<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 23, 1998
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
HADCO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
SEE TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<S> <C> <C>
MASSACHUSETTS 3672 04-2393279
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) NO.)
</TABLE>
12A MANOR PARKWAY
SALEM, NEW HAMPSHIRE 03079
(603) 898-8000
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PATRICIA RANDALL, ESQ.
VICE PRESIDENT AND
GENERAL COUNSEL
HADCO CORPORATION
12A MANOR PARKWAY
SALEM, NEW HAMPSHIRE 03079
(603) 898-8000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
STEPHEN A. HURWITZ, ESQ.
TESTA, HURWITZ & THIBEAULT, LLP
HIGH STREET TOWER
125 HIGH STREET
BOSTON, MASSACHUSETTS 02110
(617) 248-7000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER NOTE OFFERING PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 1/2% Senior Subordinated Notes
due 2008....................... $200,000,000 100% $200,000,000 $59,000
- ---------------------------------------------------------------------------------------------------------------------------------
Senior Subordinated Guarantees of
9 1/2% Senior Subordinated
Notes due 2008................. $200,000,000 -- -- (2)
=================================================================================================================================
</TABLE>
(1) Estimated solely for purposes of computing the registration fee pursuant to
Rule 457 of the Securities Act of 1933, as amended.
(2) Pursuant to Rule 457(n) of the Securities Act of 1933, as amended, no
separate registration fee is payable with respect to the Guarantees.
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
ADDRESS, INCLUDING ZIP CODE PRIMARY
AND TELEPHONE NUMBER, STATE OR OTHER STANDARD
INCLUDING AREA CODE, OF JURISDICTION OF INDUSTRIAL
NAME OF REGISTRANT AS REGISTRANT'S PRINCIPAL INCORPORATION OR CLASSIFICATION I.R.S. EMPLOYER
SPECIFIED IN ITS CHARTER EXECUTIVE OFFICES ORGANIZATION CODE NUMBER IDENTIFICATION NO.
- ------------------------ --------------------------- ---------------- -------------- ------------------
<S> <C> <C> <C> <C>
Hadco Santa Clara, Inc. c/o Hadco Corporation Delaware 3672 94-2348052
12A Manor Parkway
Salem, NH 03079
(603) 898-8000
Hadco Phoenix, Inc. c/o Hadco Corporation Delaware 3672 86-0267198
12A Manor Parkway
Salem, NH 03079
(603) 898-8000
CCIR of California Corp. c/o Hadco Corporation California 3672 77-0469690
12A Manor Parkway
Salem, NH 03079
(603) 898-8000
CCIR of Texas Corp. c/o Hadco Corporation Texas 3672 74-2821373
12A Manor Parkway
Salem, NH 03079
(603) 898-8000
</TABLE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED JUNE 23, 1998
PROSPECTUS
, 1998
HADCO CORPORATION
OFFER TO EXCHANGE ITS 9 1/2% SENIOR SUBORDINATED NOTES DUE 2008,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, FOR ANY AND ALL OF ITS OUTSTANDING
9 1/2% SENIOR SUBORDINATED NOTES DUE 2008
------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1998, UNLESS EXTENDED.
Hadco Corporation, a Massachusetts corporation ("Hadco" or the "Company"),
hereby offers (the "Exchange Offer"), upon the terms and subject to the
conditions set forth in this Prospectus (the "Prospectus") and the accompanying
letter of transmittal (the "Letter of Transmittal"), to exchange its 9 1/2%
Senior Subordinated Notes due 2008 (the "Exchange Notes"), which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement (as defined) of which this Prospectus is a
part, for an equal principal amount of its outstanding 9 1/2% Senior
Subordinated Notes due 2008 (the "Original Notes"), of which $200 million
aggregate principal amount is outstanding on the date hereof. The Exchange Notes
and the Original Notes are collectively referred to herein as the "Notes."
Subject to the terms and conditions set forth in this Prospectus and the
Letter of Transmittal, the Company will accept for exchange any and all Original
Notes that are validly tendered and not withdrawn on or prior to 5:00 p.m., New
York City time, on , 1998, unless the Exchange Offer is extended
(the "Expiration Date"). Tenders of Original Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date. The Exchange
Notes will be issued and delivered promptly after the Expiration Date. The
Exchange Offer is not conditioned upon any minimum principal amount of Original
Notes being tendered for exchange. The Exchange Offer is, however, subject to
certain customary conditions. See "The Exchange Offer -- Conditions." Original
Notes may be tendered only in integral multiples of $1,000. In the event the
Company terminates the Exchange Offer and does not accept for exchange any
Original Notes, the Company will promptly return all previously tendered
Original Notes to the holders thereof. The Company has agreed to pay the
expenses of the Exchange Offer. See "The Exchange Offer."
The Exchange Notes will be obligations of the Company evidencing the same
debt as the Original Notes, and will be entitled to the benefits of the same
Indenture, dated as of May 18, 1998 (the "Indenture"), between the Company, the
Guarantors (as defined) and State Street Bank and Trust Company, as trustee (the
"Trustee"). The form and terms of the Exchange Notes are substantially the same
as the form and terms of the Original Notes except that the Exchange Notes have
been registered under the Securities Act and therefore will not be subject to
certain restrictions on transfer applicable to the Original Notes. See "The
Exchange Offer."
SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION OF CERTAIN FACTORS
WHICH SHOULD BE CONSIDERED BY HOLDERS OF ORIGINAL NOTES WHO TENDER THEIR
ORIGINAL NOTES IN THE EXCHANGE OFFER AND PROSPECTIVE INVESTORS IN THE NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
(cover page continued on next page)
<PAGE> 4
Interest on each Exchange Note will accrue from the last date on which
interest was paid on the Original Note surrendered in exchange therefor or, if
no interest has been paid on the Original Note, from the date of original
issuance of such Original Note. No interest will be paid on the Original Notes
accepted for exchange, and holders of Original Notes whose Original Notes are
accepted for exchange will be deemed to have waived the right to receive any
payment in respect of interest on the Original Notes accrued up until the date
of the issuance of the Exchange Notes. Holders of Original Notes that are not
exchanged will receive the accrued interest payable on December 15, 1998 in
accordance with the Indenture. See "The Exchange Offer -- Terms of the Exchange
Offer."
Interest on the Exchange Notes is payable semi-annually in cash on June 15
and December 15 of each year, commencing December 15, 1998. The Exchange Notes
will be redeemable at the option of the Company, in whole or in part, at any
time on or after June 15, 2003, at 104.75% of their principal amount, plus
accrued interest, declining ratably to 100% of their principal amount, plus
accrued interest. At any time on or prior to June 15, 2001, up to 35% of the
aggregate principal amount of the Exchange Notes may be redeemed, at the option
of the Company, with the proceeds of one or more Equity Offerings (as defined)
at 109.50% of the principal amount thereof, plus accrued interest; provided,
however, that at least 65% of the original aggregate principal amount of the
Notes remains outstanding following each such redemption. In addition, at any
time prior to June 15, 2003, the Company may redeem the Exchange Notes at its
option, in whole or in part, at a price equal to the principal amount thereof,
together with accrued interest, plus the Applicable Premium (as defined). Upon a
Change of Control (as defined), the Company will be required to make an offer to
purchase the Exchange Notes at a price equal to 101% of their principal amount
on the date of purchase, plus accrued interest, if any. There can be no
assurance that the Company will have sufficient funds available at the time of
any Change of Control or will be permitted under its Senior Indebtedness (as
defined) to make any such repurchase of the Exchange Notes. See "Description of
the Notes."
The Exchange Notes will be unsecured, senior subordinated indebtedness of
the Company, will be subordinated to all Senior Indebtedness of the Company,
will rank pari passu to any senior subordinated indebtedness of the Company and
will be senior to any indebtedness of the Company subordinated to the Exchange
Notes. The Company's obligations under the Exchange Notes will be fully and
unconditionally guaranteed (the "Note Guarantees"), on a senior subordinated
basis, jointly and severally, by each of the Company's U.S. Restricted
Subsidiaries (the "Guarantors"). The Note Guarantees will be subordinated to all
Senior Indebtedness of the Guarantors on the same basis as the Exchange Notes
are subordinated to the Senior Indebtedness of the Company, pari passu with any
senior subordinated indebtedness of the Guarantors and senior to any
indebtedness of the Guarantors subordinated to the Note Guarantees.
The Original Notes were originally issued and sold on May 18, 1998 (the
"Closing Date") to certain initial purchasers (collectively, the "Initial
Purchasers") in a transaction not registered under the Securities Act (the
"Original Notes Offering"). The Initial Purchasers subsequently resold the
Original Notes to "qualified institutional buyers" in reliance on Rule 144A
under the Securities Act and to certain offshore purchasers in reliance on Rule
904 of Regulation S under the Securities Act. Accordingly, the Original Notes
may not be offered for resale, resold or otherwise transferred unless registered
under the Securities Act or unless an applicable exemption from the registration
requirements of the Securities Act is available. The Exchange Notes are being
offered hereunder in order to satisfy the obligations of the Company under a
Registration Rights Agreement, dated May 13, 1998, by and among the Company, the
Guarantors and the Initial Purchasers (the "Registration Rights Agreement").
Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission"), as set forth in no-action letters issued to third
parties unrelated to the Company, the Company believes that the Exchange Notes
issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than any holder that is (i) a
broker-dealer that acquired Original Notes as a result of market-making
activities or other trading activities or (ii) an "affiliate" of the Company or
any Guarantor within the meaning of Rule 405 under the Securities Act) without
compliance with the registration or prospectus delivery provisions of the
Securities Act, provided that such Exchange Notes are acquired in the ordinary
course of such holders' business and such holders have no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such Exchange Notes.
ii
<PAGE> 5
Any holder who tenders Original Notes in the Exchange Offer with the intention
to participate, or for the purpose of participating, in a distribution of the
Exchange Notes or who is an affiliate of the Company or any Guarantor may not
rely upon such interpretations by the staff of the Commission and, in the
absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
secondary resale transaction. Failure to comply with such requirements in such
instance may result in such holder incurring liabilities under the Securities
Act for which the holder is not indemnified by the Company. The staff of the
Commission has not considered the Exchange Offer in the context of a no-action
letter, and there can be no assurance that the staff of the Commission would
make a similar determination with respect to the Exchange Offer as in such other
circumstances.
By tendering Original Notes in exchange for Exchange Notes, each holder
will represent to the Company, among other things, that: (i) any Exchange Notes
to be received by such holder will be acquired in the ordinary course of such
holder's business; (ii) such holder has no arrangement or understanding with any
person to participate in a distribution (within the meaning of the Securities
Act) of the Exchange Notes; and (iii) such holder is not an "affiliate" of the
Company or any Guarantor (within the meaning of Rule 405 under the Securities
Act), or if such holder is an affiliate, that such holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable. Each broker-dealer that receives Exchange Notes for its own
account in exchange for Original Notes, where such Original Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of Exchange Notes
received in exchange for Original Notes where such Original Notes were acquired
as a result of market-making or other trading activities; however, this
Prospectus may not be used for resales of Notes acquired directly from the
Company. The Company has agreed that, for a period ending on the earlier to
occur of 180 days after the Expiration Date or the time when all persons subject
to the prospectus delivery requirements of the Securities Act have sold all
Exchange Notes held by them, it will furnish additional copies of this
Prospectus, as amended or supplemented, to any broker-dealer that reasonably
requests such documents for use in connection with any such resale. See "Plan of
Distribution."
Holders of Original Notes not tendered and accepted in the Exchange Offer
will continue to hold such Original Notes and will be entitled to all the rights
and benefits and will be subject to the limitations applicable thereto under the
Indenture and with respect to transfer under the Securities Act.
There has not previously been any public market for the Original Notes or
the Exchange Notes, and no assurance can be given as to the liquidity of the
trading market for the Original Notes or Exchange Notes. The Company does not
intend to list the Exchange Notes on any securities exchange or to seek approval
for quotation through any automated quotation system. The Company does intend,
however, to make an application to list the Notes on the Luxembourg Stock
Exchange. There can be no assurance that an active market for the Exchange Notes
will develop. See "Risk Factors -- Absence of Public Market." Moreover, to the
extent that Original Notes are tendered and accepted in the Exchange Offer, the
trading market for untendered and tendered but unaccepted Original Notes could
be adversely affected. In addition, the Company will have no further obligation
to such holders to provide for the registration under the Securities Act of the
Original Notes, pursuant to the Registration Rights Agreement or otherwise. See
"Risk Factors -- Consequences of Failure to Exchange."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF ORIGINAL NOTES ARE URGED TO READ THIS PROSPECTUS AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR
ORIGINAL NOTES PURSUANT TO THE EXCHANGE OFFER.
iii
<PAGE> 6
The Company was incorporated in Massachusetts in 1966. The principal
executive offices of the Company are located at 12A Manor Parkway, Salem, New
Hampshire 03079 and its telephone number is (603) 898-8000.
------------------------
Market and industry data used throughout this Prospectus were obtained
through Company research, surveys or studies conducted by third parties and
industry or general publications. The Company has not independently verified
market and industry data provided by third parties or industry or general
publications. Similarly, internal Company surveys, while believed by management
of the Company to be reliable, have not been verified by any independent
sources.
------------------------
Hadco(R), Zycon(TM), ResistAIR(TM), Buried Capacitance(TM) and
(LOGO)icroPath(TM) are trademarks of the Company. This Prospectus also includes
the trademarks of other companies.
FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED. ALL STATEMENTS REGARDING THE COMPANY'S EXPECTED FINANCIAL
POSITION, BUSINESS AND FINANCING PLANS AND OTHER EXPECTATIONS AS TO THE FUTURE
(INCLUDING, WITHOUT LIMITATION, STATEMENTS USING THE WORDS "ANTICIPATES,"
"BELIEVES," "EXPECTS," "ESTIMATES," "INTENDS," "MAY," "FUTURE," "COULD," "WILL"
AND SIMILAR WORDS OR EXPRESSIONS AS WELL AS OTHER WORDS OR EXPRESSIONS
REFERENCING FUTURE EVENTS, CONDITIONS OR CIRCUMSTANCES) ARE FORWARD-LOOKING
STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN
SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT
SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM SUCH EXPECTATIONS ("CAUTIONARY
STATEMENTS") ARE DISCLOSED IN THIS PROSPECTUS, INCLUDING, WITHOUT LIMITATION, IN
CONJUNCTION WITH THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS PROSPECTUS AND
UNDER "RISK FACTORS." ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS
ATTRIBUTABLE TO THE COMPANY, ITS SUBSIDIARIES OR PERSONS ACTING ON THEIR BEHALF
ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS. THE
COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO RELEASE PUBLICLY
ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENT CONTAINED HEREIN TO
REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY
CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS
BASED.
iv
<PAGE> 7
PROSPECTUS SUMMARY
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including, without limitation, those set forth under "Risk Factors' and
elsewhere in this Prospectus. The following summary is qualified in its entirety
by, and should be read in conjunction with, the more detailed information,
including "Risk Factors" and the Company's and Continental's (as defined herein)
historical consolidated financial statements and pro forma condensed
consolidated financial statements, and the notes thereto, appearing elsewhere in
this Prospectus.
As used herein, the terms "Company" and "Hadco," unless otherwise indicated
or the context otherwise requires, refer to Hadco Corporation and its
subsidiaries, including Hadco Phoenix, Inc. ("Hadco Phoenix") (formerly
Continental Circuits Corp. ("Continental")) and Hadco Santa Clara, Inc. ("Hadco
Santa Clara") (formerly Zycon Corporation ("Zycon")). References herein to a
fiscal year end relate to a year ending on the last Saturday in October (for
example, fiscal 1997 refers to the Company's fiscal year ended October 25,
1997). On March 20, 1998, the Company acquired all of the outstanding capital
stock of Continental (the "Continental Acquisition"), and on January 10, 1997,
the Company acquired all of the outstanding capital stock of Zycon (the "Zycon
Acquisition"). The Continental Acquisition and the Zycon Acquisition are
collectively referred to herein as the "Acquisitions." Unless otherwise
indicated or the context otherwise requires, the results of Zycon's operations
and other financial information relating to Zycon since January 10, 1997 are
included in the Company's historical consolidated financial information
presented herein. Similarly, unless otherwise indicated or the context otherwise
requires, the results of Continental's operations and other financial
information relating to Continental since March 20, 1998 are included in the
Company's historical consolidated financial information presented herein.
THE COMPANY
GENERAL
Hadco is the largest manufacturer of advanced electronic interconnect
products in North America. The Company offers a wide array of sophisticated
manufacturing, engineering and systems integration services to meet its
customers' electronic interconnect needs. The Company's principal products are
multilayer rigid printed circuits and backplane assemblies. Printed circuits are
the basic platforms used to interconnect microprocessors, integrated circuits
and other components essential to the functioning of electronic systems.
Backplane assemblies are generally larger and thicker printed circuits on which
connectors are mounted to receive and interconnect printed circuits, integrated
circuits and other electronic components. Hadco's largest customers include many
of the leading companies in the electronics industry, such as Cabletron Systems,
Compaq Computer, Hewlett-Packard, Lucent Technologies, Northern Telecom,
Solectron and Sun Microsystems. Pro forma for the Acquisitions, in fiscal 1997
the Company's total revenues would have been approximately $830 million, and
EBITDA (as defined herein) would have been approximately $144 million.
Hadco's advanced manufacturing and assembly facilities are designed to meet
the accelerated time-to-market and time-to-volume requirements of its customers
whose markets are characterized by high growth rates, rapid technological
advances and short product life-cycles. During the past five fiscal years,
Hadco, Continental and Zycon have invested approximately $342 million in
production facilities and new technologies. Hadco provides customers with a
broad range of products and services that includes development, design,
quick-turn prototype, pre-production, volume production, and backplane assembly.
Hadco is one of a small number of printed circuit manufacturers with the
technology and advanced production facilities necessary to offer all of these
services. The Company believes its combination of a broad product offering and
advanced technological capabilities facilitates long-term relationships with
existing customers, attracts new customers, and helps customers meet their
time-to-market and time-to-volume needs.
Hadco's customers are a diverse group of electronics original equipment
manufacturers ("OEMs") and contract manufacturers in the computing (mainly
workstations, servers, mainframes, storage and notebooks), data
communications/telecommunications and industrial automation industries,
including process controls,
1
<PAGE> 8
automotive, medical and instrumentation. Hadco provided its products and
services to a diverse base of approximately 560 customers in fiscal 1997
(approximately 590 customers pro forma for the Continental Acquisition)
including approximately 77 customers with purchases in excess of $1 million
(approximately 85 customers pro forma for the Continental Acquisition). The
Company's ten largest customers accounted for approximately 47% of net sales in
fiscal 1997.
INDUSTRY OVERVIEW
In 1997, the worldwide market for rigid printed circuits was $29.4 billion,
and the domestic market for rigid printed circuits was $7.9 billion. In
addition, in 1997 the domestic market for backplane assemblies was $1.2 billion.
The market for higher layer count multilayer rigid printed circuits (eight
layers and above) constituted approximately 40% of the total United States rigid
printed circuit market in 1997, and has increased at an annual compounded growth
rate of 16% over the last two years, compared to approximately 11% for the
overall printed circuit market. The growth of the printed circuit market has
been driven by a number of factors, including: (i) new end-user markets in
telecommunications and computers, (ii) an increasing number of products
containing electronic components, (iii) shorter product life cycles for
electronic products, and (iv) advances in the speed and complexity of electronic
components and products.
In 1997, approximately 93% of the domestic printed circuit market was
served by independent manufacturers (compared to approximately 71% in 1992). The
need for expanded service offerings, advanced technological capabilities and
broader geographic scope has led to consolidation in recent years, reducing the
number of printed circuit manufacturers in North America from approximately 950
in 1992 to approximately 550 in 1997. Although the printed circuit market has
been experiencing consolidation over the past several years, it remains
fragmented. Of the approximately 550 printed circuit manufacturers in the United
States in 1997, only seven had revenues in excess of $100 million.
RECENT ACQUISITIONS
On March 20, 1998, Hadco acquired all of the outstanding capital stock of
Continental, a manufacturer of multilayer printed circuits, for approximately
$188 million (including acquisition costs). On January 10, 1997, Hadco acquired
all of the outstanding capital stock of Zycon, a manufacturer of multilayer
printed circuits and backplane assemblies, for approximately $212 million
(including acquisition costs). Pro forma for the Acquisitions, Continental and
Zycon would have added approximately $396 million to Hadco's fiscal 1997 net
sales. The Acquisitions also added approximately 865,000 square feet of
manufacturing space (approximately a 129% increase) and substantially expanded
Hadco's geographic reach. The Continental Acquisition added facilities for
volume production of multilayer printed circuits in Phoenix, Arizona, a
quick-turn prototype facility in Austin, Texas, and a flexible printed circuit
manufacturing facility and printed circuit engineering and design operation in
California. The Zycon Acquisition added facilities for volume production of
multilayer printed circuits and backplane assemblies in the Silicon Valley area,
a quick-turn prototype and design facility in Haverhill, Massachusetts, and a
newly constructed facility for volume production of printed circuits in
Malaysia. The Acquisitions have also broadened the Company's customer base,
expanded its involvement in many fast growing industry sectors, added new
proprietary technologies, and increased the size of its sales force.
STRATEGY
The Company's strategy is to increase sales and profitability by providing
a wide range of electronic interconnect solutions and services to a broad and
diversified customer base and by capitalizing on major industry trends as
follows:
Provide a Broad and Integrated Offering. Hadco develops and maintains
long-term customer relationships by providing a full range of integrated
services, from development, design, quick-turn prototype and pre-production
through volume printed circuit production and backplane assembly. The Company
believes its broad range of integrated services provides significant value to
its customers by shortening their new product development cycles, helping them
to meet their time-to-market and time-to-volume requirements, lowering
2
<PAGE> 9
manufacturing costs, and providing technological expertise. By working closely
with customers at the design and prototype stage, the Company believes it
strengthens long-term relationships with its customers and gains an advantage in
securing a preferred vendor status when customers begin volume production.
Serve Diversified Customer Base in High Growth Segments. The Company
concentrates its marketing efforts on OEMs and contract manufacturers serving
OEMs in segments of the electronics market characterized by high growth, rapid
technological advances, short product development cycles and accelerated
time-to-market and time-to-volume requirements. To more fully support its
strategy of developing a large and diversified customer base, the Company
intends to offer certain large customers single points of contact to service
their needs on a global basis, and the Company is focusing on the further
development of its international sales force.
Develop Advanced Manufacturing and Process Technologies. The Company is
committed to remaining a leader in the development of advanced materials and
sophisticated process technologies that enable it to cost-effectively produce
reliable and technologically advanced products. The Company believes its
manufacturing and process capabilities provide a significant competitive
advantage and is committed to continuous improvement to maintain its leadership
position.
Maintain High Levels of Investment. Hadco believes its significant ongoing
investment in production technology allows it to maintain a leadership position
in the development of advanced materials and process technologies. The Company
has made substantial investments in production facilities and new technologies
during the past five fiscal years that have increased capacity and operating
efficiencies, improved management control and provided more consistent product
quality. As a result, the Company believes it is one of the few interconnect
manufacturers capable of satisfying the full range of volume production,
time-to-market, time-to-volume and technology requirements of customers in the
electronics industry.
Expand Backplane Assembly Operations. In recent years, to extend its
integrated offering, the Company has expanded its backplane assembly operations,
thereby broadening its range of manufacturing services, reducing customer costs
and improving product quality. With this backplane assembly expansion, the
Company is well-positioned to capture an increasing share of the full range of
interconnect requirements of its customers.
Pursue Strategic Acquisitions. The Company will consider strategic
acquisitions of companies and technologies that enhance its competitive
position, build economies of scale and help fulfill its other strategic
objectives. In evaluating possible acquisition candidates, the Company
considers, among other things, the opportunity for synergistic product
offerings, complementarity of client base, new technological capabilities and
potential for increased geographic reach.
Increase Geographic Reach. Hadco has pursued a strategy of expanding the
capacity and geographic scope of its manufacturing facilities to better serve
high growth segments of the electronics industry in key geographic markets.
Hadco believes it is the only independent North American printed circuit
manufacturer with a full service offering of design, quick-turn prototype and
volume printed circuit manufacturing and backplane assembly on both the East and
West Coasts. In addition, its volume production facility in Malaysia, which
commenced operations in fiscal 1997, is intended to provide the Company with
access to U.S. customers expanding into Asian markets. The Company also intends
to broaden its presence in Europe and other international markets.
3
<PAGE> 10
THE ORIGINAL NOTES OFFERING
Original Notes................ The Original Notes were sold by the Company on
May 18, 1998 to the Initial Purchasers pursuant
to a Purchase Agreement (the "Purchase
Agreement") dated May 13, 1998 by and among the
Company, the Guarantors and the Initial
Purchasers. The Initial Purchasers subsequently
resold the Original Notes to "qualified
institutional buyers" in reliance upon Rule
144A under the Securities Act and to offshore
purchasers in reliance on Rule 904 of
Regulation S under the Securities Act.
Registration Rights
Agreement..................... Pursuant to the Purchase Agreement, the
Company, the Guarantors and the Initial
Purchasers entered into the Registration Rights
Agreement, which granted the holders of the
Original Notes certain exchange and
registration rights. The Exchange Offer is
intended to satisfy such rights which terminate
upon the consummation of the Exchange Offer.
THE EXCHANGE OFFER
Securities Offered............ $200,000,000 aggregate principal amount of
9 1/2% Senior Subordinated Notes due 2008.
The Exchange Offer............ $1,000 principal amount of Exchange Notes will
be issued in exchange for each $1,000 principal
amount of Original Notes validly tendered and
not withdrawn pursuant to the Exchange Offer.
As of the date hereof, $200 million in
aggregate principal amount of Original Notes is
outstanding. Subject to the terms and
conditions set forth in this Prospectus and the
Letter of Transmittal, the Company will issue
the Exchange Notes to tendering holders of
Original Notes promptly after the Expiration
Date. See "The Exchange Offer."
Resales....................... Based on an interpretation by the staff of the
Commission set forth in Morgan Stanley & Co.
Incorporated, SEC No-Action Letter (available
June 5, 1991) (the "Morgan Stanley Letter"),
Exxon Capital Holdings Corporation, SEC
No-Action Letter (available May 13, 1988) (the
"Exxon Capital Letter") and similar letters,
the Company believes that Exchange Notes issued
pursuant to the Exchange Offer in exchange for
Original Notes may be offered for resale,
resold and otherwise transferred by any person
receiving such Exchange Notes, whether or not
such person is the holder (other than any such
holder or other person which is (i) a broker-
dealer that receives Exchange Notes for its own
account in exchange for Original Notes, where
such Original Notes were acquired by such
broker-dealer as a result of market-making or
other trading activities, or (ii) an
"affiliate" of the Company or any Guarantor
within the meaning of Rule 405 under the
Securities Act (collectively, "Restricted
Holders")) without compliance with the
registration and prospectus delivery provisions
of the Securities Act, provided that (a) such
Exchange Notes are acquired in the ordinary
course of business of such holder or other
person, (b) neither such holder nor such other
person is engaged in or intends to engage in a
distribution of such Exchange Notes and (c)
neither such holder nor other person has any
arrangement or
4
<PAGE> 11
understanding with any person to participate in
the distribution of such Exchange Notes. If any
person were to be participating in the Exchange
Offer for the purposes of participating in a
distribution of the Exchange Notes in a manner
not permitted by the Commission's
interpretation, such person (a) could not rely
upon the Morgan Stanley Letter, the Exxon
Capital Letter or similar letters and (b) must
comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with a secondary resale transaction.
See Morgan Stanley & Co. Incorporated SEC
No-Action Letter (available June 5, 1991) and
Exxon Capital Holdings Corporation, SEC
No-Action Letter (available May 13, 1988). Each
broker or dealer that receives Exchange Notes
for its own account in exchange for Original
Notes, where such Original Notes were acquired
by such broker or dealer as a result of market-
making or other trading activities, must
acknowledge that it will deliver a Prospectus
in connection with any sale of such Exchange
Notes. See "Plan of Distribution."
Expiration Date............... 5:00 p.m., New York City time, on
, 1998, unless the Exchange
Offer is extended, in which case the term
"Expiration Date" means the latest date and
time to which the Exchange Offer is extended.
Accrued Interest on the
Exchange Notes and Original
Notes....................... Interest on each Exchange Note will accrue from
the last date on which interest was paid on the
Original Note surrendered in exchange therefor
or, if no interest has been paid on the
Original Note, from the date of original
issuance of such Original Note. No interest
will be paid on the Original Notes accepted for
exchange, and holders of Original Notes whose
Original Notes are accepted for exchange will
be deemed to have waived the right to receive
any payment in respect of interest on such
Original Notes accrued to the date of issuance
of the Exchange Notes. Holders of Original
Notes that are not exchanged will receive the
accrued interest payable on December 15, 1998
in accordance with the Indenture. See "The
Exchange Offer -- Terms of the Exchange Offer."
Conditions to the Exchange
Offer......................... The Exchange Offer is subject to certain
customary conditions. The conditions are
limited and relate in general to proceedings
which have been instituted or laws which have
been adopted that might impair the ability of
the Company to proceed with the Exchange Offer.
As of the date of this Prospectus, none of
these events had occurred, and the Company
believes their occurrence to be unlikely. If
any such conditions exist prior to the
Expiration Date, the Company may (a) refuse to
accept any Original Notes and return all
previously tended Original Notes, (b) extend
the Exchange Offer or (c) waive such
conditions. See "The Exchange
Offer -- Conditions."
Procedures for Tendering
Original Notes.............. Each holder of Original Notes wishing to accept
the Exchange Offer must complete, sign and date
the Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal,
or such facsimile, together with the Original
Notes to
5
<PAGE> 12
be exchanged and any other required
documentation to the Exchange Agent (as
defined) at the address set forth herein and
therein. Tendered Original Notes, the Letter of
Transmittal and accompanying documents must be
received by the Exchange Agent by 5:00 p.m.,
New York City time, on the Expiration Date. See
The "Exchange Offer -- Procedures for
Tendering." By executing the Letter of
Transmittal, each holder will represent to the
Company that, among other things, the Exchange
Notes acquired pursuant to the Exchange Offer
are being obtained in the ordinary course of
business of the person receiving such Exchange
Notes, whether or not such person is the
holder, that neither the holder nor any such
other person is engaged in or intends to engage
in a distribution of the Exchange Notes or has
an arrangement or understanding with any person
to participate in the distribution of such
Exchange Notes, and that neither the holder nor
any such other person is an "affiliate," as
defined under Rule 405 of the Securities Act,
of the Company or any Guarantor or, if such
holder or other person is such an affiliate,
that such holder will comply with the
registration and prospectus delivery
requirements of the Securities Act to the
extent applicable. In lieu of physical delivery
of the certificates representing Original
Notes, tendering holders of Original Notes may
transfer Original Notes pursuant to the
procedure for book-entry transfer as set forth
under "The Exchange Offer -- Procedures for
Tendering."
Untendered Original Notes..... Following the consummation of the Exchange
Offer, holders of Original Notes eligible to
participate in the Exchange Offer but who do
not tender their Original Notes will not have
any further exchange or registration rights and
such Original Notes will continue to be subject
to certain restrictions on transfer.
Accordingly, the liquidity of the market for
such Original Notes could be adversely
affected. See "Risk Factors -- Consequences of
Failure to Exchange."
Consequences of Failure to
Exchange...................... The Original Notes that are not exchanged
pursuant to the Exchange Offer will remain
restricted securities. Accordingly, such
Original Notes may be resold only (i) to the
Company, (ii) pursuant to Rule 144A or Rule 144
under the Securities Act or pursuant to another
exemption under the Securities Act, (iii)
outside the United States to a foreign person
pursuant to the requirements of Rule 904 under
the Securities Act, or (iv) pursuant to an
effective registration statement under the
Securities Act. See "The Exchange
Offer -- Consequences of Failure to Exchange."
Shelf Registration
Statement..................... In the event that (i) the Company and the
Guarantors determine that the Exchange Offer is
not available or may not be consummated as soon
as practicable after the Expiration Date
because it would violate applicable law or the
applicable interpretations of the staff of the
Commission, (ii) the Exchange Offer is not for
any other reason consummated by November 18,
1998 or (iii) the Exchange Offer has been
completed and in the opinion of counsel for the
Initial Purchasers a registration statement
must be filed and
6
<PAGE> 13
a prospectus must be delivered by the Initial
Purchasers in connection with any offering or
sale of Original Notes, each of the Company and
the Guarantors have agreed to use its best
efforts to register the Original Notes on a
shelf registration statement (the "Shelf
Registration Statement") and use its best
efforts to cause it to be declared effective by
the Commission. In the event that the Company
is required to file a Shelf Registration
Statement, the Company has agreed to maintain
the effectiveness of such Shelf Registration
Statement for, under certain circumstances, a
maximum of two years, to cover resales of the
Original Notes.
Special Procedures for
Beneficial Holders............ Any beneficial holder whose Original Notes are
registered in the name of such holder's broker,
dealer, commercial bank, trust company or other
nominee and who wishes to tender in the
Exchange Offer should contact such registered
holder promptly and instruct such registered
holder to tender on behalf of such beneficial
holder. If such beneficial holder wishes to
tender on his, her or its own behalf, such
beneficial holder must, prior to completing and
executing the Letter of Transmittal and
delivering Original Notes owned by him, her or
it, either make appropriate arrangements to
register ownership of the Original Notes in
such holder's name or obtain a properly
completed bond power from the registered
holder. The transfer of record ownership may
take considerable time. See "The Exchange
Offer -- Procedures for Tendering."
Guaranteed Delivery
Procedures.................... Holders of Original Notes who wish to tender
their Original Notes and whose Original Notes
are not immediately available or who cannot
deliver their Original Notes and a properly
completed Letter of Transmittal or any other
documents required by the Letter of Transmittal
to the Exchange Agent prior to the Expiration
Date may tender their Original Notes according
to the guaranteed delivery procedures set forth
in "The Exchange Offer -- Guaranteed Delivery
Procedures."
Withdrawal Rights............. Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the
Expiration Date.
Acceptance of Original Notes
and Delivery of Exchange
Notes....................... Subject to certain conditions, the Company will
accept for exchange any and all Original Notes
which are properly tendered in the Exchange
Offer and not withdrawn prior to 5:00 p.m., New
York City time, on the Expiration Date. The
Exchange Notes issued pursuant to the Exchange
Offer will be delivered promptly after the
Expiration Date. See "The Exchange
Offer -- Terms of the Exchange Offer."
Certain United States Federal
Tax Consequences.............. The exchange of Original Notes for Exchange
Notes pursuant to the Exchange Offer should not
be a taxable event for United States federal
income tax purposes. A holder's holding period
for Exchange Notes should include the holding
period for Original Notes. See "Certain United
States Federal Tax Consequences."
Exchange Agent................ State Street Bank and Trust Company is serving
as exchange agent (the "Exchange Agent") in
connection with the Exchange Offer.
7
<PAGE> 14
The mailing address of the Exchange Agent is
State Street Bank and Trust Company, Two
International Place, 4th Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust
Division/Kellie Mullen. Deliveries by hand or
overnight courier should be addressed to State
Street Bank and Trust Company, 61 Broadway,
15th Floor, New York, New York 10006,
Attention: Corporate Trust Division/Kellie
Mullen. Eligible Institutions (as defined) may
fax the Exchange Agent at (617) 664-5290. For
information with respect to the Exchange Offer,
call the Exchange Agent at (617) 664-5587 or
fax it at (617) 664-5290.
