSORS........................................................84
SECTION 12.11. SEVERABILITY......................................................84
SECTION 12.12. COUNTERPART ORIGINALS.............................................84
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC..................................85
</TABLE>
EXHIBITS
Exhibit A1 FORM OF 144A/ RESTRICTED GLOBAL NOTE
Exhibit A2 FORM OF REGULATION S GLOBAL NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
Exhibit E FORM OF SUBSIDIARY GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
iv
<PAGE> 1
EXHIBIT 4.(b)
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
Dated as of March 4, 1998
by and among
Newcor, Inc.
Grand Machining Company
Deco Technologies, Inc.
Deco International , Inc.
Turn-Matic, Inc.
Rochester Gear, Inc.
Plastronics Plus, Inc.
and
Donaldson, Lufkin & Jenrette Securities Corporation
McDonald & Company Securities, Inc.
ING Baring (U.S.) Securities, Inc.
<PAGE> 2
This Registration Rights Agreement (this "AGREEMENT") is made and entered
into as of March 4, 1998, by and among Newcor, Inc., a Delaware corporation
(the "COMPANY"), Grand Machining Company, Deco Technologies, Inc., Deco
International, Inc., Turn-Matic, Inc., Rochester Gear, Inc. and Plastronics
Plus, Inc. (the "GUARANTORS"), and Donaldson, Lufkin & Jenrette Securities
Corporation, McDonald Company Securities, Inc., and ING Barings (each an
"INITIAL PURCHASER" and, collectively, the "INITIAL PURCHASERS"), each of whom
has agreed to purchase the Company's 9-7/8% Senior Subordinated Notes due 2008
(the "SERIES A NOTES") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated February
27, 1998, (the "PURCHASE AGREEMENT"), by and among the Company, the Guarantors
and the Initial Purchasers. In order to induce the Initial Purchasers to
purchase the Series A 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 Purchasers set forth
in Section 9 of the Purchase Agreement. Capitalized terms used herein and not
otherwise defined shall have the meaning assigned to them the Indenture, dated
the date hereof among the Company, the Guarantors and First Trust National
Association, as Trustee, relating to the Series A Notes and the Series B Notes
(the "INDENTURE").
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.
AFFILIATE: As defined in Rule 144 of the Act.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
CERTIFICATED SECURITIES: Definitive Notes, as defined in the Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Series B
Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange
Offer Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the period required pursuant to
Section 3(b) hereof and (c) the delivery by the Company to the Registrar under
the Indenture of Series B Notes in the same aggregate principal amount as the
aggregate principal amount of Series A Notes tendered by Holders thereof
pursuant to the Exchange Offer.
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The exchange and issuance by the Company of a principal
amount of Series B
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Notes (which shall be registered pursuant to the Exchange Offer Registration
Statement) equal to the outstanding principal amount of Series A Notes that are
tendered by such Holders in connection with such exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers propose
to sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act, and pursuant to Regulation S under
the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDERS: As defined in Section 2 hereof.
PROSPECTUS: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, 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.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company and the
Guarantors relating to (a) an offering of Series B Notes and related Subsidiary
Guarantees pursuant to an Exchange Offer or (b) the registration for resale of
Transfer Restricted Securities pursuant to the Shelf Registration Statement, in
each case, (i) that is filed pursuant to the provisions of this Agreement and
(ii) including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.
REGULATION S: Regulation S promulgated under the Act.
RULE 144: Rule 144 promulgated under the Act.
SERIES B NOTES: The Company's 9-7/8% Series B Senior Subordinated Notes
due 2008 to be issued pursuant to the Indenture: (i) in the Exchange Offer or
(ii) as contemplated by Section 4 hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
SUSPENSION NOTICE: As defined in Section 6(d) 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 Note and the related
Subsidiary Guarantees, until the earliest to occur of (a) the date on which
such Series A Note is exchanged in the Exchange Offer for a Series B Note which
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 Note has been disposed of in accordance with a Shelf Registration
Statement, or (c) the date on which such Series A Note is distributed to the
public pursuant to Rule 144 under the Act and (ii) each Series B Note acquired
by a
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Broker-Dealer for its own account as a result of market making activities or
other trading activities until the date on which such Series B Note is disposed
of by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by
the Exchange Offer Registration Statement (including the delivery of the
Prospectus contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company and the Guarantors shall (i) cause the Exchange Offer
Registration Statement to be filed with the Commission as soon as practicable
after the Closing Date, but in no event later than 60 days after the Closing
Date (such 60th day being the "FILING DEADLINE"), (ii) use its best efforts to
cause such Exchange Offer Registration Statement to become effective at the
earliest possible time, but in no event later than 135 days after the Closing
Date (such 135th day being the "EFFECTIVENESS DEADLINE"), (iii) in connection
with the foregoing, (A) file all pre-effective amendments to such Exchange
Offer Registration Statement as may be necessary in order to cause it to become
effective, (B) file, if applicable, a post-effective amendment to such Exchange
Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause
all necessary filings, if any, in connection with the registration and
qualification of the Series B 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 Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting (i) registration of the Series B Notes to be
offered in exchange for the Series A Notes that are Transfer Restricted
Securities and (ii) resales of Series B Notes by Broker-Dealers that tendered
into the Exchange Offer Series A Notes that such Broker-Dealer acquired for its
own account as a result of market making activities or other trading activities
(other than Series A Notes acquired directly from the Company or any of its
Affiliates) as contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall use their respective best efforts
to 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 and the
Guarantors shall cause the Exchange Offer to comply with all applicable federal
and state securities laws. No securities other than the Series B Notes shall
be included in the Exchange Offer Registration Statement. The Company and the
Guarantors shall use their respective best efforts to cause the Exchange Offer
to be Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
business days thereafter (such 30th day being the "CONSUMMATION DEADLINE").
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of
market-making activities or other trading activities (other than Series A Notes
acquired directly from the Company or any Affiliate of the Company), may
exchange such Transfer Restricted Securities pursuant to the Exchange Offer.
Such "Plan of Distribution" section shall also contain all other information
with respect to such sales by such Broker-Dealers that the Commission may
require in order to permit such sales pursuant thereto, but
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<PAGE> 5
such "Plan of Distribution" shall not name any such Broker-Dealer or disclose
the amount of Transfer Restricted Securities held by any such Broker-Dealer,
except to the extent required by the Commission as a result of a change in
policy, rules or regulations after the date of this Agreement.
Because 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 its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company and
Guarantors shall permit the use of the Prospectus contained in the Exchange
Offer Registration Statement by such Broker-Dealer to satisfy such prospectus
delivery requirement. To the extent necessary to ensure that the prospectus
contained in the Exchange Offer Registration Statement is available for sales
of Series B Notes by Broker-Dealers, the Company and the Guarantors agree to
use their respective best efforts to keep the Exchange Offer Registration
Statement continuously effective, supplemented, amended and current as required
by and subject to the provisions of Section 6(a) and (c) hereof and in
conformity 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 is Consummated or
such shorter period as will terminate when all Transfer Restricted Securities
covered by such Registration Statement have been sold pursuant thereto. The
Company and the Guarantors shall provide sufficient copies of the latest
version of such Prospectus to such Broker-Dealers, promptly upon request, and
in no event later than one day after such request, at any time during such
period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
applicable law (after the Company and the Guarantors have complied with the
procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of
Transfer Restricted Securities shall notify the Company within 20 business days
following the Consummation of the Exchange Offer that (A) such Holder was
prohibited by law or Commission policy from participating in the Exchange Offer
or (B) such Holder may not resell the Series B Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and the Prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder or (C) such Holder is a Broker-Dealer
and holds Series A Notes acquired directly from the Company or any of its
Affiliates, then the Company and the Guarantors shall:
(x) cause to be filed, on or prior to 30 days after the earlier of (i) the
date on which the Company determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the date
on which the Company receives the notice specified in clause (a)(ii) above,
(such earlier date, the "FILING DEADLINE"), a shelf registration statement
pursuant to Rule 415 under the Act (which may be an amendment to the Exchange
Offer Registration Statement (the "SHELF REGISTRATION STATEMENT")), relating to
all Transfer Restricted Securities, and
(y) shall use their respective best efforts to cause such Shelf
Registration Statement to become effective on or prior to 60 days after the
Filing Deadline for the Shelf Registration Statement (such 60th day the
"EFFECTIVENESS DEADLINE").