Use of Proceeds............... The Company will not receive any proceeds from
the Exchange Offer. See "Use of Proceeds." The
Company has agreed to bear the expenses of the
Exchange Offer pursuant to the Registration
Rights Agreement. No underwriter is being used
in connection with the Exchange Offer.
SUMMARY OF TERMS OF THE EXCHANGE NOTES
The Exchange Offer constitutes an offer to exchange up to $200 million
aggregate principal amount of the Exchange Notes for up to an equal aggregate
principal amount of Original Notes. The Exchange Notes will be obligations of
the Company evidencing the same indebtedness as the Original Notes, and will be
entitled to the benefit of the same Indenture. The form and terms of the
Exchange Notes are substantially the same as the form and terms of the Original
Notes except that (i) the Exchange Notes have been registered under the
Securities Act, (ii) the Exchange Notes do not include provisions providing for
an increase in the interest rate in certain circumstances relating to the timing
of the consummation of the Exchange Offer and (iii) the holders of Exchange
Notes will not be entitled to certain rights under the Registration Rights
Agreement, which rights will terminate upon the consummation of the Exchange
Offer. See "Description of the Notes."
COMPARISON WITH ORIGINAL NOTES
Freely Transferable........... The Exchange Notes will be freely transferable
under the Securities Act by holders who are not
Restricted Holders. Restricted Holders are
restricted from transferring the Exchange Notes
without compliance with the registration and
prospectus delivery requirements of the
Securities Act. The Exchange Notes will be
identical in all material respects (including
interest rate, maturity date and restrictive
covenants) to the Original Notes, with the
exception that the Exchange Notes will be
registered under the Securities Act. See "The
Exchange Offer -- Terms of the Exchange Offer."
Registration Rights........... The holders of Original Notes currently are
entitled to certain registration rights
pursuant to the Registration Rights Agreement,
dated May 13, 1998 (the "Registration Rights
Agreement"), by and among the Company, the
Guarantors and Morgan Stanley & Co.
Incorporated, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, BancAmerica Robertson
Stephens and BT Alex. Brown Incorporated, as
the initial purchasers of the Original Notes
(collectively, the "Initial Purchasers"),
including the right to cause the Company to
register the Original Notes under the
Securities Act if the Exchange Offer is not
consummated prior to the date which is six
months after the date the Original Notes were
issued,
8
<PAGE> 15
and in certain other limited circumstances. See
"The Exchange Offer -- Conditions." However,
pursuant to the Registration Rights Agreement,
such registration rights will expire upon
consummation of the Exchange Offer.
Accordingly, holders of Original Notes who do
not exchange their Original Notes for Exchange
Notes in the Exchange Offer will not be able to
reoffer, resell or otherwise dispose of their
Original Notes unless such Original Notes are
subsequently registered under the Securities
Act or unless an exemption from the
registration requirements of the Securities Act
is available.
TERMS OF THE EXCHANGE NOTES
Securities Offered............ $200 million aggregate principal amount of
9 1/2% Senior Subordinated Notes due 2008.
Maturity...................... June 15, 2008.
Interest...................... Interest on the Exchange Notes will be payable
semi-annually in cash, on June 15 and December
15 of each year, commencing on December 15,
1998.
Ranking; Subordination........ The Exchange Notes will be unsecured, senior
subordinated indebtedness of the Company, will
be subordinated to all Senior Indebtedness of
the Company, will rank pari passu to any senior
subordinated indebtedness of the Company and
will be senior to any indebtedness of the
Company subordinated to the Exchange Notes. The
Exchange Notes will also be effectively
subordinated to all Senior Indebtedness of the
Guarantors. In addition, the Exchange Notes
will be effectively subordinated to all
existing and future liabilities of the
Company's subsidiaries that are not Guarantors
(the "Non-Guarantor Subsidiaries"). At May 2,
1998, on a pro forma basis after giving effect
to the Original Notes Offering and the use of
the net proceeds therefrom and the Continental
Acquisition, the Company and the Guarantors
would have had approximately $170 million of
Senior Indebtedness outstanding and
approximately $249 million would have been
available to the Company under the Credit
Facility (as defined), which, if borrowed,
would constitute Senior Indebtedness. See
"Description of the Notes -- Ranking;
Subordination."
Optional Redemption........... The Exchange Notes will be redeemable at the
option of the Company, in whole or in part, at
any time on or after June 15, 2003, at the
redemption prices set forth herein, plus
accrued interest, if any, to the date of
redemption. See "Description of the Notes." In
addition, at any time on or prior to June 15,
2001, up to 35% of the aggregate principal
amount of Exchange Notes will be redeemable, at
the option of the Company, with the proceeds of
one or more Equity Offerings at 109.50% of the
original principal amount thereof, plus accrued
interest; provided, however, that at least 65%
of the original aggregate principal amount of
the Notes remains outstanding following each
such redemption. In addition, the Exchange
Notes will be redeemable at the option of the
Company, in whole or in part, at any time prior
to June 15, 2003, at a redemption price equal
to the principal amount thereof, together
9
<PAGE> 16
with accrued and unpaid interest to the date of
redemption, plus the Applicable Premium. See
"Description of the Notes -- Optional
Redemption."
Note Guarantees............... The Company's obligations under the Exchange
Notes will be fully and unconditionally
guaranteed, on a senior subordinated basis,
jointly and severally, by each of the
Guarantors. The Note Guarantees will be
subordinated to all Senior Indebtedness of the
Guarantors on the same basis as the Exchange
Notes are subordinated to the Senior
Indebtedness of the Company, pari passu with
any senior subordinated indebtedness of the
Guarantors and senior to any indebtedness of
the Guarantors subordinated to the Note
Guarantees. At May 2, 1998, on a pro forma
basis after giving effect to the Original Notes
Offering and the use of the net proceeds
therefrom and the Continental Acquisition, the
Guarantors would have had Senior Indebtedness
of approximately $18 million (in addition to
approximately $151 million representing
guarantees of the Company's borrowings under
the Credit Facility). In addition, the Note
Guarantees will be effectively subordinated to
all existing and future liabilities of the
Non-Guarantor Subsidiaries. At May 2, 1998, on
the same pro forma basis, the Non-Guarantor
Subsidiaries would have had approximately $7
million of outstanding liabilities. See
"Description of the Notes -- Note Guarantees"
and Note 16 of the Notes to the Company's
Consolidated Financial Statements.
Change of Control............. Upon a Change of Control (as defined herein),
the Company will be required to make an offer
to purchase the Exchange Notes at a purchase
price equal to 101% of their principal amount
on the date of purchase, plus accrued interest,
if any. There can be no assurance that the
Company will have sufficient funds available at
the time of any Change of Control or will be
permitted under the Credit Facility or other
Senior Indebtedness to make any such repurchase
of the Exchange Notes. See "Description of the
Notes -- Repurchase of Notes upon a Change of
Control."
Certain Covenants............. The Indenture contains certain covenants that,
among other things, will limit the ability of
the Company and its Restricted Subsidiaries (as
defined) or, in certain cases, the Guarantors,
to incur indebtedness, pay dividends, prepay
subordinated indebtedness, repurchase capital
stock, make investments, create liens, engage
in transactions with stockholders and
affiliates, sell assets and engage in mergers
and consolidations. However, these limitations
will be subject to a number of important
qualifications and exceptions. See "Description
of the Notes -- Covenants."
RISK FACTORS
Holders of Original Notes exchanging such Original Notes for Exchange Notes
in the Exchange Offer and prospective investors in the Notes should carefully
consider all the information set forth in this Prospectus and, in particular,
should evaluate the specific factors under "Risk Factors."
10
<PAGE> 17
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
---------------------------------------------------------------------- ---------------------
OCTOBER 25, OCTOBER 25,
1997 1997 APRIL 26, MAY 2
OCTOBER 28, OCTOBER 26, OCTOBER 25, PRO PRO FORMA AS 1997 1998
1995 1996 1997(1) FORMA(2) ADJUSTED(2)(3) ACTUAL(1) ACTUAL(4)
----------- ----------- ----------- ----------- -------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Net sales............ $265,168 $350,685 $648,705 $830,468 $830,468 $292,198 $407,863
Gross profit......... 67,440 90,455 141,392 170,772 170,772 64,840 75,798
Write-off of acquired
in-process research
and development..... -- -- 78,000 -- -- 78,000 63,050
Restructuring and
other non-recurring
charges............. -- -- -- -- -- -- 5,947
-------- -------- -------- -------- -------- --------- ---------
Income (loss) from
operations.......... 33,906 51,532 (1,194) 86,055 86,055 (41,979) (32,509)
Interest expense..... (537) (338) (10,923) (27,544) (33,802) (5,251) (6,294)
Net income (loss).... 21,374 32,014 (36,493) 36,210 32,502 (59,212) (47,612)
STATEMENT OF CASH
FLOWS DATA:
Cash flows from
operating
activities.......... $ 36,349 $ 55,629 $ 50,667 $ 13,990 $ 12,595
Cash flows from
investing
activities.......... (31,104) (47,910) (268,913) (229,871) (236,656)
Cash flows from
financing
activities.......... (3,002) 3,760 197,631 190,201 216,887
Capital
expenditures........ 28,865 54,998 69,851 $ 97,341 $ 97,341 29,611 48,186
OTHER DATA:
Depreciation and
amortization........ $ 15,194 $ 18,843 $ 41,850 $ 57,972 $ 58,597 $ 18,001 $ 30,407
EBITDA(6)............ 49,100 70,375 118,656 144,027 144,027 54,022 64,531
Ratio of earnings to
fixed charges(7).... 66.2x 156.3x 0.2x 3.2x 2.6x -- --
Ratio of EBITDA to
interest expense.... 91.4x 208.2x 10.9x 5.2x 4.3x 10.3x 10.3x
Ratio of total debt
to EBITDA........... 0.09x 0.05x 0.97x 2.23x 2.27x 4.51x 5.64x
<CAPTION>
SIX MONTHS ENDED
--------------------------
MAY 2, MAY 2,
1998 1998
PRO PRO FORMA AS
FORMA(5) ADJUSTED(3)(5)
-------- ---------------
<S> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Net sales............ $459,814 $459,814
Gross profit......... 77,716 77,716
Write-off of acquired
in-process research
and development..... -- --
Restructuring and
other non-recurring
charges............. 5,947 5,947
-------- --------
Income (loss) from
operations.......... 25,460 25,460
Interest expense..... (12,083) (15,211)
Net income (loss).... 8,880 6,996
STATEMENT OF CASH
FLOWS DATA:
Cash flows from
operating
activities..........
Cash flows from
investing
activities..........
Cash flows from
financing
activities..........
Capital
expenditures........ $ 58,983 $ 58,983
OTHER DATA:
Depreciation and
amortization........ $ 36,012 $ 36,012
EBITDA(6)............ 67,419 67,419
Ratio of earnings to
fixed charges(7).... 2.2x 1.8x
Ratio of EBITDA to
interest expense.... 5.6x 4.4x
Ratio of total debt
to EBITDA........... 5.40x 5.40x
</TABLE>
<TABLE>
<CAPTION>
MAY 2, 1998
--------------------------
ACTUAL AS ADJUSTED(3)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments........... $ 4,997 $ 4,997
Working capital............................................. 98,633 98,633
Total assets................................................ 739,441 745,691
Long-term debt, net of current portion...................... 359,037 365,287
Stockholders' investment.................................... 195,569 195,569
</TABLE>
- ---------------
(1) Net loss for the year ended October 25, 1997 and the six months ended April
26, 1997 includes a non-recurring write-off relating to the Zycon
Acquisition for acquired in-process research and development. Before
deducting the non-recurring write-off, income from operations was $76.8
million and $36.0 million, net income was $41.5 million and $18.8 million,
and the ratio of earnings to fixed charges was 7.3 and 7.0, for the year
ended October 25, 1997 and the six months ended April 26, 1997,
respectively.
(2) Gives effect to the Acquisitions assuming they had occurred on October 27,
1996. See Pro Forma Condensed Consolidated Financial Statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
11
<PAGE> 18
(3) Adjusted to reflect (i) the sale by the Company of the Notes offered hereby,
less discounts and commissions and estimated offering expenses payable by
the Company, and (ii) the application of the net proceeds therefrom. See
"Use of Proceeds."
(4) Net loss for the six months ended May 2, 1998 includes a non-recurring
write-off of $63 million relating to the Continental Acquisition for
acquired in-process research and development, as well as a $3.6 million
charge, net of tax, for restructuring and other non-recurring expenses
related to the consolidation of the Company's East Coast Tech Center
operations. Before deducting such non-recurring write-off, charge for
restructuring and other non-recurring expenses, income from operations was
$36.5 million, net income was $19.0 million, the ratio of earnings to fixed
charges was 5.6 for the six months ended May 2, 1998.
(5) Gives effect to the Continental Acquisition assuming it had occurred on
October 27, 1996. See Pro Forma Condensed Consolidated Financial Statements.
(6) EBITDA represents net income before interest, income taxes, depreciation and
amortization, and write-off of acquired in-process research and development.
EBITDA pro forma as adjusted does not include the amortization of deferred
financing costs related to the Notes of $0.6 million annually. EBITDA is not
a measurement of financial performance under generally accepted accounting
principles and should not be considered an alternative measure of the
Company's net income, operating performance, cash flow or liquidity. It is
included herein to provide additional information related to the Company's
ability to service debt. The EBITDA measures presented herein may not be
comparable to other similarly titled measures of other companies.
(7) Computed by dividing the sum of net income (loss), before deducting
provisions for income taxes and fixed charges, by total fixed charges. Fixed
charges consist of interest on debt and amortization of debt issuance costs
and a portion of capital lease costs that is intended to represent interest
expense.
12
<PAGE> 19
RISK FACTORS
This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including, without limitation, those set forth in the following risk factors and
elsewhere in this Prospectus. In addition to the other information included or
incorporated by reference in this Prospectus, the following risk factors should
be considered carefully in evaluating the Company and its business before
exchanging Original Notes for Exchange Notes offered hereby or making an
investment decision to purchase Notes.
LEVERAGE
The Acquisitions significantly increased the Company's debt service
obligations. At May 2, 1998, on a pro forma basis after giving effect to the
Original Notes Offering and the use of the net proceeds therefrom and the
Continental Acquisition, the Company and its subsidiaries would have had
approximately $544 million of total liabilities, and approximately $196 million
of stockholders' investment, and the Company and the Guarantors would have had
approximately $170 million of outstanding Senior Indebtedness, and the Company
would have had approximately $249 million available to it under the Credit
Facility, which, if borrowed, would constitute Senior Indebtedness. At May 2,
1998, on the same pro forma basis, the Guarantors would have had Senior
Indebtedness of approximately $18 million (in addition to approximately $151
million representing guarantees of the Company's borrowings under the Credit
Facility). The Company and its subsidiaries (including the Guarantors) will be
permitted to incur substantial additional indebtedness, including Senior
Indebtedness, in the future. See "Capitalization" and "Description of the Notes
- -- Covenants -- Limitation on Indebtedness."
Although the Company's cash flow from operations has been sufficient to
meet its debt service obligations in the past, there can be no assurance that
the Company's operating results will continue to be sufficient for the Company
to meet such obligations. The Company's ability to comply with the terms of the
Indenture and the Credit Facility, to make cash payments with respect to the
Notes and under the Credit Facility and to satisfy its other debt obligations or
to refinance any of such obligations will depend on the future performance of
the Company, which in turn is subject to prevailing economic conditions and
financial and other factors beyond its control. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources," "Description of the Notes" and "Description of Certain
Indebtedness."
The degree to which the Company and the Guarantors are leveraged could have
important consequences to holders of the Notes, including, but not limited to:
(i) adversely affecting their ability to satisfy their obligations with respect
to the Notes, (ii) increasing their vulnerability to general adverse economic
and industry conditions, (iii) limiting their ability to obtain additional
financing to fund potential acquisitions, future working capital, capital
expenditures and other general corporate requirements, (iv) requiring the
dedication of a substantial portion of their cash flow from operations to the
payment of principal of, and interest on, its indebtedness, thereby reducing the
availability of such cash flow to fund working capital, capital expenditures or
other general corporate purposes, (v) limiting their flexibility in planning
for, or reacting to, changes in its business and the industry, (vi) they may be
substantially more leveraged than certain of their competitors, which may place
them at a relative competitive disadvantage, (vii) a significant portion of
their borrowings are and may continue to be at variable rates of interest, which
exposes them to the risk of increased interest rates, and (viii) the
indebtedness outstanding under the Credit Facility will mature prior to the
maturity of the Notes. In addition, the Credit Facility contains financial and
other restrictive covenants that will limit the ability of the Company to, among
other things, borrow additional funds. See "Description of Certain
Indebtedness."
SUBORDINATION
The Notes are unsecured, senior subordinated indebtedness of the Company,
are subordinated to all Senior Indebtedness of the Company, rank pari passu to
any senior subordinated indebtedness of the
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Company and are senior to any indebtedness of the Company subordinated to the
Notes. The Company's obligations under the Notes are fully and unconditionally
guaranteed, on a senior subordinated basis, jointly and severally, by the
Guarantors. The Note Guarantees are subordinated to all Senior Indebtedness of
the Guarantors on the same basis as the Notes are subordinated to the Senior
Indebtedness of the Company, pari passu with any senior subordinated
indebtedness of the Guarantors and senior to any indebtedness of the Guarantors
subordinated to the Note Guarantees. The Notes are also effectively subordinated
to all Senior Indebtedness of the Guarantors. In addition, the Notes and the
Note Guarantees are effectively subordinated to all existing and future
liabilities of the Non-Guarantor Subsidiaries. Upon any distribution to
creditors of the Company or the Guarantors in a liquidation or dissolution or in
a bankruptcy, reorganization, insolvency, receivership or similar proceeding,
the holders of Senior Indebtedness will be entitled to be paid in full in cash
before any payment may be made with respect to the Notes or the Note Guarantees.
In addition, the subordination provisions of the Indenture will provide that
payments with respect to the Notes and the Note Guarantees will be blocked in
the event of a payment default on Senior Indebtedness and may be blocked for up
to 179 days each year in the event of certain non-payment defaults on Senior
Indebtedness. In the event of a bankruptcy, liquidation or reorganization, the
payment of the principal of, or premium, if any, and interest on the Notes and
the Note Guarantees is subordinated to the extent provided in the Indenture to
the prior payment in full of all Senior Indebtedness. There can be no assurance
that the Company or the Guarantors will have sufficient funds remaining after
payments to holders of Senior Indebtedness to make payments to the holders of
the Notes or the Note Guarantees. By reason of the subordination, in the event
of the liquidation or dissolution of the Company or the Guarantors, holders of
Senior Indebtedness may receive more, ratably, and holders of the Notes may
receive less, ratably, than the other creditors of the Company. In any of the
foregoing events, there can be no assurance that there would be sufficient
assets to pay amounts due on the Notes or the Note Guarantees. See "Description
of the Notes -- Ranking; Subordination."
At May 2, 1998, on a pro forma basis after giving effect to the Original
Notes Offering and the use of the net proceeds therefrom and the Continental
Acquisition, the Company and the Guarantors would have had approximately $170
million of Senior Indebtedness outstanding and approximately $249 million would
have been available to the Company under the Credit Facility, which, if
borrowed, would constitute Senior Indebtedness. At May 2, 1998, on the same pro
forma basis, the Guarantors would have had Senior Indebtedness of approximately
$18 million (in addition to approximately $151 million representing guarantees
of the Company's borrowings under the Credit Facility). The Company's debt
service was approximately $15 million for fiscal 1997. See "Description of
Certain Indebtedness."
RESTRICTIVE COVENANTS
The Credit Facility contains a number of covenants that, among other
things, restrict the ability of the Company to incur additional indebtedness,
change its capitalization, pay dividends or other distributions, prepay
subordinated indebtedness, dispose of certain assets, enter into sale and
leaseback transactions, create liens, enter into guarantees, make certain
investments, acquisitions or mergers, and that otherwise restrict corporate
activities. In addition, under the Credit Facility, the Company is required to
maintain specified financial covenants, including minimal levels of consolidated
net worth, a maximum ratio of consolidated funded debt to EBITDA, maximum
capital expenditures and minimum interest coverage and fixed charge coverage.
The ability of the Company to comply with such provisions may be affected by
events beyond its control. The breach of any of these covenants could result in
a default under the Credit Facility. In the event of any such default, depending
on the actions taken by the lenders under the Credit Facility, the Company could
be prohibited from making any payments on the Notes. In addition, in the event
of any such default such lenders could elect to declare all amounts borrowed
under the Credit Facility, together with accrued interest, to be due and
payable. No sinking fund is provided for the Notes. In addition, the loan
instruments governing the indebtedness of certain of the Company's subsidiaries
contain certain restrictive covenants which limit the payment of dividends and
distributions to, and the transfer of assets to, the Company and require such
subsidiaries to satisfy specific financial covenants. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "Description of the Notes" and
"Description of Certain Indebtedness."
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<PAGE> 21
DEPENDENCE ON ELECTRONICS INDUSTRY
The Company's principal customers are electronics OEMs and contract
manufacturers in the computing (mainly workstations, servers, mainframes,
storage and notebooks), data communications/telecommunications and industrial
automation industries, including process controls, automotive, medical and
instrumentation. These industry segments, and the electronics industry as a
whole, are characterized by intense competition, relatively short product
life-cycles and significant fluctuations in product demand. In addition, the
electronics industry is generally subject to rapid technological change and
product obsolescence. Discontinuance or modifications of products containing
components manufactured by the Company could have a material adverse effect on
the Company's business, financial condition and results of operations. Further,
the electronics industry is subject to economic cycles and has in the past
experienced, and is likely in the future to experience, recessionary periods. A
recession or any other event leading to excess capacity or a downturn in the
electronics industry would likely result in intensified price competition,
reduced gross margins and a decrease in unit volume, all of which would have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Recent Developments,"
"Business -- Industry Overview and Trends" and "-- Markets and Customers."
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company's quarterly operating results have varied and may continue to
fluctuate significantly from period to period, including on a quarterly basis.
At times in the past, the Company's net sales and net income have decreased from
the prior quarter. Operating results are affected by a number of factors,
including the timing and volume of orders from and shipments to customers
relative to the Company's manufacturing capacity, product and price competition,
product mix, number of working days in a particular quarter, manufacturing
process yields, the timing of expenditures in anticipation of future sales, raw
material and component availability, the length of sales cycles, trends in the
electronics industry and general economic factors. In recent years, the
Company's gross margins have varied primarily as a result of capacity
utilization, product mix, lead times, volume levels and complexity of customer
orders. There can be no assurance that the Company will be able to manage the
utilization of manufacturing capacity or product mix in a manner that will
maintain or improve gross margins. The timing and volume of orders placed by the
Company's customers vary due to customer attempts to manage inventory, changes
in customers' manufacturing strategies and variation in demand for customer
products. The Company's expense levels are relatively fixed and are based, in
part, on expectations of future revenues. Consequently, if revenue levels are
below expectations, this occurrence is likely to materially adversely affect the
Company's business, financial condition and results of operations. Fluctuations
in quarterly operating results could have a material adverse effect on the price
of the Notes and on the cash flow of the Company necessary to pay amounts due on
the Notes. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
VARIABILITY OF ORDERS
The level and timing of orders placed by the Company's customers vary due
to a number of factors, including customer attempts to manage inventory, changes
in the customers' manufacturing strategies and variations in demand for customer
products due to, among other things, technological changes, new product
introductions, product life-cycles, competitive conditions or general economic
conditions. Since the Company generally does not obtain long-term purchase
orders or commitments from its customers, it must anticipate the future volume
of orders based on discussions with its customers. A substantial portion of
sales in a given quarter may depend on obtaining orders for products to be
manufactured and shipped in the same quarter in which those orders are received.
The Company relies on its estimate of anticipated future volumes when making
commitments regarding the level of business that it will seek and accept, the
mix of products that it intends to manufacture, the timing of production
schedules and the levels and utilization of personnel and other resources. A
variety of conditions, both specific to the individual customer and generally
affecting the customer's industry, may cause customers to cancel, reduce or
delay orders that were previously made or anticipated. A significant portion of
the Company's released backlog at any time may be subject to
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<PAGE> 22
cancellation or postponement without penalty. The Company cannot assure the
timely replacement of canceled, delayed or reduced orders. Significant or
numerous cancellations, reductions or delays in orders by a customer or group of
customers could materially adversely affect the Company's business, financial
condition and results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business -- Released
Backlog."
ACQUISITIONS
On March 20, 1998, the Company acquired all of the outstanding capital
stock of Continental for approximately $188 million (including acquisition
costs). On January 10, 1997, the Company acquired all of the outstanding capital
stock of Zycon for approximately $212 million (including acquisition costs). The
Company has limited experience in integrating acquired companies or technologies
into its operations. Therefore, there can be no assurance that the Company will
operate the acquired businesses profitably in the future. The gross profit
margins for Continental and Zycon for their respective fiscal years ended July
31, 1997 and December 31, 1996 were 18.2% and 15.7%, respectively. The gross
profit margins for Hadco (not including Continental or Zycon) for its fiscal
years ended October 26, 1996 and October 25, 1997 were 25.8% and 21.8%,
respectively. As a result of the Acquisitions, the Company expects its gross
profit margin will be lower in future fiscal quarters than has historically been
the case. Operating expenses associated with the acquired businesses may have a
material adverse effect on the Company's business, financial condition and
results of operations in the future. In addition, shortly after the Continental
Acquisition, one senior member of Continental's management left the Company.
There can be no assurance that the Company will be able to retain key personnel
at Continental. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business -- General."
The Company may from time to time pursue the acquisition of other
companies, assets, products or technologies. The Company may incur additional
indebtedness and additional charges against earnings in connection with future
acquisitions, and such incurrences could have material adverse consequences to
holders of Notes. See "-- Leverage." Acquisitions involve a number of operating
risks that could materially adversely affect the Company's operating results,
including the diversion of management's attention to assimilate the operations,
products and personnel of the acquired companies, the amortization of acquired
intangible assets, and the potential loss of key employees of the acquired
companies. Furthermore, acquisitions may involve businesses in which the Company
lacks experience. There can be no assurance that the Company will be able to
manage one or more acquisitions successfully, or that the Company will be able
to integrate the operations, products or personnel gained through any such
acquisitions without a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Strategy."
MANAGEMENT OF GROWTH
In fiscal 1997 and 1998, the Company has significantly expanded its
operations, including geographically, which has placed, and will continue to
place, significant demands on the Company's management, operational, technical
and financial resources. The Acquisitions have intensified these demands. The
Company expects that expansion will require additional management personnel and
the development of further expertise by existing management personnel. The
Company's ability to manage growth effectively, particularly given the
increasing scope of its operations, will require it to continue to implement and
improve its operational, financial and management information systems as well as
to further develop the management skills of its managers and supervisors and to
train, motivate and manage its employees. The Company's failure to effectively
manage future growth could have a material adverse effect on the Company's
business, financial condition and results of operations. Competition for
personnel is intense, and there can be no assurance that the Company will be
able to attract, assimilate or retain additional highly qualified employees in
the future, especially engineering personnel. The failure to hire and retain
such personnel could have a material adverse effect on the Company's business,
financial condition and results of operations. See "-- Acquisitions."
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<PAGE> 23
COMPETITION
The electronic interconnect industry is highly fragmented and characterized
by intense competition. The Company believes its major competitors are the large
U.S. and international independent and captive producers that also manufacture
multilayer printed circuits and provide backplane and other electronic
assemblies. Some of these competitors have significantly greater financial,
technical and marketing resources, greater name recognition and a larger
installed customer base than the Company. In addition, these competitors may
have the ability to respond more quickly to new or emerging technologies, may
adapt more quickly to changes in customer requirements and may devote greater
resources to the development, promotion and sale of their products than the
Company.
During periods of recession or economic slowdown in the electronics
industry and other periods when excess capacity exists, electronics OEMs become
more price sensitive, which could have a material adverse effect on interconnect
pricing. In addition, the Company believes that price competition from printed
circuit manufacturers in Asia and other locations with lower production costs
may play an increasing role in the printed circuit markets in which the Company
competes. This price competition from Asian printed circuit manufacturers may
intensify as a result of economic turmoil, currency devaluations or financial
market instability that many Asian countries are currently experiencing.
Moreover the Company's basic interconnect technology is generally not subject to
significant proprietary protection, and companies with significant resources or
international operations may enter the market. Increased competition could
result in price reductions, reduced margins or loss of market share, any of
which could materially adversely affect the Company's business, financial
condition and results of operations.
The demand for printed circuits has continued to be affected by the
development of smaller, more powerful electronic components requiring less
printed circuit area. Expansion of the Company's existing products or services
could expose the Company to new competition. Moreover, new developments in the
electronics industry could render existing technology obsolete or less
competitive and could potentially introduce new competition into the industry.
There can be no assurance that the Company will continue to compete successfully
against present and future competitors or that competitive pressures faced by
the Company will not have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Industry
Overview and Trends" and "-- Competition."
MALAYSIAN FACILITY AND ASIAN ECONOMIC TURMOIL
Hadco Santa Clara (formerly Zycon) completed construction of a volume
manufacturing facility for printed circuits in Malaysia in fiscal 1997. Hadco's
management has no experience in operating foreign manufacturing facilities, and
there can be no assurance that the Company will operate the new facility on a
profitable basis. The Company believes that the Malaysian facility could incur
operating losses in the future as a result of various factors, including,
without limitation, operating inefficiencies and price competition for the
products which the Company intends to produce at the facility. International
operations are also subject to a number of risks, including unforeseen changes
in regulatory requirements, exchange rates, tariffs and other trade barriers,
misappropriation of intellectual property, currency fluctuations, and political
and economic instability. Malaysia and other Asian countries have recently
experienced economic turmoil and a significant devaluation of their local
currencies. There can be no assurance that this period of Asian economic turmoil
will not result in increased price competition, reduced sales by the Company's
customers in Asia with a concomitant reduction in such customers' orders for the
Company's products, restrictions on the transfer of funds overseas, employee
turnover, labor unrest, the reversal of current policies encouraging foreign
investment and trade, or other domestic Asian economic problems that could
materially adversely affect the Company's business, financial condition or
results of operations.
TECHNOLOGICAL CHANGE, PROCESS DEVELOPMENT AND PROCESS DISRUPTION
The market for the Company's products and services is characterized by
rapidly changing technology and continuing process development. The future
success of the Company's business will depend in large part upon its ability to
maintain and enhance its technological capabilities, develop and market products
and services
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<PAGE> 24
that meet changing customer needs and successfully anticipate or respond to
technological changes, on a cost-effective and timely basis. In addition, the
electronic interconnect industry in the future could encounter competition from
new technologies that render existing electronic interconnect technology less
competitive or obsolete, including technologies that may reduce the number of
printed circuits required in electronic components. There can be no assurance
that the Company will effectively respond to the technological requirements of
the changing market. To the extent the Company determines that new technologies
and equipment are required to remain competitive, the development, acquisition
and implementation of such technologies and equipment are likely to continue to
require significant capital investment by the Company. There can be no assurance
that capital will be available for this purpose in the future or that
investments in new technologies will result in commercially viable technological
processes or that there will be commercial applications for these technologies.
Moreover, the Company's business involves highly complex manufacturing processes
that have in the past and could in the future be subject to periodic failure or
disruption. Process disruptions can result in delays in certain product
shipments, and there can be no assurance that failures or disruptions will not
occur in the future. In addition, the Company has a large manufacturing facility
in Santa Clara, California, an area of the United States that is subject to
significant natural disasters, including earthquakes, fires and flooding. The
loss of revenue and earnings to the Company from such a technological change,
process development or process disruption, as well as any disruption of the
Company's operations resulting from a natural disaster such as an earthquake,
fire, flood or drought in California or other locations where the Company has
facilities, could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Industry
Overview and Trends," "-- Strategy" and "-- Products and Services."
CUSTOMER CONCENTRATION
During the past several years, the Company's sales to a small number of its
customers have accounted for a significant percentage of the Company's annual
net sales. During fiscal 1995, 1996 and 1997, the Company's ten largest
customers accounted for approximately 46%, 48% and 47% of net sales,
respectively. In fiscal 1997, Solectron accounted for approximately 15% of the
net sales of the Company. The Company generally does not obtain long-term
purchase orders or commitments from its customers, and the orders received by
the Company generally require delivery within 90 days. Given the Company's
strategy of developing long-term purchasing relationships with high growth
companies, the Company's dependence on a number of its most significant
customers may increase. There can be no assurance that the Company will be able
to identify, attract and retain customers with high growth rates or that the
customers that it does attract and retain will continue to grow. Although there
can be no assurance that the Company's principal customers will continue to
purchase products and services from the Company at current levels, the Company
expects to continue to depend upon its principal customers for a significant
portion of its net sales. The loss of or decrease in orders from one or more
major customers could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Markets and
Customers" and "-- Variability of Orders."
MANUFACTURING CAPACITY
The Company believes its long-term competitive position depends in part on
its ability to increase manufacturing capacity. The Company may obtain such
additional capacity through acquisitions or expansion of its current facilities.
Either approach would require substantial additional capital, and there can be
no assurance that such capital will be available from cash generated by current
operations. Further, there can be no assurance that the Company will be able to
acquire sufficient capacity or successfully integrate and manage such additional
facilities. Although the Company has historically needed to increase its
manufacturing capacity, the Company believes that excess capacity may exist in
the printed circuit and electronic assembly industries. In addition, growth
rates in the electronics industry as a whole have fluctuated historically. These
factors could have a material adverse effect on future orders and pricing. The
Company's expansion of its manufacturing capacity has significantly increased
and will continue to significantly increase its fixed costs, and the future
profitability of the Company will depend on its ability to utilize its
manufacturing capacity in an effective manner. The failure to obtain sufficient
capacity when needed or to successfully integrate and manage additional
manufacturing facilities could adversely impact the Company's relationships with
its
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customers and materially adversely affect the Company's business, financial
condition and results of operations. See "-- Technological Change, Process
Development and Process Disruption" and "Business -- Manufacturing and
Facilities."
ENVIRONMENTAL MATTERS
The Company is subject to a variety of local, state and federal
environmental laws and regulations relating to the storage, use, discharge and
disposal of chemicals, solid waste and other hazardous materials used during its
manufacturing process, as well as air quality regulations and restrictions on
water use. When violations of environmental laws occur, the Company can be held
liable for damages and the costs of remedial actions and can also be subject to
revocation of permits necessary to conduct its business. Any such revocations
could require the Company to cease or limit production at one or more of its
facilities, which could have a material adverse effect on the Company's
business, financial condition and results of operations. Moreover, the Company's
failure to comply with present and future regulations could restrict the
Company's ability to expand its facilities or could require the Company to
acquire costly equipment or to incur other significant expenses to comply with
environmental regulations.
Environmental laws could become more stringent over time, imposing greater
compliance costs and increasing risks and penalties associated with violation.
The Company operates in several environmentally sensitive locations and is
subject to potentially conflicting and changing regulatory agendas of political,
business and environmental groups. Changes or restrictions on discharge limits,
emissions levels, or material storage or handling might require a high level of
unplanned capital investment and/or relocation. There can be no assurance that
compliance with new or existing regulations will not have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Business -- Environmental Matters," "-- Legal Proceedings and Claims" and
Note 9 of Notes to the Company's Consolidated Financial Statements.
AVAILABILITY OF RAW MATERIALS AND COMPONENTS
Although the Company has not entered into any supply agreements and does
not have any guaranteed sources of raw materials or components, it routinely
purchases raw materials and components from several key material suppliers.
Although alternative material suppliers are currently available, a significant
unplanned event at a major supplier could have a material adverse effect on the
Company's operations. Hadco Santa Clara has experienced shortages of certain
types of raw materials in the past. The Company believes that the potential
exists for shortages of materials in the printed circuit and electronic assembly
industries, which could have a material adverse effect on the Company's
manufacturing operations and future unit costs. Product changes and the overall
demand for electronic interconnect products could increase the industry's use of
new laminate materials, standard laminate materials, multilayer blanks,
electronic components and other materials, and therefore such materials may not
be readily available to the Company in the future. Electronic components used by
the Company in producing backplane assemblies are purchased by the Company and,
in certain circumstances, the Company may bear the risk of component price
fluctuations. There can be no assurance that shortages of certain types of
electronic components will not occur in the future. Component shortages or price
fluctuations could have a material adverse effect on the Company's backplane
assembly business, thereby materially adversely affecting the Company's
business, financial condition and results of operations. To the extent that the
Company's backplane assembly business expands as a percentage of the Company's
net sales, component shortages and price fluctuations could, to a greater
extent, materially adversely affect the Company's business, financial condition
and results of operations. See "Business -- Supplier Relationships."
DEPENDENCE ON KEY PERSONNEL
The Company's future success depends to a large extent upon the continued
services of key managerial and technical employees. The only executive officers
of the Company bound by employment or non-compete agreements are the President
and Chief Executive Officer and a Senior Vice President (formerly President and
Chief Executive Officer of Continental). Hadco's President and Chief Executive
Officer's non-compete
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<PAGE> 26
agreement expires one year after the termination of his employment with the
Company. Most other key employees of the Company do not have employment or
non-compete agreements. The loss of the services of any of the Company's key
employees could have a material adverse effect on the Company. The Company
believes that its future success depends on its continuing ability to attract
and retain highly qualified technical, managerial and marketing personnel.
Competition for such personnel is intense, especially for engineering personnel,
and there can be no assurance that the Company will be able to attract,
assimilate or retain such personnel. If the Company is unable to hire and retain
key personnel, the Company's business, financial condition and results of
operations may be materially adversely affected. See "Management."
INTELLECTUAL PROPERTY
The Company's success depends in part on its proprietary techniques and
manufacturing expertise, particularly in the area of complex multilayer printed
circuits. The Company has few patents and relies primarily on trade secret
protection of its intellectual property. There can be no assurance that the
Company will be able to protect its trade secrets or that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's trade secrets. In addition,
litigation may be necessary to protect the Company's trade secrets, to determine
the validity and scope of the proprietary rights of others or to defend against
claims of patent infringement. If any infringement claim is asserted against the
Company, the Company may seek to obtain a license of the other party's
intellectual property rights. There is no assurance that a license would be
available on reasonable terms or at all. Litigation with respect to patents or
other intellectual property matters could result in substantial costs and
diversion of management and other resources and could have a material adverse
effect on the Company's business, financial condition and results of operations.
See "Business -- Legal Proceedings and Claims" for a description of a notice
received by the Company from the Lemelson Medical, Education & Research
Foundation Limited Partnership alleging infringement of certain patents.
POSSIBLE INABILITY TO FUND A CHANGE OF CONTROL OFFER
Upon a Change of Control, the Company will be required to offer to
repurchase all outstanding Notes at 101% of the principal amount thereof plus
accrued and unpaid interest to the date of repurchase. However, there can be no
assurance that sufficient funds will be available at the time of any Change of
Control to make any required repurchases of Notes tendered or that restrictions
in the Credit Facility or other Senior Indebtedness will allow the Company to
make such required repurchases. The Company's repurchase of Notes upon a Change
of Control, absent a waiver, would constitute a default under the terms of the
Company's Credit Facility. Any future credit agreements or other agreements
relating to other indebtedness (including other Senior Indebtedness) to which
the Company becomes a party may contain similar restrictions and provisions. In
the event a Change of Control occurs at a time when the Company is prohibited
from repurchasing Notes, the Company could seek the consent of its lenders to
the repurchase of the Notes or could attempt to refinance the borrowings that
contain such prohibition. If the Company does not obtain such a consent or repay
such borrowings, the Company would remain prohibited from repurchasing Notes.
Any failure by the Company to repurchase the Notes when required following a
Change of Control would result in an Event of Default under the Indenture
whether or not such repurchase is permitted by the subordination provisions of
the Indenture. Any such default may, in turn, cause a default under Senior
Indebtedness of the Company. Moreover, the occurrence of a Change of Control may
cause an event of default under Senior Indebtedness of the Company. As a result,
in each case, any repurchase of the Notes would, absent a waiver, be prohibited
under the subordination provisions of the Indenture until the Senior
Indebtedness is paid in full. Notwithstanding these provisions, the Company
could enter into certain transactions, including certain recapitalizations that
would not constitute a Change of Control but would increase the amount of debt
outstanding at such time. See "Description of the Notes -- Covenants" and
"-- Repurchase of Notes upon a Change of Control" and "Description of Certain
Indebtedness."
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FRAUDULENT CONVEYANCE
In the event of the bankruptcy or insolvency of any of the Guarantors, the
incurrence of the Note Guarantee of such Guarantor would be subject to review
under relevant federal and state fraudulent conveyance and similar statutes in a
bankruptcy or reorganization case or a lawsuit by or on behalf of creditors of
such Guarantor. Under those statutes, if a court were to find that the Note
Guarantee of such Guarantor was incurred with the intent of hindering, delaying
or defrauding creditors or that such Guarantor received less than a reasonably
equivalent value or fair consideration therefor and, at the time of its
incurrence, such Guarantor either (i) was insolvent or rendered insolvent by
reason thereof, (ii) was engaged in a business or transaction for which its
remaining unencumbered assets constituted unreasonably small capital or (iii)
intended to or believed that it would incur debts beyond its ability to pay as
they matured or became due, the court could void those obligations.
The measure of insolvency for purposes of a fraudulent conveyance claim
will vary depending upon the law of the jurisdiction being applied. Generally,
however, a company will be considered insolvent at a particular time if the sum
of its debts at that time is greater than the then fair value of its assets or
if the fair salable value of its assets at the time is less than the amount that
would be required to pay its probable liability on its existing debts as they
become absolute and mature. The Company believes that, after giving effect to
the Original Notes Offering and the incurrence of the Note Guarantees by the
Guarantors, each of the Guarantors will be (i) neither insolvent nor rendered
insolvent by the incurrence of its Note Guarantee, (ii) in possession of
sufficient capital to run its business effectively and (iii) incurring debts
within its ability to pay as the same mature or become due. No assurance can be
given, however, that the assumptions and methodologies used by the Company in
reaching its conclusions about the solvency of the Company and any Guarantor
would be adopted by a court or that a court would concur with those conclusions.
In the event the Note Guarantee of a Guarantor was voided as a fraudulent
conveyance, holders of the Notes would effectively be subordinated to all
indebtedness and other liabilities of such Guarantor.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Original Notes have not been registered under the Securities Act or any
state securities laws and therefore may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case in
compliance with certain other conditions and restrictions. Original Notes that
are not tendered in exchange for Exchange Notes or are tendered but not accepted
will, following the consummation of the Exchange Offer, continue to bear a
legend reflecting such restrictions on transfer and will remain restricted
securities. Accordingly, such Original Notes may be resold only (i) to the
Company, (ii) pursuant to Rule 144A or Rule 144 under the Securities Act or
pursuant to another exemption under the Securities Act, (iii) outside the United
States to a foreign person pursuant to the requirements of Rule 904 under the
Securities Act, or (iv) pursuant to an effective registration statement under
the Securities Act. In addition, upon consummation of the Exchange Offer,
holders of Original Notes that remain outstanding will not be entitled to any
rights to have such Original Notes registered under the Securities Act. See "The
Exchange Offer." To the extent that Original Notes are not tendered and accepted
in the Exchange Offer, a holder's ability to sell such Original Notes could be
adversely affected.
ABSENCE OF PUBLIC MARKET
The Exchange Notes will be new securities for which there is currently no
public market. The Company does not intend to list the Exchange Notes on any
national securities exchange or to seek the admission thereof to trading in the
National Association of Securities Dealers Automated Quotation System. The
Company does, however, intend to file an application to list the Notes on the
Luxembourg Stock Exchange, although no assurance can be given that such
application will be accepted. The Initial Purchasers have advised the Company
that they currently intend to make a market in the Exchange Notes, but they are
not obligated to do so and, if commenced, may discontinue such market making at
any time. Further, if any of the Notes are traded, they may trade at a discount
from the initial offering price, depending on prevailing interest rates, the
21
<PAGE> 28
market for similar securities, and other factors including general economic
conditions and the financial condition, performance, and prospects of the
Company. Accordingly, there can be no assurance as to the development of any
market, or the liquidity of any market that may develop, for the Exchange Notes.
In addition, to the extent that Original Notes are tendered and accepted in
the Exchange Offer, the aggregate principal amount of Original Notes outstanding
will decrease, with a resulting decrease in the liquidity of the market
therefor.
PROCEDURES FOR TENDER OF ORIGINAL NOTES
The Exchange Notes will be issued in exchange for Original Notes only after
timely receipt by the Exchange Agent of such Original Notes, a properly
completed and duly executed Letter of Transmittal and all other required
documents. Therefore, holders of Original Notes desiring to tender such Original
Notes in exchange for Exchange Notes should allow sufficient time to ensure
timely delivery. Neither the Exchange Agent nor the Company is under any duty to
give notification of defects or irregularities with respect to tenders of
Original Notes for exchange. Any holder of Original Notes who tenders in the
Exchange Offer for the purpose of participating in a distribution of the
Exchange Notes will be required to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. Each broker-dealer that receives Exchange Notes for its own account
in exchange for Original Notes, where such Original Notes were acquired by such
broker-dealer as a result of market-making or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. See "Plan of Distribution."
FORWARD-LOOKING STATEMENTS
A number of the matters and subject areas discussed in this Prospectus that
are not historical or current facts deal with potential future circumstances and
developments. The discussion of such matters and subject areas is qualified by
the inherent risks and uncertainties surrounding future expectations generally,
and also may differ materially from the Company's actual future experience
involving any one or more of such matters and subject areas. The Company has
attempted to identify, in context, certain of the factors that it currently
believes may cause actual future experience and results to differ from the
Company's current expectations regarding the relevant matter or subject area.
The operations and results of the Company's business also may be subject to the
effect of other risks and uncertainties in addition to the relevant qualifying
factors identified elsewhere in the foregoing "Risk Factors" section, including,
but not limited to, other risks and uncertainties described from time to time in
the Company's reports filed with the Commission.
22
<PAGE> 29
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain obligations of the
Company and the Guarantors under the Registration Rights Agreement. The Company
will not receive any proceeds from the issuance of the Exchange Notes offered
hereby. The Company has agreed to bear the expenses of the Exchange Offer
pursuant to the terms of the Registration Rights Agreement. No underwriter is
being used in connection with the Exchange Offer.
23
<PAGE> 30
CAPITALIZATION
The following table sets forth the consolidated cash, cash equivalents and
short-term investments and capitalization of the Company as of May 2, 1998, (i)
on a historical basis and (ii) as adjusted for the Original Notes Offering and
the application of the net proceeds therefrom.
<TABLE>
<CAPTION>
MAY 2, 1998
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash, cash equivalents and short-term investments........... $ 4,997 $ 4,997
======== ========
Short-term debt and current portion of long-term debt....... $ 4,837 $ 4,837
======== ========
Long-term debt:
Credit Facility........................................... $345,000 $151,930
Notes offered hereby (net of original issue discount of
$680,000).............................................. -- 199,320
Other long-term debt, net of current portion.............. 14,037 14,037
-------- --------
Total long-term debt................................... 359,037 365,287
-------- --------
Stockholders' investment:
Common stock, $0.05 par value, 50,000,000 shares
authorized; 13,212,452 shares issued(1)................ 662 662
Paid-in capital........................................... 171,466 171,466
Deferred compensation..................................... (75) (75)
Retained earnings......................................... 23,516 23,516
-------- --------
Total stockholders' investment......................... 195,569 195,569
-------- --------
Total capitalization.............................. $554,606 $560,856
======== ========
</TABLE>
- ---------------
(1) Excludes options outstanding as of May 2, 1998 to acquire 1,426,395 shares
of Common Stock at a weighted average exercise price of $30.21 per share and
an additional 1,011,410 shares of Common Stock reserved for issuance under
the Company's stock option plans, employee stock purchase plan and outside
directors' compensation plan. See Note 10 of Notes to the Company's
Consolidated Financial Statements.
24
<PAGE> 31
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial
information is based upon historical consolidated financial statements and gives
effect to the Acquisitions and the Original Notes Offering and the use of the
net proceeds therefrom.
In January 1997, the Company acquired all of the outstanding capital stock
of Zycon for approximately $212 million (including acquisition costs). The Zycon
Acquisition was accounted for as a purchase. A significant portion of the
purchase price was identified in an appraisal as intangible assets, including
approximately $78 million of acquired in-process research and development. See
Note 2 of Notes to the Company's Consolidated Financial Statements.
In March 1998, the Company acquired all of the outstanding capital stock of
Continental for approximately $188 million (including acquisition costs). The
Continental Acquisition has been accounted for as a purchase. A significant
portion of the purchase price was identified in an appraisal as intangible
assets, including approximately $63 million of acquired in-process research and
development. See Note 2 of Notes to the Company's Consolidated Financial
Statements.
The Pro Forma Condensed Consolidated Statement of Operations for the year
ended October 25, 1997 assumes the Acquisitions had occurred on October 27, 1996
and includes the actual results of operations of Hadco for its fiscal year ended
October 25, 1997 (including Zycon's actual results of operations from January
10, 1997 through October 25, 1997), Zycon's actual results of operations for the
three months ended December 31, 1996 and Continental's actual results of
operations for its fiscal year ended July 31, 1997. The Pro Forma Condensed
Consolidated Statement of Operations for the six months ended May 2, 1998
assumes the Continental Acquisition had occurred on October 25, 1997 and
reflects Hadco's actual results of operations for the six months ended May 2,
1998 and Continental's actual results of operations beginning November 2, 1997,
and ending on the date of acquisition, March 19, 1998.
The Pro Forma Condensed Consolidated Statements of Operations do not
include the effect of any non-recurring write-offs directly attributable to the
Acquisitions and are not necessarily indicative of the actual results that would
have been achieved had the Acquisitions occurred at the beginning of the
respective periods, nor do they purport to indicate the results of future
operations of the Company. The accompanying Pro Forma Condensed Consolidated
Financial Statements should be read in conjunction with the Company's and
Continental's historical financial statements and related notes thereto
appearing elsewhere in this Prospectus.
25
<PAGE> 32
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS(1)
FOR THE YEAR ENDED OCTOBER 25, 1997
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
---------------------------------------------------- COMBINED
HADCO ZYCON CONTINENTAL ZYCON CONTINENTAL AS ADJUSTED
YEAR ENDED QUARTER ENDED YEAR ENDED PRO FORMA PRO FORMA FOR THE
OCTOBER 25, 1997 DECEMBER 31, 1996 JULY 31, 1997 ADJUSTMENTS ADJUSTMENTS ACQUISITIONS
---------------- ----------------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net sales............... $648,705 $61,011 $120,752 $ -- $ -- $830,468
Cost of sales........... 507,313 52,650 98,698 -- 1,035(2) 659,696
-------- ------- -------- -------- -------- --------
Gross profit............ 141,392 8,361 22,054 -- (1,035) 170,772
Operating expenses...... 64,586 4,753 8,487 1,188(3) 5,703(4) 84,717
Write-off of acquired
in-process research
and development....... 78,000 -- -- (78,000)(5) -- --
-------- ------- -------- -------- -------- --------
Income (loss) from
operations............ (1,194) 3,608 13,567 76,812 (6,738) 86,055
Other expense........... -- (6,019) (365) 6,019(6) -- (365)
Interest and other
income................ 3,296 167 -- (496)(7) -- 2,967
Interest expense........ (10,923) (1,033) (354) (2,703)(8) (12,531)(9) (27,544)
-------- ------- -------- -------- -------- --------
Income (loss) before
provision for income
taxes................. (8,821) (3,277) 12,848 79,632 (19,269) 61,113
Provision for income
taxes................. 27,672 1,247 4,826 (1,953)(12) (6,889)(12) 24,903
-------- ------- -------- -------- -------- --------
Net income (loss)....... $(36,493) $(4,524) $ 8,022 $ 81,585 $(12,380) $ 36,210
======== ======= ======== ======== ======== ========
Net income (loss) per
share
Basic................. $ (3.18) $ 3.16
Diluted............... $ (3.18) $ 3.03
Weighted average shares
outstanding
Basic................. 11,458 11,458
Diluted............... 11,458 11,942
<CAPTION>
PRO FORMA
COMBINED
PRO FORMA AS ADJUSTED
EFFECTS OF FOR THE
THE ORIGINAL ORIGINAL NOTES
NOTES OFFERING OFFERING
-------------- --------------
<S> <C> <C>
Net sales............... $ -- $830,468
Cost of sales........... -- 659,696
------- --------
Gross profit............ -- 170,772
Operating expenses...... -- 84,717
Write-off of acquired
in-process research
and development....... -- --
------- --------
Income (loss) from
operations............ -- 86,055
Other expense........... -- (365)
Interest and other
income................ -- 2,967
Interest expense........ (6,258)(10)(11) (33,802)
------- --------
Income (loss) before
provision for income
taxes................. (6,258) 54,855
Provision for income
taxes................. (2,550)(12) 22,353
------- --------
Net income (loss)....... $(3,708) $ 32,502
======= ========
Net income (loss) per
share
Basic................. $ 2.84
Diluted............... $ 2.72
Weighted average shares
outstanding
Basic................. 11,458
Diluted............... 11,942
</TABLE>
- ---------------
(1) For purposes of the Pro Forma Condensed Consolidated Statement of
Operations, acquired in-process research and development of approximately
$63 million related to the Continental Acquisition was assumed to have been
written off prior to the period presented herein, so that the Pro Forma
Condensed Consolidated Statement of Operations includes only recurring
costs.
(2) Gives effect to conforming Continental's accounting policy of capitalizing
certain inventory and spare parts costs to Hadco's policy of expensing
these inventory and spare parts costs.
(3) Gives effect to amortization for three months of acquired intangible assets
totaling $106.4 million recognized in the Zycon Acquisition over lives
ranging from 12 to 30 years.
(4) Gives effect to the amortization of intangible assets totaling $97.3
million recognized in the Continental Acquisition over lives ranging from
12 to 20 years.
(5) Gives effect to the elimination of a non-recurring write-off of acquired
in-process research and development related to the Zycon Acquisition.
(6) Gives effect to the elimination of non-recurring acquisition costs incurred
by Zycon in connection with the Zycon Acquisition.
(7) Gives effect to a reduction in interest income as a result of utilizing
cash for the Zycon Acquisition.
(8) Gives effect to interest expense related to $212 million of net additional
bank debt to finance the Zycon Acquisition at an assumed 7.5% weighted
average interest rate.
(9) Gives effect to the interest expense related to the $187.9 million of bank
debt to finance the Continental Acquisition at an assumed 7% weighted
average interest rate.
(10) Reflects additional interest expense related to the issuance of the
Original Notes over the interest expense related to indebtedness, with an
assumed interest rate of 6.7%, which indebtedness is being refinanced with
the net proceeds from the sale of the Original Notes.
(11) Gives effect to $0.6 million of amortization expense on deferred financing
costs totaling $6.3 million related to the Original Notes Offering.
(12) Gives effect to an adjustment in the tax provision as a result of the
combination and pro forma adjustments.
26
<PAGE> 33
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS(1)
FOR THE SIX MONTHS ENDED MAY 2, 1998
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
-----------------------------
HADCO CONTINENTAL PRO FORMA
SIX MONTHS PERIOD FROM EFFECTS OF PRO FORMA
ENDED NOV. 2, 1997 TO PRO FORMA PRO FORMA THE ORIGINAL COMBINED
MAY 2, 1998 MARCH 19, 1998 ADJUSTMENTS COMBINED NOTES OFFERING AS ADJUSTED
----------- --------------- ----------- --------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales................... $407,863 $ 51,951 $ -- $459,814 $ -- $459,814
Cost of sales............... 332,065 52,601 (2,568)(2) 382,098 -- 382,098
-------- -------- -------- -------- ------- --------
Gross profit................ 75,798 (650) 2,568 77,716 -- 77,716
Operating expenses.......... 39,310 7,715 (716)(3,8) 46,309 -- 46,309
Restructuring and other non-
recurring charges......... 5,947 5,947 5,947
Write-off of acquired
in-process research and
development............... 63,050 4,300 (67,350)(1) -- --
-------- -------- -------- -------- ------- --------
Income from operations...... (32,509) (12,665) 70,634 25,460 -- 25,460
Interest and other income
(expense)................. 1,377 (906) 891(8) 1,362 -- 1,362
Interest expense............ (6,294) (969) (4,820)(4) (12,083) (3,128)(5)(6) (15,211)
-------- -------- -------- -------- ------- --------
Income before provision for
income taxes.............. (37,426) (14,540) 66,705 14,739 (3,128) 11,611
Provision for income
taxes..................... 10,186 (4,133) (194)(7) 5,859 (1,243)(7) 4,616
-------- -------- -------- -------- ------- --------
Net Income.................. $(47,612) $(10,407) $ 66,899 $ 8,880 $(1,885) $ 6,995
======== ======== ======== ======== ======= ========
Net Income per share
Basic..................... $ (3.63) $ 0.68 $ 0.53
Diluted................... $ (3.63) $ 0.66 $ 0.52
Weighted Average Shares
Outstanding
Basic..................... 13,130 13,130 13,130
Diluted................... 13,130 13,532 13,532
</TABLE>
- ---------------
(1) Gives effect to the elimination of the write-off of acquired in-process
research and development related to the Continental Acquisition, so that the
Pro Forma Condensed Consolidated Statement of Operations includes only
recurring costs.
(2) Gives effect to conforming Continental's accounting policy of capitalizing
certain inventory and spare parts costs to Hadco's policy of expensing these
inventory and spare parts costs.
(3) Gives effect to the amortization of acquired intangible assets totaling
$97.3 million recognized in the Continental Acquisition over lives ranging
from 12 to 20 years.
(4) Gives effect to interest expense related to $187.9 million in bank debt to
finance the Continental Acquisition at an assumed 7% interest rate.
(5) Reflects additional interest expense related to the issuance of the Original
Notes over the interest expense related to indebtedness, with an assumed
interest rate of 6.7%, which indebtedness is being refinanced with the net
proceeds from the sale of the Original Notes.
(6) Gives effect to $0.2 million of amortization expense on deferred financing
costs totaling $6.3 million related to the Original Notes Offering.
(7) Gives effect to an adjustment in the tax provision as a result of the
combination and pro forma adjustments.
(8) Gives effect to the elimination of certain acquisition related costs
including investment banking fees and legal fees incurred by Continental
during the period ended March 19, 1998.
27
<PAGE> 34
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table presents selected historical consolidated financial
data for the Company. The selected historical consolidated financial data for
each of the years ended October 30, 1993, October 29, 1994, October 28, 1995,
October 26, 1996 and October 25, 1997 have been derived from the Company's
Consolidated Financial Statements, which have been audited by Arthur Andersen
LLP, independent public accountants. The selected consolidated financial data
for the six months ended April 26, 1997 and May 2, 1998 have been derived from
the Company's unaudited consolidated financial statements, which reflect in the
opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for such periods.
The results for the six months ended May 2, 1998 are not necessarily indicative
of results for any future period. The selected historical consolidated financial
data should be read in conjunction with each of the Company's and Continental's
consolidated financial statements and the Pro Forma Condensed Consolidated
Financial Statements, and the notes thereto, appearing elsewhere in this
Prospectus and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED, ENDED,
---------------------------------------------------- -------------------
OCT. 30, OCT. 29, OCT. 28, OCT. 26, OCT. 25, APR. 26, MAY 2,
1993 1994 1995 1996 1997(1) 1997(1) 1998(2)
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $189,494 $221,570 $265,168 $350,685 $648,705 $292,198 $407,863
Cost of sales...................... 152,849 176,052 197,728 260,230 507,313 227,358 332,065
-------- -------- -------- -------- -------- -------- --------
Gross profit....................... 36,645 45,518 67,440 90,455 141,392 64,840 75,798
Operating expenses................. 22,935 29,036 33,534 38,923 64,586 28,819 39,310
Write-off of acquired in-process
research and development......... -- -- -- -- 78,000 78,000 63,050
Restructuring and other
non-recurring charges............ 5,947
-------- -------- -------- -------- -------- -------- --------
Income (loss) from operations...... 13,710 16,482 33,906 51,532 (1,194) (41,979) (32,509)
Interest and other income.......... 633 843 1,669 1,287 3,296 806 1,377
Interest expense................... (1,402) (891) (537) (338) (10,923) (5,251) (6,294)
-------- -------- -------- -------- -------- -------- --------
Income (loss) before provision for
income taxes..................... 12,941 16,434 35,038 52,481 (8,821) (46,424) (37,426)
Provision for income taxes......... 4,714 6,491 13,664 20,467 27,672 12,788 10,186
-------- -------- -------- -------- -------- -------- --------
Net income (loss).................. $ 8,227 $ 9,943 $ 21,374 $ 32,014 $(36,493) $(59,212) $(47,612)
======== ======== ======== ======== ======== ======== ========
Net income (loss) per share
Basic(3)......................... $ 0.85 $ 1.01 $ 2.18 $ 3.12 $ (3.18) $ (5.67) $ (3.63)
Diluted(3)....................... $ 0.76 $ 0.93 $ 1.98 $ 2.89 $ (3.18) $ (5.67) $ (3.63)
STATEMENT OF CASH FLOWS DATA:
Cash flows from operating
activities....................... $ 18,341 $ 29,284 $ 36,349 $ 55,629 $ 50,667 $ 13,990 $ 12,595
Cash flows from investing
activities....................... (11,237) (23,428) (31,104) (47,910) (268,913) (229,871) (236,656)
Cash flows from financing
activities....................... (5,923) (5,833) (3,002) 3,760 197,631 190,201 216,887
Capital expenditures............... 14,270 19,510 28,865 54,998 69,851 29,611 48,186
OTHER DATA:
Depreciation and amortization...... $ 13,730 $ 14,611 $ 15,194 $ 18,843 $ 41,850 18,001 30,407
EBITDA(4).......................... 27,440 31,093 49,100 70,375 118,656 54,022 64,531
Ratio of earnings to fixed
charges(5)....................... 10.2x 19.4x 66.2x 156.3x 0.2x -- --
Ratio of EBITDA to interest
expense.......................... 19.6x 34.9x 91.4x 208.2x 10.9x 10.3x 10.3x(6)
Ratio of total debt to EBITDA...... 0.34x 0.15x 0.09x 0.05x 0.97x 4.51x 5.64x
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash, cash equivalents and
short-term investments........... $ 27,445 $ 31,563 $ 36,474 $ 42,187 $ 13,733 $ 7,106 $ 4,997
Working capital.................... 30,593 31,829 41,043 43,561 53,693 34,766 98,633
Total assets.............. 110,782 126,326 162,991 219,501 502,517 466,277 739,441
Long-term debt, net of current
portion.......................... 9,382 4,526 2,387 1,515 109,716 236,730 359,037
Stockholders' investment........... 68,431 77,440 100,774 138,841 239,912 81,515 195,569
</TABLE>
28
<PAGE> 35
- ---------------
(1) Net loss for the six months ended April 26, 1997 and the fiscal year ended
October 25, 1997 includes a non-recurring write-off relating to the Zycon
Acquisition for acquired in-process research and development. Before
deducting the non-recurring write-off, income from operations was $76.8
million and $36.0 million, net income was $41.5 million and $18.8 million,
the ratio of earnings to fixed charges was 7.3 and 7.0 and diluted net
income per share was $3.48 and $1.71 for the year ended October 25, 1997 and
the six months ended April 26, 1997, respectively.
(2) Net loss for the six months ended May 2, 1998 includes a non-recurring
write-off of $63 million relating to the Continental Acquisition for
acquired in-process research and development, as well as a $3.6 million
charge, net of tax, for restructuring and other non-recurring expenses
related to the consolidation of the Company's East Coast Tech Center
operations. Before deducting such non-recurring write-off, charge for
restructuring and other non-recurring expenses, income from operations was
$36.5 million, net income was $19.0 million, the ratio of earnings to fixed
charges was 5.6 and diluted net income per share was $1.41 for the six
months ended May 2, 1998.
(3) See Note 1 of Notes to the Company's Consolidated Financial Statements for
an explanation of the basis used to calculate net income (loss) per share.
(4) EBITDA represents net income before interest, income taxes, depreciation and
amortization, and write-off of acquired in-process research and development.
EBITDA is not a measurement of financial performance under generally
accepted accounting principles and should not be considered an alternative
measure of the Company's net income, operating performance, cash flow or
liquidity. It is included herein to provide additional information related
to the Company's ability to service debt. The EBITDA measures presented
herein may not be comparable to other similarly titled measures of other
companies.
(5) Computed by dividing the sum of net income (loss), before deducting
provisions for income taxes and fixed charges, by total fixed charges. Fixed
charges consist of interest on debt and amortization of debt issuance costs
and a portion of capital lease costs that is intended to represent interest
expense.
(6) After giving pro forma effect to the Continental Acquisition and the
Original Notes Offering as if they had occurred at the beginning of the
period presented, the ratio of EBITDA to interest expense would have been
4.4 based on an effective interest rate of 9.551% on the Notes.
29
<PAGE> 36
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion contains forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including, without limitation, those set forth under "Risk
Factors" and elsewhere in this Prospectus.
On March 20, 1998, the Company acquired all of the outstanding capital
stock of Continental, and on January 10, 1997, the Company acquired all of the
outstanding capital stock of Zycon. Unless otherwise indicated or the context
otherwise requires, the results of Zycon's operations and other financial
information relating to Zycon since January 10, 1997 are included in the
Company's historical consolidated financial information presented herein.
Similarly, unless otherwise indicated or the context otherwise requires, the
results of Continental's operations and other financial information relating to
Continental since March 20, 1998 are included in the Company's historical
consolidated financial information presented herein.
OVERVIEW
Hadco is the largest manufacturer of advanced electronic interconnect
products in North America. The Company offers a wide array of sophisticated
manufacturing, engineering and systems integration services to meet its
customers' electronic interconnect needs. The Company's principal products are
multilayer rigid printed circuits and backplane assemblies. Hadco's customers
are a diverse group of electronics OEMs and contract manufacturers in the
computing (mainly workstations, servers, mainframes, storage and notebooks),
data communications/telecommunications and industrial automation industries,
including process controls, automotive, medical and instrumentation.
The Company believes that its financial performance is driven primarily by
the same factors that affect the electronic interconnect market. The market for
higher count multilayer rigid printed circuits (eight layers and above)
constituted approximately 40% of the total United States rigid printed circuit
market in 1997, and has increased at an annual compounded growth rate of 16%
over the last two years, compared to approximately 11% for the overall printed
circuit market. This growth has been driven, in part, by (i) new end-user
markets in telecommunications and computers, (ii) an increasing number of
products containing electronic components, (iii) shorter product life-cycles for
electronic products, and (iv) advances in the speed and complexity of electronic
components and products. In addition, the continuing trend by OEMs of
outsourcing manufacturing of both printed circuits and backplanes has
contributed to the Company's growth over time. Lastly, the ongoing consolidation
of the fragmented printed circuit market has created opportunities for larger
companies, such as Hadco, that have broad product offerings, volume
manufacturing capabilities and advanced process technologies.
Since fiscal 1993, net sales of the Company have grown from $189.5 million
to $648.7 million for fiscal 1997. Pro forma for the Acquisitions, net sales for
fiscal 1997 would have been $830.5 million.
ZYCON ACQUISITION
On January 10, 1997, the Company acquired all of the outstanding capital
stock of Zycon. The acquisition added facilities for volume production of
multilayer printed circuits and backplane assemblies in the Silicon Valley area,
a quick-turn prototype and design facility in Massachusetts, and a newly
constructed facility for volume production of printed circuits in Malaysia.
Hadco acquired Zycon for approximately $212 million (including acquisition
costs) and recorded the acquisition under the purchase method of accounting. As
a result, a purchase price premium of approximately $187 million was recorded on
the transaction. Approximately $78 million of the premium was written off as
acquired in-process research and development with no alternative future use as a
non-recurring write-off to net income for the fiscal year ended October 25,
1997. The remaining premium of approximately $109 million was allocated to
identifiable intangibles and goodwill, and will be written off over 12 to 30
years, with an average amortization period of 17 years. The acquisition was
financed with borrowings under a $250 million senior revolving credit facility,
plus existing cash, cash equivalents and short-term investments.
30
<PAGE> 37
CONTINENTAL ACQUISITION
On March 20, 1998, the Company acquired all of the outstanding capital
stock of Continental, further broadening Hadco's product and service
capabilities. The acquisition added facilities for volume production of
multilayer printed circuits in Phoenix, Arizona, a quick-turn prototype facility
in Austin, Texas, and a flexible printed circuit manufacturing facility and
printed circuit engineering and design operation in California. Hadco acquired
Continental for approximately $188 million (including acquisition costs) and
recorded the acquisition under the purchase method of accounting. As a result, a
purchase price premium of $160.3 million was recorded on the transaction.
Approximately $63 million of the premium was written off as acquired in-process
research and development with no alternative future use as a non-recurring
write-off to net income for the fiscal quarter ended May 2, 1998. The remaining
premium of $97.3 million was allocated to identifiable intangibles and goodwill,
and will be written off over 12 to 20 years, with an average amortization period
of 16 years. The acquisition was financed from borrowings under the Credit
Facility.
The gross profit margins for Continental and Zycon for their respective
fiscal years ended July 31, 1997 and December 31, 1996 were 18.2% and 15.7%,
respectively. The gross profit margins for Hadco (not including Continental or
Zycon) for its fiscal years ended October 26, 1996 and October 25, 1997 were
25.8% and 21.8%, respectively. As a result of the Acquisitions, the Company
expects its gross profit margin will be lower in future fiscal quarters than has
historically been the case for Hadco.