If, after the Company has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law (i.e., clause
(a)(i) above), then the filing of the Exchange Offer Registration Statement
shall be deemed to satisfy the requirements of clause (x) above; provided that,
in such event, the Company shall remain obligated to meet the Effectiveness
Deadline set forth in clause (y).
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<PAGE> 6
To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Company and
the Guarantors shall use their respective best efforts to keep any Shelf
Registration Statement required by this Section 4(a) continuously effective,
supplemented, amended and current as required by and subject to the provisions
of Sections 6(b) and (c) hereof and in conformity 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 two years (as extended
pursuant to Section 6(c)(i)) following the Closing Date, or such shorter period
as will terminate when all Transfer Restricted Securities covered by such Shelf
Registration Statement have been sold pursuant thereto.
(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 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act 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 provided all such
information. Each selling Holder agrees to promptly furnish additional
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 Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any
such Registration Statement has not been declared effective by the Commission
on or prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer
has not been Consummated on or prior to the Consummation Deadline 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 within 2 business days by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective within 5 business days of filing such
post-effective amendment to such Registration Statement (each such event
referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then the
Company and the Guarantors hereby jointly and severally agree to pay to each
Holder of Transfer Restricted Securities affected thereby liquidated damages in
an amount equal to $.05 per week per $1,000 in principal amount of Transfer
Restricted Securities held by such Holder for each week or portion thereof that
the Registration Default continues for the first 90-day period immediately
following the occurrence of such Registration Default. 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 in principal
amount of Transfer Restricted Securities; provided that the Company and the
Guarantors shall in no event be required to pay liquidated damages for more
than one Registration Default at any given time. Notwithstanding anything to
the contrary set forth herein, (1) upon filing of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (i) above, (2) upon the effectiveness of the
Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (ii) above, (3) upon Consummation of
the Exchange Offer, in the case of (iii) above, or (4) upon the filing of a
post-effective amendment to the Registration Statement or an additional
Registration Statement that causes the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement) to again be declared
effective or made usable in the case of (iv) above, the liquidated damages
payable with respect to the Transfer Restricted Securities as a result of such
clause (i),
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(ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture,
on each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated
damages are due cease to be Transfer Restricted Securities, all obligations of
the Company and the Guarantors to pay liquidated damages with respect to
securities shall survive until such time as such obligations with respect to
such securities shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company and the Guarantors shall (x) comply with all
applicable provisions of Section 6(c) below, (y) use their respective best
efforts to effect such exchange and to permit the resale of Series B Notes by
Broker-Dealers that tendered in the Exchange Offer Series A Notes that such
Broker-Dealer acquired for its own account as a result of its market making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its Affiliates) being sold in accordance
with the intended method or methods of distribution thereof, and (z) comply
with all of the following provisions:
(i) If, following the date hereof there has been announced a change in
Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Company raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company and the Guarantors hereby agree to seek
a no-action letter or other favorable decision from the Commission allowing
the Company and the Guarantors to Consummate an Exchange Offer for such
Transfer Restricted Securities. The Company and the Guarantors hereby agree
to pursue the issuance of such a decision to the Commission staff level. In
connection with the foregoing, the Company and the Guarantors hereby agree
to take all such other actions as may be requested by the Commission or
otherwise required in connection with the issuance of such decision,
including without limitation (A) participating in telephonic conferences
with the Commission staff, (B) delivering 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 pursuing a resolution (which need not
be favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation, any
Holder who is a Broker Dealer) shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company and the Guarantors (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 Notes to be issued in the Exchange Offer and
(C) it is acquiring the Series B Notes in its ordinary course of business.
Each Holder using the Exchange Offer to participate in a distribution of the
Series B Notes will be required to acknowledge and agree that, if the
resales are of Series B Notes obtained by such Holder in exchange for Series
A Notes acquired directly from the Company or an Affiliate thereof, it (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, if applicable, any no-action letter obtained pursuant to
clause (i) above), and (2) must comply with the registration and prospectus
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delivery requirements of the Act in connection with a secondary resale
transaction and that such a secondary resale transaction must 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.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors are
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) as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and, if
applicable, any no-action letter obtained pursuant to clause (i) above, (B)
including a representation that neither the Company nor any Guarantor has
entered into any arrangement or understanding with any Person to distribute
the Series B Notes to be received in the Exchange Offer and that, to the
best of the Company's and each Guarantors' information and belief, each
Holder participating in the Exchange Offer is acquiring the Series B 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 Notes
received in the Exchange Offer and (C) any other undertaking or
representation required by the Commission as set forth in any no-action
letter obtained pursuant to clause (i) above, if applicable.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall
(i) comply with all the provisions of Section 6(c) below and use their
respective 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 (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company and the Guarantors will 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 within the time periods and otherwise in
accordance with the provisions hereof; and
(ii) issue, upon the request of any Holder or purchaser of Series A
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to the
aggregate principal amount of Series A Notes sold pursuant to the Shelf
Registration Statement and surrendered to the Company for cancellation; the
Company shall register Series B Notes on the Shelf Registration Statement
for this purpose and issue the Series B Notes to the purchaser(s) of
securities subject to the Shelf Registration Statement in the names as such
purchaser(s) shall designate.
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement, the Company and the
Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements 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 an
untrue statement of material fact or omit to state any material fact
necessary to make the statements therein not misleading or (B) not to be
effective and usable for resale of Transfer Restricted Securities during the
period required by this Agreement, the Company and the Guarantors shall file
promptly an appropriate amendment to such Registration Statement curing such
defect, and, if Commission review is required, use their respective best
efforts to cause such amendment to be declared effective as soon as
practicable; if at any time the Commission shall issue any stop order
suspending the effectiveness of any Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the
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<PAGE> 9
qualification or exemption from qualification of the Transfer Restricted
Securities under state securities or Blue Sky laws, the Company and the
Guarantors shall use their respective best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as the case may be; 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 Rules 424, 430A and 462, as applicable, 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) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and to register such
Transfer Restricted Securities in such denominations and such names as the
selling Holders may request at least two business days prior to such sale of
Transfer Restricted Securities;
(iv) use their respective best efforts to cause the disposition of 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 to
consummate the disposition of such Transfer Restricted Securities;
provided, however, that neither the Company nor any Guarantor shall 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;
(v) provide a CUSIP number for all Transfer Restricted Securities not
later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with certificates for the Transfer Restricted Securities which are in a form
eligible for deposit with The Depository Trust Company;
(vi) otherwise use their respective best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable Registration
Statement, as soon as practicable, a consolidated earnings statement meeting
the requirements of Rule 158 (which need not be audited) covering a
twelve-month period beginning after the effective date of the Registration
Statement (as such term is defined in paragraph (c) of Rule 158 under the
Act); and
(vii) 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 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.
(d) Additional provisions applicable to Shelf Registration Statements and
Certain Exchange
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Offer Prospectuses. In connection with each Shelf Registration Statement, and
each Exchange Offer Registration Statement if and to the extent that an Initial
Purchaser has notified the Company that it is a holder of Series B Notes that
are Transfer Restricted Securities (for so long as such Series B Notes are
Transfer Restricted Securities or for the period provided in Section 3,
whichever is shorter), the Company and the Guarantors shall:
(i) advise each Holder promptly and, if requested by such Holder,
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 applicable 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 in order to make the statements
therein not misleading, or that requires the making of any additions to or
changes in the Prospectus in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) if any fact or event contemplated by Section 6(d)(i)(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, in the light of the circumstances under which they were
made, not misleading;
(iii) furnish to each Holder in connection with such exchange or
sale, 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 after the initial filing of such
Registration Statement), which documents will be subject to the review and
comment of such Holders in connection with such sale, 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 such Holders shall reasonably object
within five business days after the receipt thereof. A Holder shall be
deemed to have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as proposed
to be filed, contains an untrue statement of a material fact or omits to
state any material fact necessary to make the statements therein not
misleading or fails to comply with the applicable requirements of the Act;
(iv) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to each Holder in connection with such
exchange or sale, if any, make the Company's and the Guarantors'
representatives available for discussion of such document and other
customary due diligence matters, and include such information in such
document prior to the filing thereof as such Holders may reasonably request;
(v) make available, at reasonable times, for inspection by each Holder
and any attorney or accountant retained by such Holders, all financial and
other records, pertinent corporate documents of
9
<PAGE> 11
the Company and the Guarantors and cause the Company's and the Guarantors'
officers, directors and employees to supply all information reasonably
requested by any such Holder, attorney or accountant in connection with such
Registration Statement or any post-effective amendment thereto subsequent to
the filing thereof and prior to its effectiveness;
(vi) if requested by any Holders in connection with such exchange or
sale, promptly include in any Registration Statement or Prospectus, pursuant
to a supplement or post-effective amendment if necessary, such information
as such Holders may reasonably request to have included therein, including,
without limitation, information relating to the "Plan of Distribution" of
the Transfer Restricted Securities; 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 included in such
Prospectus supplement or post-effective amendment;
(vii) furnish to each Holder in connection with such exchange or sale
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);
(viii) deliver to each Holder 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 and
the Guarantors hereby consent to the use (in accordance with law) of the
Prospectus and any amendment or supplement thereto by each selling Holder in
connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement thereto;
(ix) upon the request of any Holder, enter into such agreements
(including underwriting agreements) 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 applicable Registration Statement contemplated by
this Agreement as may be reasonably requested by any Holder in connection
with any sale or resale pursuant to any applicable Registration Statement.