RESULTS OF OPERATIONS
The following table sets forth certain Consolidated Statements of
Operations data and other data as a percentage of net sales. The table and the
discussion below should be read in conjunction with the Company's and
Continental's consolidated financial statements and the Pro Forma Condensed
Consolidated Financial Statements, and notes thereto, that appear elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED, SIX MONTHS ENDED,
------------------------------------------------ -----------------------------------
OCT. 25, MAY 2,
OCT. 28, OCT. 26, OCT. 25, 1997 APR. 26, MAY 2, 1998
1995 1996 1997(1) PRO FORMA(3) 1997(1) 1998(2) PRO FORMA(4)
-------- -------- -------- ------------ -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF
OPERATIONS:
Net sales..................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales................. 74.6 74.2 78.2 79.4 77.8 81.4 83.1
----- ----- ----- ----- ----- ----- -----
Gross profit.................. 25.4 25.8 21.8 20.6 22.2 18.6 16.9
Operating expenses............ 12.6 11.1 9.2 8.7 9.3 8.7 9.5
Write-off of acquired
in-process research and
development................. -- -- 12.0 -- 26.7 15.5 --
Restructuring and other non-
recurring charges........... 1.4 1.3
Amortization of acquired
intangible assets........... -- -- 0.8 1.5 0.6 0.9 0.6
----- ----- ----- ----- ----- ----- -----
Income (loss) from
operations.................. 12.8 14.7 (0.2) 10.4 (14.4) (7.9) 5.5
Interest expense.............. (0.2) (0.1) (1.7) (3.3) (1.8) (1.6) (2.6)
Interest income (expense) and
other, net.................. 0.6 0.4 0.5 0.3 0.3 0.3 0.3
----- ----- ----- ----- ----- ----- -----
Income (loss) before provision
for income taxes............ 13.2 15.0 (1.4) 7.4 (15.9) (9.2) 3.2
Provision for income taxes.... 5.1 5.9 4.2 3.0 4.4 2.5 1.3
----- ----- ----- ----- ----- ----- -----
Net income (loss)............. 8.1% 9.1% (5.6)% 4.4% 20.3% 11.7% 1.9%
===== ===== ===== ===== ===== ===== =====
OTHER DATA:
Capital expenditures.......... 10.9% 15.7% 10.6% 10.7% 10.1% 11.8% 12.8%
</TABLE>
31
<PAGE> 38
- ---------------
(1) Net loss for the six months ended April 26, 1997 and the fiscal year ended
October 25, 1997 includes a non-recurring write-off relating to the Zycon
Acquisition for acquired in-process research and development. As a
percentage of net sales for the fiscal year ended October 25, 1997, income
from operations was 11.8%, income before provision for income taxes was
10.7%, and net income was 6.4%, all before deducting the non-recurring
write-off.
(2) Net loss for the six months ended May 2, 1998 includes a non-recurring
write-off relating to the Continental Acquisition for acquired in-process
research and development and for restructuring and other non-recurring
expenses related to the consolidation of the Company's East Coast Tech
Center operations. As a percentage of net sales for the six months ended May
2, 1998, income from operations was 8.9%, income before provision for income
taxes was 7.7%, and net income was 4.7%, all before deducting such
non-recurring write-off, charge for restructuring and other non-recurring
expenses.
(3) Gives effect to the Acquisitions assuming they had occurred on October 27,
1996. See Pro Forma Condensed Consolidated Financial Statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
(4) Gives effect to the Continental Acquisition assuming it had occurred on
October 27, 1996. See Pro Forma Condensed Consolidated Financial Statements.
SIX MONTHS ENDED MAY 2, 1998 AND APRIL 26, 1997
Net sales for the six months ended May 2, 1998 increased 39.6% over net
sales for the six months ended April 26, 1997. The increase resulted from
several factors including the acquisitions of Zycon and Continental, which added
$80.2 million to printed circuit net sales in the six month period, and an
increase in both backplane assembly and printed circuit net sales (excluding
these Acquisitions). Backplane assembly net sales increased due to higher
production volume and shipments. Printed circuit net sales increased due to
higher production volume and shipments and a shift towards products with more
layers and greater densities. In addition, average pricing for printed circuits
decreased 3.4% for the first six months of fiscal 1998 over the same period in
fiscal 1997. Net sales from backplane assemblies increased to 14.2% of net sales
from 11.7% in the first six months of fiscal 1997.
The gross profit margin decreased to 18.6% in the six months ended May 2,
1998 from 22.2% in the comparable period in fiscal 1997. The decrease resulted
from lower capacity utilization from printed circuit facilities, and lower
overall gross margins from the Hadco Santa Clara and Hadco Phoenix operations.
Operating expenses, as a percent of net sales, decreased to 9.6% in the six
months ended May 2, 1998 from 9.9% in the comparable period in fiscal 1997, due
to increased net sales and the fixed nature of the Company's operating expenses.
The decrease was partially offset by goodwill and purchased intangibles
amortization.
Income from operations for the six months ended May 2, 1998 and April 26,
1997, was reduced by $63 million and $78 million, respectively, over the
comparable respective preceding periods, due to non-recurring write-offs of
acquired in-process research and development recorded in connection with the
Continental and Zycon acquisitions. The remaining goodwill and purchased
intangibles will be amortized over 12 to 30 years, with an average amortization
period of 17 years, which will reduce income from operations by approximately
$3.1 million per fiscal quarter. In addition, income from operations for the six
months ended May 2, 1998, was reduced by approximately $5.9 million for
restructuring and other non-recurring charges related to the consolidation of
the Company's East Coast Tech Center operations.
Excluding the non-recurring write-off and restructuring charges, income
from operations, as a percent of net sales, decreased to 8.9% for the six months
ended May 2, 1998 from 12.3% in the comparable period in fiscal 1997, primarily
as a result of the same factors affecting gross profit margins, and of goodwill
and purchased intangibles amortization from the acquisitions.
Interest income increased in the six months ended May 2, 1998 as compared
to the six months ended April 26, 1997, due to higher daily average cash
balances available for investing. Interest expense increased in
32
<PAGE> 39
the six months ended May 2, 1998 as compared to the six months ended April 26,
1997, due to an increase in outstanding debt as a result of the acquisitions.
The Company includes in operating expenses charges for actual expenditures
and accruals, based on estimates, for environmental matters. To the extent and
in amounts Hadco believes circumstances warrant, it will continue to accrue and
charge to operating expenses cost estimates relating to known environmental
matters. The Company believes the ultimate disposition of known environmental
matters will not have a material adverse effect upon the liquidity, capital
resources, business or consolidated financial position of the Company. However,
one or more of such environmental matters could have a significant negative
impact on the Company's consolidated financial results for a particular
reporting period. See "Business -- Environmental Matters," "-- Legal Proceedings
and Claims" and Note 9 of Notes to the Company's Consolidated Financial
Statements.
The Company believes that excess capacity may exist in the printed circuit
and electronic assembly industries, as well as fluctuating growth rates in the
electronics industry as a whole. Both factors could have a material adverse
effect on future orders and pricing. However, the Company has historically
needed to increase its own manufacturing capacity to maintain and expand its
market position, although the Company's manufacturing capacity needs could
change at any time or times in the future. The Company also believes that the
potential exists for a shortage of materials in the printed circuit and
electronic assembly industries which could have a material adverse effect on
future unit costs. In response to such concerns, the Company engages in the
normal industry practices of maintaining primary and secondary vendors and
diversifying its customer base. There can be no assurances, however, that such
measures will be sufficient to protect the Company against any shortages of
materials. See "Risk Factors -- Manufacturing Capacity" and "-- Availability of
Raw Materials and Components."
In accordance with generally accepted accounting principles, the Company
provides for income taxes on an interim basis, using its effective annual income
tax rate. Although the Company has recorded a loss before income taxes in 1998
and 1997, the Company anticipates an effective annual income tax rate for fiscal
1998 of 39.75%, which is slightly less than the combined federal and state
statutory rates. The effective rate was increased by amortization of goodwill
which is not tax deductible, and was offset by the tax benefit of the Company's
foreign sales corporation and various state investment tax credits. The
effective tax rate for fiscal 1998 is based on current tax laws.
FISCAL YEARS ENDED OCTOBER 25, 1997 AND OCTOBER 26, 1996
Net sales during 1997 increased approximately 85% over 1996. The increase
resulted from several factors including the Zycon Acquisition, which added
$216.1 million in printed circuit net sales after January 10, 1997, and an
increase in both backplane assembly and non-Zycon printed circuit net sales.
Backplane assembly net sales increased due to higher product volume and
shipments. Printed circuit net sales increased due to higher production volume
and shipments and a shift towards products with more layers and greater
densities. In addition, average pricing for printed circuits decreased 0.6% for
1997 over 1996. Net sales from backplane assemblies decreased to 16.2% of total
net sales excluding Zycon, from 16.9% in 1996.
The gross profit margin decreased to 21.8% in 1997 from 25.8% for 1996. The
decrease resulted from increased investment in new capacity and technologies at
certain facilities and lower overall gross margins from the Zycon operations
(including ongoing start-up expenses associated with the volume production
facility in Malaysia).
Operating expenses, as a percent of net sales, decreased to 10.0% in 1997
from 11.1% in 1996, due to increased net sales and the fixed nature of the
Company's operating expenses. The decrease was partially offset by goodwill and
purchased intangibles amortization of $5.2 million.
Income from operations for 1997 was reduced by approximately $78 million
due to a non-recurring write-off relating to acquired in-process research and
development recorded in connection with the Zycon Acquisition. The remaining
goodwill and purchased intangibles will be amortized over 12 to 30 years, with
an
33
<PAGE> 40
average amortization period of 17 years, which will reduce income from
operations by approximately $1.6 million per fiscal quarter.
Excluding the non-recurring write-off of approximately $78 million for
acquired in-process research and development, operating margins decreased to
11.8% for 1997 from 14.7% in 1996, primarily as a result of the same factors
affecting gross profit margins and from the goodwill amortization related to the
Zycon Acquisition.
Interest income decreased in 1997 as compared to 1996 due to lower daily
average cash balances available for investing. Interest expense increased in
1997 as compared to 1996 due to an increase in outstanding debt as a result of
the Zycon Acquisition.
In accordance with generally accepted accounting principles, the Company
provides for income taxes on an interim basis, using its effective annual income
tax rate. Although the Company incurred a loss before income taxes during 1997,
the Company recorded an income tax provision because the write-off of acquired
in-process research and development is not deductible for income tax purposes.
Without taking into consideration the write-off of acquired in-process research
and development, the Company's effective annual income tax rate for 1997 was
40.0%, which is approximately equal to the combined federal and state statutory
rates. The effective rate was increased by amortization of goodwill and acquired
intangibles which is not tax deductible, and this item was offset by the tax
benefit of the Company's foreign sales corporation and various state investment
tax credits. The effective tax rate for 1997 was based on then current tax laws.
FISCAL YEARS ENDED OCTOBER 26, 1996 AND OCTOBER 28, 1995
Net sales during 1996 increased 32.3% over 1995. The change was due to a
15.1% increase in the volume of production and shipments and a shift in product
mix to higher layer, higher density products, as compared to 1995. Average
pricing per unit increased 6.1% compared to 1995. Sales of backplane and other
electronic assemblies increased to approximately 17% of the Company's net sales
in 1996, versus approximately 7% for 1995.
The gross profit margin increased to 25.8% in 1996 from 25.4% in 1995. The
increase was a direct result of a higher volume of shipments, an increase in the
technology level of product mix, and improved pricing. These increases were
partially offset by increased costs relating to the implementation of new
production lines and materials and the shift in mix to a higher level of
value-added products.
Operating expenses, as a percent of net sales, decreased to 11.1% during
1996 from 12.6% during 1995, due to increased revenue. Operating expenses
increased to $38.9 million in 1996 from $33.5 million in 1995, primarily as a
result of increased variable costs directly attributable to increased net sales.
Included in operating expenses are charges for actual expenditures and accruals,
based on estimates, for environmental matters. During 1996 and 1995, the Company
made, and charged to operating expenses, actual payments of approximately
$680,000 and $1.1 million, respectively, for environmental matters. In 1996 and
1995, the Company also accrued and charged to operating expenses $1.8 million
and $2.7 million, respectively, as cost estimates relating to known
environmental matters.
In 1996, interest income decreased as a result of lower cash balances
available for investment. Interest expense decreased in 1996 from 1995 due to
decreased average debt balances during the year.
The annual effective tax rate for 1996 and 1995 was 39.0%, which was less
than the then current combined federal and state statutory rates. This
difference was caused primarily by tax advantaged investments and the tax
benefits of a foreign sales corporation.
QUARTERLY RESULTS
The following table presents certain unaudited consolidated financial
information for each of the Company's nine fiscal quarters for the period ended
May 2, 1998, as well as certain of such information expressed as a percentage of
net sales for the same period. Information for the three months ended April 26,
1997 includes the results of operations for Hadco Santa Clara (formerly Zycon)
from January 10, 1997, the
34
<PAGE> 41
date of the Zycon Acquisition. Information for the three months ended May 2,
1998 includes the results of operations for Continental Circuits Corp. from
March 20, 1998, the date of the Continental Acquisition. In the opinion of
management, this information has been prepared on the same basis as the audited
Consolidated Financial Statements of the Company appearing elsewhere in this
Prospectus and includes all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the quarterly results when read in
conjunction with the Company's Consolidated Financial Statements. The Company's
operating results have been subject to fluctuations, and thus results for any
quarter are not necessarily indicative of results for any future period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED,
--------------------------------------------------------------------------------------------------
APRIL 27, JULY 27, OCT. 26, JAN. 25, APRIL 26, JULY 26, OCT. 25, JAN. 31, MAY 2
1996 1996 1996 1997(1) 1997 1997 1997 1998 1998(2)
--------- -------- -------- -------- --------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PERCENTAGES AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED
STATEMENTS OF
OPERATIONS:
Net sales............ $88,096 $88,225 $97,883 $111,536 $180,662 $183,274 $173,233 $198,276 $209,587
Gross profit......... 22,951 22,419 24,623 26,377 38,463 39,254 37,298 39,068 36,730
Income (loss) from
operations......... 12,703 12,910 14,385 (62,443) 20,464 21,352 19,855 21,284 (53,793)
Net income (loss).... 7,895 7,994 8,934 (69,161) 9,953 11,369 11,346 12,127 (59,739)
Diluted net income
(loss) per share... $ 0.71 $ 0.72 $ 0.81 $ (6.64) $ 0.91 $ 0.93 $ 0.84 $ 0.90 $ (4.54)
AS A PERCENTAGE OF
NET SALES:
Gross profit......... 26.1% 25.4% 25.2% 23.6% 21.3% 21.4% 21.5% 19.7% 17.5%
Income (loss) from
operations......... 14.4 14.6 14.7 (56.0) 11.3 11.7 11.5 10.7 (25.7)
Net income (loss).... 9.0 9.1 9.1 (62.0) 5.5 6.2 6.6 6.1 (28.5)
</TABLE>
- ---------------
(1) Net loss for the three months ended January 25, 1997 includes a
non-recurring write-off relating to the Zycon Acquisition for acquired
in-process research and development. Income from operations was $15,557,000,
net income was $8,839,000, net income per share was $0.81 (based on weighted
average shares outstanding of approximately 10,944,000), and, as a
percentage of net sales, income from operations was 13.9% and net income was
7.9%, all before deducting the non-recurring write-off.
(2) Net loss for the three months ended May 2, 1998 includes a non-recurring
write-off relating to the Continental Acquisition for acquired in-process
research and development, and for restructuring and other non-recurring
expenses related to the consolidation of the Company's East Coast Tech
Center operations. Income from operations was $15,204,000, net income was
$6,894,000, net income per share was $0.51 (based on weighted average shares
outstanding of approximately 13,545,000), and as a percentage of net sales,
income from operations was 7.3% and net income was 3.3%, all before
deducting such non-recurring write-off, charge for restructuring and other
non-recurring expenses.
The Company's results of operations have fluctuated and may continue to
fluctuate from period to period, including on a quarterly basis. Variations in
quick-turn prototype and volume production orders, in the average number of
layers per printed circuit, and in the mix of products sold by the Company have
significantly affected both net sales and gross profit. Gross profit declined to
17.5% in the three months ended May 2, 1998 from 21.3% in the three months ended
April 26, 1997 primarily as a result of (i) costs related to increases in
manufacturing capacity and the development of new technologies, and (ii) factors
related to the Zycon and Continental Acquisitions. Operating results generally
are also affected by other factors, including the timing and volume of orders
from and shipments to customers relative to the Company's manufacturing
capacity, product and price competition, product mix, the number of working days
in a particular quarter, manufacturing process yields, the timing of
expenditures in anticipation of future sales, raw material availability, the
length of sales cycles, trends in the electronics industry and general economic
factors. Many of these factors are outside the control of the Company.
35
<PAGE> 42
The Company generally does not obtain long-term purchase orders or
commitments from its customers, and a substantial portion of sales in a given
quarter may depend on obtaining orders for products to be manufactured and
shipped in the same quarter in which those orders are received. Sales for future
quarters may not be predictable. The Company relies on its estimate of
anticipated future volumes when making commitments regarding the level of
business that it will seek and accept, the mix of products that it intends to
manufacture, the timing of production schedules and the levels and utilization
of personnel and other resources. A variety of conditions, both specific to the
individual customer and generally affecting the customer's industry, may cause
customers to cancel, reduce or delay orders that were previously made or
anticipated. A significant portion of the Company's released backlog at any time
may be subject to cancellation or postponement without penalty. The Company
cannot assure the timely replacement of canceled, delayed or reduced orders.
Significant or numerous cancellations, reductions or delays in orders by a
customer or group of customers could materially adversely affect the Company's
business, financial condition and results of operations. The Company's expense
levels are relatively fixed and are based, in part, on expectations of future
revenues. Consequently, if revenue levels are below expectations, the Company's
business, financial condition and results of operations are likely to be
materially adversely affected. Fluctuations in quarterly operating results could
have a material adverse effect on the price of the Notes and on the cash flow of
the Company necessary to pay amounts due on the Notes. See "Risk Factors --
Fluctuations in Quarterly Operating Results."
LIQUIDITY AND CAPITAL RESOURCES
In fiscal 1997, the Company's financing requirements were satisfied
principally from cash flows from operations, bank borrowings and the sale of the
Company's Common Stock. Cash provided by operating activities was $50.7 million,
net bank borrowings were $60.2 million, and the proceeds from the sale of Common
Stock were $131.1 million. These funds were used to meet increased working
capital needs and to acquire Zycon for approximately $212 million (including
acquisition costs), as well as for capital expenditures of $69.0 million.
Net cash provided by (used in) operating activities for fiscal 1995, 1996
and 1997 was $36.3 million, $55.6 million and $50.7 million, respectively. In
fiscal 1996 and 1997, cash from operating activities increased primarily due to
increases in net income and depreciation. In fiscal 1997, cash used in operating
activities consisted of the effects of a write-off of acquired in-process
research and development, offset by increases in accounts receivable and
inventories, both of which were affected by the Zycon Acquisition.
Net cash used in investing activities was $(31.1) million, $(47.9) million
and $(268.9) million in fiscal 1995, 1996 and 1997, respectively. In fiscal 1995
and 1996, investing activities consisted primarily of capital expenditures. In
fiscal 1997, investing activities consisted primarily of the $209.7 million
purchase (net of cash balance) of Zycon, and additional capital expenditures.
Net cash provided by (used in) financing activities was $(3.0) million,
$3.8 million and $197.6 million in fiscal 1995, 1996 and 1997, respectively. In
fiscal 1995, cash used in financing activities was affected by principal
payments of long-term debt and capital leases. In fiscal 1996, cash provided by
financing activities was affected by a tax benefit from the exercise of options,
partially offset by payments of capital leases. In fiscal 1997, cash provided by
financing activities consisted primarily of borrowings under the Company's
revolving credit facility and the cash proceeds from the sale of Common Stock
which was used for the Zycon Acquisition.
At May 2, 1998, the Company had working capital of $98.6 million and a
current ratio of 1.80, compared to working capital of $53.7 million and a
current ratio of 1.48 at October 25, 1997. Cash, cash equivalents and short-term
investments at May 2, 1998 were $5.0 million, a decrease of $8.7 million from
$13.7 million at October 25, 1997.
The Company currently anticipates that its capital expenditures for fiscal
1998 will be in excess of $90 million, of which $17.8 million represents
commitments to purchase manufacturing equipment and leasehold improvements. The
majority of these capital expenditures is expected to be completed by the end of
fiscal 1998. The amount of these anticipated capital expenditures will
frequently change based on future changes in business plans and conditions of
the Company and changes in economic conditions.
36
<PAGE> 43
In December 1997, the Company negotiated the Credit Facility with various
banks, which amended and restated an existing credit facility. Interest on loans
outstanding under the Credit Facility is, at the Company's option, payable at
either (1) the Base Rate (as defined in the Credit Facility), or (2) the
Eurodollar Rate, plus the Applicable Eurodollar Rate Margin (both as defined in
the Credit Facility). At May 2, 1998, $345 million was outstanding under the
Credit Facility. As of May 2, 1998, the weighted average interest rate on loans
outstanding under the Credit Facility was 6.56%. The Credit Facility expires and
all outstanding loans thereunder mature on January 8, 2002. The Company used the
$193.82 million in net proceeds from the sale of the Notes on May 18, 1998 to
repay outstanding indebtedness under the Credit Facility. See "Use of Proceeds,"
"Description of Certain Indebtedness," and Note 7 of Notes to the Company's
Consolidated Financial Statements.
The Company believes its existing working capital and borrowing capacity,
coupled with the funds generated from the Company's operations, and the net
proceeds from the sale of the Original Notes, will be sufficient to fund its
anticipated working capital, capital expenditure and debt payment requirements
through fiscal 1998. Because the Company's capital requirements cannot be
predicted with certainty, however, there is no assurance that the Company will
not require additional financing during this period. There is no assurance that
any additional financing will be available on terms satisfactory to the Company
or not disadvantageous to the Company's security holders, including the holders
of the Notes.
YEAR 2000 COMPLIANCE
The Company is reviewing the areas within its business and operations which
could be adversely affected by Year 2000 issues and evaluating the costs
associated with modifying and testing its systems for the Year 2000. Although
the Company is not yet able to estimate its incremental cost for Year 2000
issues, based on its preliminary review to date, the Company does not believe
Year 2000 issues will have a material adverse effect on the Company's business,
financial condition or results of operations. The Company is also working with
suppliers to ensure their systems are Year 2000 compliant as well. All costs
associated with supplier compliance will be borne by the suppliers.
NEW ACCOUNTING STANDARDS
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income.
This Statement established standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of general-purpose financial statements. This Statement is effective for fiscal
years beginning after December 15, 1997. Reclassification of financial
statements for earlier periods provided for comparative purposes is required.
This Statement, requiring only additional informational disclosures, is
effective for the Company's fiscal year ending October 30, 1999.
In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of
an Enterprise and Related Information. This Statement established standards for
the way that public business enterprises report information about operating
segments in annual financial statements and requires that enterprises report
selected information about operating segments in interim financial reports
issued to stockholders. This Statement is effective for fiscal years beginning
after December 15, 1997. In the initial year of application, comparative
information for earlier years is to be restated. This Statement, requiring only
additional informational disclosures, is effective for the Company's fiscal year
ending October 30, 1999.
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. This Statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
This Statement is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5 Reporting on the Costs of Start-Up Activities
(SOP 98-5). SOP 98-5 provides guidance on the financial reporting of start-up
activities and organization costs to be expensed as incurred. SOP 98-5 will not
have a material impact on the Company's financial statements.
37
<PAGE> 44
BUSINESS
The following Business section contains forward-looking statements which
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including, without limitation, those set forth under
"Risk Factors" and elsewhere in this Prospectus.
GENERAL
Hadco is the largest manufacturer of advanced electronic interconnect
products in North America. The Company offers a wide array of sophisticated
manufacturing, engineering and systems integration services to meet its
customers' electronic interconnect needs. The Company's principal products are
multilayer rigid printed circuits and backplane assemblies. Printed circuits are
the basic platforms used to interconnect microprocessors, integrated circuits
and other components essential to the functioning of electronic systems. By
working closely with customers at the design and prototype stage, the Company
believes it strengthens long-term relationships with its customers and gains an
advantage in securing a preferred vendor status when customers begin volume
production. Hadco's largest customers include many of the leading companies in
the electronics industry, such as Cabletron Systems, Compaq Computer,
Hewlett-Packard, Lucent Technologies, Northern Telecom, Solectron and Sun
Microsystems. Pro forma for the Acquisitions, in fiscal 1997 the Company's total
revenues would have been approximately $830 million, and EBITDA would have been
approximately $144 million.
Hadco's advanced manufacturing and assembly facilities are designed to meet
the accelerated time-to-market and time-to-volume requirements of its customers
whose markets are characterized by high growth rates, rapid technological
advances and short product life-cycles. During the past five fiscal years,
Hadco, Continental and Zycon have invested approximately $342 million in
production facilities and new technologies. Hadco provides customers with a
broad range of products and services that includes development, design,
quick-turn prototype, pre-production, volume production, and backplane assembly.
Hadco is one of a small number of printed circuit manufacturers with the
technology and advanced production facilities necessary to offer all of these
services. The Company believes its combination of a broad product offering and
advanced technological capabilities facilitates long-term relationships with
existing customers, attracts new customers and helps customers meet their
time-to-market and time-to-volume needs.
Hadco's customers are a diverse group of electronics OEMs and contract
manufacturers in the computing (mainly workstations, servers, mainframes,
storage and notebooks), data communications/telecommunications and industrial
automation industries, including process controls, automotive, medical and
instrumentation. Hadco provided its products and services to a diverse base of
approximately 560 customers in fiscal 1997 (approximately 590 customers pro
forma for the Continental Acquisition), including approximately 77 customers
with purchases in excess of $1 million (approximately 85 customers pro forma for
the Continental Acquisition). The Company's ten largest customers accounted for
approximately 47% of net sales in fiscal 1997.
On March 20, 1998, Hadco acquired all of the outstanding capital stock of
Continental, a manufacturer of multilayer printed circuits, for approximately
$188 million (including acquisition costs). On January 10, 1997, Hadco acquired
all of the outstanding capital stock of Zycon, a manufacturer of multilayer
printed circuits and backplane assemblies, for approximately $212 million
(including acquisition costs). Pro forma for the Acquisitions, Continental and
Zycon would have added approximately $396 million to Hadco's fiscal 1997 net
sales. The Acquisitions also added approximately 865,000 square feet of
manufacturing space (approximately a 129% increase) and substantially expanded
Hadco's geographic reach. The Continental Acquisition added facilities for
volume production of multilayer printed circuits in Phoenix, Arizona, a
quick-turn prototype facility in Austin, Texas, and a flexible printed circuit
manufacturing facility and printed circuit engineering and design operation in
California. The Zycon Acquisition added facilities for volume production of
multilayer printed circuits and backplane assemblies in the Silicon Valley area,
a quick-turn prototype and design facility in Haverhill, Massachusetts, and a
newly constructed facility for volume production of printed circuits in
Malaysia. The Acquisitions have also broadened the Company's customer base,
expanded its
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involvement in many fast growing industry sectors, added new proprietary
technologies, and increased the size of its sales force.
INDUSTRY OVERVIEW AND TRENDS
Printed circuits are the basic platforms used to interconnect
microprocessors, integrated circuits and other components essential to the
functioning of electronic products. Printed circuits consist of a pattern of
electrical traces etched from copper laminated on an insulated base that is
typically composed of rigid fiberglass or thin flexible circuits. To meet the
increasing requirements of OEMs and contract manufacturers, printed circuit
manufacturers have developed more complex multilayer designs with surface mount
and other attachment technologies, narrower widths and separations of copper
traces, advanced materials, and smaller diameters of vias and through-holes to
connect internal circuitry. Backplane assemblies are generally larger and
thicker printed circuits on which connectors are mounted to receive and
interconnect printed circuits, integrated circuits and other electronic
components.
Electronic interconnect products are customized for specific electronic
applications and are sold to OEMs and contract manufacturers in volumes that
range from several units for prototypes and small quantities for pre-production
to large quantities for volume production. In the 1980s, the electronic
interconnect market was largely comprised of military and computer applications,
and was characterized by periods of cyclicality. However, the proliferation of
electronics and the emergence of new technologies have significantly broadened
this market and reduced the amplitude of interconnect industry cycles in the
1990s. Electronic interconnects such as rigid printed circuits, flexible
circuits and backplane assemblies are now used in a wide variety of industries
and products, including data communications/telecommunications, workstations,
servers, personal computers, peripherals, industrial automation,
instrumentation, medical, transportation and defense.
As electronic products have become smaller and more complex, the
manufacture of interconnect products has required increasingly sophisticated
engineering and manufacturing expertise and substantial capital investment.
These advanced manufacturing process and technology requirements have caused
OEMs to rely more heavily on independent manufacturers and to reduce dependence
on their internal captive facilities. Industry sources estimate that
approximately 93% of the domestic printed circuit market was served by
independent manufacturers in 1997 (compared to approximately 71% in 1992).
Captive manufacturing facilities serve the remaining approximately 7% of the
market. Historically, electronics OEMs used independent printed circuit
manufacturers as offload capacity for their captive facilities. During economic
downturns, independent facilities lost production orders as captives produced a
greater percentage of demand internally. However, as a result of outsourcing of
OEM printed circuit production, the Company believes independents are less
affected by unused captive capacity during market downturns than was previously
the case.
In 1997, the worldwide market for rigid printed circuits was $29.4 billion,
and the domestic market for rigid printed circuits was $7.9 billion. In
addition, higher layer count rigid printed circuits (eight layers and above)
constituted approximately 40% of the total United States market in 1997, and has
increased at an annual compounded growth rate of 16% over the past two years,
compared to approximately 11% for the overall printed circuit market. The need
for expanded service offerings, advanced technological capabilities and broader
geographic scope has led to consolidation in recent years, reducing the number
of printed circuit manufacturers in North America from approximately 950 in 1992
to approximately 550 in 1997. Although the printed circuit market has been
experiencing consolidation over the past several years, it remains fragmented.
Of the approximately 550 rigid printed circuit manufacturers in the United
States in 1997, only seven had revenues in excess of $100 million.
According to industry sources, the domestic market for backplane assemblies
was approximately $1.2 billion in 1997. As in the printed circuit market, OEMs
have increasingly come to rely on independent producers of backplane assemblies,
allowing OEMs to reduce their capital investments, improve inventory management
and purchasing power and take advantage of the process technology expertise of
manufacturing specialists.
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The Company considers the following trends important in understanding the
electronic interconnect industry:
Industry Consolidation. The Company believes the industry will continue to
consolidate as a result of the substantial capital investment for advanced
production facilities, engineering and manufacturing expertise and technology
required to make increasingly sophisticated electronic interconnect products.
The increased investment requirement for state-of-the-art production facilities
has accelerated consolidation in the electronic interconnect industry and the
exit of smaller companies. In addition, OEMs and contract manufacturers
increasingly recognize that only a few suppliers of interconnect products can
consistently provide timely delivery of required volumes of highly sophisticated
electronic interconnect products. As a result, Hadco believes that companies
with lesser financial and technical resources are likely to exit the industry
and larger interconnect companies with sufficient resources will continue to
gain market share.
Increasing Demand for Single Sourcing. To avoid delays and costs during
the product life-cycle, OEMs are increasingly turning to suppliers capable of
producing electronic interconnect products from development, design, quick-turn
prototype and pre-production through volume production, and backplane assembly.
The accelerated time-to-market and time-to-volume needs of OEMs have resulted in
increased collaboration with qualified suppliers capable of providing a broad
and integrated offering. To meet their rapidly changing electronic interconnect
requirements, many OEMs have moved to limit their vendor base to a smaller
number of technically qualified suppliers capable of providing both quick-turn
prototype and pre-production quantities as well as cost-competitive volume
production quantities.
New and Emerging Markets. The markets for electronic products are growing
as a result of new product introductions, technological change, demands for a
wider variety of electronic product features, and increasingly powerful and less
expensive electronic components. New markets have emerged in computing, data
communications/telecommunications and multimedia. Moreover, existing industries
have significantly expanded applications in areas such as computer networking
and peripherals, digital and mobile communications, video-on-demand, the
Internet/World Wide Web, instrumentation and industrial controls. The Company
believes these new and emerging electronic product markets and applications have
also contributed to the reduction in the amplitude of the electronic
interconnect industry cycles.
Greater Demand for Complex Electronic Products. Advanced communication
equipment, as well as next-generation computer chips and microprocessors,
require interconnect systems that operate at greater speeds and higher
frequencies with minimal signal loss and distortion. Further, electronics OEMs
are designing more compact and portable high performance products. The
complexity of these new products requires higher performance, smaller size,
greater circuit and component density, and increased reliability. These
requirements necessitate greater sophistication in printed circuit manufacturing
and process technologies, including advanced materials, more layers, narrower
line widths and spacing, smaller vias to connect internal circuitry, and more
precise positioning of traces and pads to accommodate a greater density of
surface mount components. These products require increasingly advanced packaging
technologies, such as Multichip Module (MCM), Tape Automated Bonding (TAB),
Direct Chip Attach (DCA), High Density Interposers (HDI), Ball Grid Array (BGA),
and high frequency materials. The trend toward increasingly sophisticated
products also requires greater engineering support and investment in
manufacturing and process technology for suppliers to produce high-quality
electronic interconnect products on-time, in volume, and at acceptable cost.
Shorter Product Life-Cycles for Electronic Products. Rapid changes in
technology have significantly shortened the life-cycle of complex electronic
products and placed increased pressure on OEMs to develop new products as
quickly as possible. The time-to-market considerations of OEMs have increased
emphasis on the engineering and quick-turn production of small unit volumes of
electronic interconnects in the prototype development stage. In addition, the
success of first-to-market products has heightened the emphasis on volume
manufacturing expertise and technologically advanced manufacturing
infrastructure.
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STRATEGY
The Company's strategy is to increase sales and profitability by providing
a wide range of electronic interconnect solutions and services to a broad and
diversified customer base and by capitalizing on major industry trends as
follows:
Provide a Broad and Integrated Offering. Hadco develops and maintains
long-term customer relationships by providing a full range of integrated
services, from development, design, quick-turn prototype and pre-production
through volume printed circuit production and backplane assembly. The Company
believes its broad range of integrated services provides significant value to
its customers by shortening their new product development cycles, helping them
to meet their time-to-market and time-to-volume requirements, lowering
manufacturing costs, and providing technological expertise. By working closely
with customers at the design and prototype stage, the Company believes it
strengthens long-term relationships with its customers and gains an advantage in
securing a preferred vendor status when customers begin volume production.
Serve Diversified Customer Base in High Growth Segments. The Company
concentrates its marketing efforts on OEMs and contract manufacturers serving
OEMs in segments of the electronics market characterized by high growth, rapid
technological advances, short product development cycles and accelerated
time-to-market and time-to-volume requirements. To more fully support its
strategy of developing a large and diversified customer base, the Company
intends to offer certain large customers single points of contact to service
their needs on a global basis, and the Company is focusing on the further
development of its international sales force.
Develop Advanced Manufacturing and Process Technologies. The Company is
committed to remaining a leader in the development of advanced materials and
sophisticated process technologies that enable it to cost-effectively produce
reliable and technologically advanced products. The Company believes its
manufacturing and process capabilities provide a significant competitive
advantage and is committed to continuous improvement to maintain its leadership
position.
Maintain High Levels of Investment. Hadco believes its significant ongoing
investment in production technology allows it to maintain a leadership position
in the development of advanced material and process technologies. The Company
has made substantial investments in production facilities and new technologies
during the past five fiscal years that have increased capacity and operating
efficiencies, improved management control and provided more consistent product
quality. As a result, the Company believes it is one of the few interconnect
manufacturers capable of satisfying the full range of volume production,
time-to-market, time-to-volume and technology requirements of customers in the
electronics industry.
Expand Backplane Assembly Operations. In recent years, to extend its
integrated offering, the Company has expanded its backplane assembly operations,
thereby broadening its range of manufacturing services, reducing customer costs
and improving product quality. With this backplane assembly expansion, the
Company is well positioned to capture an increasing share of the full range of
interconnect requirements of its customers.
Pursue Strategic Acquisitions. The Company will consider strategic
acquisitions of companies and technologies that enhance its competitive
position, build economies of scale and help fulfill its other strategic
objectives. In evaluating possible acquisition candidates, the Company
considers, among other things, the opportunity for synergistic product
offerings, complementarity of client base, new technological capabilities and
potential for increased geographic reach.
Increase Geographic Reach. Hadco has pursued a strategy of expanding the
capacity and geographic scope of its manufacturing facilities to better serve
high growth segments of the electronics industry in key geographic markets.
Hadco believes it is the only independent North American printed circuit
manufacturer with a full service offering of design, quick-turn prototype and
volume printed circuit manufacturing and backplane assembly on both the East and
West Coasts. In addition, its volume production facility in Malaysia, which
commenced operations in fiscal 1997, is intended to provide the Company with
access to U.S. customers expanding into Asian markets. The Company also intends
to broaden its presence in Europe and other international markets.
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PRODUCTS AND SERVICES
The Company's products and services are designed to meet its customers'
electronic interconnect needs for complex multilayer printed circuits and
backplane assemblies. Hadco offers complementary processes and capabilities that
begin with product conception and continue through delivery of volume products.
The Company's products and services include the following:
Development. Through development groups located at various facilities,
Hadco identifies, develops and markets new technologies that benefit its
customers. These development groups work closely with customers during all
stages of product life-cycles. For instance, process design changes and
refinements required for volume production are identified and implemented prior
to production. The development groups also focus on the special requirements of
the Company's customers, including increasing printed circuit densities,
electronic packaging and advanced materials and products. When appropriate, the
development groups have coordinated the acquisition of technology licenses,
filed patent disclosures and applications, and registered trademarks on behalf
of the Company.
Design. The Company provides design and engineering assistance in the
early stages of product development which assures both mechanical and electrical
considerations are integrated to achieve a high quality and cost effective
product. The Company also evaluates customer designs for manufacturability and,
when appropriate, recommends design changes to reduce manufacturing costs or
lead times or to increase manufacturing yields or the quality of finished
printed circuits. The Company believes that this long-term view of manufacturing
and customer relationships distinguishes the Company from many manufacturers
which compete primarily in the quick-turn market. By working closely with its
customers, the Company also gains a better understanding of the future
requirements of OEMs. This cooperative process shortens the time in transition
from the development of the prototype design to volume manufacturing and
facilitates the delivery of high quality products to customer premises in a
timely fashion. The Company's recent acquisition of Continental added
Continental's PCA Design division, which provides circuit design and engineering
services.
Quick-Turn Prototype. Prototypes typically require lead times of three to
seven days, and as short as 24 hours. The Company provides quick-turn prototype
services to the product development groups of customers that require small test
quantities. Hadco offers these services through its Tech Centers in New
Hampshire, California, Massachusetts and Texas. Prototype development at these
Centers has included multilayer printed circuits of up to 48 layers, embedded
discrete components, Multichip Modules (MCM), Single Chip Carriers (SCC), planar
magnetics, advanced surface finishes, and various high performance substrates
for the high frequency microwave market. The Tech Centers also support advanced
attachment technologies such as Tape Automated Bonding (TAB), Direct Chip Attach
(DCA) and High Density Interposers (HDI). In combining the design of a printed
circuit with the manufacture of the prototype, Hadco can reduce the length of
the design/manufacture cycle. By working closely with customers at the design
and prototype stage, the Company believes it strengthens long-term relationships
with its customers and gains an advantage in securing a preferred vendor status
when customers begin volume production.
Pre-Production. Pre-production is the manufacture of limited quantities of
electronic interconnects during the transition period from prototype to volume
production. Pre-production generally requires quick-turn delivery to accommodate
time-to-volume pressures or as a temporary solution for unforeseen customer
demands. Pre-production is done in the Tech Centers and in volume production
facilities.
Volume Production. Volume production is characterized by longer lead times
and increased emphasis on lower cost as the product moves to full-scale
commercial production. As customers increasingly demand a quick transition from
prototype to volume production, few independent manufacturers can provide
complex printed circuits of 18 or more layers in the volume provided by Hadco's
larger facilities. During 1996, the Tech Centers transitioned chip attachment
technologies such as Ball Grid Array (BGA), Tape Automated Bonding (TAB), Direct
Chip Attach (DCA), High Density Interposers (HDI), and other technologies
including Multichip Module (MCM) and Single Chip Carriers (SCC) to volume
production. The Company operates six facilities located in Arizona, California,
New York, New Hampshire and Malaysia for medium and high-volume printed circuit
production.
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Backplane Assembly. Backplane assemblies are generally larger and thicker
printed circuits on which connectors are mounted to interconnect printed
circuits, integrated circuits and other electronic components. Hadco
incorporates its own printed circuits in backplane assemblies to provide
customers with a high level of printed circuit technology on a quick-turn and
volume basis. Net sales of backplane assemblies accounted for approximately 7%,
17% and 11% of total Company net sales during fiscal 1995, 1996 and 1997,
respectively, and for approximately 8% on a pro forma basis including
Continental during fiscal 1997. With its backplane assembly operations, Hadco is
one of a few companies that provides its customers with the advantage of an
integrated offering to meet their needs from development and design through
volume production and backplane assembly.
The Company's advanced process capabilities enhance each of the above
services and include:
Manufacture of High Performance Printed Circuits. The Company produces
technologically advanced printed circuits primarily for the high performance
market at the Tech Centers and its volume production facilities. These printed
circuits, used principally in the data communications and telecommunications
industries, are designed to function in high temperature environments and at
higher frequencies. Materials used by the Company for these products include
Teflon(R), cyanate ester, GETEK(R), liquid crystal polymers, polymides, and
bismaleimide triazine epoxies.
Development of Emerging Technologies. The Company undertakes projects to
develop advanced or improved processes, materials and product lines. Buried
Capacitance(TM) and buried resistance are advanced materials being developed by
the Company to provide improved electrical performance and greater interconnect
densities. Sales of Buried Capacitance(TM) products by the Company in fiscal
1997 totaled $31.7 million. In addition, the Company is developing the
microPath(TM) family of micro via processes, which include liquid imaging, dry
film imaging, plasma etching, and laser drilling. Micro vias provide a
significant increase in printed circuit density. The Continental Acquisition
also added PCA Design's micro via design methodology. During fiscal 1996, the
Company also began to produce rigid flex printed circuit products utilizing
licensed HVRFlex(TM) technology. These products enable customers to fold a
printed circuit and reduce the need for cable connectors in the portable
computer and telecommunications markets. See "--Manufacturing and Facilities."
MARKETS AND CUSTOMERS
Hadco's customers are a diverse group of OEMs and contract manufacturers in
the computing (mainly workstations, servers, mainframes, storage and notebooks),
data communications/telecommunications and industrial automation industries,
including process controls, automotive, medical and instrumentation. The
following table shows, for the periods indicated, the Company's net sales and
percentage of its net sales to the principal end-user markets it serves. The pro
forma information in the table includes Continental.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED,
-----------------------------------------------------------------
OCTOBER 25,
OCTOBER 28, OCTOBER 26, OCTOBER 25, 1997
MARKETS 1995 1996 1997 PRO FORMA
------- ------------- ------------- ------------- --------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Computing............................. $ 84.9 32% $119.2 34% $205.0 32% $291.6 35%
Contract Assembly..................... 69.0 26 112.2 32 289.2 44 339.7 41
Data Communications/
Telecommunications.................. 90.2 34 94.7 27 119.1 18 139.5 17
Industrial Automation................. 15.9 6 17.5 5 24.8 4 44.0 5
Other................................. 5.2 2 7.1 2 10.5 2 15.7 2
------ --- ------ --- ------ --- ------ ---
Total Net Sales.............. $265.2 100% $350.7 100% $648.6 100% $830.5 100%
====== === ====== === ====== === ====== ===
</TABLE>
The Company supplied its products and services to a diverse base of
approximately 560 customers in fiscal 1997 (approximately 590 customers pro
forma for the Continental Acquisition), including approximately 77 customers
with purchases in excess of $1 million (approximately 85 customers pro forma for
the Continental Acquisition). The Company attempts to market its products to
customers who currently have, or
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have the potential to achieve, significant market share in their respective
industries. The following lists the Company's largest customers during fiscal
1997:
Cabletron Systems
Celestica
Cisco Systems
Compaq Computer
Hewlett-Packard
Jabil Circuits
Lucent Technologies
Northern Telecom
RSP Manufacturing
SCI Systems
Solectron
Sun Microsystems
During fiscal 1995, 1996 and 1997, no customer accounted for more than
approximately 7%, 15% and 15%, respectively, of Hadco's net sales. In fiscal
1997, one customer, Solectron, accounted for approximately 15% of the net sales
of the Company (approximately 13% pro forma for the Continental Acquisition).
The Company's ten largest customers together accounted for approximately 46%,
48% and 47%, respectively, during the same periods.
The Company generally does not obtain long-term purchase orders or
commitments from its customers, and the orders received by the Company generally
require delivery within 90 days. However, many of the Company's customers have
maintained long-term purchasing relationships with the Company. See "Risk
Factors -- Variability of Orders."
Pro forma for the Acquisitions, approximately 17% of the Company's net
sales in fiscal 1997 were attributable to sales outside of the United States,
principally in Canada and Europe. The Company currently intends to expand its
sales efforts outside of the United States.
SALES AND MARKETING
The Company markets its products through its own sales and marketing
organization and independent manufacturers' representatives. As of May 2, 1998,
the Company employed 166 sales and marketing employees, of which 85 are direct
sales representatives. The Company is also represented by 12 independent
manufacturers' representatives in North America, Europe, Mexico, Asia, Australia
and the Middle East. Regional direct sales offices are located in Arizona,
California, Colorado, Georgia, Minnesota, New Hampshire, North Carolina, Oregon,
Pennsylvania, Texas and Canada. The Company's sales organization is divided into
four territories, and each direct sales representative and each manufacturer's
representative works within one of the four territories. Each territory also has
a support staff of sales engineers and technical service personnel responsible
for technical liaison and problem solving, development of product and market
opportunities, market research and marketing communications.
The Company focuses on developing close relationships with customers
beginning at the earliest development and design phases and continuing
throughout all stages of product production. The Company's Advanced Packaging
Development Group identifies, develops and markets new technologies that benefit
its customers and is intended to position the Company as an important source for
these solutions. This group also assists marketing efforts by hosting the
Regional Technology Symposiums at which the Company's technical capabilities are
presented to, and industry technical trends are discussed with, customers of the
Company.
MANUFACTURING AND FACILITIES
The need for high volume production of dense multilayer printed circuits
has transformed the electronic interconnect industry into one that increasingly
requires complex manufacturing processes and necessitates high levels of
investment in facilities, advanced materials, production processes and product
design capabilities. The Company has invested in production technology to
manufacture large volumes of dense multilayer printed circuits utilizing
advanced attachment strategies such as Surface Mount Technology (SMT), Tape
Automated Bonding (TAB), High Density Interposers (HDI) and Ball Grid Array
(BGA). The Company employs numerous advanced manufacturing techniques and
systems, including Computer Aided Manufacturing (CAM) systems, Computer
Integrated Manufacturing (CIM) systems, computer controlled drilling and
routing, dry-film imaging, multi-purpose metals plating, high-volume surface
coating, dual-access electrical
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testing, automated optical inspection, high-volume photoimageable solder mask
processing, and computer controlled high-volume lamination systems. These
techniques enable the Company to manufacture complex printed circuits of
consistent quality, in high-volume and on a timely basis. All of the Company's
North American production facilities are ISO9002 certified. See "--Products and
Services."
Hadco has pursued a strategy of expanding the capacity and geographic scope
of its manufacturing facilities to better serve high growth segments of the
electronics industry in key geographic markets. With the acquisition of
Continental in March 1998, the Company added a volume manufacturing facility
totaling 229,000 square feet in Arizona, a 30,000 square foot quick-turn
prototype facility in Texas, and a 16,000 square foot flexible printed circuit
manufacturing facility in California. With the acquisition of Zycon in January
1997, the Company added a 310,000 square foot volume production facility in
California, a 180,000 square foot volume production facility in Malaysia, a
71,000 square foot quick-turn prototype facility in Massachusetts and a 29,000
square foot backplane assembly facility in California.
In total, the Company currently leases or owns approximately 1.5 million
square feet of manufacturing space. The Company's facilities are as follows:
<TABLE>
<CAPTION>
FUNCTION LOCATION SQUARE FEET
-------- ---------------------------- -----------
<S> <C> <C>
Volume Production.................................. Santa Clara and San Jose, CA 310,000*
Owego, NY 292,000
Phoenix, AZ 229,000
Derry, NH 200,000
Kuching, Malaysia 180,000
Hudson, NH 54,000
Quick-Turn Prototype............................... Haverhill, MA 71,000
Watsonville, CA 35,000
Austin, TX 30,000
Salem, NH 27,000**
Backplane Assembly................................. Salem, NH 60,000
Santa Clara, CA 29,000
Administrative..................................... Salem, NH 35,000***
Santa Clara, CA 29,000
Phoenix, AZ 21,000
</TABLE>
- ---------------
* Does not include the 16,000 square foot flexible printed circuit facility in
San Jose, CA.
** A consolidation of this facility with the Haverhill, MA facility is underway
and is currently expected to be completed during the second half of fiscal
1998.
*** Under renovation.
The Company owns its volume production facilities in Owego, New York,
Derry, New Hampshire, Hudson, New Hampshire and Phoenix, Arizona. The Company
leases its volume production and backplane assembly facilities in Santa Clara
and San Jose, California, which are located in four adjacent buildings; the
leases for these four buildings expire in March 2009, and contain options to
extend for up to two additional periods of five years each. Construction of the
volume production facility in Kuching, Malaysia was completed in calendar 1996;
the Company leases the land on which this facility is located for a period of 60
years, expiring in November 2055. The Hudson, New Hampshire operations are
located in two separate buildings, one of which, containing 41,300 square feet,
is owned by the Company, and the second of which, containing 12,700 square feet,
is leased with the lease expiring in December 2000, with options to extend
through December 2009.
Leases for the Company's quick-turn prototype facility in Haverhill,
Massachusetts expire in December 2003, with options on two of the leases to
extend for an additional five years and options on the third lease to extend for
an additional ten years. The lease for the Watsonville, California quick-turn
prototype facility expires in December 1999, with options to extend until
December 2011. The lease for the quick-turn prototype facility in Salem, New
Hampshire expires in May 1999, with an option to extend until May 2004. The
lease
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for the quick-turn prototype facility in Austin, Texas expires in March 2004,
with options to extend until March 2014.
The lease for the backplane assembly facility in Salem, New Hampshire
expires in May 2005, with options to extend until May 2011. The leases for the
Santa Clara, California buildings include the 29,000 square feet of backplane
assembly operations.
As a result of the Continental Acquisition, the Company also leases a
flexible printed circuit manufacturing facility in San Jose, California and a
circuit design and engineering services facility in Saratoga, California. The
San Jose lease expires in December 2000, and the Saratoga lease expires in
November 2001, with an option to extend until November 2006.
The administrative and corporate offices in Salem, New Hampshire are
located in three separate buildings, one of which is covered by a lease expiring
in May 2003 with options to extend until May 2008, the second of which is
covered by a lease expiring in May 2008, and the third of which is a sublease
expiring in July 2003, with options to extend until July 2009. The leases for
the Santa Clara, California buildings include the 29,000 square feet of
administrative space. The Phoenix, Arizona facilities include 21,000 square feet
of administrative and office space.
Additionally, the Company owns approximately six acres of land in Salem,
New Hampshire, approximately five acres of land in Derry, New Hampshire,
approximately 29 acres of land in Owego, New York, and approximately four acres
of land in Phoenix, Arizona.
In fiscal 1997, the Company's capital expenditures relating to its
environmental control facilities and equipment totaled approximately $841,000.
The Company estimates that it will make capital expenditures with respect to its
environmental control facilities and equipment of approximately $6.6 million and
$6.5 million in fiscal 1998 and 1999, respectively.
SUPPLIER RELATIONSHIPS
Historically, the majority of raw materials used in the Company's
manufacture of printed circuits and components used in backplane assemblies have
been readily available. However, product changes and the overall demand for
electronic interconnect products could increase the industry's use of new
laminate materials, standard laminate materials, multilayer blanks, electronic
components and other materials, and therefore such materials may not be readily
available to the Company in the future. Zycon has experienced shortages of
certain types of raw materials in the past. The Company believes that the
potential exists for a shortage of materials in the printed circuit and
electronic assembly industries which could have a material adverse effect on
future unit costs. In response to such concerns, the Company engages in the
normal industry practices of maintaining primary and secondary vendors and
diversifying its customer base. There can be no assurances, however, that such
measures will be sufficient to protect the Company against any shortages of
materials. Further, there can be no assurances that shortages of certain types
of raw materials or components will not occur in the future. To date, material
shortages or price fluctuations have not had a materially adverse effect on the
Company, but there can be no assurance that material shortages or price
fluctuations will not have a material adverse effect on the Company in the
future. See "Risk Factors -- Availability of Raw Materials and Components."
The Company works with its suppliers to develop just-in-time supply systems
which reduce inventory carrying costs. The Company also maintains a Supplier
Certification Program which evaluates potential vendors on the basis of such
factors as quality, on-time delivery, cost, technical capability, and potential
technical advancement. Certification is based on both actual performance and
audits of vendors' manufacturing sites. Key suppliers are reviewed quarterly to
preserve strong relationships with these suppliers and maintain regular dialogue
on quality, cost and technical advancement issues. Many suppliers attend the
Company's Supplier Symposium, where the Company's goals and objectives are
discussed with vendors. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
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COMPETITION
The electronic interconnect industry is highly fragmented and characterized
by intense competition. The Company believes that its major competitors are the
large U.S. and international independent and captive producers that also
manufacture multilayer printed circuits and provide backplane and other
electronic assemblies. Some of these competitors have significantly greater
financial, technical and marketing resources, greater name recognition and a
larger installed customer base than the Company. In addition, these competitors
may have the ability to respond more quickly to new or emerging technologies,
may adapt more quickly to changes in customer requirements and may devote
greater resources to the development, promotion and sale of their products than
the Company.
During periods of recession or economic slowdown in the electronics
industry and other periods when excess capacity exists, electronics OEMs become
more price sensitive, which could have a material adverse effect on interconnect
pricing. In addition, the Company believes that price competition from printed
circuit manufacturers in Asia and other locations with lower production costs
may play an increasing role in the printed circuit markets in which the Company
competes. This price competition from Asian printed circuit manufacturers may
intensify as a result of economic turmoil, currency devaluations or financial
market instability that many Asian countries are currently experiencing. The
Company's basic interconnect technology is generally not subject to significant
proprietary protection, and companies with significant resources or
international operations may enter the market. Increased competition could
result in price reductions, reduced margins or loss of market share, any of
which could materially adversely affect the Company's business, financial
condition and results of operations.
The demand for printed circuits has continued to be affected by the
development of smaller, more powerful electronic components requiring less
printed circuit area. Expansion of the Company's existing products or services
could expose the Company to new competition. Moreover, new developments in the
electronics industry could render existing technology obsolete or less
competitive and could potentially introduce new competition into the industry.
There can be no assurance that the Company will continue to compete successfully
against present and future competitors or that competitive pressures faced by
the Company will not have a material adverse effect on the Company's business,
financial condition and results of operations.
Hadco competes on the basis of product quality, timeliness of delivery,
price, customer technical support and its integrated offering, from development
and design through volume production and backplane assembly.
PRODUCT PROTECTION
The Company has obtained eleven United States and 21 foreign patents.
Although Hadco seeks to protect certain proprietary technology and other
intangible assets through patents and trademark filings, it has relatively few
patents and relies primarily on trade secret protection. There can be no
assurance that the Company will be able to protect its trade secrets or that
others will not independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to the Company's trade
secrets. The future success of the Company will depend on the continued
development of processes and capabilities. The Company believes that its
accumulated experience with respect to materials and process technology is also
important to its operations. See "Business -- Legal Proceedings and Claims."
RELEASED BACKLOG
The Company's released backlog as of May 2, 1998 was $125.6 million,
compared with $144.4 million as of April 26, 1997. The Company anticipates
delivering approximately 82% of this released backlog during its third quarter
of fiscal 1998. Released backlog consists of orders for which artwork has been
received, a delivery date has been scheduled and the Company anticipates it will
manufacture and deliver the order. Cancellation and postponement charges, to the
extent they exist with respect to released backlog, generally vary depending
upon the time of cancellation or postponement, and a significant portion of the
Company's released backlog at any time may be subject to cancellation or
postponement without penalty. Variations in the size, timing and delivery
schedules of purchase orders received by the Company, as well as changes in
customers' delivery
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requirements, may result in substantial fluctuations in released backlog from
period to period. Accordingly, the Company believes that released backlog is not
a meaningful indicator of future quarterly or annual financial results.
EMPLOYEES
As of May 2, 1998, the Company had 7,951 employees, compared to 5,611
employees as of April 26, 1997. The employees are not represented by a union,
and the Company has never experienced any labor problems resulting in a work
stoppage.
ENVIRONMENTAL MATTERS
The Company is required to comply with all federal, state, county and
municipal regulations regarding protection of the environment. There can be no
assurance that more stringent environmental laws will not be adopted in the
future and, if adopted, the costs of compliance with more stringent
environmental laws could be substantial. Waste treatment and disposal are major
considerations for printed circuit manufacturers. The Company uses chemicals in
the manufacture of its products that are classified by the Environmental
Protection Agency (EPA) as hazardous substances. The Company is aware of certain
chemicals that exist in the ground at certain of its facilities. The Company has
notified various governmental agencies and continues to work with them to
monitor and resolve these matters. During March 1995, the Company received a
Record Of Decision (ROD) from the New York State Department of Environmental
Conservation (NYSDEC), regarding soil and groundwater contamination at its
Owego, New York facility. Based on a Remedial Investigation and Feasibility
Study (RIFS) for apparent on-site contamination at that facility and a Focused
Feasibility Study (FFS), each prepared by environmental consultants of the
Company, the NYSDEC has approved a remediation program of groundwater withdrawal
and treatment and iterative soil flushing. The Company has executed a
Modification of the Order on Consent to implement the approved ROD. The cost,
based upon the FFS, to implement this remediation is estimated to be $4.6
million, and is expected to be expended as follows: $260,000 for capital
equipment and $4.3 million for operation and maintenance costs which will be
incurred and expended over the estimated life of the program of 30 years. NYSDEC
has notified the Company that it will take additional samples from a wetland
area near the Company's Owego facility. Analytical reports of earlier sediment
samples indicated the presence of certain inorganics. There can be no assurance
that the Company and/or other third parties will not be required to conduct
additional investigations and remediation at that location, the costs of which
are currently indeterminable due to the numerous variables described in the
fifth paragraph of this "-- Environmental Matters" section.
From 1974 to 1980, the Company operated a printed circuit manufacturing
facility in Florida as a lessee of property that is now the subject of a pending
lawsuit (the "Florida Lawsuit") and investigation by the Florida Department of
Environmental Protection (FDEP). Hadco and others are participating in
alternative dispute resolution regarding the site with an independent mediator.
In connection with the mediation, in February 1992 the FDEP presented
computer-generated estimates of remedial costs, for activities expected to be
spread over a number of years, that ranged from approximately $3.3 million to
$9.7 million. Mediation sessions were conducted in March 1992 but were then
suspended during ongoing assessment and feasibility activities. On June 9, 1992,
the Company entered into a Cooperating Parties Agreement in which it and Gould,
Inc., another prior lessee of the site, agreed to fund certain assessment and
feasibility study activities at the site. The cost of such activities is not
expected to be material to the Company. Management believes it is likely that it
will participate in implementing a continuing remedial program for the site, the
costs of which are currently unknown. In June 1995, Hadco was named a
third-party defendant in the Florida Lawsuit. See "-- Legal Proceedings and
Claims."
The Company has commenced the operation of a groundwater extraction system
at its Derry, New Hampshire facility to address certain groundwater
contamination and groundwater migration control issues. Further investigation is
underway to determine the areal extent of the groundwater contaminant plume.
Because of the uncertainty regarding both the quantity of contaminants beneath
the building at the site and the long-term effectiveness of the groundwater
migration control system the Company has installed, it is not possible to make a
reliable estimate of the length of time remedial activity will have to be
performed.
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However, it is anticipated that the groundwater extraction system will be
operated for at least 30 years. There can be no assurance that the Company will
not be required to conduct additional investigations and remediation relating to
the Derry facility. The total costs of such groundwater extraction system and of
conducting any additional investigations and remediation relating to the Derry
facility are not fully determinable due to the numerous variables described in
the fifth paragraph of this "-- Environmental Matters" section.
The City of Santa Clara adopted an ordinance that, as of April 1, 1997,
reduced the amount of waste, including copper and nickel, that companies such as
the Company may discharge into the city sanitary sewer. The ordinance provides
for substantial penalties for intentional or negligent violations. These
penalties include fines ranging from $10,000 to $50,000 per day, revocation of
required business permits, the issuance of a cease and desist order and, under
certain circumstances, up to nine months' imprisonment. Under the ordinance, the
Company is subject to stringent requirements on the amount of water it can
discharge. The concentration limit for Hadco's copper discharge was reduced from
2.70 milligrams per liter to 1.02 milligrams per liter, and the concentration
limit for Hadco's nickel discharge was reduced from 2.60 milligrams per liter to
0.15 milligrams per liter. The Company believes it is currently in compliance
with the new discharge limits.
The Company accrues estimated costs associated with known environmental
matters, when such costs can be reasonably estimated. The cost estimates
relating to future environmental clean-up are subject to numerous variables, the
effects of which can be difficult to measure, including the stage of the
environmental investigations, the nature of potential remedies, possible joint
and several liability, the magnitude of possible contamination, the difficulty
of determining future liability, the time over which remediation might occur,
and the possible effects of changing laws and regulations.
Management believes the ultimate disposition of above known environmental
matters described in this "-- Environmental Matters" section will not have a
material adverse effect upon the liquidity, capital resources, business or
consolidated financial position of the Company. However, one or more of such
environmental matters could have a significant negative impact on the Company's
consolidated financial results for a particular reporting period. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" and Note 9 of Notes to the Company's Consolidated Financial
Statements.
The Company plans additional capital expenditures during fiscal 1998 to
further reduce air emissions and reduce waste generation. See discussion under
"-- Manufacturing and Facilities" concerning the Company's capital expenditures
relating to environmental control facilities and equipment, and under "-- Legal
Proceedings and Claims" relating to lawsuits regarding environmental matters.
LEGAL PROCEEDINGS AND CLAIMS
The Company is one of 33 entities which have been named as potentially
responsible parties in a lawsuit pending in the federal district court of New
Hampshire concerning environmental conditions at the Auburn Road, Londonderry,
New Hampshire landfill site. Local, state and federal entities and certain other
parties to the litigation seek contribution for past costs, totaling
approximately $20 million, allegedly incurred to assess and remediate the Auburn
Road site. In December 1996, following publication and comment period, the EPA
amended the ROD to change the remedy at the Auburn Road site from active
groundwater remediation to future monitoring. Other parties to the lawsuit also
allege that future monitoring will be required. The Company is contesting
liability, but is participating in mediation with 27 other parties in an effort
to resolve the lawsuit.
In connection with the Florida Lawsuit pending in the Circuit Court for
Broward County, Florida (described above under "-- Environmental Matters"), each
of Hadco and Gould, Inc., another prior lessee of the site of the printed
circuit manufacturing facility in Florida, was served with a third-party
complaint in June 1995, as third-party defendants in such pending Florida
Lawsuit by a party who had previously been named as a defendant when the Florida
Lawsuit was commenced in 1993 by the FDEP. The Florida Lawsuit seeks damages
relating to environmental pollution and FDEP costs and expenses, civil
penalties, and declaratory and injunctive relief to require the parties to
complete assessment and remediation of soil and
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groundwater contamination. The other parties include alleged owners of the
property and Fleet Credit Corporation, a secured lender to a prior lessee of the
property. "See Business -- Environmental Matters."
In March 1993, the EPA notified Hadco Santa Clara (formerly Zycon) of its
potential liability for maintenance and remediation costs in connection with a
hazardous waste disposal facility operated by Casmalia Resources, a California
Limited Partnership, in Santa Barbara County, California. The EPA identified
Hadco Santa Clara as one of the 65 generators which had disposed the greatest
amounts of materials at the site. Based on the total tonnage contributed by all
generators, Hadco Santa Clara's share is estimated at approximately 0.2% of the
total weight.
The Casmalia site was regulated by the EPA during the period when the
material was accepted. There is no allegation that Hadco Santa Clara violated
any law in the disposal of material at the site, rather the EPA's actions
stemmed from the fact that Casmalia Resources may not have the financial means
to implement a closure plan for the site and because of Hadco Santa Clara's
status as a generator of hazardous waste.
In June 1997, the United States District Court in Los Angeles, California
approved and entered a Consent Decree among the EPA and 49 entities (including
Hadco Santa Clara) acting through the Casmalia Steering Committee (CSC). The
Consent Decree sets forth the terms and conditions under which the CSC will
carry out work aimed at final closure of the site. Certain closure activities
will be performed by the CSC. Later work will be performed by the CSC, if funded
by other parties. Under the Consent Decree, the settling parties will work with
the EPA to pursue the non-settling parties to ensure they participate in
contributing to the closure and long-term operation and maintenance of the
facility.
The EPA will continue as the lead regulatory agency during the final
closure work. Because long-term maintenance plans for the site will not be
determined for a number of years, it has not yet been decided which regulatory
agency will oversee this phase of the work plan or how the long-term costs will
be funded. However, the agreement provides a mechanism for ensuring that an
appropriate federal, state or local agency will assume regulatory responsibility
for long-term maintenance.
The future costs in connection with the lawsuits described in the preceding
paragraphs are currently indeterminable due to such factors as the unknown
timing and extent of any future remedial actions which may be required, the
extent of any liability of the Company and of other potentially responsible
parties, and the financial resources of the other potentially responsible
parties. See Note 9 of Notes to the Company's Consolidated Financial Statements.
On March 27, 1998, the Company received a written notice from legal counsel
for the Lemelson Medical, Education & Research Foundation Limited Partnership
(the "Lemelson Partnership"), alleging that the Company is infringing certain
patents held by the Lemelson Partnership and offering to license such patents to
the Company. The ultimate outcome of this matter is not currently determinable,
and there can be no assurance that the outcome of this matter will not have a
material adverse effect upon the Company's business, financial condition and
results of operations. Litigation with respect to patents and other intellectual
property matters can result in substantial damages, require the cessation of the
manufacture, use and sale of infringing products and the use of certain
processes, or require the infringing party to obtain a license to the relevant
intellectual property.
On January 12, 1998, Hadco Santa Clara (formerly Zycon) received notice of
the filing of a lawsuit, before the Superior Court (County of Santa Clara,
California), against it by Jackie Riley, Keith Riley and Richard Riley for
damages (including punitive damages) for alleged injuries suffered, including
Richard Riley's cancer, as a result of the alleged emission at a Zycon facility
of effluent from allegedly toxic and hazardous chemical substances. Because this
matter is at an early stage, the Company believes it cannot assess the potential
range of damages that might be awarded should the plaintiffs prevail.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Horace H. Irvine II(1).................... 61 Chairman of the Board of Directors
President, Chief Executive Officer and
Andrew E. Lietz........................... 59 Director
Senior Vice President, Chief Financial
Timothy P. Losik.......................... 39 Officer and Treasurer
John D. Caruso, Jr........................ 49 Senior Vice President
Christopher T. Mastrogiacomo.............. 40 Senior Vice President
Frederick G. McNamee, III................. 41 Senior Vice President
Michael K. Sheehy......................... 50 Senior Vice President
Robert E. Snyder.......................... 58 Senior Vice President
James C. Hamilton......................... 60 Clerk
Oliver O. Ward(2)......................... 63 Director
Patrick Sweeney........................... 62 Director
Lawrence Coolidge(1)...................... 62 Director
John F. Smith(1)(2)(3).................... 62 Director
John E. Pomeroy(3)........................ 56 Director
James C. Taylor(2)(3)..................... 60 Director
Mauro J. Walker........................... 62 Director
</TABLE>
- ---------------
(1) Member of Nominating Committee.
(2) Member of Audit Committee.
(3) Member of Compensation Committee.
Mr. Irvine is a founder of the Company and has been its Chairman of the
Board since the Company was incorporated in 1966, and its Chief Executive
Officer from 1966 until 1986. He was President of the Company from 1966 until
1980 and Treasurer of the Company from 1966 until 1984. He is Chairman of the
Executive and Long-Term Planning and Strategy Committees of the Board of
Directors.
Mr. Lietz joined the Company in 1984 and has been President and Chief
Executive Officer of the Company since October 1995. From July 1991 to October
1995 Mr. Lietz was the Chief Operating Officer and a Vice President of the
Company. He has been a director of the Company since February 1993. Prior to
joining the Company, Mr. Lietz spent 20 years employed by IBM where he held
various sales, marketing and management positions. Mr. Lietz is also a director
of Energy North Natural Gas, Inc. and Wyman-Gordon Company.
Mr. Losik joined the Company in 1986 and has been Senior Vice President in
charge of Eastern Operations since June 1998, a Senior Vice President since
September 1997 and the Chief Financial Officer and Treasurer of the Company
since March 1994. He currently serves as Senior Vice President, Chief Financial
Officer and Treasurer of the Company. He was a Vice President from March 1994 to
September 1997, Controller of the Company from June 1992 to March 1994 and a
Corporate Accounting Manager from March 1988 to June 1992. Mr. Losik is a
certified public accountant. From 1979 to 1986, Mr. Losik held various
positions, including partner, in public accounting firms.
Mr. Caruso joined the Company in September 1997 as a Senior Vice President
in charge of Eastern Operations. In June 1998, Mr. Caruso was appointed Senior
Vice President in charge of Corporate Services and Chief Information Officer.
Prior to joining Hadco, Mr. Caruso was the Managing Director of Worldwide
Manufacturing at Cabletron Systems, a computer company, from 1990 to September
1997.
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Mr. Mastrogiacomo joined the Company in March 1988 and has been the Senior
Vice President in charge of the Santa Clara volume operations as well as all
North American value added manufacturing operations (backplane assembly) since
September 1997. He was a Vice President from January 1997 to September 1997, and
the Business Unit Manager in charge of the Derry volume printed circuit business
unit from January 1994 to January 1997. From March 1988 to January 1994, Mr.
Mastrogiacomo was Manufacturing Manager at the Company's Owego, New York
facility.
Mr. McNamee joined the Company in March 1998 as Senior Vice President in
charge of Hadco Phoenix. Prior to joining the Company, Mr. McNamee was Chairman,
President and Chief Executive Officer of Continental from December 1994 to March
1998. Mr. McNamee joined Continental as President and Chief Executive Officer in
September 1994, and was elected a director of Continental in November 1994.
Prior to joining Continental, Mr. McNamee worked for 15 years at IBM in Austin,
Texas, in a variety of circuit board manufacturing positions, including as
manager of the IBM circuit board facility in Austin from November 1992 to
September 1994.
Mr. Sheehy joined the Company in 1994 and has been the Senior Vice
President of worldwide sales and marketing since September 1997. He was the Vice
President in charge of the value added manufacturing business unit (backplane
assembly) from March 1995 to September 1997. Prior to joining the Company, Mr.