In such connection, the Company and the Guarantors shall:
(A) upon request of any Holder, furnish (or in the case of
paragraphs (2) and (3), use its best efforts to cause to be furnished)
to each Holder, upon Consummation of the Exchange Offer or upon the
effectiveness of the Shelf Registration Statement, as the case may be:
(1) a certificate, dated such date, signed on behalf of the
Company and each Guarantor by (x) the President or any Vice
President and (y) a principal financial or accounting officer of the
Company and such Guarantor, confirming, as of the date thereof, the
matters set forth in Sections [6(y), 9(a) and 9(b)] of the Purchase
Agreement and such other similar matters as such Holders 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 and the
Guarantors covering matters similar to those set forth in paragraph
(e) of Section 9 of the Purchase Agreement and such other matters as
such Holder 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
and the Guarantors, representatives of the independent public
accountants for the Company and the Guarantors and has considered
the matters required to be stated therein and the statements
contained therein, although such counsel has not independently
verified the accuracy,
10
<PAGE> 12
completeness or fairness of such statements; and that such counsel
advises that, on the basis of the foregoing, 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 of the Exchange Offer, 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 the 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 the date of Consummation
of the Exchange Offer, or as of 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 to underwriters
in connection with underwritten offerings, and affirming the matters
set forth in the comfort letters delivered pursuant to Section
[9(i)] of the Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the selling Holders to evidence compliance with
the matters covered in clause (A) above and with any customary
conditions contained in any agreement entered into by the Company and
the Guarantors pursuant to this clause (ix);
(x) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders and their 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
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 applicable Registration Statement; provided,
however, that neither the Company nor any Guarantor shall 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; and
(xi) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(e) Restrictions on Holders. Each Holder's acquisition of a Transfer
Restricted Security constitutes such Holder's agreement that, upon receipt of
the notice referred to in Section 6(d)(i)(C) or any notice from the Company of
the existence of any fact of the kind described in Section 6(d)(i)(D) hereof
(in each case, a "SUSPENSION NOTICE"), such Holder will forthwith discontinue
disposition of Transfer Restricted Securities pursuant to the applicable
Registration Statement until (i) such Holder has received copies of the
supplemented or amended Prospectus contemplated by Section 6(d)(ii) hereof, or
(ii) such Holder is advised in writing 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 (in
each case, the "RECOMMENCEMENT DATE"). Each Holder receiving a Suspension
Notice shall
11
<PAGE> 13
be required to either (i) destroy any Prospectuses, other than permanent file
copies, then in such Holder's possession which have been replaced by the
Company with more recently dated Prospectuses or (ii) 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 the Suspension 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 a number of
days equal to the number of days in the period from and including the date of
delivery of the Suspension Notice to the date of delivery of the Recommencement
Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors' 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; (ii) all fees
and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including certificates for the
Series B 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, the Guarantors and one counsel for the Holders of
Transfer Restricted Securities which shall be Latham & Watkins or such other
counsel as may be selected by a majority of such Holders; (v) all application
and filing fees in connection with listing the Series B Notes on a national
securities exchange or automated quotation system pursuant to the requirements
hereof; and (vi) all fees and disbursements of independent certified public
accountants of the Company and the Guarantors (including the expenses of any
special audit and comfort letters required by or incident to such performance).
The Company will, in any event, bear its and the Guarantors' 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 or the Guarantors.
(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 and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities who are tendering Series A Notes into in the Exchange Offer and/or
selling or reselling Series A Notes or Series B Notes pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Latham & Watkins,
unless another firm shall 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 and the Guarantors agree, jointly and severally, to
indemnify and hold harmless each Holder, its directors, officers and each
Person, if any, who controls such Holder (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act), from and against any and all
losses, claims, damages, liabilities, judgments, (including without limitation,
any legal or other expenses incurred in connection with investigating or
defending any matter, including any action that could give rise to any such
losses, claims, damages, liabilities or judgments) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, preliminary prospectus or Prospectus (or any amendment
or supplement thereto) provided by the Company to any Holder or any prospective
12
<PAGE> 14
purchaser of Series B Notes or registered Series A Notes, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by an untrue statement or omission or alleged untrue statement or
omission that is based upon information relating to any of the Holders
furnished in writing to the Company by any of the Holders.
(b) Each Holder of Transfer Restricted agrees, severally and not jointly,
to indemnify and hold harmless the Company and the Guarantors, and their
respective directors and officers, and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company, or the Guarantors to the same extent as the foregoing indemnity
from the Company and the Guarantors set forth in section (a) above, but only
with reference to information relating to such Holder furnished in writing to
the Company by such Holder expressly for use in any Registration Statement. In
no event shall any Holder, its directors, officers or any Person who controls
such Holder be liable or responsible for any amount in excess of the amount by
which the total amount received by such Holder with respect to its sale of
Transfer Restricted Securities pursuant to a Registration Statement exceeds (i)
the amount paid by such Holder for such Transfer Restricted Securities and (ii)
the amount of any damages that such Holder, its directors, officers or any
Person who controls such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), a Holder shall not be required
to assume the defense of such action pursuant to this Section 8(c), but may
employ separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of the Holder). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for all indemnified parties and all such
fees and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by a majority of the Holders, in the case of the parties
indemnified pursuant to Section 8(a), and by the Company and Guarantors, in the
case of parties indemnified pursuant to Section 8(b). The indemnifying party
shall indemnify and hold harmless the indemnified party from and against any
and all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with its written consent or (ii) effected
without its written consent if the settlement is entered into more than twenty
business days after the indemnifying party shall have received a request from
the indemnified party for reimbursement for the fees and expenses of counsel
(in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
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<PAGE> 15
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this Section 8
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors, on the one hand, and the Holders, on the other hand, from their
sale of Transfer Restricted Securities or (ii) if the allocation provided by
clause 8(d)(i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) above but also the relative fault of the Company and the Guarantors, on
the one hand, and of the Holder, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the Company and the Guarantors, on the
one hand, and of the Holder, on the other hand, 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 such Guarantor,
on the one hand, or by the Holder, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result
of the losses, claims, damages, liabilities and judgments referred to above
shall be deemed to include, subject to the limitations set forth in the second
paragraph of Section 8(a), any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
The Company, the Guarantors and each Holder agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any
matter, including any action that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, no Holder, its directors, its officers or any Person, if any, who
controls such Holder shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the total received by such Holder with
respect to the sale of Transfer Restricted Securities pursuant to a
Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. 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. The Holders' obligations to contribute pursuant
to this Section 8(d) are several in proportion to the respective principal
amount of Transfer Restricted Securities held by each Holder hereunder and not
joint.
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<PAGE> 16
SECTION 9. RULE 144A AND RULE 144
The Company and each Guarantor agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding and during any period in
which the Company or such Guarantor (i) is not subject to Section 13 or 15(d)
of the Exchange Act, to make available, upon request of any Holder, to such
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities designated by 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, and (ii) is subject to
Section 13 or 15 (d) of the Exchange Act, to make all filings required thereby
in a timely manner in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors acknowledge and agree that
any failure by the Company and/or the Guarantors to comply with their
respective obligations under Sections 3 and 4 hereof may result in material
irreparable injury to the Initial Purchasers or the Holders for which there is
no adequate remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, the Initial
Purchasers or any Holder may obtain such relief as may be required to
specifically enforce the Company's and the Guarantor's obligations under
Sections 3 and 4 hereof. The Company and the Guarantors further agree to waive
the defense in any action for specific performance that a remedy at law would
be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any Guarantor
will, 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.