Sheehy was the Vice President of Logistic Operations and then Operations at
Kendall Square Research Corp. from January 1991 to November 1994. Prior to that,
Mr. Sheehy held various management positions at Wang Computer from 1981 to 1991.
Mr. Snyder joined the Company in January 1997 and has been a Senior Vice
President since September 1997. Prior to joining the Company, Mr. Snyder was
Managing Director of Asian Operations of Zycon from January 1996 to January
1997. He was a vice president of Zycon from February 1990 to January 1996.
Mr. Hamilton has been the Clerk of the Company since 1966. He is a partner
in the law firm of Hamilton & Dahmen, LLP, general counsel to the Company.
Mr. Ward has been a director of the Company since 1987. He is Chairman of
the Audit and Finance Committees of the Board of Directors. He was a founder and
has served as chairman of the board, chief executive officer and president of
Germanium Power Devices Corp., a manufacturer and marketer of germanium
semiconductors, since 1973.
Mr. Sweeney has been a director of the Company since 1991. He was President
and Chief Executive Officer of the Company from 1991 until October 1995, and
Chief Operating Officer from July 1990 to July 1991. He is currently a private
business consultant.
Mr. Coolidge has been a director of the Company since 1995. He has been the
president and a private trustee of Loring, Wolcott & Coolidge Office, a
fiduciary services provider, since 1962. In August 1994, Mr. Coolidge became an
associate of Loring, Wolcott & Coolidge Fiduciary Advisors, a registered
investment advisor.
Mr. Smith has been a director of the Company since 1995. He is Chairman of
the Nominating Committee of the Board of Directors. He has been the president of
MYCOS International, Inc., a property development corporation, since April 1993,
and president of PerSeptive Biosystems, Inc., a biotechnology company, July 1996
to January 1998 and currently serves as a consultant. In April 1993, Mr. Smith
retired as Senior Vice President and Chief Operating Officer of Digital
Equipment Corporation, a computer company, in which capacities he had served
since 1991. He began his career at Digital Equipment Corporation in 1958 and
served in various other senior management positions from 1976 to 1991. Mr. Smith
is also a director of Ansys Corporation, Instron Corporation, and Sequoia
Systems, Inc.
Mr. Pomeroy has been a director of the Company since September 1996. He has
been president and chief executive officer of Dover Technologies, a group of
manufacturing companies and a subsidiary of Dover Corporation, since 1987. Mr.
Pomeroy is also a director of Adept Technologies, Inc.
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Mr. Taylor has been a director of the Company since December 1996. He is
Chairman of the Compensation Committee of the Board of Directors. He has been an
advisory director at Downer and Company, an investment banking firm, since 1995.
He was a managing director of Burns Fry Limited, an investment banking firm,
from 1988 to 1994.
Mr. Walker has been a director of the Company since June 1998. Mr. Walker
is the former Senior Vice President and Motorola Director of Manufacturing for
Motorola Corporation, a position he held from 1989 to 1997. Mr. Walker is a past
chair of the Motorola Corporate Advanced Manufacturing Technology Council and
served as a member of Motorola's Science Advisory Board. Mr. Walker is an
ex-officio member and past Industry Chairman of the National Electronics
Manufacturing Initiative, an electronics manufacturing industry organization.
Directors are elected annually and hold office until the next annual
meeting of stockholders and until their successors are duly elected and
qualified, or until their earlier removal or resignation. Executive officers are
elected to serve at the pleasure of the Board of Directors. There are no family
relationships among any of the directors and executive officers of the Company.
DESCRIPTION OF CERTAIN INDEBTEDNESS
The following is a summary of certain material terms of certain
indebtedness of the Company. The summary is qualified in its entirety by
reference to the Credit Facility and other agreements to which such summary
relates, copies of which are available upon request to the Company.
CREDIT FACILITY
In December 1997, the Company negotiated a $400 million unsecured senior
revolving credit facility with a group of banks that amended and restated the
Company's then existing credit facility. Approximately $220 million of loans
were incurred under the Credit Facility to finance the Continental Acquisition
in March 1998 to repay outstanding indebtedness of Continental and to pay
certain costs relating to the Continental Acquisition. The Credit Facility was
amended in March 1998 to add certain representations, warranties, conditions and
covenants in connection with the Continental Acquisition. The Credit Facility
was further amended in May 1998 to add certain conditions and covenants with
respect to the Original Notes Offering. As of May 2, 1998, the amount
outstanding under the Credit Facility was $345 million. At May 2, 1998, after
giving effect to the Original Notes Offering and the use of the net proceeds
therefrom, the amount outstanding under the Credit Facility would have been
approximately $151 million. The Company is required to pay a quarterly
commitment fee ranging from 0.2% to 0.375% per annum, based on the Company's
ratio of Consolidated Funded Debt to EBITDA (as defined in the Credit Facility),
of the unused commitment under the Credit Facility. The Credit Facility expires
on January 8, 2002 (the "Credit Facility Maturity Date"). Borrowings under the
Credit Facility are guaranteed by Continental, Zycon and certain other
subsidiaries of the Company. The net proceeds of the Original Notes Offering
will be used to repay borrowings under the Credit Facility incurred in
connection with the Acquisitions.
Subject to the satisfaction of customary conditions, the Company may obtain
loans or letters of credit under the Credit Facility at any time prior to the
Credit Facility Maturity Date. Such loans may be used for acquisitions permitted
under the Credit Facility, working capital and general corporate purposes. Such
letters of credit may be used solely for general corporate purposes.
At the Company's election, loans under the Credit Facility bear interest at
either (i) the Base Rate or (ii) the Eurodollar Rate plus the Applicable
Eurodollar Rate Margin. The "Base Rate" is equal to the higher of (a) the annual
rate of interest announced from time to time by BankBoston, N.A. as its base
rate, and (b) one-half of one percent (0.5%) above the Federal Funds Effective
Rate, in each case as in effect from time to time (the Federal Funds Effective
Rate being, for any day, either the rate per annum equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, or if such rate is not
published, the average of the quotations for such day on such transactions
received by BankBoston, N.A. from three funds brokers selected by it). For any
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applicable interest period, the "Eurodollar Rate" is equal to (i) the arithmetic
average of the annual rates (rounded upwards to the nearest 1/16 of 1%) of the
rate at which BankBoston, N.A. is offered dollar deposits in the interbank
eurodollar market, divided by (ii) a number equal to 1.00 minus the maximum rate
at which reserves may be required to be maintained under Regulation D of the
Board of Governors of the Federal Reserve System. The Applicable Eurodollar Rate
Margin in effect at any time ranges from 0.5% to 1.375%, based on the Company's
ratio of Consolidated Funded Debt to EBITDA (as defined in the Credit Facility).
Interest on loans which bear interest based upon the Base Rate is payable
quarterly in arrears and on the Credit Facility Maturity Date, and interest on
loans which bear interest based upon the Eurodollar Rate is payable on the last
day of each relevant interest period (or if such period exceeds three months, on
each three month anniversary of the first day of such interest period) and on
the Credit Facility Maturity Date. As of May 2, 1998, the weighted average
interest rate on loans outstanding under the Credit Facility was 6.56%.
The Credit Facility provides for certain mandatory repayments (of up to
$150 million of loans outstanding under the Credit Facility) in the event the
Company incurs certain specified indebtedness. The Credit Facility contains
customary representations and warranties. The Credit Facility also contains
extensive affirmative and negative covenants, including, among others, certain
limits on the ability of the Company to incur indebtedness, create liens, make
investments, pay dividends or other distributions, engage in mergers,
consolidations, acquisitions or dispositions, enter into sale and leaseback
transactions, enter into guarantees, prepay subordinated indebtedness, make
capital expenditures or create any new series of capital stock or amend the
terms of existing capital stock. The Credit Facility also requires the Company
to maintain certain financial covenants, including maximum ratio of Consolidated
Funded Debt to EBITDA, minimum interest coverage, minimum consolidated net worth
and minimum fixed charge coverage. The Credit Facility also contains customary
events of default, including upon a change in control.
MALAYSIAN CREDIT FACILITY
The Company has a line of credit arrangement with a Malaysian bank
denominated in Malaysian ringgits and U.S. dollars for aggregate borrowings of
$3.4 million for the purpose of acquiring land, facilities and equipment for the
Company's Malaysian subsidiary. The arrangement is renewable annually. At May 2,
1998, there were no amounts outstanding under this arrangement.
OTHER INDEBTEDNESS
As of May 2, 1998, the Company had approximately $18.1 million in
outstanding capitalized leases and lease line of credit obligations, and a $0.8
million industrial development bond.
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER
General
In connection with the sale of Original Notes to the Initial Purchasers
pursuant to the Placement Agreement, dated May 13, 1998 (the "Placement
Agreement"), among the Company, the Guarantors and Morgan Stanley & Co.
Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BancAmerica
Robertson Stephens and BT Alex. Brown Incorporated, the holders of the Original
Notes became entitled to the benefits of the Registration Rights Agreement.
Under the Registration Rights Agreement, the Company became obligated to
file a registration statement in connection with a registered exchange offer and
consummate such exchange offer within six months of the date the Original Notes
were issued (the "Issue Date"). The Exchange Offer being made hereby, if
consummated within the required time period, will satisfy the Company's
obligations under the Registration Rights Agreement. The Company understands
that there are approximately beneficial owners of such Original Notes. This
Prospectus, together with the Letter of Transmittal, is being sent to all such
beneficial holders known to the Company.
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal, the Company will accept all
Original Notes properly tendered and not withdrawn prior to 5:00 p.m., New York
City time, on the Expiration Date. Subject to the terms and conditions set forth
in this Prospectus and the Letter of Transmittal, the Company will issue $1,000
principal amount of Exchange Notes in exchange for each $1,000 principal amount
of outstanding Original Notes accepted in the Exchange Offer. Holders may tender
some or all of their Original Notes pursuant to the Exchange Offer.
Based on an interpretation by the staff of the Commission set forth in the
Morgan Stanley Letter, the Exxon Capital Letter and similar letters, the Company
believes that Exchange Notes issued pursuant to the Exchange Offer in exchange
for Original Notes may be offered for resale, resold and otherwise transferred
by any person who received such Exchange Notes, whether or not such person is
the holder (other than Restricted Holders) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the ordinary course of such holder's or
other person's business, neither such holder nor such other person is engaged in
or intends to engage in any distribution of the Exchange Notes and such holders
or other persons have no arrangement or understanding with any person to
participate in the distribution of such Exchange Notes. See Morgan Stanley & Co.
Incorporated, SEC No-Action Letter (available June 5, 1991) and Exxon Capital
Holdings Corporation, SEC No-Action Letter (available May 13, 1988).
If any person were to be participating in the Exchange Offer for the
purposes of participating in a distribution of the Exchange Notes in a manner
not permitted by the Commission's interpretation, such person (a) could not rely
on the Morgan Stanley Letter, the Exxon Capital Letter or similar letters and
(b) must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Original Notes, where such Original Notes were acquired by such
broker-dealer as a result of market-making or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Original Notes where such Original Notes were acquired by such
broker-dealer as result of market-making or other trading activities; however,
this Prospectus may not be used for resales of Notes acquired directly from the
Company. The Company has agreed that, for a period ending on the earlier to
occur of 180 days after the Expiration Date or the time when all persons subject
to the prospectus delivery requirements of the Securities Act have sold all
Exchange Notes
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<PAGE> 62
held by them, it will make this Prospectus, as it may be amended or supplemented
from time to time, available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. See "Use
of Proceeds." The Company has agreed to bear the expenses of the Exchange Offer
pursuant to the Registration Rights Agreement. No underwriter is being used in
connection with the Exchange Offer.
The Company shall be deemed to have accepted validly tendered Original
Notes when, as and if the Company has given oral or written notice thereof to
the Exchange Agent. The Exchange Agent will act as agent for the tendering
holders of Original Notes for the purposes of receiving the Exchange Notes from
the Company and delivering Exchange Notes to such holders.
If any tendered Original Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain conditions set forth herein under
"-- Conditions" without waiver by the Company, certificates for any such
unaccepted Original Notes will be returned, without expense, to the tendering
holder thereof as promptly as practicable after the Expiration Date.
Holders of Original Notes who tender in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of
Original Notes pursuant to the Exchange Offer. The Company will pay all charges
and expenses, other than certain applicable taxes in connection with the
Exchange Offer. See "-- Fees and Expenses."
In the event the Exchange Offer is consummated, the Company will not be
required to register the Original Notes. The Original Notes that are not
exchanged pursuant to the Exchange Offer will remain restricted securities.
Accordingly, such Original Notes may be resold only (i) to the Company, (ii)
pursuant to Rule 144A or Rule 144 under the Securities Act or pursuant to
another exemption under the Securities Act, (iii) outside the United States to a
foreign person pursuant to the requirements of Rule 904 under the Securities
Act, or (iv) pursuant to an effective registration statement under the
Securities Act. See "Risk Factors -- Consequences of Failure to Exchange."
Expiration Date; Extensions; Amendment
The term "Expiration Date" shall mean the expiration date set forth on the
cover page of this Prospectus, unless the Company, in its sole discretion,
extends the Exchange Offer, in which case the term "Expiration Date" shall mean
the latest date to which the Exchange Offer is extended.
In order to extend the Expiration Date, the Company will notify the
Exchange Agent of any extension by oral or written notice and will mail to the
record holders of Original Notes an announcement thereof, each prior to 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Such announcement may state that the Company is
extending the Exchange Offer for a specified period of time.
The Company reserves the right (a) to delay accepting any Original Notes,
to extend the Exchange Offer or to terminate the Exchange Offer and not accept
Original Notes not previously accepted if any of the conditions set forth herein
under "-- Conditions" shall have occurred and shall not have been waived by the
Company (if permitted to be waived by the Company), by giving oral or written
notice of such delay, extension or termination to the Exchange Agent, or (b) to
amend the terms of the Exchange Offer in any manner deemed by it to be
advantageous to the holders of the Original Notes. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as practicable
by oral or written notice thereof. If the Exchange Offer is amended in a manner
determined by the Company to constitute a material change, the Company will
promptly disclose such amendment in a manner reasonably calculated to inform the
holders of the Original Notes of such amendment and the Company may extend the
Exchange Offer for a period of up to ten business days, depending upon the
significance of the amendment and the manner of disclosure to holders of the
Original Notes, if the Exchange Offer would otherwise expire during such
extension period.
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<PAGE> 63
Without limiting the manner in which the Company may choose to make public
announcements of any extension, amendment or termination of the Exchange Offer,
the Company shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.
INTEREST ON THE EXCHANGE NOTES
Interest on each Exchange Note will accrue from the last date on which
interest was paid on the Original Note surrendered in exchange therefor or, if
no interest has been paid on the Original Note, from the date of original
issuance of such Original Note. Interest on the Exchange Notes will be payable
semiannually on June 15 and December 15 of each year, commencing December 15,
1998, at the rate of 9 1/2% per annum. Holders of Original Notes whose Original
Notes are accepted for exchange will be deemed to have waived the right to
receive any payment in respect of interest on the Original Notes accrued up
until the date of the issuance of the Exchange Notes. No interest will be paid
on the Original Notes accepted for exchange. Holders of Original Notes that are
not exchanged will receive the accrued interest payable on December 15, 1998 in
accordance with the Indenture.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by instruction 3 of the Letter of Transmittal, and mail
or otherwise deliver such Letter of Transmittal or such facsimile, together with
the Original Notes and any other required documents. To be validly tendered,
such documents must reach the Exchange Agent on or before 5:00 p.m., New York
City time, on the Expiration Date.
Timely confirmation of a book-entry transfer of any Original Note, if such
procedure is available, into the Exchange Agent's account at The Depository
Trust Company ("DTC" or the "Depository") pursuant to the procedure for
book-entry transfer described in the following paragraphs, which confirmation is
received by the Exchange Agent prior to the Expiration Date, shall satisfy the
requirement of delivery of such Original Note to the Exchange Agent.
Any financial institution that is a participant in the Depository's
Book-Entry Transfer Facility system may make book-entry delivery of the Original
Notes by causing the Depository to transfer such Original Notes into the
Exchange Agent's account at the Depository in accordance with the Depository's
procedure for such transfer. Although delivery of Original Notes may be effected
through book-entry transfer into the Exchange Agent's account at the Depository,
the Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and any other required documents, must, in any case, be transmitted
to and received or confirmed by the Exchange Agent at its address set forth
herein prior to 5:00 p.m., New York City time, on the Expiration Date, in
accordance with the guaranteed delivery procedures described in this Prospectus.
The Exchange Agent and the Depository have confirmed that any financial
institution that is a participant in the Depository's system may utilize the
Depository's Automated Tender Offer Program to tender Original Notes.
The tender by a holder of Original Notes will constitute an agreement
between such holder and the Company in accordance with the terms and subject to
the conditions set forth herein and in the Letter of Transmittal.
Delivery of all documents must be made to the Exchange Agent at its address
set forth below. Holders may also request their respective brokers, dealers,
commercial banks, trust companies or nominees to effect such tender for such
holders.
THE METHOD OF DELIVERY OF ORIGINAL NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDERS. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY TO THE EX-
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<PAGE> 64
CHANGE AGENT ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
NO LETTER OF TRANSMITTAL OR ORIGINAL NOTES SHOULD BE SENT TO THE COMPANY.
Only a holder of Original Notes may tender such Original Notes in the
Exchange Offer. The term "holder" with respect to the Exchange Offer means any
person in whose name Original Notes are registered on the books of the Company
or any other person who has obtained a properly completed bond power from the
registered holder.
Any beneficial holder whose Original Notes are registered in the name of
his broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on his behalf. If such beneficial holder wishes
to tender on his own behalf, such registered holder must, prior to completing
and executing the Letter of Transmittal and delivering his Original Notes,
either make appropriate arrangements to register ownership of the Original Notes
in such holder's name or obtain a properly completed bond power from the
registered holder. The transfer of record ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an office or correspondent in the
United States (an "Eligible Institution") unless the Original Notes tendered
pursuant thereto are tendered (a) by a registered holder who has not completed
the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or (b) for the account of an Eligible
Institution. In the event that signatures on a Letter of Transmittal or a notice
of withdrawal, as the case may be, are required to be guaranteed, such guarantee
must be by an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the
registered holder of any Original Notes listed therein (which term includes any
participants in DTC whose name appears on a security position listing as the
owner of the Original Notes), such Original Notes must be endorsed or
accompanied by appropriate bond powers and a proxy which authorizes such person
to tender the Original Notes on behalf of the registered holder, in each case
signed as the name of the registered holder or holders appears on the Original
Notes.
If the Letter of Transmittal or any Original Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by the
Company, evidence satisfactory to the Company of their authority so to act must
be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), and withdrawal of the tendered Original Notes will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Original
Notes not properly tendered or any Original Notes the Company's acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the right to waive any irregularities or conditions of tender as
to particular Original Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Original Notes must be
cured within such time as the Company shall determine. Neither the Company, the
Exchange Agent nor any other person shall be under any duty to give notification
of defects or irregularities with respect to tenders of Original Notes, nor
shall any of them incur any liability for failure to give such notification.
Tenders of Original Notes will not be deemed to have been made until such
irregularities have been cured or waived. Any Original Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost to
such holder by the Exchange Agent to the tendering holders of Original Notes,
unless otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
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<PAGE> 65
In addition, the Company reserves the right in its sole discretion to (a)
purchase or make offers for any Original Notes that remain outstanding
subsequent to the Expiration Date or, as set forth under "-- Conditions," to
terminate the Exchange Offer in accordance with the terms of the Registration
Rights Agreement and (b) to the extent permitted by applicable law, purchase
Original Notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers will differ from the terms
of the Exchange Offer.
By tendering, each holder will represent to the Company that, among other
things, (a) the Exchange Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of such holder or other person, (b)
neither such holder no such other person is engaged in or intends to engage in a
distribution of the Exchange Notes, (c) neither such holder nor other person has
any arrangement or understanding with any person to participate in the
distribution of such Exchange Notes, and (d) such holder or other person is not
an "affiliate," as defined under Rule 405 of the Securities Act, of the Company
or any Guarantor or, if such holder or other person is such an affiliate, will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable.
Each broker-dealer that receives Exchange Notes for its own account
exchange for Original Notes, where such Original Notes were acquired by such
broker-dealer as a result of market-making or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Original Notes where such Original Notes were acquired by such
broker-dealer as a result of market-making or other trading activities; however,
this Prospectus may not be used for resales of Notes acquired directly from the
Company. The Company has agreed that, for a period ending on the earlier to
occur of 180 days after the Expiration Date or the time when all persons subject
to the prospectus delivery requirements of the Securities Act have sold all
Exchange Notes held by them, it will make this Prospectus, as it may be amended
or supplemented from time to time, available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. See "Use
of Proceeds." The Company has agreed to bear the expenses of the Exchange Offer
pursuant to the Registration Rights Agreement. No underwriter is being used in
connection with the Exchange Offer.
The Original Notes were issued on May 18, 1998 and there is no public
market for them at present. To the extent Original Notes are tendered and
accepted in the Exchange Offer, the principal amount of outstanding Original
Notes will decrease with a resulting decrease in the liquidity in the market
therefor. Following the consummation of the Exchange Offer, holders of Original
Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for the Original Notes could be
adversely affected.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Original Notes at the Depository for purposes of the Exchange Offer
within two business days after the date of this Prospectus, and any financial
institution that is a participant in the Depository's system may make book-entry
delivery of Original Notes by causing the Depository to transfer such Original
Notes into the Exchange Agent's account at the Depository in accordance with the
Depository's procedure for such transfer. Although delivery of Original Notes
may be effected through book-entry transfer into the Exchange Agent's account at
the Depository, the Letter of Transmittal (or facsimile thereof), with any
required signature guarantees and any other required documents, must, in any
case, be transmitted to and received or confirmed by the Exchange Agent at its
addresses set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date, in accordance with the guaranteed delivery procedures described
in this Prospectus.
Where Original Notes were tendered by book-entry transfer and such Original
Notes are to be returned to the holder thereof for any reason, such Original
Notes will be credited to the account of such holder
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<PAGE> 66
maintained at the Depository, and such procedure shall satisfy the Company's
obligation to return Original Notes in the event such return is required by the
terms described herein.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Original Notes and (a) whose Original
Notes are not immediately available or (b) who cannot deliver their Original
Notes (or complete the procedures for book-entry transfer), the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, may effect a tender if:
(i) the tender is made through an Eligible Institution;
(ii) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder of the Original Notes, the
certificate number or numbers of such Original Notes and the principal
amount of Original Notes tendered, stating that the tender is being made
thereby, and guaranteeing that, within three business days after the
Expiration Date, the Letter of Transmittal (or facsimile thereof) together
with the certificate(s) representing the Original Notes to be tendered in
proper form for transfer (or a confirmation of a book-entry transfer into
the Exchange Agent's account at the Depository of Original Notes delivered
electronically) and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the Exchange
Agent; and
(iii) such properly completed and executed Letter of Transmittal (or
facsimile thereof) together with the certificate(s) representing all
tendered Original Notes in proper form for transfer (or a confirmation of a
book-entry transfer into the Exchange Agent's account at the Depository of
Original Notes delivered electronically) and all other documents required
by the Letter of Transmittal are received by the Exchange Agent within
three business days after the Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Original Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date, unless previously accepted for exchange.
To withdraw a tender of Original Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (a) specify the name of
the person having deposited the Original Notes to be withdrawn (the
"Depositor"), (b) identify the Original Notes to be withdrawn (including the
certificate number or numbers and principal amount of such Original Notes), (c)
be signed by the Depositor in the same manner as the original signature on the
Letter of Transmittal by which such Original Notes were tendered (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Original Notes register the
transfer of such Original Notes into the name of the Depositor withdrawing the
tender and (d) specify the name in which any such Original Notes are to be
registered, if different from that of the Depositor. If Original Notes have been
tendered pursuant to the procedures for book-entry transfer, the notice of
withdrawal must specify the name and number of the account at DTC to be credited
with the withdrawal of the Original Notes. All questions as to the validity,
form and eligibility (including time of receipt) of such withdrawal notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Original Notes so withdrawn will be deemed not to have been
validly tendered for purposes of the Exchange Offer and no Exchange Notes will
be issued with respect thereto unless the Original Notes so withdrawn are
validly retendered. Any Original Notes which have been tendered but which are
not accepted for exchange will be returned to the holder thereof without cost to
such holder as soon as practicable after withdrawal, rejection of tender or
termination of the Exchange Offer. Properly withdrawn Original Notes may be
retendered by following one of the procedures described above under
"-- Procedures for Tendering" at any time prior to the Expiration Date.
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Where Original Notes were tendered by book-entry transfer and such Original
Notes are to be returned to the holder thereof for any reason, such Original
Notes will be credited to the account of such holder maintained at the
Depository, and such procedure shall satisfy the Company's obligation to return
Original Notes in the event such return is required by the terms described
herein.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company will not
be required to accept for exchange, or exchange Exchange Notes for, any Original
Notes not theretofore accepted for exchange, and may terminate or amend the
Exchange Offer as provided herein before the acceptance of such Original Notes,
if the Company determines in good faith that any of the following conditions
exist: the Exchange Offer would, or would reasonably be likely to, violate
applicable law or applicable interpretations of the staff of the Commission or a
stop order, injunction or similar Commission or court order or ruling has been
instituted against the Exchange Offer. If the Company determines in good faith
that any of these conditions are not satisfied, the Company may (i) refuse to
accept any Original Notes and return all tendered Original Notes to the
tendering holder, (ii) extend the Exchange Offer and retain all Original Notes
tendered prior to the expiration of the Exchange Offer, subject, however, to the
rights of holders to withdraw such Original Notes (see "-- Withdrawal of
Tenders") or (iii) waive such unsatisfied conditions with respect to the
Exchange Offer and accept all properly tendered Original Notes which have not
been withdrawn. If such waiver constitutes a material change to the Exchange
Offer, the Company will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to the registered holders of the Original
Notes, and the Company will extend the Exchange Offer for a period of ten
business days, depending upon the significance of the waiver and the manner of
disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such ten business day period.
Holders may have certain rights and remedies against the Company under the
Registration Rights Agreement should the Company fail to consummate the Exchange
Offer, notwithstanding a failure of the conditions stated above. Such conditions
are not intended to modify those rights or remedies in any respect. The
foregoing conditions are for the sole benefit of the Company and may be asserted
by the Company regardless of the circumstances giving rise to such condition or
may be waived by the Company in whole or in part at any time and from time to
time in the Company's discretion. The failure by the Company at any time to
exercise the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
Pursuant to the Registration Rights Agreement, in the event that (i) the
Company and the Guarantors determine that the Exchange Offer is not available or
may not be consummated as soon as practicable after the Expiration Date because
it would violate applicable law or the applicable interpretations of the Staff
of the Commission, (ii) the Exchange Offer is not for any other reason
consummated by November 18, 1998, or (iii) the Exchange Offer has been completed
and in the opinion of counsel for the Initial Purchasers a registration
statement must be filed and a prospectus must be delivered by the Initial
Purchasers in connection with any offering or sale of Original Notes, each of
the Company and the Guarantors have agreed to use its best efforts to cause to
be filed as soon as practicable after such determination, date or notice of such
opinion of counsel is given to the Company and the Guarantors, as the case may
be, a shelf registration statement (the "Shelf Registration Statement") with
respect to the Original Notes and to use its best efforts to have such Shelf
Registration Statement declared effective by the Commission.
EXCHANGE AGENT
State Street Bank and Trust Company has been appointed as Exchange Agent
for the Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter of
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Transmittal and deliveries of completed Letters of Transmittal with tendered
Original Notes should be directed to the Exchange Agent addressed as follows:
<TABLE>
<CAPTION>
By Mail By Hand/ Overnight Delivery By Facsimile
------- --------------------------- ------------
<S> <C> <C>
State Street Bank and Trust Company State Street Bank and Trust Company (Eligible Institutions only)
Two International Place, 4th Floor 61 Broadway, 15th Floor (617) 664-5290
Boston, MA 02110 New York, New York 10006
Attention: Corporate Trust Attention: Corporate Trust
Division/ Kellie Mullen Division/ Kellie Mullen
Tel. (617) 664-5587
</TABLE>
The Company will indemnify the Exchange Agent and its agents for any loss,
liability or expense incurred by them, including reasonable costs and expenses
of their defense, except for any such loss, liability or expense caused by
negligence, misconduct or bad faith.
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail. Additional solicitations may be made by
officers and regular employees of the Company and its affiliates in person, by
telephone or facsimile.
The Company will not make any payments to brokers, dealers, or other
persons soliciting acceptances of the Exchange Offer. The Company, however, will
pay the Exchange Agent reasonable and customary fees for its services and will
reimburse the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith. The Company may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus, Letters of Transmittal
and related documents to the beneficial owners of the Original Notes, and in
handling or forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer,
including fees and expenses of the Exchange Agent and Trustee and accounting and
legal fees and expenses and printing costs, will be paid by the Company and are
estimated in the aggregate to be approximately $275,000.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Original Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes (or Original Notes for principal amounts not
tendered or accepted for exchange) are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered holder
of the Original Notes tendered, or if tendered Original Notes are registered in
the name of any person other than the person signing the Letter of Transmittal,
or if a transfer tax is imposed for any reason other than the exchange of
Original Notes pursuant to the Exchange Offer, then the amount of any such
transfer taxes (whether imposed on the registered holder or any other persons)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
ACCOUNTING TREATMENT
The Company will not recognize any gain or loss for accounting purposes
upon the consummation of the Exchange Offer. The expense of the Exchange Offer
will be amortized by the Company over the term of the Exchange Notes under
generally accepted accounting principles.
CONSEQUENCE OF FAILURE TO EXCHANGE
Participation in the Exchange Offer is voluntary. Holders of the Original
Notes are urged to consult their financial and tax advisors in making their own
decisions on what action to take. The Original Notes which are not exchanged for
the Exchange Notes pursuant to the Exchange Offer will remain restricted
securities. Accordingly, such Original Notes may be resold only (i) to a person
whom the seller reasonably believes is a
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"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) in a transaction meeting the requirements of Rule 144A, (ii) in a
transaction meeting the requirements of Rule 144 under the Securities Act, (iii)
outside the United States to a foreign person in a transaction meeting the
requirements of Rule 904 under the Securities Act, (iv) in accordance with
another exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel if the Company so requests), (v) to the Company
or (vi) pursuant to an effective registration statement and, in each case, in
accordance with any applicable securities laws of any state of the United States
or any other applicable jurisdiction. See "Risk Factors -- Consequences of
Failure to Exchange."
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DESCRIPTION OF THE NOTES
The Original Notes were, and the Exchange Notes will be, issued under the
Indenture dated as of May 18, 1998, among the Company, as issuer, all of the
Company's Restricted Subsidiaries other than Foreign Subsidiaries, as guarantors
(collectively, the "Guarantors") and State Street Bank and Trust Company, as
trustee (the "Trustee"). The form of the Exchange Notes and the Original Notes
will be identical in all material respects except that the Exchange Notes will
have been registered under the Securities Act and therefore will not bear
legends restricting their transfer. In the event the Notes are listed on the
Luxembourg Stock Exchange, the proposed Luxembourg paying agent and transfer
agent (the "Luxembourg Paying Agent" and the "Luxembourg Transfer Agent") will
be appointed in accordance with the Indenture. Information concerning the
Luxembourg Paying Agent and the Luxembourg Transfer Agent is set forth in the
Indenture. A copy of the Indenture is available upon request from the Company.
The following summary of certain provisions of the Indenture does not purport to
be complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Indenture, including the definitions of certain terms
therein and those terms made a part thereof by the Trust Indenture Act of 1939,
as amended. Whenever particular defined terms of the Indenture not otherwise
defined herein are referred to, such defined terms are incorporated herein by
reference. For definitions of certain capitalized terms used in the following
summary, see "--Certain Definitions." As used in this "Description of the
Notes," the term "Company," unless otherwise indicated or the context otherwise
requires, refers only to Hadco Corporation and does not include any of its
subsidiaries, including Zycon or Continental. For the purposes of the following
description, the Exchange Notes and the Original Notes are at times collectively
referred to as the "Notes." The Exchange Notes and any Original Notes that
remain outstanding after consummation of the Exchange Offer will be treated as a
single class of securities under the Indenture. The term "Holders" shall refer,
collectively, to holders of Notes.
GENERAL
The Notes are unsecured senior subordinated obligations of the Company,
initially limited to $200 million aggregate principal amount, and will mature on
June 15, 2008. Each Note initially bears interest at 9 1/2% per annum from the
date of original issuance or from the most recent Interest Payment Date to which
interest has been paid or provided for, payable semiannually (to Holders of
record at the close of business on the June 1 or December 1 immediately
preceding the Interest Payment Date) on June 15 and December 15 of each year,
commencing December 15, 1998.
If by the date that is six months after the Closing Date, the Company and
the Guarantors have not consummated a registered exchange offer for the Original
Notes or caused a shelf registration statement with respect to resales of the
Original Notes to be declared effective (a "Registration Default"), the annual
interest rate on the Notes will increase by .5%, effective until the
consummation of a registered exchange offer or the effectiveness of a shelf
registration statement and such additional interest shall be payable to Holders
of the Notes on the Interest Payment Dates, commencing with the first such date
occurring after any such increased interest commences to accrue. After the date
on which such Registration Default is cured, the interest rate on the Notes will
revert to the interest rate originally borne by the Notes (as shown on the cover
of this Prospectus). See "-- Registration Rights."
Interest is computed on the basis of a 360 day year comprised of twelve 30
day months. Principal of, premium, if any, and interest on the Notes will be
payable, and the Notes may be exchanged or transferred, at the office or agency
of the Company in Boston, Massachusetts (which initially will be the corporate
trust office of the Trustee at Two International Place, Boston, Massachusetts
02110 and, to the extent applicable, the offices of the Luxembourg Paying Agent
and the Luxembourg Transfer Agent, respectively); provided that, at the option
of the Company, payment of interest may be made by check mailed to the Holders
at their addresses as they appear in the Security Register. In the event the
Notes are listed on the Luxembourg Stock Exchange, for so long as the Notes are
so listed and the rules of such stock exchange so require, the Company will
maintain a paying agent and transfer agent in Luxembourg.
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The Notes are issued only in fully registered form, without coupons, in
denominations of $1,000 of principal amount and any integral multiple thereof.
See "-- Book-Entry; Delivery and Form." No service charge will be made for any
registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any transfer tax or other similar
governmental charge payable in connection therewith.
Subject to the covenants described below under "Covenants" and applicable
law, the Company may issue additional Notes under the Indenture. The Notes, the
Exchange Notes offered hereby and any additional Notes subsequently issued would
be treated as a single class for all purposes under the Indenture.
NOTE GUARANTEES
The Company's obligations under the Notes are fully and unconditionally
guaranteed (the "Note Guarantees"), on a senior subordinated basis, jointly and
severally, by the Guarantors; provided that no Note Guarantee shall be
enforceable against any Guarantor in an amount that would cause such Note
Guarantee to be a fraudulent conveyance under applicable law. See "Risk
Factors -- Fraudulent Conveyance."
The Note Guarantees are subordinated to all Senior Indebtedness of the
Guarantors on the same basis as the Notes are subordinated to the Senior
Indebtedness of the Company, pari passu with any senior subordinated
indebtedness of the Guarantors and senior to any indebtedness of the Guarantors
subordinated to the Note Guarantees. The Foreign Subsidiaries and the Company's
Subsidiaries which are not Restricted Subsidiaries will not guarantee the Notes.