Neither the Company nor any Guarantor has previously entered into any agreement
granting any registration rights with respect to its securities to any Person.
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
and the Guarantors' securities under any agreement in effect on the date
hereof.
(c) 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 (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities (excluding Transfer Restricted Securities held
by the Company or its Affiliates). Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose Transfer Restricted Securities are being tendered
pursuant to the Exchange Offer, and that does not affect directly or indirectly
the rights of other Holders whose Transfer Restricted 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
subject to such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect its rights or the
rights of Holders hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex,
15
<PAGE> 17
telecopier, or air courier guaranteeing overnight delivery:
(i) if to a 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
(ii) if to the Company or the Guarantors:
Newcor, Inc.
1825 S. Woodward
Suite 240
Bloomfield Hills, MI 48302
Telecopier No.: (248) 253-2413
Attention: John Garber
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, when receipt acknowledged, if telecopied;
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; provided, that nothing herein shall be deemed to permit any
assignment, transfer or other disposition of Transfer Restricted Securities in
violation of the terms hereof or of the Purchase Agreement or the Indenture.
If any transferee of any Holder shall acquire Transfer Restricted Securities in
any manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale
set forth in this Agreement and, if applicable, the Purchase Agreement, and
such Person shall be entitled to receive the benefits hereof.
(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 LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(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.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their
16
<PAGE> 18
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 with respect to the Transfer Restricted
Securities. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
17
<PAGE> 19
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
NEWCOR, INC.
By: /s/ W. John Weinhardt
----------------------------
Name: W. John Weinhardt
Title: President and CEO
By: /s/ John Garber
----------------------------
Name: John Garber
Title: VP and CFO
ROCHESTER GEAR, INC.
By: /s/ W. John Weinhardt
----------------------------
Name: W. John Weinhardt
Title: Chairman
PLASTRONICS PLUS, INC.
By: /s/ W. John Weinhardt
----------------------------
Name: W. John Weinhardt
Title: Chairman
18
<PAGE> 20
GRAND MACHINING COMPANY
By: /s/ W. John Weinhardt
----------------------------
Name: W. John Weinhardt
Title: Chairman
DECO TECHNOLOGIES, INC.
By: /s/ W. John Weinhardt
----------------------------
Name: W. John Weinhardt
Title: Chairman
DECO INTERNATIONAL, INC.
By: /s/ W. John Weinhardt
----------------------------
Name: W. John Weinhardt
Title: Chairman
TURN-MATIC, INC.
By: /s/ W. John Weinhardt
----------------------------
Name: W. John Weinhardt
Title: Chairman
19
<PAGE> 21
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ David Philip Costanzo
---------------------------
Name: David Philip Costanzo
Title: Vice President
MCDONALD & COMPANY SECURITIES, INC.
By: /s/ Edward S. Pentecost
---------------------------
Name: Edward S. Pentecost
Title: Senior Vice President
ING BARING (U.S.) SECURITIES, INC.
By: /s/ Ellen G. Itskovitz
---------------------------
Name: Ellen G. Itskovitz
Title: VP
20
<PAGE> 1
EXHIBIT 10(b)
March 4, 1998
Newcor, Inc.
1825 S. Woodward Avenue
Suite 240
Bloomfield Hills, Ml 48302
Attention: President and Chief Executive Officer
Gentlemen:
In accordance with Section 10.2 of the Stock Purchase Agreement dated
December 9, 1997 (the "Agreement"), between Stephen Grand, individually and as
Trustee of the Stephen Grand Revocable Trust dated July 5, 1979 and the Stephen
M. Grand Property Trust dated January 22, 1992, and Newcor, Inc., this letter
will confirm certain understandings between the parties to the Agreement.
Capitalized terms used but not otherwise defined in this letter will have the
meanings given to them in the Agreement.
In connection with effecting the Permitted Distribution contemplated by
Section 1.4 of the Agreement, Seller intends to cause Deco Grand to (a) form a
corporate subsidiary (the "Entity") and (b) transfer certain of the assets
constituting the Permitted Distribution to the Entity. Following the actions
referred to in the preceding sentence, Deco Grand will then, as part of the
Permitted Distribution, transfer its ownership interest in the Entity to
Seller. Seller agrees that any Taxes, including but not limited to any Taxes on
any income or gain associated with the transfers contemplated in the first and
second sentences of this paragraph (or any transaction or event deemed to occur
as a result of said transfers or any tax election made in connection with said
transfers) will be allocated to and paid solely and exclusively by Seller and
Seller shall indemnify and hold harmless the Deco Companies, Buyer and their
respective Representatives therefrom and any Losses associated therewith.
Notwithstanding anything to the contrary in the Agreement, the parties
hereto expressly intend that Seller shall defend, indemnify and hold harmless
Buyer, the Deco Companies and their respective Representatives pursuant to
Section 5.7(c) of the Agreement in respect of all Losses based upon, arising
out of or otherwise in respect of any of the following: (i) formation of the
Entity (including with respect to the filing of an election for the Entity to
be a qualified subchapter S subsidiary under the Code); (ii) transfer of
certain of the assets constituting the Permitted Distribution to the Entity;
and (iii) transfer of the ownership interest of Deco Grand in the Entity to
Seller, and the items set forth above in clauses (i), (ii) and (iii) shall be
deemed for all purposes to be included in paragraph 1 of Exhibit 53(c),
including for the purposes of survivability under Section 10.13(a)(ii) of the
Agreement and to be an Excluded Item under Section 10.140)(i) of the Agreement.
Buyer consents to Seller taking all actions necessary to (i) form the
Entity, (ii) transfer certain of the assets constituting the Permitted
Distribution to the Entity and (iii) transfer the ownership interest of Deco
Grand in the Entity to Seller.
<PAGE> 2
For purposes of clarification, the parties expressly intend and agree
that the indemnification obligations of Seller under section 5.7(c) of the
Agreement with respect to matters defined in paragraph I of Exhibit 5.7(c), as
supplemented as provided above, are intended to cover all Losses based upon,
arising out of or otherwise in respect of any of the items comprising the
Permitted Distribution as identified in Exhibit 1.4 to the Agreement or the
Additional Permitted Distribution (including but not limited to the ownership,
use or operation thereof), which Losses arise at any time whether before or
after the Closing Date, except only those liabilities expressly set forth as
liabilities on the Final Statement.
This Agreement shall be deemed to be part of. and incorporated by
reference in the Agreement.
Seller hereby represents and warrants to Buyer that the entirety of
the Permitted Distribution and the Additional Permitted Distribution has been
fully and effectively completed prior to the Closing and Seller shall
indemnify, defend and hold harmless Buyer, the Deco Companies and their
respective Representatives pursuant to Section 5.7(c) from all Losses
(including but not limited to 4 Taxes) that may be incurred by any of them from
any inaccuracy in or breach of such representation and warranty. The
indemnification obligation in this Section shall be treated as subject to
Section 10.13(a)(ii) of the Agreement (as to severability) and to be an
Excluded Item under Section 10.14(J)(i) of the Agreement.
Except as set forth above, nothing contained in this letter is a meant
to modify, amend or otherwise alter the Agreement, including Seller's
obligations under Section 5.7 of the Agreement, and the Agreement shall remain
in full force and effect in accordance with its terms.
Please indicate your agreement with the foregoing by signing this
letter in the space provided below.
Stephen M. Grand
----------------------------------
Stephen M. Grand, individually and
as Trustee of the Stephen Grand
Revocable Trust dated July 5, 1979
and the Stephen M. Grand Property
Trust dated January 22, 1992
Acknowledged and Agreed
to on March 4. 1998:
NEWCOR, INC.
By: /s/ W. John Weinhardt
------------------------
Its: President
----------------
cc: Miller, Canfield, Paddock and
150 West Jefferson', Suite 2500
Detroit, Michigan 48226
Attention: David D. Joswick, Esq,
<PAGE> 1
EXHIBIT 10(d)
Execution Copy
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), dated as of the 3rd
day of March, 1998, but effective as of the Closing Date (as defined below), by
and among NEWCOR, INC., a Delaware corporation ("Employer"), and KEITH HALE
("Employee").