Therefore, the Notes and the Note Guarantees are effectively subordinated to all
existing and future liabilities of such Non-Guarantor Subsidiaries.
Each Guarantor may consolidate with or merge into or sell its assets to the
Company or another Guarantor without limitation, or with other Persons upon the
terms and conditions set forth in the Indenture. See "Certain
Covenants -- Consolidation, Merger and Sale of Assets." In the event all or
substantially all of the assets or the Capital Stock of a Guarantor is sold by
the Company or one of its Subsidiaries and the sale complies with the provisions
set forth in "Certain Covenants -- Limitation on Asset Sales," the Guarantor's
Note Guarantee will be automatically discharged and released.
The Company will cause any Person (other than a Foreign Subsidiary) that
becomes a Restricted Subsidiary on or after the Closing Date to execute the
Indenture as a Guarantor.
OPTIONAL REDEMPTION
The Notes will be redeemable, at the Company's option, in whole or in part,
at any time or from time to time, on or after June 15, 2003 and prior to
maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's last address as it appears in the Security
Register, at the following Redemption Prices (expressed in percentages of
principal amount), plus accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant Regular Record
Date that is on or prior to the Redemption Date to receive interest due on an
Interest Payment Date), if redeemed during the 12-month period commencing June
15, of the years set forth below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---- ----------------
<S> <C>
2003......................................... 104.750%
2004......................................... 103.167
2005......................................... 101.583
2006 and thereafter.......................... 100.000
</TABLE>
In addition, at any time and from time to time prior to June 15, 2001, the
Company may redeem up to 35% of the aggregate principal amount of the Notes with
the proceeds of one or more Equity Offerings, at a Redemption Price of 109.50%,
plus accrued and unpaid interest to the Redemption Date (subject to the rights
of Holders of record on the relevant Regular Record Date that is prior to the
Redemption Date to receive interest due on an Interest Payment Date); provided
that (i) Notes representing 65% of the principal amount
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of Notes initially issued remain outstanding after each such redemption and (ii)
notice of such redemption is mailed within 60 days of the related Equity
Offering.
Prior to June 15, 2003, the Notes will be redeemable at the Company's
option, in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice mailed by first class mail to each
Holder's registered address, at a redemption price (expressed as a percentage of
principal amount) equal to the sum of the principal amount of such Notes plus
the Applicable Premium thereon at the time of redemption (an "Early Redemption
Date") (subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date).
The following definitions are used to determine the redemption price:
"Applicable Premium" means, with respect to a Note at any Early Redemption
Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the
excess of (A) the present value at such time of (1) the redemption price of such
Note at June 15, 2003 (such redemption price being set forth on the table above)
plus (2) all semiannual payments of interest through, June 15, 2003 computed
using a discount rate equal to the Treasury Rate plus 50 basis points over (B)
the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least two business days prior to the date fixed
for repayment (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the then
remaining Average Life to Stated Maturity of the Notes, provided, however, that
if the average life to Stated Maturity of the Notes is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given.
In the case of any partial redemption, selection of the Notes for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not listed on a national securities exchange, by
lot, pro rata or by such other method as the Trustee in its sole discretion
shall deem to be fair and appropriate; provided that no Note of $1,000 in
principal amount or less shall be redeemed in part. If any Note is to be
redeemed in part only, the notice of redemption relating to such Note shall
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note.
SINKING FUND
There will be no sinking fund payments for the Notes.
REGISTRATION RIGHTS
The Exchange Offer is intended to satisfy certain of the obligations of the
Company and the Guarantors under the Registration Rights Agreement, as described
in this "-- Registration Rights" section.
The Company and the Guarantors have agreed with the Initial Purchasers, for
the benefit of the Holders, that they will use their best efforts, at their
cost, to file and cause to become effective a registration statement with
respect to a registered offer (the "Exchange Offer") to exchange the Original
Notes for an issue of senior subordinated notes of the Company being offered
hereby (the "Exchange Notes") with terms identical to the Original Notes and the
Note Guarantees (except that the Exchange Notes will not bear legends
restricting the transfer thereof). Upon such registration statement being
declared effective, the Company and the Guarantors shall offer the Exchange
Notes in return for surrender of the Original Notes. Such offer shall remain
open for not less than 20 business days after the date notice of the Exchange
Offer is mailed to Holders. For each Original Note surrendered to the Company
under the Exchange Offer, the Holder will receive an Exchange Note of equal
principal amount. Interest on each Exchange Note shall accrue from the last
Interest Payment Date on which interest was paid on the Original Notes so
surrendered or, if no interest has been paid on such
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Original Notes, from the Closing Date. In the event that applicable
interpretations of the staff of the Securities and Exchange Commission (the
"Commission") do not permit the Company to effect the Exchange Offer, or under
certain other circumstances, the Company and the Guarantors shall, at their
cost, use their best efforts to cause to become effective a shelf registration
statement (the "Shelf Registration Statement") with respect to resales of the
Notes and to keep such Shelf Registration Statement effective until the
expiration of the time period referred to in Rule 144(k) under the Securities
Act after the Closing Date, or such shorter period that will terminate when all
Original Notes covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement or are eligible for resale under
Rule 144(k) or any similar provision then in force under the Securities Act. The
Company shall, in the event of such a shelf registration, provide to each Holder
copies of the prospectus, notify each Holder when the Shelf Registration
Statement for the Original Notes has become effective and take certain other
actions as are required to permit resales of the Notes. A Holder that sells its
Original Notes pursuant to the Shelf Registration Statement generally will be
required to be named as a selling security holder in the related prospectus and
to deliver a prospectus to purchasers, will be subject to certain of the civil
liability provisions under the Securities Act in connection with such sales and
will be bound by the provisions of the Registration Rights Agreement that are
applicable to such a Holder (including certain indemnification obligations).
In the event of a registration default, the annual interest rate borne by
the Original Notes will be increased by .5%, effective until the Exchange Offer
or the Shelf Registration Statement is declared effective and such additional
interest shall be payable to Holders of the Original Notes on each Interest
Payment Date, commencing with the first such date occurring after any such
increased interest commences to accrue. After the date on which such
registration default is cured, the interest rate on the Notes will revert to the
interest rate originally borne by the Notes (as shown on the cover of this
Prospectus).
If the Company and the Guarantors effect the Exchange Offer, they will be
entitled to close the Exchange Offer 20 business days after the commencement
thereof, provided that they have accepted all Original Notes theretofore validly
surrendered in accordance with the terms of the Exchange Offer. Original Notes
not tendered in the Exchange Offer shall bear interest at the rate set forth on
the cover page of this Prospectus and be subject to all of the terms and
conditions specified in the Indenture and to the transfer restrictions described
in "Transfer Restrictions."
This summary of certain provisions of the Registration Rights Agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is available from the Company upon request.
RANKING; SUBORDINATION
The Notes are unsecured senior subordinated Indebtedness of the Company and
the Guarantors. The payment of the Senior Subordinated Obligations is, to the
extent set forth in the Indenture, subordinated in right of payment to the prior
payment in full, in cash or cash equivalents, of all Senior Indebtedness. At May
2, 1998, pro forma for the Original Notes Offering and the use of the proceeds
therefrom and the Continental Acquisition, the Company and the Guarantors would
have had approximately $170 million of Senior Indebtedness outstanding and
approximately $249 million would have been available to the Company under the
Credit Facility, which, if borrowed, would constitute Senior Indebtedness. At
May 2, 1998, on the same pro forma basis, the Guarantors would have had Senior
Indebtedness of approximately $18 million (in addition to approximately $151
million representing guarantees of the Company's borrowings under the Credit
Facility). Although the Indenture contains limitations on the amount of
additional indebtedness that the Company or any of its Restricted Subsidiaries
may incur, under certain circumstances the amount of such indebtedness could be
substantial and, in any case, such indebtedness may be Senior Indebtedness. See
"-- Covenants -- Limitation on Indebtedness." Notwithstanding the foregoing,
payment from the money or the proceeds of Government Securities held in any
defeasance trust described under "-- Defeasance" below, will not be
contractually subordinated in right of payment to any Senior Indebtedness or
subject to the restrictions described herein, provided such defeasance trust is
established pursuant to the terms of the Indenture on the Closing Date and not
in violation of the terms of any Senior Indebtedness.
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Except with respect to the money and/or Government Securities held under
any defeasance trust, established pursuant to the terms of the Indenture on the
Closing Date and not in violation of the terms of any Senior Indebtedness, upon
any payment or distribution of assets or securities of the Company or any
Guarantor of any kind or character, whether in cash, property or securities,
upon any dissolution or winding up or total or partial liquidation or
reorganization of the Company or any Guarantor, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other proceedings,
all amounts due or to become due upon all Senior Indebtedness shall first be
paid in full, in cash or cash equivalents, before the Holders of the Notes or
the Trustee on behalf of the Holders of the Notes shall be entitled to receive
any payment by the Company or such Guarantor on account of Senior Subordinated
Obligations or any payment to acquire any of the Notes for cash, property or
securities, or any distribution with respect to the Notes of any cash, property
or securities (other than a payment or distribution in the form of Permitted
Junior Securities). Before any payment may be made by, or on behalf of, the
Company or such Guarantor on any Senior Subordinated Obligations (other than
with the money and/or Government Securities held under any defeasance trust
established pursuant to the terms of the Indenture on the Closing Date and not
in violation of the terms of any Senior Indebtedness), upon any such
dissolution, winding up, liquidation or reorganization, any payment or
distribution of assets or securities of the Company or such Guarantor of any
kind or character, whether in cash, property or securities (other than a payment
or distribution in the form of Permitted Junior Securities), to which the
Holders of the Notes or the Trustee on behalf of the Holders of the Notes would
be entitled, but for the subordination provisions of the Indenture, shall be
made by the Company or such Guarantor or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person making such payment or
distribution or by the Holders of the Notes or the Trustee if received by them
or it, directly to the holders of the Senior Indebtedness or their
representatives or to any trustee or trustees under any indenture pursuant to
which any such Senior Indebtedness may have been issued, as their respective
interests appear, to the extent necessary to pay all such Senior Indebtedness in
full, in cash or cash equivalents after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of such Senior
Indebtedness. If a payment or distribution is made to Holders of the Notes that,
due to the subordination provisions, should not have been made to them, such
Holders shall be required to hold such payment(s) or distribution(s) in trust
for the holders of Senior Indebtedness and pay it over to them as their
respective interests may appear.
No direct or indirect payment (other than a payment or distribution in the
form of Permitted Junior Securities) by or on behalf of the Company or any
Guarantor of Senior Subordinated Obligations (other than with the money and/or
Government Securities held under any defeasance trust established pursuant to
the terms of the Indenture on the Closing Date and not in violation of the terms
of any Senior Indebtedness), whether pursuant to the terms of the Notes or the
Note Guarantees or upon acceleration or otherwise shall be made if, at the time
of such payment, there exists a default in the payment of all or any portion of
the obligations on any Senior Indebtedness of the Company or such Guarantor and
such default shall not have been cured or waived or the benefits of this
sentence waived by or on behalf of the holders of such Senior Indebtedness. In
addition, during the continuance of any other event of default with respect to
any Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated, upon receipt by the Trustee of written notice from the trustee or
other representative for the holders of such Designated Senior Indebtedness (or
the holders of at least a majority in principal amount of such Designated Senior
Indebtedness then outstanding), no payment (other than a payment or distribution
in the form of Permitted Junior Securities) of Senior Subordinated Obligations
(other than with the money and/or Government Securities held under any
defeasance trust established pursuant to the terms of the Indenture on the
Closing Date and not in violation of the terms of any Senior Indebtedness) may
be made by or on behalf of the Company or such Guarantor upon or in respect of
the Notes or the Note Guarantees for a period (a "Payment Blockage Period")
commencing on the date of receipt of such notice and ending 179 days thereafter
(unless, in each case, such Payment Blockage Period shall be terminated by
written notice to the Trustee from such trustee of, or other representatives
for, such holders or by payment in full in cash or cash equivalents of such
Designated Senior Indebtedness or at such time as such defaults cease to exist
or have been cured or waived). Not more than one Payment Blockage Period may be
commenced with respect to the Notes (with respect to the Company or any
particular Guarantor) during any period of 360 consecutive days. Notwithstanding
anything in the Indenture to the contrary, (with respect to the Company and each
Guarantor) there must be
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180 consecutive days in any 360-day period in which no Payment Blockage Period
is in effect. No event of default that existed or was continuing (it being
acknowledged that any subsequent action that would give rise to an event of
default pursuant to any provision under which an event of default previously
existed or was continuing shall constitute a new event of default for this
purpose) on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period shall be, or shall be made, the basis for the commencement of a second
Payment Blockage Period by the representative for, or the holders of, such
Designated Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such event of default shall have been cured or waived
for a period of not less than 60 consecutive days.
To the extent any payment of Senior Indebtedness (whether by or on behalf
of the Company or any Guarantor, as proceeds of security or enforcement of any
right of setoff or otherwise) is declared to be fraudulent or preferential, set
aside or required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then if such payment is
recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person, the Senior Indebtedness or part thereof
originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred. To the extent the obligation to
repay any Senior Indebtedness is declared to be fraudulent, invalid, or
otherwise set aside under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then the obligation so declared fraudulent, invalid
or otherwise set aside (and all other amounts that would come due with respect
thereto had such obligation not been so affected) shall be deemed to be
reinstated and outstanding as Senior Indebtedness for all purposes hereof as if
such declaration, invalidity or setting aside had not occurred.
If the Company and the Guarantors fail to make any payment on the Notes
when due or within any applicable grace period, whether or not on account of
payment blockage provisions, such failure would constitute an Event of Default
under the Indenture and would enable the holders of the Notes to accelerate the
maturity thereof; provided, however, that so long as the Credit Facility is in
effect, such declaration shall not become effective until the earlier of (A)
five Business Days after delivery of such notice to the representative of the
Credit Facility and (B) the acceleration of any Indebtedness under the Credit
Facility. See "-- Events of Default."
By reason of the subordination provisions described above, in the event of
the Company's or any Guarantor's liquidation or dissolution, holders of Senior
Indebtedness may receive more, ratably, and holders of the Notes may receive
less, ratably, than the other creditors of the Company or any Guarantor.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants and other provisions of the Indenture. Reference is made to the
Indenture for the full definition of all terms as well as any other capitalized
term used herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person (including an Unrestricted Subsidiary) becomes a Restricted
Subsidiary or assumed in connection with an Asset Acquisition by a Restricted
Subsidiary and not Incurred in connection with such Person becoming a Restricted
Subsidiary or such Asset Acquisition; provided that Indebtedness of such Person
which is redeemed, defeased, retired or otherwise repaid at the time of or
immediately upon consummation of the transactions by which such Person becomes a
Restricted Subsidiary or such Asset Acquisition shall not be Acquired
Indebtedness.
"Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of the Company and its Restricted Subsidiaries for such period
determined in conformity with GAAP; provided that the following items shall be
excluded in computing Adjusted Consolidated Net Income (without duplication):
(i) the net income of any Person that is not a Restricted Subsidiary, except to
the extent of the amount of dividends or other distributions actually paid to
the Company or any of its Restricted Subsidiaries by such Person during such
period; (ii) solely for the purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (C) of the first paragraph of the
"Limitation on Restricted Payments' covenant described below (and in such case,
except to the extent includable pursuant to clause (i) above), the
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net income (or loss) of any Person accrued prior to the date it becomes a
Restricted Subsidiary or is merged into or consolidated with the Company or any
of its Restricted Subsidiaries or all or substantially all of the property and
assets of such Person are acquired by the Company or any of its Restricted
Subsidiaries; (iii) the net income of any Restricted Subsidiary to the extent
that the declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of such net income is not at the time permitted by the
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to such
Restricted Subsidiary; (iv) any gains or losses (on an after-tax basis)
attributable to Asset Sales; (v) except for purposes of calculating the amount
of Restricted Payments that may be made pursuant to clause (C) of the first
paragraph of the "Limitation on Restricted Payments" covenant described below,
any amount paid or accrued as dividends on Preferred Stock of the Company or any
Restricted Subsidiary owned by Persons other than the Company and any of its
Restricted Subsidiaries; (vi) all extraordinary gains and extraordinary losses;
(vii) gains or losses on the repurchase or redemption of any securities
(including in connection with the retirement or defeasance of any Indebtedness);
and (viii) non-cash expenses arising from the write-off of goodwill, in-process
research and development costs and inventory and fixed asset charges, in each
case associated with Asset Acquisitions.
"Adjusted Consolidated Net Tangible Assets" means, as of any date of
determination, the total amount of assets of the Company and its Restricted
Subsidiaries (less applicable depreciation, amortization and other valuation
reserves), except to the extent resulting from write-ups of capital assets
(excluding write-ups in connection with accounting for acquisitions in
conformity with GAAP and excluding the effects of foreign currency exchange
adjustments under Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 52), after deducting therefrom (i) all current
liabilities of the Company and its Restricted Subsidiaries (excluding
intercompany items) and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense, deferred financing costs and other like
intangibles, all as set forth on the most recent quarterly or annual
consolidated balance sheet of the Company and its Restricted Subsidiaries,
prepared in conformity with GAAP and filed with the Commission or provided to
the Trustee pursuant to the "Commission Reports and Reports to Holders"
covenant.
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Asset Acquisition" means (i) an investment by the Company or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged into or consolidated with the
Company or any of its Restricted Subsidiaries or (ii) an acquisition by the
Company or any of its Restricted Subsidiaries of the property and assets of any
Person other than the Company or any of its Restricted Subsidiaries that
constitute substantially all of a division or line of business of such Person.
"Asset Disposition" means the sale or other disposition by the Company or
any of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of
any Restricted Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of the Company or any of its
Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by
way of merger, consolidation or sale-leaseback transaction) in one transaction
or a series of related transactions by the Company or any of its Restricted
Subsidiaries to any Person other than the Company or any of its Restricted
Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Restricted Subsidiaries
or (iii) any other property and assets (other than the Capital Stock or other
Investment in an Unrestricted Subsidiary) of the Company or any of its
Restricted Subsidiaries outside the ordinary course of business of the Company
or such Restricted Subsidiary and, in each case, that is not governed by the
provisions of the Indenture applicable to mergers, consolidations and sales of
assets of the Company; provided that "Asset Sale" shall not include (a) sales or
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other dispositions of inventory, receivables and other current assets
(including, without limitation, Temporary Cash Investments), (b) sales,
transfers or other dispositions of assets constituting a Restricted Payment
permitted to be made under the "Limitation on Restricted Payments" covenant, (c)
sales or other dispositions of assets for consideration at least equal to the
fair market value of the assets sold or disposed of, to the extent that the
consideration received would satisfy clause (B) of the "Limitation on Asset
Sales" covenant, (d) dispositions of equipment that is no longer useful in the
conduct of the business of the Company or any of its Restricted Subsidiaries,
and (e) sales, leases, conveyances, transfers, or other dispositions to the
Company or to a Restricted Subsidiary or to any other Person if after giving
effect to such sale, lease, conveyance, transfer or other disposition such other
Person is or becomes a Restricted Subsidiary.
"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents (however designated, whether voting or non-voting) in equity of such
Person, whether outstanding on the Closing Date or issued thereafter including,
without limitation, all Common Stock and Preferred Stock.
"Capitalized Lease Obligations" means indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Change of Control" means such time as (i) a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the
ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
more than 50% of the total voting power of the Voting Stock of the Company on a
fully diluted basis; or (ii) individuals who on the Closing Date constitute the
Board of Directors (together with any new directors whose election by the Board
of Directors or whose nomination by the Board of Directors for election by the
Company's stockholders was approved by a vote of at least a majority of the
members (A) of the Board of Directors then in office who either were members of
the Board of Directors on the Closing Date or whose election or nomination for
election was previously so approved or (B) the nominating committee of the Board
of Directors whose members were elected pursuant to the foregoing clause (A))
cease for any reason to constitute a majority of the members of the Board of
Directors then in office.
"Closing Date" means the date on which the Original Notes were originally
issued under the Indenture.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus the following (to the extent deducted in calculating
such Adjusted Consolidated Net Income), (i) Consolidated Interest Expense, (ii)
income taxes (other than income taxes (either positive or negative) attributable
to extraordinary and non-recurring gains or losses or sales of assets), (iii)
depreciation expense, (iv) amortization expense and (v) all other non-cash
items, including, without limitation, any non-cash charge reflecting
compensation expense relating to employee stock option or similar plans,
reducing Adjusted Consolidated Net Income (other than items that will require
cash payments and for which an accrual or reserve is, or is required by GAAP to
be, made), less all non-cash items increasing Adjusted Consolidated Net Income,
all as determined on a consolidated basis for the Company and its Restricted
Subsidiaries in conformity with GAAP; provided that, if any Restricted
Subsidiary is not a Wholly Owned Restricted Subsidiary, Consolidated EBITDA
shall be reduced (to the extent not otherwise reduced in accordance with GAAP)
by an amount equal to (A) the amount of the Adjusted Consolidated Net Income
attributable to such Restricted Subsidiary multiplied by (B) the percentage
ownership interest in the income of such Restricted Subsidiary not owned on the
last day of such period by the Company or any of its Restricted Subsidiaries.
"Consolidated Interest Expense" means, without duplication, for any period,
the aggregate amount of interest which, in conformity with GAAP, would be set
forth opposite the caption "interest expense" or any
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like caption on a statement of operations (including, without limitation,
amortization of debt discount and debt issuance cost; the interest portion of
any deferred payment obligation; all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; amortization
of other financing fees and expenses; interest on Indebtedness that is
Guaranteed or secured by the Company or any of its Restricted Subsidiaries;
capitalized interest and accrued interest; dividends in respect of all
Disqualified Stock of the Company and all Preferred Stock of Subsidiaries; and
all other non-cash interest expense) and all but the principal component of
rentals in respect of Capitalized Lease Obligations paid, accrued or scheduled
to be paid or to be accrued by the Company and its Restricted Subsidiaries
during such period; excluding, however, (i) any amount of such interest of any
Restricted Subsidiary if the net income of such Restricted Subsidiary is
excluded in the calculation of Adjusted Consolidated Net Income pursuant to
clause (iii) of the definition thereof (but only in the same proportion as the
net income of such Restricted Subsidiary is excluded from the calculation of
Adjusted Consolidated Net Income pursuant to clause (iii) of the definition
thereof) and (ii) any premiums, fees and expenses (and any amortization thereof)
payable in connection with the offering of the Notes, all as determined on a
consolidated basis (without taking into account Unrestricted Subsidiaries) in
conformity with GAAP.
"Credit Facility" means the Amended and Restated Revolving Credit Agreement
dated as of December 8, 1997 among the Company, the lending institutions listed
on Schedule 1 thereto, and BankBoston, N.A., as Agent, as guaranteed by the
Guarantors, as amended, as such agreement, facility or credit, in whole or in
part, may be amended, renewed, extended, substituted, refinanced, restructured,
replaced, supplemented or otherwise modified from time to time and whether by
the same or another agent, lender or group of lenders (including, without
limitation, any successive renewals, extensions, substitutions, refinancings,
restructurings, replacements, supplementations or other modifications of the
foregoing) for the Company or any Restricted Subsidiary.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" means Indebtedness under the Credit
Facility and any Indebtedness constituting Senior Indebtedness that, at the date
of determination, has an aggregate principal amount outstanding of at least $25
million owed by the Company or the Guarantors and that is specifically
designated by the Company or any Guarantor, in the instrument creating or
evidencing such Senior Indebtedness as "Designated Senior Indebtedness."
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (i) required to be redeemed prior to
the Stated Maturity of the Notes, (ii) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Stated Maturity
of the Notes or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; provided that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control' provisions
applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in "Limitation on Asset Sales" and
"Repurchase of Notes upon a Change of Control" covenants described below and
such Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provision prior to the Company's
repurchase of such Notes as are required to be repurchased pursuant to the
"Limitation on Asset Sales" and "Repurchase of Notes upon a Change of Control"
covenants described below.
"Equity Offering" means (i) a public offering by the Company of its Capital
Stock (other than Disqualified Stock) or (ii) the issuance and sale of Capital
Stock of the Company to a person engaged
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primarily in a business that is related, ancillary or complementary to the
businesses of the Company and its Restricted Subsidiaries on the date of such
issuance or sale, provided that such person has a market capitalization of at
least $50 million.
"fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by the Board of Directors, whose determination shall be conclusive if
evidenced by a Board Resolution.
"Foreign Subsidiary" means any Subsidiary of the Company organized under
laws other than the laws of the United States of America or any jurisdiction
thereof.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations contained or referred to in
the Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants and with other provisions of the Indenture shall be
made without giving effect to (i) the amortization of any expenses incurred in
connection with the offering of the Notes and (ii) except as otherwise provided,
the amortization or write-off of any amounts required or permitted (as of the
Closing Date) by Accounting Principles Board Opinion Nos. 16 and 17.
"Government Securities" means direct obligations of, obligations fully
guaranteed by, or participations in pools consisting solely of obligations of or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States of
America is pledged and which are not callable or redeemable at the option of the
issuer thereof.
"Guarantee" means an obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to incur, create, issue, assume, Guarantee or otherwise become liable
for or with respect to, or become responsible for, the payment of, contingently
or otherwise, such Indebtedness or other obligation or the recording, as
required pursuant to GAAP or otherwise, of any such Indebtedness or other
obligation on the balance sheet of such Person, including an "Incurrence" of
Acquired Indebtedness; provided that neither the accrual of interest nor the
accretion of original issue discount shall be considered an Incurrence of
Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto, but excluding obligations with
respect to letters of credit (including trade letters of credit) securing
obligations (other than obligations described in (i) or (ii) above or (v), (vi)
or (vii) below) entered into in the ordinary course of business of such Person
to the extent such letters of credit are not drawn upon or, if drawn upon, to
the extent such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand
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for reimbursement), (iv) all obligations of such Person to pay the deferred and
unpaid purchase price of property or services, which purchase price is due more
than six months after the date of placing such property in service or taking
delivery and title thereto or the completion of such services, except Trade
Payables, (v) all Capitalized Lease Obligations, (vi) all Indebtedness of other
Persons secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; provided that the amount of such
Indebtedness shall be the lesser of (A) the fair market value of such asset at
such date of determination and (B) the amount of such Indebtedness, (vii) all
Indebtedness of other Persons Guaranteed by such Person to the extent such
Indebtedness is Guaranteed by such Person and (viii) to the extent not otherwise
included in this definition, obligations under Currency Agreements and Interest
Rate Agreements. The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and, with respect to contingent obligations, the maximum
liability upon the occurrence of the contingency giving rise to the obligation,
provided (A) that the amount outstanding at any time of any Indebtedness issued
with original issue discount is the face amount of such Indebtedness less the
remaining unamortized portion of the original issue discount of such
Indebtedness at the time of its issuance as determined in conformity with GAAP,
(B) that money borrowed and set aside at the time of the Incurrence of any
Indebtedness in order to prefund the payment of the interest on such
Indebtedness shall not be deemed to be "Indebtedness" and (C) that Indebtedness
shall not include (i) any liability for federal, state, local or other taxes;
(ii) any Trade Payables and other accrued liabilities arising in the ordinary
course of business; or (iii) any indemnification obligation, purchase price
adjustment, earnout or other similar obligation of the Person to third parties
if such indemnification obligation would not appear as a liability upon a
balance sheet of the Person prepared in accordance with GAAP.
"Interest Coverage Ratio" means, on any Transaction Date, the ratio of (i)
the aggregate amount of Consolidated EBITDA for the then most recent four fiscal
quarters prior to such Transaction Date for which reports have been filed with
the Commission pursuant to the "Commission Reports and Reports to Holders"
covenant (the "Four Quarter Period") to (ii) the aggregate Consolidated Interest
Expense during such Four Quarter Period. In making the foregoing calculation,
(A) pro forma effect shall be given to any Indebtedness Incurred or repaid
during the period (the "Reference Period") commencing on the first day of the
Four Quarter Period and ending on the Transaction Date (other than Indebtedness
Incurred or repaid under a revolving credit or similar arrangement to the extent
of the commitment thereunder (or under any predecessor revolving credit or
similar arrangement) in effect on the last day of such Four Quarter Period
unless any portion of such Indebtedness is projected, in the reasonable judgment
of the senior management of the Company, to remain outstanding for a period in
excess of 12 months from the date of the Incurrence thereof), in each case as if
such Indebtedness had been Incurred or repaid on the first day of such Reference
Period; (B) Consolidated Interest Expense attributable to interest on any
Indebtedness (whether existing or being Incurred) computed on a pro forma basis
and bearing a floating interest rate shall be computed as if the rate in effect
on the Transaction Date (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months or, if shorter, at least equal to the remaining term
of such Indebtedness) had been the applicable rate for the entire period; (C)
pro forma effect shall be given to Asset Dispositions and Asset Acquisitions
(including giving pro forma effect to the application of proceeds of any Asset
Disposition) that occur during such Reference Period as if they had occurred and
such proceeds had been applied on the first day of such Reference Period; and
(D) pro forma effect shall be given to asset dispositions and asset acquisitions
(including giving pro forma effect to the application of proceeds of any asset
disposition) that have been made by any Person that has become a Restricted
Subsidiary or has been merged with or into the Company or any Restricted
Subsidiary during such Reference Period and that would have constituted Asset
Dispositions or Asset Acquisitions had such transactions occurred when such
Person was a Restricted Subsidiary as if such asset dispositions or asset
acquisitions were Asset Dispositions or Asset Acquisitions that occurred on the
first day of such Reference Period; provided that to the extent that clause (C)
or (D) of this sentence requires that pro forma effect be given to an Asset
Acquisition or Asset Disposition, such pro forma calculation shall be based upon
the four full fiscal quarters immediately preceding the Transaction Date of the
Person, or division or line of business of the Person, that is acquired or
disposed for which financial information is available.
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"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of Guarantee or
similar arrangement; but excluding payment obligations of customers in the
ordinary course of business that are, in conformity with GAAP, recorded as
accounts receivable on the balance sheet of the Company or its Restricted
Subsidiaries) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others), or any purchase or acquisition of Capital Stock, bonds,
notes, debentures or other similar instruments issued by, such Person and shall
include (i) the designation or redesignation of a Restricted Subsidiary as an
Unrestricted Subsidiary and (ii) the fair market value of the Capital Stock (or
any other Investment), held by the Company or any of its Restricted
Subsidiaries, of (or in) any Person that has ceased to be a Restricted
Subsidiary, including without limitation, by reason of any transaction permitted
by clause (iii) of the "Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries" covenant; provided that the fair market value of the
Investment remaining in any Person that has ceased to be a Restricted Subsidiary
shall not exceed the aggregate amount of Investments previously made in such
Person valued at the time such Investments were made less the net reduction of
such Investments. For purposes of the definition of "Unrestricted Subsidiary"
and the "Limitation on Restricted Payments" covenant described below, (i)
"Investment" shall include the fair market value of the assets (net of
liabilities (other than liabilities to the Company or any of its Restricted
Subsidiaries)) of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary, (ii) the fair market value
of the assets (net of liabilities (other than liabilities to the Company or any
of its Restricted Subsidiaries)) of any Unrestricted Subsidiary at the time that
such Unrestricted Subsidiary is designated a Restricted Subsidiary shall be
considered a reduction in outstanding Investments and (iii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the proceeds
of such Asset Sale in the form of cash or cash equivalents, including payments
in respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary) and proceeds
from the conversion of other property received when converted to cash or cash
equivalents, net of (i) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (ii) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of the Company and its Restricted
Subsidiaries, taken as a whole, (iii) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Sale that either (A) is
secured by a Lien on the property or assets sold or (B) is required to be paid
as a result of such sale and (iv) appropriate amounts to be provided by the
Company or any Restricted Subsidiary as a reserve against any liabilities
associated with such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as determined in conformity with GAAP and (b) with respect
to any issuance or sale of Capital Stock, the direct or indirect proceeds of
such issuance or sale in the form of cash or cash equivalents, net of attorney's
fees, accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees incurred in connection with
such issuance or sale and net of taxes paid or payable as a result thereof.
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"Offer to Purchase" means an offer to purchase Notes by the Company from
the Holders commenced by mailing a notice to the Trustee and each Holder
stating: (i) the covenant pursuant to which the offer is being made and that all
Notes validly tendered will be accepted for payment on a pro rata basis; (ii)
the purchase price and the date of purchase (which shall be a Business Day no
earlier than 30 days nor later than 60 days from the date such notice is mailed)
(the "Payment Date"); (iii) that any Note not tendered will continue to accrue
interest pursuant to its terms; (iv) that, unless the Company defaults in the
payment of the purchase price, any Note accepted for payment pursuant to the
Offer to Purchase shall cease to accrue interest on and after the Payment Date;
(v) that Holders electing to have a Note purchased pursuant to the Offer to
Purchase will be required to surrender the Note, together with the form entitled
"Option of the Holder to Elect Purchase" on the reverse side of the Note
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the Business Day immediately preceding the Payment
Date; (vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased; and (vii) that Holders
whose Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered; provided
that each Note purchased and each new Note issued shall be in a principal amount
of $1,000 or integral multiples thereof. On the Payment Date, the Company shall
(i) accept for payment on a pro rata basis Notes or portions thereof tendered
pursuant to an Offer to Purchase; (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof so
accepted; and (iii) deliver, or cause to be delivered, to the Trustee all Notes
or portions thereof so accepted together with an Officers' Certificate
specifying the Notes or portions thereof accepted for payment by the Company.
The Paying Agent shall promptly mail to the Holders of Notes so accepted payment
in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of $1,000 or
integral multiples thereof. The Company will publicly announce the results of an
Offer to Purchase as soon as practicable after the Payment Date. The Trustee
shall act as the Paying Agent for an Offer to Purchase. The Company will comply
with 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 the event that the Company is required to repurchase Notes pursuant to an
Offer to Purchase.
"Permitted Investment" means (i) an Investment in the Company or a
Restricted Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted Subsidiary or be merged or consolidated with or
into or transfer or convey all or substantially all its assets to, the Company
or a Restricted Subsidiary; (ii) cash and Temporary Cash Investments; (iii)
payroll, travel, relocation and similar loans or advances; (iv) stock,
obligations or securities received in the settlement of debts incurred in the
ordinary course of business and in satisfaction of judgments; (v) an Investment
in an Unrestricted Subsidiary consisting solely of an Investment in another
Unrestricted Subsidiary; (vi) Interest Rate Agreements and Currency Agreements
designed solely to protect the Company or its Restricted Subsidiaries against
fluctuations in interest rates or foreign currency exchange rates; (vii)
Investments in the Notes (or the notes issued upon the exchange of the Notes);
and (viii) Investments in an aggregate amount outstanding at any time not to
exceed $100 million.
"Permitted Junior Securities" means any securities of the Company, any
Guarantor or any other business entity that are equity securities or are
subordinated in right of payment to all Senior Indebtedness, that may at the
time be outstanding, to substantially the same extent as, or to a greater extent
than, the Notes and the Note Guarantees are so subordinated as provided in the
Indenture; provided that Permitted Junior Securities may not have terms less
favorable in any material respect to the Company or the holders of the Senior
Indebtedness than the terms of the Indenture and the Notes.
"Preferred Stock" of any Person means any Capital Sock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemption or upon liquidation.