W I T N E S S E T H:
WHEREAS, Employer and Stephen Grand, individually and as trustee
of the Stephen Grand Revocable Trust dated July 5, 1979 and the Stephen M.
Grand Property Trust dated January 22, 1992 (collectively, "Seller") have
executed and delivered a Stock Purchase Agreement (the "Purchase Agreement")
providing for, among other things, the purchase by Employer from Seller of all
of the issued and outstanding shares of capital stock of Grand Machining Co.,
Deco Technologies, Inc. and Deco International, Inc. (the "Deco Group"); and
WHEREAS, Employee is an officer and employee of the Deco Group; and
WHEREAS, if, but only if, the closing of the transactions contemplated
by the Purchase Agreement shall occur (which is currently expected to occur on
March 4, 1998), Employer desires to employ Employee, and Employee is willing to
accept such employment, on the terms and conditions of this Agreement; and
WHEREAS, the parties hereto expressly intend that this Agreement shall
not become effective unless and until the closing of the transactions
contemplated in the Purchase Agreement shall
<PAGE> 2
occur, and that at the Closing Date (as defined in the Purchase Agreement) ,
Employer shall have received a Mutual Release and Waiver Agreement in the form
attached hereto as Exhibit A (the "Release and Waiver") signed by Employee
waiving and releasing any claim Employee may have against the Deco Group and
Employer under the Deco Agreement described in Section 20 below, subject to the
provisions of Section 24 below.
NOW, THEREFORE, in consideration of the premises and the mutual
undertakings set forth herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Employment and Duties; Board Appointment. In accordance with
actions taken and authorized by the Board of Directors of Employer (the
"Employer Board"), effective at the Closing Date, Employee shall be appointed
as an officer of Employer with the title of Vice President and General Manager
of the Deco Group and shall have the duties and responsibilities commensurate
with such title and office. During the period of his employment hereunder,
Employee also shall serve as an officer of such other affiliates of Employer
and in such other capacities consistent with the above referenced position,
title and office as he may be requested by the President and Chief Executive
Officer of Employer from time to time, and shall assume such additional duties
and responsibilities consistent with the above referenced position, title and
office as from time to time may be assigned to him by the President and Chief
Executive Officer of Employer, all without additional compensation therefor.
Employee shall report directly to the President and Chief Executive Officer of
Employer. Throughout the period of his
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<PAGE> 3
employment hereunder, Employee shall devote his full time, attention, and
energy exclusively to the affairs of Employer and those of its affiliates to
which he is responsible from time to time. For purposes of this Agreement, the
term "affiliates" shall mean, as of any particular time of determination, any
entity that is controlled by or is under common control with Employer.
2. Term of Employment. The employment of Employee hereunder shall
become effective as of the Closing Date and shall continue thereafter until the
close of business on first anniversary of the Closing Date (the "Initial
Employment Period") , unless earlier terminated as hereinafter provided. After
the Initial Employment Period, the term of this Agreement shall be
automatically extended for additional one-year periods unless written notice is
given by one party to the other of his or its intention to terminate Employee's
employment hereunder at the end of the Initial Employment Period or any
extended term, as the case may be. Employee shall be an employee "at will"
under this Agreement. Subject to Employer's obligations upon termination as
provided in Section 10 below, nothing contained in this Agreement is intended
nor shall be construed as conferring on Employee the right to continued
employment by Employer for any period of time.
3. Compensation. As full compensation for all services to be performed
by Employee hereunder, Employer shall pay to Employee the following:
(a) Salary at the rate of $160,000 per year (to be reviewed
annually by the President and Chief Executive Officer of Employer),
payable at the intervals at which other
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<PAGE> 4
executive officers of Employer are paid. Employee's salary shall not be
reduced unless part of an across-the-board reduction in compensation or
reduction in force applicable to all executive officers of the Employer.
(b) Employee shall be paid a one-time payment of the sum of $15,000 as
a "signing" bonus provided that Employee's employment under this Agreement
is not terminated on or prior to the thirtieth (30) day following the
Closing Date. The signing bonus shall be payable by Employer to Employee at
the next regularly scheduled pay period after the expiration of such thirty
(30) day period.
(c) Employee will be eligible to participate in the Newcor Management
Incentive Plan beginning with the fiscal year beginning November 1, 1997
subject to the terms and conditions of that plan. Employee hereby
acknowledges receipt of a copy of the Newcor Management Incentive Plan.
(d) Employee shall be eligible to participate in Employer's 1996
Employee Incentive Stock Plan (the ,Stock Plan") , subject to the terms and
conditions of that plan. Employee hereby acknowledges receipt of a copy of
the Stock Plan.
4. Certain Fringe Benefits. During the period of his employment hereunder,
Employer will (i) provide Employee with the use of an automobile (subject to a
$50.00 per month charge to Employee for personal use of the automobile) in
accordance with Employer's policy (executive level) as the same maybe changed
from time to time by Employer (and Employee acknowledges receipt of a
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<PAGE> 5
copy of Employer's automobile policy); (ii) pay or reimburse to Employee the
dues, fees (but not the initiation fees) and minimums at Metamora Country Club
or Oakhurst Country Club, of which Employee is presently a member; (iii) pay or
reimburse Employee for the cost of an annual physical examination in a
recognized executive physical program; and (iv) provide Employee twenty (20)
working days vacation on an annual basis pursuant to Employer's policy (which
vacation shall be scheduled consistent with the reasonable requirements of
Employer and will be subject to review and approval by the President and Chief
Executive Officer of Employer).
5. Other Employee Benefits. During the period of his employment
hereunder, Employee also shall be entitled to participate in such Employer
employee benefit plans as from time to time are maintained, sponsored, or made
available by Employer to its employees or its executive employees generally, in
each case on the same terms and subject to the same conditions and limitations
generally applicable to other executive officers of Employer with respect to
participation therein.
6. Certain Expenses. Employer shall pay or reimburse Employee for
the reasonable travel, entertainment and other incidental expenses (including
the cost of business publications and professional associations) incurred on
business of Employer with the approval of the President and Chief Executive
Officer of Employer and in accordance with Employer's practices as in effect
during the period of employment hereunder as applied to executive officers.
-5-
<PAGE> 6
7. Stock Grant. As evidenced by that certain Stock Grant Letter to be
issued to Employee by Employer (the "Stock Grant Letter") on the Closing Date
(a copy of the form of which is attached to this Agreement as Exhibit B) , and
subject to Section 24 hereof, Employee shall be granted, on the terms and
subject to the conditions specified in the Stock Grant Letter and the Stock
Plan, the provisions of which are hereby incorporated by reference herein, an
aggregate of 10,000 Restricted Shares (as defined in the Stock Plan). Employee
acknowledges receipt of a copy of the Stock Plan and plan prospectus and
documents incorporated by reference. In the event of any inconsistency between
this Agreement or the Stock Grant Letter and the Stock Plan, the terms of the
Stock Plan shall govern.
8. Insurance. Employer shall have the right to purchase disability and
group life insurance policies (in addition to any other policy Employer may
provide Employee under this Agreement or otherwise) on Employee whenever during
the period of his employment hereunder Employer deems it reasonable to acquire
such insurance. Employee agrees to cooperate in the acquisition of such
insurance and to perform all acts necessary and proper in connection therewith,
including submission to such medical examinations as may be reasonably
required. Any policy owned by Employer may be dealt with in such manner as
Employer deems appropriate.
9. Termination of Employment; Effect.
(a) Employee's employment hereunder will be terminated in any of
the following ways:
(i) Immediately upon the death of the Employee;
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<PAGE> 7
(ii) Immediately upon the Employee becoming permanently
disabled within the meaning of Employer's long term disability policy
as then in effect;
(iii) By either the Employee or Employer giving notice of his
or its intention not to extend this Agreement Is term as provided in
Section 2 above, in which case Employee's employment will terminate at
the end of the Initial Employment Period or extended term, as the case
may be; or
(iv) By either the Employee or Employer at any time, Without
or with Cause (as hereinafter defined) by 30 days' prior written
notice to the other, effective as of the date specified in such
notice; provided, however, that Employer shall state in such notice
the reason (s) for termination (in reasonable detail).
(b) Upon the termination of Employee's employment in any of the ways
provided in subsection (a), then this Agreement and all rights and
obligations of Employee and Employer hereunder shall terminate and cease
immediately, except for (i) Employee's rights to the payments provided in
Section 10 below; and (ii) the rights and obligations set forth in Sections
12, 13, 14, 15 and 16 below.
10. Payments On Termination. Employee shall be entitled to the
following payments and benefits upon termination of his employment:
(a) If Employee's employment is terminated under Section 9(a)(i)
above, or if Employee's employment is terminated by
-7-
<PAGE> 8
Employee under Section 9 (a) (iii) above, or if Employee's employment is
terminated (either voluntarily by Employee or for Cause by Employer) under
Section 9 (a) (iv) above, then Employee shall be entitled to the cash
compensation under Section 3 (a) above, and the benefits to which Employee is
entitled under Sections 4 and 5 above, through the date of termination of
employment.
(b) If Employee's employment is terminated under Section 9 (a) (ii)
above, or by Employer, either without Cause under Section 9 (a) (iv) above or
pursuant to Section 9 (a) (iii) above, Employee shall be entitled to the cash
compensation payable under Section 3 (a) above (at the then current annual
rate) and continuation of the benefits referred to in Sections 4 (i) 4 (ii) and
5 above, for a period of twelve (12) months following the effectiveness of such
termination of employment and at the then normal intervals and provided,
further, that the benefits provided under Section 4(i) and (ii) above shall
continue for the period determined as aforesaid but not after Employee shall be
effectively provided with substantially equivalent such benefits by another
employer. In the event termination of employment occurs under Section 9 (a)
(ii) above, the payments made by Employer as aforesaid shall be reduced by any
payments made to Employee under Employer's long-term disability policy. In
addition, Employee shall be entitled to receive any bonus earned by Employee
under Section 3(c) above through the date of termination of employment payable
at such time as any like bonuses are paid by Employer generally, and
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<PAGE> 9
out-placement services to a value of $40,000.00 with a firm designated by
the Employee and approved by Employer for a period not to exceed twelve
(12) months.
11. Definition. For purposes of this Agreement, "Cause" means any of
the following:
(a) Material breach of any of the terms of this Agreement;
(b) Conviction of or plea of guilty or nolo contendere to a
crime involving moral turpitude or involving any violation of securities or
commodities law or regulation, or the issuance of any court or
administrative order enjoining or prohibiting Employee from violating any
such law or regulation;
(c) Repeated or habitual intoxication with alcohol or drugs
while on the premises of Employer or any of its affiliates or during the
performance by Employee of any of his duties hereunder;
(d) Embezzlement of any property belonging or entrusted to
Employer or any of its affiliates;
(e) Repeated or protracted absence from work without cause;
(f) Willful misconduct or gross neglect of duties, or failure to
act with respect to duties or actions previously communicated to Employee
in writing by the President and Chief Executive Officer of Employer.
12. Conflicts of Interest. Employee shall adhere to Employer's Business
Philosophy and Code of Ethics, as interpreted
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<PAGE> 10
and applied by Employer, and as the same may be revised by Employer from time
to time; provided that, regardless of how interpreted or applied, Employee
shall not take any action that is contrary to the express direction of the
President and Chief Executive Officer of Employer as to such policy. Employee
acknowledges receipt of a copy of Employer's Business Philosophy and Code of
Ethics in effect as of the date hereof.
13. Confidentiality. Employee agrees to be loyal to Employer during
the period of employment hereunder and will take reasonable measures to hold in
confidence and will not use or disclose any information regarding the
techniques, processes, business plans, services, pricing, trade secrets,
customers, customer lists, marketing information, financial information,
prospect names, current or planned products, services, sales, employees or
other private, proprietary or confidential information of Employer and its
affiliates, except as such disclosure or use may be required in connection with
Employee's work for Employer and its affiliates. Upon termination of Employee's
employment for any reason, Employee will deliver to Employer any and all
materials that contain such confidential information and will not retain any
copies, reproductions or summaries of any such materials. All property of
Employer shall be returned by Employee promptly and in good condition except
for normal wear. Employee's obligations under this Section 13 shall continue in
effect for a period of three (3) years after termination of Employee's
employment.
14. Improvements and Developments. All business ideas, concepts,
inventions, improvements, developments and any other
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<PAGE> 11
intellectual property of any sort made or conceived by Employee, either solely
or in collaboration with others, during the period of employment (whether or
not during working hours) shall become and remain the sole and exclusive
property of Employer, its successors and assigns. Employee will promptly
disclose in writing to Employer all such ideas, concepts, inventions,
improvements, developments and other intellectual property, and will cooperate
fully in confirming, protecting and obtaining legal protection of Employer's
ownership rights.
Employee hereby represents and warrants to Employer that Employee has
not invented or conceived any ideas, concepts, inventions, improvements,
developments and other intellectual property prior to becoming employed by
Employer.
At the request of the President and Chief Executive Officer of
Employer, whether or not made during the period of his employment hereunder,
Employee agrees to execute such confidentiality agreements (consistent with
Section 13 above) assignments of intellectual property rights and other
documents as hereafter may reasonably be determined by the President and Chief
Executive Officer of Employer to be appropriate to carry out the purposes of
this Section and Section 13 above.
The obligations of Employee in this Section shall continue in effect
after termination of Employee's employment for any reason.
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<PAGE> 12
15. Noncompetition.
(a) Employee hereby acknowledges that the principal businesses of the
Deco Group is manufacturing, supplying and marketing high tolerance or complex
machined engine components and assemblies primarily for diesel engines and the
medium and heavy duty truck industries (the "Business") ; Employee is one of a
limited number of persons who has developed the Business of the Deco Group to
its present condition; and Employee's work for the Deco Group with respect to
the Business has brought Employee into close contact with many confidential
affairs not readily available to the public. Employee acknowledges that during
the period of employment hereunder, Employer will provide and make available to
Employee, and Employee will receive, special training and knowledge from
Employer, which will include confidential and proprietary information of
Employer, including the confidential information identified in Section 13
above. Employee acknowledges that this confidential information is valuable to
Employer and, therefore, its protection and maintenance constitutes a
legitimate interest to be protected by Employer by this covenant not to
compete. Employee hereby agrees that during the period of employment hereunder
and continuing at all times while Employee is employed in any capacity by
Employer (whether or not this Agreement is extended) and until one (1) year
after the effective date of termination of employment, Employee will not:
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<PAGE> 13
(i) directly or indirectly whether as an officer, director,
consultant, agent, employee, partner, shareholder (other than
ownership as a passive investor of less than 5% of the outstanding
voting stock of a company listed on a national stock exchange or the
Nasdaq National Market) , participant, owner or otherwise of, or
render services or advice to, any business which competes with any
segment of the Business anywhere in North America; and
(ii) directly or indirectly, whether on behalf of himself or any
other Person (a) sell, offer to sell or quote, or (b) solicit sales,
offers or quotations with respect to, Products to or from Customers of
the Business (as defined below); and
(iii) directly or indirectly, employ or solicit the employment or
engagement by others of any employee of Employer or any of its
affiliates or induce or attempt to induce any employee of Employer or
any of its affiliates to leave such employment or in any way interfere
with the relationship between Employer or any of its affiliates and
any such employee; and
(iv) disparage Employer or any of its affiliates or any of their
respective directors , officers or employees.
For the purpose of this Agreement, the following terms shall have the
following respective meanings:
"Products" means (a) products of the Business that are covered by
agreements and/or quotes at the effective date of
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<PAGE> 14
termination or at any time during the 24 immediately preceding months and any
products that are substantially similar to such products in function or use and
(b) products identified as "target (s) of opportunity" in the then current
strategic plan for the Business.
"Customers of the Business" means (a) Persons with which the Business
has any contractual relationship or has submitted quotes for Products at the
effective date of termination or at any time during the 24 months immediately
preceding months and (b) Persons identified as "targets of opportunity" for in
the then current strategic plan for the Business.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, unincorporated association, business or other entity
whatsoever.
In the event of a breach by Employer of Section 15(a) hereof, the time
period of such covenant shall be extended by the period of the duration of the
breach. Employer shall be entitled to furnish any employer or other person or
entity a copy of this Agreement or relevant portions thereof.
Employee acknowledges that the restricted period of time and geographical
area under Section 15(a) hereof are reasonable, in view of the nature of the
business in which Employer and the Deco Group are engaged and Employee's
knowledge of the Business and the confidential information that will be made
available to Employee in connection with this Agreement. Employee represents to
Employer that the enforcement of the restrictions contained in this Section 15
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<PAGE> 15
would not be unduly burdensome to Employee. Notwithstanding the foregoing, if
any provision, or any part thereof, of this Section 15 is held to be
unenforceable because of the duration thereof or the area covered thereby, the
parties agree that the court making the determination shall have the power to
reduce the duration or the area of such provision, or to delete specific words
or phrases, and in its reduced or amended form such provision shall then be
enforceable and be enforced.
(c) Employee intends to, and does hereby, confer jurisdiction to
enforce the covenants contained in this Section 15 upon the courts of (i) any
jurisdiction within the State of Michigan and (ii) if Employee is alleged to be
competing with Employer or the Deco Group in violation of this Section 15 in
any other jurisdiction, then in any other jurisdiction in which such alleged
competition takes place. If the courts of any one or more of such jurisdictions
shall hold such covenants wholly unenforceable by reason of the breadth of such
scope or otherwise, such determination shall not bar or in any way affect the
right of Employer to the relief provided above in the courts of any other
jurisdiction in which such covenants may be enforced as provided herein, as to
breaches of such covenants as they relate to each jurisdiction being, for this
purpose, severable into diverse and independent covenants. In addition, the
provisions of this Section 15 and Section 16 shall continue to be binding
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<PAGE> 16
upon Employee in accordance with their terms notwithstanding the
termination of this Agreement.
16. Remedies for Certain Breaches. If Employee commits a breach,
or threatens to commit a breach, of any of the provisions of Sections 13, 14 or
15, Employer shall have the right and remedy to have the provisions of Sections
13, 14 and/or 15 enforced by any court of competent jurisdiction by injunction,
restraining order, specific performance or other equitable relief in favor of
Employer, it being acknowledged and agreed that any breach or threatened breach
of Sections 13, 14 and/or 15 by Employee will cause irreparable injury to
Employer and that money damages, in and of themselves, will not provide an
adequate remedy to Employer. Each of such rights and remedies shall be
independent of the others, and shall be severally enforceable, and all of such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available under law or in equity to Employer.
17. Integration; Amendment. This Agreement, the Release and Waiver and
the Stock Grant Letter contain the entire agreement of the parties relating to
the subject matter hereof and thereof, and together supersede and replace in
their entirety any prior agreements or understandings concerning such subject
matter. This Agreement may not be waived, changed, modified, extended, or
discharged orally, but only by agreement in writing signed in the case of
Employer by a duly authorized non-employee member of Employer's Board.
18. Jurisdiction. Any controversy, dispute, or claim arising out of or
relating to Employee's employment or to this Agreement or
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<PAGE> 17
breach thereof which is not amicably settled by the parties within thirty (30)
days of the written request of a party may be brought only in a court of
competent jurisdiction of the State of Michigan. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT TO, AND AGREES TO NOT MAKE ANY CLAIM FOR ANY, TRIAL BY JURY
IN CONNECTION WITH ANY SUCH CONTROVERSY, DISPUTE OR CLAIM. Each party
acknowledges that right to trial by jury is a constitutional right but may be
waived and each acknowledges and agrees that such party expressly intends to,
and hereby does, irrevocably waive all such right in the case of any
controversy, dispute or claim described in this Section 18.
19. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Michigan applicable to contracts
made and to be performed within such State.
20. Termination of Employment Agreement with Grand Machining Company.
Subject to the condition that the Employee has been paid in full and received
all amounts owed to the Employee at the Closing pursuant to the terms of the
following agreements (amount estimated at $1,500,000), Employee will execute
and deliver to Employer the Release and Waiver relating to the Second Amended
and Restated Employment Agreement dated as of December 23, 1993 (but effective
as of January 1, 1990), as amended by that certain letter agreement between
Employee and the Deco Group dated March 18, 1997 (the "Deco Agreement") From
and after the Closing Date, Employee shall look solely to Seller for payment of
any amounts owing thereunder or the provision of any other benefits. Any other
employment or similar agreement, commitment or understanding of any character
shall be terminated by Employee and, effective at such
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<PAGE> 18
time, Employee releases and discharges the Deco Group from any and all claims
for compensation, benefits or otherwise thereunder or otherwise.
21. Reimbursement of Legal Fees. Employer shall reimburse Employee for
reasonable legal fees incurred by Employee in the negotiation of this Agreement.
22. Withholding. All payments to and benefits conferred upon
Employee hereunder shall be subject to all required withholdings under
applicable law or regulation.
23. Representations. Employee represents and warrants to Employer
that he (i) has thoroughly read and understands all of the provisions of this
Agreement; (ii) has submitted this Agreement to his own attorney for review and
received the advice and counsel of such attorney with respect to this
Agreement; (iii) is satisfied with all of the terms and conditions of this
Agreement and accepts them freely and of his own accord; and (iv) the Deco
Agreement is the only employment, compensatory, "pay to stay" or similar
agreement between Employee and the Deco Group (or any member of the Deco
Group).
24. Time Agreement Shall Become Effective. Subject to the condition
that Employee has been paid in full and received all amounts owed to Employee
under the Deco Agreement, this Agreement shall become effective automatically
as of the Closing Date without the action of any party hereto except only that
this Agreement shall not become effective at the election of Employer if the
Employee shall have died or become disabled or there shall occurred any other
fact, circumstance or development that would give
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<PAGE> 19
Employer the right to terminate Employee's employment hereunder for Cause (if
Employee had been employed hereunder) , or the Deco Group to terminate the Deco
Agreement for Cause or Employer shall have otherwise determined in good faith
that Employee is unable or unwilling to provide the services contemplated in
this Agreement. Employee hereby agrees that Employee shall not have any right
to rescind this Agreement.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written.
NEWCOR, INC.
BY /s/ W. John Weinhardt
------------------------
Its PRESIDENT & CEO
-------------------
/s/ Keith Hale
---------------------------
Keith Hale
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<PAGE> 21
EXHIBIT A
MUTUAL RELEASE AND WAIVER
This Mutual Release and Waiver ("Release") is being executed and delivered in
connection with the "Employment Agreement") dated as of March 3, 1998 (the
"Employment Agreement") between Newcor, Inc., a Delaware corporation
("Employer") and Keith Hale ("Employee"). Capitalized terms used in this
Release without definition have the respective meanings given to them in the
Employment Agreement, unless otherwise defined herein.
Employee is a party to the Deco Agreement. In connection with the
acquisition of all of the outstanding capital stock of the Deco Group by
Employer, the rights and obligations of the Deco Group under the Deco Agreement
are being distributed to and assumed by Stephen Grand, individually and as
Trustee (i) of the Stephen Grand Revocable Trust dated July 5, 1979; and (ii)
of the Stephen M. Grand Property Trust dated January 22, 1992 (collectively,
the "Seller") and Employee is receiving certain payments from Mr. Grand under
the Deco Agreement on the date of this Release.
Employee hereby agrees to look to, seek payment from and make claims
against only Seller for any payments or other claims that Employee may have
under the Deco Agreement (whether for compensation, benefits or otherwise) and
Employee is releasing Employer, each of the companies constituting the Deco
Group and the Releasees (as defined below) from any responsibility therefor as
provided below in this Release.
Employee acknowledges that execution and delivery of this Release by
Employee is an express condition precedent to Employer's obligations under the
Employment Agreement and that Employer is relying on this Release. Employer
acknowledges that payment of all amounts owed to Employee under the Deco
Agreement is an express condition precedent to Employee's
<PAGE> 22
obligations under the Employment Agreement and that Employee is relying upon
distribution to, and assumption of, the rights and obligations of the Deco
Group under the Deco Agreement to and by the Seller.
Each party, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged and intending to be legally bound,
and in order to induce the other party to enter into the Employment Agreement,
hereby agrees as follows;
Each party, on behalf of himself or itself and each of his or its heirs,
executors, personal representatives. successors and assigns and any other
person claiming by or through him or it ("Associated Persons"), hereby
unconditionally and irrevocably compromises, settles, remises, acquits and
finally and forever releases and discharges the other party, in the case of the
Employee each of the companies constituting the Deco Group, and each of their
respective individual, joint or mutual past, present and future directors,
officers, employees, agents, consultants, advisors, legal counsel, accountants,
and financial advisors, other representatives, affiliates, shareholders,
controlling persons, subsidiaries, successors and assigns. but expressly
excluding the Seller, (individually a "Releasee" and collectively the
"Releasees") from any and all claims. counterclaims, setoffs, choses in action,
demands, proceedings, lawsuits, causes of action, orders. obligations,
contracts, agreements, debts, damages and liabilities whatsoever, but not
including in any event any violation of law or government regulation by
Employee, whether known or unknown, suspected or unsuspected, both at law and
in equity, which either party or any of his or its Associated Persons now have,
have ever had or may hereafter have against any of the Releasees on account of
or arising out of any matter, cause or event relating in any fashion to the
Deco Agreement, employment of the Employee by any of the companies constituting
the Deco Group, or any other employment, "pay to stay" or similar agreement,
-2-
<PAGE> 23
commitment or understanding of any character whatsoever between Employee and
any of the companies constituting the Deco Group, ("Claims") and Employee
agrees to look only to Seller therefor. However, nothing contained herein shall
operate to limit, reduce or otherwise impair the rights of Employee against
Seller under the terms of the Deco Agreement as set forth therein and as
distributed to and assumed by Seller.
Each party hereby irrevocably covenants to refrain, directly or
indirectly, from asserting any Claim against the other party or any Releasee
based upon any matter purported to be released hereby.
If any provision of this Release is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Release will
remain in full force and effect. Any provision of this Release held invalid or
unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
This Release may not be changed except in a writing signed by the
person(s) against whose interest such change shall operate. This Release shall
be governed by and construed under the laws of the State of Michigan without
regard to principles of conflicts of law.
All words used in this Release will be construed to be of such gender or
number as the circumstances require.
Each Party agrees to take such further actions and execute and deliver
such other documents, instruments, certificates, agreements and other
instruments as may be reasonably or desirable in order to implement this
Release.
The provisions hereof shall inure to the benefit of each of the
Releasees and their respective assigns, successors, heirs, executors and
administrators, and shall be binding upon each party and their respective
assigns, successors, heirs, executors and administrators.
-3-
<PAGE> 24
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Release as of this 3rd day of March, 1998.
NEWCOR, INC.
By: /s/ Keith Hale
-------------------------------- --------------------------------
Keith Hale
-4-
<PAGE> 25
Exhibit B
Confidential
Internal Memorandum
To: Keith Hale
From: W. John Weinhardt
Re: Award of Restricted Shares
Date of Grant: March 4, 1998
I am pleased to confirm that, effective the date set forth above, you
have been granted an Award of Restricted Shares (the "Award") under the
1996 Employee Incentive Stock Plan (the "Plan") as follows:
Number of Shares: 10,000
Restriction Period: 36 months commencing as of the grant
date noted above
The Award is subject to all of the terms and conditions of the Plan, including,
but not limited to, Section 7.4.1 (Restriction Period) , Section 7.4.2 (Vesting
and Forfeiture) , Section 7.4.3 (Other Matters), Section 8.2 (Transfer
Restrictions), Section 8.4 (Overriding Precondition; Potential Forfeiture),
Section 8.6 (Tax Withholding), and Section 8.9 (No Change in Employment
Status).
The provisions of the Plan are hereby incorporated by reference herein. In the
event of any inconsistency between the terms of this memorandum or any other
agreement between you and the Company and the Plan, the terms of the Plan shall
govern.
A copy of the Plan (together with certain related documents) has been delivered
to you. Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Plan.
Acknowledged and Agreed:
/s/ Keith Hale
- ------------------------
Keith Hale
Date: March 4, 1998
<PAGE> 1
EXHIBIT 99.(a)
IMMEDIATE RELEASE
NEWCOR ANNOUNCES SIGNING OF PURCHASE AGREEMENT FOR PRIVATELY PLACED NOTES
Newcor, Inc., Bloomfield Hills, Michigan, February 27, 1998. W. John
Weinhardt, president and chief executive officer of Newcor, Inc., announced
today that Newcor has entered into an agreement to privately place $125,000,000
principal amount of its 9.875% Senior Subordinated Notes due 2008 for the
purposes of refinancing its recent acquisition of Machine Tool & Gear, Inc.,
financing its pending acquisition of Turn-Matic, Inc. and the Deco group of
companies and refinancing of existing indebtedness. The note offering and the
Turn-Matic and Deco acquisitions are scheduled to close on March 4, 1998.
The notes have not been registered under the Securities Act of 1933, as
amended, and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.
Newcor, headquartered in Bloomfield Hills, Michigan, designs and manufactures
precision machined and molded rubber and plastic products as well as custom
machines and manufacturing systems. Newcor is listed on the NASDAQ Stock
Market under the symbol NEWC.
<PAGE> 1
EXHIBIT 99.(b)
IMMEDIATE RELEASE
NEWCOR ANNOUNCES COMPLETION OF ACQUISITIONS
Newcor, Inc., Bloomfield Hills, Michigan, March 5, 1998. W. John Weinhardt,
president and chief executive officer of Newcor, Inc., announced today that
Newcor completed the acquisitions for cash of 100% of he common stock of the
three corporations that comprise the Deco Group and 100% of the common stock of
Turn-Matic, Inc. As a result of these acquisitions, and the acquisition of
Machine Tool & Gear, Inc. which closed on December 23, 1997, Newcor has taken a
significant step in accelerating its strategy to become a leading supplier of
high volume precision machined engine, transmission, and powertrain components
and assemblies to the automotive, medium and heavy duty truck, and
agricultural/off-road vehicle industries.
The three acquisitions, which had pro forma fiscal 1997 sales of approximately
$112 million, complement Newcor's existing product and customer base, while
adding a substantial new product position in engine components and assemblies
and a key new market position in the medium and heavy duty truck industry.
Newcor's expanded Precision Machined Products segment will be capable of
providing customers with a broad range of manufacturing processes and
value-added capabilities such as design and engineering, assembly and testing,
and program management from concept development through production and
assembly.
With the closing of these three acquisitions, Newcor's Precision Machined
Products segment pro forma 1997 sales were over $172 million. Combined with
sales from Newcor's Rubber and Plastic segment, Newcor's sales of components
and assemblies to the automotive, medium and heavy duty truck and agricultural
and off-road vehicle industries were over $220 million on a pro forma basis for
1997, comprising approximately 91% of total sales.
Newcor expects to continue the aggressive implementation of its strategy to
become a leading supplier of precision machined engine, transmission and
powertrain components and assemblies and high value-added molded rubber and
plastic products for the automotive, medium and heavy duty truck and
agricultural/off-road vehicle industries. This strategy calls for continued
internal growth from new business opportunities, coupled with additional
targeted acquisitions to complement these core businesses. Newcor plans to
create increased shareholder value through growth. The acquisitions were
financed with net proceeds from the private placement of $125,000,000 principal
amount of Newcor's 9.875% Senior Subordinated Notes due March 2008 which was
announced on February 27, 1998. The terms of the notes require Newcor to
suspend its cash dividend. The elimination of the cash dividend is consistent
with Newcor's growth strategy.
(continued)
<PAGE> 2
EXHIBIT 99.(b)
continued
Newcor, headquartered in Bloomfield Hills, Michigan, designs and manufactures
precision machined and molded rubber and plastic products as well as custom
machines and manufacturing systems. Newcor is listed on the NASDAQ Stock
Market under the symbol NEWC.
Cautionary Statements Under the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995
This press release contains information that constitutes "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. A number of factors could cause actual results to differ materially
from those included in or suggested by such forward-looking statements,
including without limitation: the cyclical nature of the industries served by
the Company, all of which have encountered significant downturns in the past;
the level of production by and demand from the Company's principal customers,
upon which the Company is substantially dependent, including the three major
domestic automobile manufactures, American Axle & Manufacturing, Inc., Detroit
Diesel Corporation and Deere & Company; whether, when and to what extent
expected orders materialize; whether the Company will be able to successfully
integrate the acquisitions of Machine Tool & Gear, the Deco Group and
Turn-Matic into the Company's pre-exisiting operations and operate them
profitably; and the extent to which it is successful; the impact on the Company
of actions by its competitors, some of which are significantly larger and
have greater financial and other resources than the Company. All
forward-looking statements in this press release are qualified by such factors.
The Company disclaims any obligation to update any such forward-looking
statements.