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"Purchase Money Indebtedness" means any Indebtedness Incurred in the
ordinary course of business by a Person to finance the cost (including the cost
of construction) of an item of property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Senior Indebtedness" means the following obligations of the Company or any
Guarantor, whether outstanding on the Closing Date or thereafter Incurred: (i)
all Indebtedness and all other monetary obligations (including principal,
interest, expenses, fees, costs, enforcement expenses (including legal fees and
disbursements) reimbursement or indemnity obligations and other monetary
obligations) of the Company or any Guarantor under or in respect of the Credit
Facility, any and all interest accruing or out of pocket costs incurred after
the date of any filing by or against the Company or any Guarantor of any
petition or under any bankruptcy, insolvency or reorganization act, regardless
of whether the claim of the holders of such Senior Indebtedness is allowed or
allowable in the case or proceeding relating thereto, (ii) all obligations of
the Company or any Guarantor with respect to any Interest Rate Agreement or
Currency Agreement, (iii) all obligations of the Company or any Guarantor to
reimburse any bank or other Person in respect of amounts paid under letters of
credit, acceptances or other similar instruments, (iv) all Indebtedness and all
expenses, fees and other monetary obligations of the Company or any Guarantor
(other than the Notes and the Note Guarantees), including principal and interest
on such Indebtedness, unless such Indebtedness, by its terms or by the terms of
any agreement or instrument pursuant to which such Indebtedness is issued, is
pari passu with, or subordinated in right of payment to, the Notes and (v) in
addition to and without limiting the foregoing clauses (i) through (iv), all
deferrals, renewals, extensions, replacements, substitutions and refundings of,
and amendments, modifications and supplements to, with or without the same
parties, any of the Senior Indebtedness described above; provided that the term
"Senior Indebtedness" shall not include (a) any Indebtedness of the Company or
any Guarantor that, when Incurred, was without recourse to the Company or such
Guarantor, (b) any Indebtedness of the Company or any Guarantor to a Subsidiary
of the Company, or to a joint venture in which the Company or such Guarantor has
an interest, (c) any Indebtedness of the Company or any Guarantor, to the extent
not permitted by the "Limitation on Indebtedness" covenant or the "Limitation on
Senior Subordinated Indebtedness' covenant described below, (d) any repurchase,
redemption or other obligation in respect of Disqualified Stock, (e) any
Indebtedness to any employee of the Company or any of its Subsidiaries, (f) any
liability for taxes owed or owing by the Company or any Guarantor or (g) any
Trade Payables. Senior Indebtedness will also include interest accruing
subsequent to events of bankruptcy of the Company or any Guarantor at the rate
provided for in the document governing such Senior Indebtedness, whether or not
such interest is an allowed claim enforceable against the debtor in a bankruptcy
case under bankruptcy law.
"Senior Subordinated Obligations" means any (i) principal of, premium, if
any, or interest on the Notes, (ii) the Note Guarantees and (iii) other amounts
(including fees and indemnity rights) payable pursuant to the terms of the Notes
or the Note Guarantees or the Indenture or upon acceleration, including any
amounts received upon the exercise of rights of rescission or other rights of
action (including claims for damages) or otherwise, to the extent relating to
the purchase price or the acquisition, repurchase or redemption of the Notes or
amounts corresponding to such principal, premium, if any, or interest or other
amounts on the Notes.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (ii) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year.
"S&P" means Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, and its successors.
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"Stated Maturity" means, (i) with respect to any security, the date
specified in such security as the fixed date on which the final installment of
principal of such debt security is due and payable, including pursuant to any
mandatory redemption provision.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Temporary Cash Investment" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof, (ii) time deposit accounts, certificates of deposit and money
market deposits issued by a bank or trust company (including the Trustee) which
is organized under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States of America, and which
bank or trust company has capital, surplus and undivided profits aggregating in
excess of $50 million (or the foreign currency equivalent thereof) and, with
respect to any such entity organized under the laws of any foreign country has
outstanding debt which is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act) or any money-market fund sponsored
by a registered broker dealer or mutual fund distributor, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank or trust
company (including the Trustee) meeting the qualifications described in clause
(ii) above, (iv) commercial paper issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to Moody's or "A-1"
(or higher) according to S&P, and (v) securities with maturities of five years
or less from the date of acquisition issued or fully and unconditionally
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least investment grade by S&P or Moody's.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Unrestricted Subsidiary" means (i) Hadco Foreign Sales Corporation, CCIR
International, Inc., Zycon Corporation and Continental Circuits Corp.; (ii) any
Subsidiary of the Company that at the time of determination shall be designated
an Unrestricted Subsidiary by the Board of Directors in the manner provided
below; and (iii) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Restricted Subsidiary (including any newly acquired
or newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on
any property of, the Company or any Restricted Subsidiary; provided that either
(I) the Subsidiary to be so designated has total assets of $20,000 or less or
(II) if such Subsidiary has assets greater than $20,000, such designation would
be permitted under the "Limitation on Restricted Payments" covenant described
below. The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that immediately after giving effect to such
designation (i) no Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such designation and (ii)
all Liens and Indebtedness of such Unrestricted Subsidiary outstanding
immediately after such designation would, if Incurred at such time, have been
permitted to be Incurred (and shall be deemed to have been Incurred) for all
purposes of the Indenture. Any such designation by the Board of Directors shall
be evidenced to the Trustee by promptly filing with the Trustee a copy of the
Board Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
Notwithstanding anything herein contained to the contrary, no Guarantor may be
designated an Unrestricted Subsidiary unless all or
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substantially all of the assets of such Guarantor are transferred to another
Guarantor or a Person who upon such transfer becomes a Guarantor.
"Voting Stock" means with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person.
COVENANTS
Limitation on Indebtedness
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness (other than the Notes and Indebtedness
existing on the Closing Date (whether or not any such Indebtedness existing on
the Closing Date is repaid or reborrowed)); provided that the Company and any
Guarantor may Incur Indebtedness if, after giving effect to the Incurrence of
such Indebtedness and the receipt and application of the proceeds therefrom, the
Interest Coverage Ratio would be greater than 3:1.
Notwithstanding the foregoing, in addition to Indebtedness permitted by the
foregoing paragraph the Company and any Restricted Subsidiary (except as
specified below) may Incur each and all of the following: (i) Indebtedness of
the Company and the Guarantors outstanding at any time in an aggregate principal
amount not to exceed the commitments under the Credit Facility on the Closing
Date; (ii) Indebtedness owed (A) to the Company evidenced by an unsubordinated
promissory note or (B) to any Restricted Subsidiary; provided that any event
which results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of such Indebtedness (other than to the
Company or another Restricted Subsidiary) shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness not permitted by this clause (ii);
(iii) Indebtedness issued in exchange for, or the net proceeds of which are used
to refinance or refund, then outstanding Indebtedness (other than Indebtedness
Incurred under clause (i), (ii), (iv), (vi) or (vii) of this paragraph; it being
understood that Indebtedness Incurred under such clauses can be refinanced
thereunder) and any refinancings thereof in an amount not to exceed the amount
so refinanced or refunded (plus premiums, accrued interest, fees and expenses);
provided that Indebtedness the proceeds of which are used to refinance or refund
the Notes or Indebtedness that is pari passu with, or subordinated in right of
payment to, the Notes shall only be permitted under this clause (iii) if (A) in
case the Notes are refinanced in part or the Indebtedness to be refinanced is
pari passu with the Notes, such new Indebtedness, by its terms or by the terms
of any agreement or instrument pursuant to which such new Indebtedness is
outstanding, is expressly made pari passu with, or subordinate in right of
payment to, the remaining Notes, (B) in case the Indebtedness to be refinanced
is subordinated in right of payment to the Notes, such new Indebtedness, by its
terms or by the terms of any agreement or instrument pursuant to which such new
Indebtedness is issued or remains outstanding, is expressly made subordinate in
right of payment to the Notes at least to the extent that the Indebtedness to be
refinanced is subordinated to the Notes and (C) such new Indebtedness,
determined as of the date of Incurrence of such new Indebtedness, does not
mature prior to the Stated Maturity of the Indebtedness to be refinanced or
refunded, and the Average Life of such new Indebtedness is at least equal to the
remaining Average Life of the Indebtedness to be refinanced or refunded; and
provided further that in no event may Indebtedness of the Company be refinanced
by means of any Indebtedness of any Restricted Subsidiary pursuant to this
clause (iii); (iv) Indebtedness (A) in respect of performance, surety or appeal
bonds provided in the ordinary course of business, (B) under Currency Agreements
and Interest Rate Agreements; provided that such agreements (a) are designed
solely to protect the Company or its Restricted Subsidiaries against
fluctuations in foreign currency exchange rates or interest rates and (b) do not
increase the Indebtedness of the obligor outstanding at any time other than as a
result of fluctuations in foreign currency exchange rates or interest rates or
by reason of fees, indemnities and compensation payable thereunder; and (C)
arising from agreements providing for indemnification, adjustment of purchase
price,
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earnouts or similar obligations, or from Guarantees or letters of credit, surety
bonds or performance bonds securing any obligations of the Company or any of its
Restricted Subsidiaries pursuant to such agreements, in any case Incurred in
connection with the disposition of any business, assets or Restricted Subsidiary
(other than Guarantees of Indebtedness Incurred by any Person acquiring all or
any portion of such business, assets or Restricted Subsidiary for the purpose of
financing such acquisition), in a principal amount not to exceed the gross
proceeds actually received by the Company or any Restricted Subsidiary in
connection with such disposition; (v) Indebtedness of the Company and any
Guarantor, to the extent the net proceeds thereof are promptly (A) used to
purchase Notes tendered in an Offer to Purchase made as a result of a Change in
Control or (B) deposited to defease the Notes as described below under
"Defeasance"; (vi) Guarantees of the Notes and Guarantees of Indebtedness of the
Company by any Restricted Subsidiary provided the Guarantee of such Indebtedness
is permitted by and made in accordance with the "Limitation on Issuance of
Guarantees by Restricted Subsidiaries" covenant described below; (vii)
Indebtedness under the Notes and the Note Guarantees (as well as the notes
issued upon the exchange of the Notes); (viii) Indebtedness of the Company or
any Guarantor constituting Purchase Money Indebtedness or Capitalized Lease
Obligations that do not, at any one time outstanding, exceed 10% of the Adjusted
Consolidated Net Tangible Assets of the Company and the Guarantors; (ix)
Indebtedness of the Company, the Guarantors and the Foreign Subsidiaries
outstanding at any time in the aggregate principal amount not to exceed $100
million; and (x) Indebtedness of the Company and the Guarantors (in addition to
Indebtedness permitted under clauses (i) through (ix) above) in an aggregate
principal amount outstanding at any time not to exceed $50 million.
(b) With respect to any particular Indebtedness, notwithstanding any other
provision of this "Limitation on Indebtedness" covenant, the maximum amount of
Indebtedness that the Company or a Restricted Subsidiary may Incur pursuant to
this "Limitation on Indebtedness" covenant shall not be deemed to be exceeded
due solely to the result of fluctuations in the exchange rates of currencies.
(c) For purposes of determining any particular amount of Indebtedness under
this "Limitation on Indebtedness" covenant, (1) Guarantees, Liens or obligations
with respect to letters of credit supporting Indebtedness otherwise included in
the determination of such particular amount shall not be included and (2) any
Liens granted pursuant to the equal and ratable provisions referred to in the
"Limitation on Liens" covenant described below shall not be treated as
Indebtedness. For purposes of determining compliance with this "Limitation on
Indebtedness" covenant, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described in the above
clauses, the Company, in its sole discretion, shall classify, and from time to
time may reclassify, such item of Indebtedness and only be required to include
the amount and type of such Indebtedness in one of such clauses. No Indebtedness
incurred pursuant to the first paragraph of Section (a) of this "Limitation on
Indebtedness" covenant shall be included in calculating any limitation set forth
in clauses (i) through (x), of such Section (a).
Limitation on Senior Subordinated Indebtedness
The Company and the Guarantors shall not Incur any Indebtedness that is
subordinate in right of payment to any Senior Indebtedness unless such
Indebtedness is pari passu with, or subordinated in right of payment to, the
Notes or the Note Guarantee of such Guarantor, as the case may be; provided that
the foregoing limitation shall not apply to distinctions between categories of
Senior Indebtedness that exist by reason of any Liens or Guarantees arising or
created in respect of some but not all Senior Indebtedness.
Limitation on Restricted Payments
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, (i) declare or pay any dividend or make any distribution
on or with respect to its Capital Stock (other than (x) dividends or
distributions payable solely in shares of its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to acquire shares of
such Capital Stock and (y) pro rata dividends or distributions on Common Stock
of Restricted Subsidiaries held by minority stockholders) held by Persons other
than the Company or any of its Restricted Subsidiaries, (ii) purchase, redeem,
retire or otherwise acquire for value any shares of Capital Stock of (A) the
Company or an Unrestricted Subsidiary (including options, warrants or other
rights to acquire such shares of Capital Stock) held by any Person or (B) a
Restricted Subsidiary
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(including options, warrants or other rights to acquire such shares of Capital
Stock) held by any Affiliate of the Company (other than a Wholly Owned
Restricted Subsidiary) or any holder (or any Affiliate of such holder) of 5% or
more of the Capital Stock of the Company, (iii) make any voluntary or optional
principal payment, or voluntary or optional redemption, repurchase, defeasance,
or other acquisition or retirement for value, of Indebtedness of the Company
that is subordinated in right of payment to the Notes or (iv) make any
Investment, other than a Permitted Investment, in any Person (such payments or
any other actions described in clauses (i) through (iv) above being collectively
"Restricted Payments") if, at the time of, and after giving effect to, the
proposed Restricted Payment: (A) a Default or Event of Default shall have
occurred and be continuing, (B) the Company could not Incur at least $1.00 of
Indebtedness under the first paragraph of the "Limitation on Indebtedness"
covenant or (C) the aggregate amount of all Restricted Payments (the amount, if
other than in cash, to be determined in good faith by the Board of Directors,
whose determination shall be conclusive and evidenced by a Board Resolution)
made after the Closing Date shall exceed the sum of (1) 50% of the aggregate
amount of the Adjusted Consolidated Net Income (or, if the Adjusted Consolidated
Net Income is a loss, minus 100% of the amount of such loss) (determined by
excluding income resulting from transfers of assets by the Company or a
Restricted Subsidiary to an Unrestricted Subsidiary) accrued on a cumulative
basis during the period (taken as one accounting period) beginning on the first
day of the fiscal quarter immediately following the Closing Date and ending on
the last day of the last fiscal quarter preceding the Transaction Date for which
reports have been filed with the Commission or provided to the Trustee pursuant
to the "Commission Reports and Reports to Holders" covenant plus (2) the
aggregate Net Cash Proceeds received by the Company after the Closing Date from
the issuance and sale permitted by the Indenture of its Capital Stock (other
than Disqualified Stock) to a Person who is not a Subsidiary of the Company,
including an issuance or sale permitted by the Indenture of Indebtedness of the
Company for cash subsequent to the Closing Date upon the conversion of such
Indebtedness into Capital Stock (other than Disqualified Stock) of the Company,
or from the issuance to a Person who is not a Subsidiary of the Company of any
options, warrants or other rights to acquire Capital Stock of the Company (in
each case, exclusive of any Disqualified Stock or any options, warrants or other
rights that are redeemable at the option of the holder, or are required to be
redeemed, prior to the Stated Maturity of the Notes) plus (3) an amount equal to
the net reduction in Investments (other than reductions in Permitted Investments
or Investments made pursuant to the following paragraph) in any Person resulting
from payments of interest on Indebtedness, dividends, repayments of loans or
advances, or other transfers of assets, in each case to the Company or any
Restricted Subsidiary or from the Net Cash Proceeds from the sale of any such
Investment (except, in each case, to the extent any such payment or proceeds are
included in the calculation of Adjusted Consolidated Net Income), or from
redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries (valued
in each case as provided in the definition of "Investments"), not to exceed, in
each case, the amount of Investments previously made by the Company or any
Restricted Subsidiary in such Person or Unrestricted Subsidiary plus (4) $5
million.
The foregoing provision shall not be violated by reason of: (i) the payment
of any dividend or distribution within 60 days after the date of declaration
thereof if, at said date of declaration, such payment would comply with the
foregoing paragraph; (ii) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Indebtedness that is subordinated in
right of payment to the Notes including premium, if any, and accrued and unpaid
interest, with the proceeds of, or in exchange for, Indebtedness Incurred under
clause (iii) of the second paragraph of part (a) of the "Limitation on
Indebtedness" covenant; (iii) the repurchase, redemption or other acquisition of
Capital Stock of the Company or an Unrestricted Subsidiary (or options, warrants
or other rights to acquire such Capital Stock) in exchange for, or out of the
proceeds of a substantially concurrent offering of, shares of Capital Stock
(other than Disqualified Stock) of the Company (or options, warrants or other
rights to acquire such Capital Stock); (iv) the making of any principal payment
or the repurchase, redemption, retirement, defeasance or other acquisition for
value of Indebtedness of the Company which is subordinated in right of payment
to the Notes in exchange for, or out of the proceeds of, a substantially
concurrent offering of, shares of the Capital Stock (other than Disqualified
Stock) of the Company (or options, warrants or other rights to acquire such
Capital Stock); (v) payments or distributions, to dissenting stockholders
pursuant to applicable law, pursuant to or in connection with a consolidation,
merger or transfer of assets that complies with the provisions of the Indenture
applicable to mergers, consolidations and transfers of all or substantially all
of the property and assets of the Company;
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(vi) Restricted Payments not to exceed $30 million (provided that to the extent
such Restricted Payment is an Investment, Investments not to exceed $30 million
at any one time outstanding); or (vii) Investments acquired in exchange for
Capital Stock (other than Disqualified Stock) of the Company (or options,
warrants or other rights to acquire such Capital Stock) or financed or
refinanced out of the proceeds of a substantially concurrent offering of shares
of Capital Stock of the Company (or options, warrants or other rights to acquire
such Capital Stock); provided that, except in the case of clauses (i) and (iii),
no Default or Event of Default shall have occurred and be continuing or occur as
a consequence of the actions or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (ii) thereof, an
exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iii) or (iv) thereof and an Investment referred to in clause (vi)
thereof), and the Net Cash Proceeds from any issuance of Capital Stock referred
to in clauses (iii) and (iv), shall be included in calculating whether the
conditions of clause (C) of the first paragraph of this "Limitation on
Restricted Payments" covenant have been met with respect to any subsequent
Restricted Payments. In the event the proceeds of an issuance of Capital Stock
of the Company are used for the redemption, repurchase or other acquisition of
the Notes, or Indebtedness that is pari passu with the Notes, then the Net Cash
Proceeds of such issuance shall be included in clause (C) of the first paragraph
of this "Limitation on Restricted Payments" covenant only to the extent such
proceeds are not used for such redemption, repurchase or other acquisition of
Indebtedness.
The amount of any Investment "outstanding" at any time shall be deemed to
be equal to the amount of such Investment on the date made, less the return on
capital to the Company and its Restricted Subsidiaries with respect to such
Investment by distribution, sale or otherwise (up to the amount of such
Investment on the date made).
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries
The Company will not, and will not permit any Restricted Subsidiary to,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions permitted by
applicable law on any Capital Stock of such Restricted Subsidiary owned by the
Company or any other Restricted Subsidiary, (ii) pay any Indebtedness owed to
the Company or any other Restricted Subsidiary, (iii) make loans or advances to
the Company or any other Restricted Subsidiary or (iv) transfer any of its
property or assets to the Company or any other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions: (i) existing on the Closing Date in the Credit Facility, the
Indenture or any other agreements in effect on the Closing Date, and any
amendments, modifications, supplements, extensions, refinancings, renewals or
replacements of such agreements; provided that the encumbrances and restrictions
in any such amendments, modifications, supplements, extensions, refinancings,
renewals or replacements are no less favorable in any material respect to the
Holders than those encumbrances or restrictions that are then in effect and that
are being amended, modified, supplemented, extended, refinanced, renewed or
replaced; (ii) existing under or by reason of applicable law; (iii) under any
instrument governing Acquired Indebtedness incurred in accordance with the
Indenture; provided that such encumbrances or restrictions are not adopted in
contemplation of the related acquisition; (iv) in the case of clause (iv) of the
first paragraph of this "Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries" covenant, (A) that restrict in a customary
manner the subletting, assignment or transfer of any property or asset that is a
lease, license, conveyance or contract or similar property or asset, (B)
existing by virtue of any transfer of, agreement to transfer, option or right
with respect to, or Lien on, any property or assets of the Company or any
Restricted Subsidiary not otherwise prohibited by the Indenture or (C) arising
or agreed to in the ordinary course of business, not relating to any
Indebtedness, and that do not, individually or in the aggregate, detract from
the value of property or assets of the Company or any Restricted Subsidiary in
any manner material to the Company or any Restricted Subsidiary; (v) with
respect to a Restricted Subsidiary and imposed pursuant to an agreement that has
been entered into for the sale or disposition of all or substantially all of the
Capital Stock of, or property and assets of, such Restricted Subsidiary; and
(vi) with respect to any Foreign Subsidiary; provided that (A) the
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Investments of the Company and its Subsidiaries in such Foreign Subsidiary are,
as determined by the Board of Directors, not made for the purpose of removing
assets from the Company and the Guarantors which removal, in the judgment of the
Board of Directors, would be likely to have a material adverse impact on the
Company's ability to make payments on the Notes and (B) such encumbrances or
restrictions are not, in the judgment of the Board of Directors of the Company,
likely to have a material adverse impact on the Company's ability to make
payments on the Notes. Nothing contained in this "Limitation on Dividend and
Other Payment Restrictions Affecting Restricted Subsidiaries" covenant shall
prevent the Company or any Restricted Subsidiary from (1) creating, incurring,
assuming or suffering to exist any Liens otherwise permitted in the "Limitation
on Liens" covenant or (2) restricting the sale or other disposition of property
or assets of the Company or any of its Restricted Subsidiaries that secure
Indebtedness of the Company or any of its Restricted Subsidiaries.
Limitation on the Issuance and Sale of Capital Stock of Restricted
Subsidiaries
The Company will not sell, and will not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell, any shares of Capital Stock of a
Restricted Subsidiary (including options, warrants or other rights to purchase
shares of such Capital Stock) except (i) to the Company or a Wholly Owned
Restricted Subsidiary; (ii) issuances of director's qualifying shares or sales
to foreign nationals of shares of Capital Stock of foreign Restricted
Subsidiaries, to the extent required by applicable law; (iii) if, immediately
after giving effect to such issuance or sale, such Restricted Subsidiary would
no longer constitute a Restricted Subsidiary and any Investment in such Person
remaining after giving effect to such issuance or sale would have been permitted
to be made under the "Limitation on Restricted Payments" covenant if made on the
date of such issuance or sale; or (iv) issuances or sales of Common Stock of a
Restricted Subsidiary, provided that the Company or such Restricted Subsidiary
applies the Net Cash Proceeds, if any, of any such sale in accordance with
clause (A) or (B) of the "Limitation on Asset Sales" covenant described below.
Limitation on Issuances of Guarantees by Restricted Subsidiaries
The Company will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of the Company which is pari passu
with or subordinate in right of payment to the Notes ("Guaranteed
Indebtedness"), unless (i) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to the Indenture providing for a Guarantee
(a "Subsidiary Guarantee") of payment of the Notes by such Restricted Subsidiary
and (ii) such Restricted Subsidiary waives and will not in any manner whatsoever
claim or take the benefit or advantage of, any rights of reimbursement,
indemnity or subrogation or any other rights against the Company or any other
Restricted Subsidiary as a result of any payment by such Restricted Subsidiary
under its Subsidiary Guarantee; provided that this paragraph shall not be
applicable to any Guarantee of any Restricted Subsidiary that existed at the
time such Person became a Restricted Subsidiary and was not Incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary. If the Guaranteed Indebtedness is (A) pari passu with the Notes,
then the Guarantee of such Guaranteed Indebtedness shall be pari passu with, or
subordinated to, the Subsidiary Guarantee or (B) subordinated to the Notes, then
the Guarantee of such Guaranteed Indebtedness shall be subordinated to the
Subsidiary Guarantee at least to the extent that the Guaranteed Indebtedness is
subordinated to the Notes.
Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary may provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer,
to any Person not an Affiliate of the Company, of all of the Company's and each
Restricted Subsidiary's Capital Stock in, or all or substantially all the assets
of, such Restricted Subsidiary (which sale, exchange or transfer is not
prohibited by the Indenture) or (ii) the release or discharge of the Guarantee
which resulted in the creation of such Subsidiary Guarantee, except a discharge
or release by or as a result of payment under such Guarantee.
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Limitation on Transactions with Shareholders and Affiliates
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of property or assets,
or the rendering of any service) with any holder (or any Affiliate of such
holder) of 10% or more of any class of Capital Stock of the Company (calculated
on a fully diluted basis) or with any Affiliate of the Company or any Restricted
Subsidiary, except upon fair and reasonable terms no less favorable to the
Company or such Restricted Subsidiary than could be obtained, at the time of
such transaction or, if such transaction is pursuant to a written agreement, at
the time of the execution of the agreement providing therefor, in a comparable
arm's-length transaction with a Person that is not such a holder or an
Affiliate.
The foregoing limitation does not limit, and shall not apply to (i)
transactions (A) approved by a majority of the disinterested members of the
Board of Directors or (B) for which the Company or a Restricted Subsidiary
delivers to the Trustee a written opinion of a nationally recognized investment
banking firm stating that the transaction is fair to the Company or such
Restricted Subsidiary from a financial point of view; (ii) any transaction
solely between the Company and any of its Wholly Owned Restricted Subsidiaries
or solely between Wholly Owned Restricted Subsidiaries; (iii) the payment in
cash or securities of reasonable and customary regular fees to directors of the
Company who are not employees of the Company; (iv) any payments or other
transactions pursuant to any tax-sharing agreement between the Company and any
other Person with which the Company files a consolidated tax return or with
which the Company is part of a consolidated group for tax purposes; or (v) any
Restricted Payments not prohibited by the "Limitation on Restricted Payments"
covenant. Notwithstanding the foregoing, any transaction or series of related
transactions covered by the first paragraph of this "Limitation on Transactions
with Shareholders and Affiliates" covenant and not covered by clauses (ii)
through (v) of this paragraph, the aggregate amount of which exceeds $2 million
in value, must be approved or determined to be fair in the manner provided for
in clause (i)(A) or (B) above.
Limitation on Liens
The Company and the Guarantors shall not Incur any Indebtedness secured by
a Lien ("Secured Indebtedness") which is not Senior Indebtedness unless
contemporaneously therewith effective provision is made to secure the Notes or
the Note Guarantee of such Guarantor, as the case may be, equally and ratably
with (or, if the Secured Indebtedness is subordinated in right of payment to the
Notes, prior to) such Secured Indebtedness for so long as such Secured
Indebtedness is secured by such Lien.
The foregoing shall not apply to Liens (including extensions and renewals
thereof) upon real or personal property acquired after the Closing Date,
provided that (a) such Lien is created solely for the purpose of securing
Indebtedness Incurred, in accordance with the "Limitation on Indebtedness'
covenant described below, to finance the cost (including the cost of design,
development, acquisition, construction, installation, improvement,
transportation or integration) of the item of property or assets subject thereto
and such Lien is created prior to, at the time of or within six months after the
later of the acquisition, the completion of construction or the commencement of
full operation of such property, (b) the principal amount of the Indebtedness
secured by such Lien does not exceed 100% of such cost and (c) any such Lien
shall not extend to or cover any property or assets other than such item of
property or assets and any improvements on such item.
Limitation on Asset Sales
The Company will not, and will not permit any Restricted Subsidiary to,
consummate any Asset Sale, unless (i) the consideration received by the Company
or such Restricted Subsidiary is at least equal to the fair market value of the
assets sold or disposed of and (ii) at least 75% of the consideration received
consists of cash or Temporary Cash Investments; provided, however, that the
amount of any note or other securities received by the Company or any such
Restricted Subsidiary which are converted into cash within 180 days of such
Asset Sale shall be deemed to be cash for purposes of this provision. In the
event and to the extent that the Net Cash Proceeds received by the Company or
any of its Restricted Subsidiaries from one or more Asset
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Sales occurring on or after the Closing Date in any period of 12 consecutive
months exceed 10% of Adjusted Consolidated Net Tangible Assets (determined as of
the date closest to the commencement of such 12-month period for which a
consolidated balance sheet of the Company and its Subsidiaries has been filed
with the Commission pursuant to the "Commission Reports and Reports to Holders"
covenant), then the Company shall or shall cause the relevant Restricted
Subsidiary to (i) within twelve months after the date Net Cash Proceeds so
received exceed 10% of Adjusted Consolidated Net Tangible Assets (A) apply an
amount equal to such excess Net Cash Proceeds to permanently repay Senior
Indebtedness of the Company, or any Restricted Subsidiary providing a Subsidiary
Guarantee pursuant to the "Limitation on Issuances of Guarantees by Restricted
Subsidiaries" covenant described above or Indebtedness of any other Restricted
Subsidiary, in each case owing to a Person other than the Company or any of its
Restricted Subsidiaries or (B) invest an equal amount, or the amount not so
applied pursuant to clause (A) (or enter into a definitive agreement committing
to so invest within 12 months after the date of such agreement), in property or
assets (other than current assets) of a nature or type or that are used in a
business (or in a company having property and assets of a nature or type, or
engaged in a business) similar or related to the nature or type of the property
and assets of, or the business of, the Company and its Restricted Subsidiaries
existing on the date of such investment and (ii) apply (no later than the end of
the 12-month period referred to in clause (i)) such excess Net Cash Proceeds (to
the extent not applied pursuant to clause (i)) as provided in the following
paragraph of this "Limitation on Asset Sales" covenant. The amount of such
excess Net Cash Proceeds required to be applied (or to be committed to be
applied) during such 12-month period as set forth in clause (i) of the preceding
sentence and not applied as so required by the end of such period shall
constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
"Limitation on Asset Sales" covenant totals at least $10 million, the Company
must commence, not later than the fifteenth Business Day of such month, and
consummate an Offer to Purchase from the Holders on a pro rata basis an
aggregate principal amount of Notes equal to the Excess Proceeds on such date,
at a purchase price equal to 100% of the principal amount of the Notes, plus, in
each case, accrued interest (if any) to the Payment Date.
Upon the consummation of any Offer to Purchase pursuant to this "Limitation
on Asset Sales" covenant, the amount of Excess Proceeds shall be reset to zero.
Any transaction permitted under the covenant described under
"Consolidation, Merger and Sale of Assets" shall not be deemed an Asset Sale for
purposes of this covenant.
REPURCHASE OF NOTES UPON A CHANGE OF CONTROL
The Company must commence, within 30 days of the occurrence of a Change of
Control, and consummate an Offer to Purchase for all Notes then outstanding, at
a purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the Payment Date (subject to the right of Holders of
record on the relevant Regular Record Date that is prior to the Change of
Control to receive interest due on an Interest Payment Date).
There can be no assurance that the Company will have sufficient funds
available at the time of any Change of Control to make any debt payment
(including repurchases of Notes) required by the foregoing covenant (as well as
may be contained in other securities of the Company which might be outstanding
at the time). The above covenant requiring the Company to repurchase the Notes
will, unless consents are obtained, require the Company to repay all
indebtedness then outstanding which by its terms would prohibit such Note
repurchase, either prior to or concurrently with such Note repurchase.
COMMISSION REPORTS AND REPORTS TO HOLDERS
Whether or not the Company is then required to file reports with the
Commission, the Company shall file with the Commission (if permitted) all such
reports and other information as it would be required to file with the
Commission by Sections 13(a) or 15(d) under the Securities Exchange Act of 1934
if it were subject thereto. The Company shall supply the Trustee and each Holder
or shall supply to the Trustee for forwarding
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to each such Holder, without cost to such Holder, copies of such reports and
other information (whether or not so filed).
EVENTS OF DEFAULT
The following events will be defined as "Events of Default" in the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at Stated Maturity, upon
acceleration, redemption or otherwise; (b) default in the payment of interest on
any Note when the same becomes due and payable, and such default continues for a
period of 30 days whether or not such payment is prohibited by the provisions
described above under "--Ranking; Subordination"; (c) default in the performance
or breach of the provisions of the Indenture applicable to mergers,
consolidations and transfers of all or substantially all of the assets of the
Company or the failure to comply for 30 days after notice of its obligation to
make an Offer to Purchase in accordance with the "Limitation on Asset Sales" or
"Repurchase of Notes upon a Change of Control" covenant; (d) the Company
defaults in the performance of or breaches any other covenant or agreement of
the Company in the Indenture or under the Notes (other than a default specified
in clause (a), (b) or (c) above) and such default or breach continues for a
period of 60 consecutive days after written notice by the Trustee or the Holders
of 25% or more in aggregate principal amount of the Notes; (e) there occurs with
respect to any issue or issues of Indebtedness of the Company or any Significant
Subsidiary having an outstanding principal amount of $10 million or more in the
aggregate for all such issues of all such Persons, whether such Indebtedness now
exists or shall hereafter be created, (I) an event of default that has caused
the holder thereof to declare such Indebtedness to be due and payable prior to
its Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 60 days of such
acceleration and/or (II) the failure to make a principal payment at the final
(but not any interim) fixed maturity and such defaulted payment shall not have
been made, waived or extended within the applicable grace period related to any
such payment default; (f) any final judgment or order (not covered by insurance)
for the payment of money in excess of $10 million in the aggregate for all such
final judgments or orders against all such Persons (treating any deductibles,
self-insurance or retention as not so covered) shall be rendered against the
Company or any Significant Subsidiary and shall not be paid or discharged, and
there shall be any period of 60 consecutive days following entry of the final
judgment or order that causes the aggregate amount for all such final judgments
or orders outstanding and not paid or discharged against all such Persons to
exceed $10 million during which a stay of enforcement of such final judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; (g) a
court having jurisdiction in the premises enters a decree or order for (A)
relief in respect of the Company or any Guarantor that would be a Significant
Subsidiary if the references to 10% in the definition of Significant Subsidiary
were 20% instead of 10% (a "Significant Guarantor") or any Significant
Subsidiary in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, (B) appointment of a receiver,
liquidation, assignee, custodian, trustee, sequestrator or similar official of
the Company or any Significant Guarantor or any Significant Subsidiary or for
all or substantially all of the property and assets of the Company or any
Significant Guarantor or any Significant Subsidiary or (C) the winding up or
liquidation of the affairs of the Company or any Significant Guarantor or any
Significant Subsidiary and, in each case, such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; (h) the Company or
any Significant Guarantor or any Significant Subsidiary (A) commences a
voluntary case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or consents to the entry of an order for relief in
an involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidation, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant Guarantor or
any Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Subsidiary or (C) effects any general
assignment for the benefit of creditors or (i) the Company or any Guarantor
disclaims any Note Guarantee or asserts that any Note Guarantee is not binding
on any Guarantor.
If an Event of Default (other than an Event of Default specified in clause
(g) or (h) above that occurs with respect to the Company or any Significant
Guarantor or any Significant Subsidiary) occurs and is continuing under the
Indenture, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes, then outstanding, by written notice to the Company (and to
the Trustee if such notice is given by
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the Holders), may, and the Trustee at the request of such Holders shall, declare
the principal of, premium, if any, and accrued interest on the Notes to be
immediately due and payable. Upon a declaration of acceleration, such principal
of, premium, if any, and accrued interest shall be immediately due and payable;
provided, however, that so long as the Credit Facility is in effect, such
declaration shall not become effective until the earlier of (A) five Business
Days after delivery of such notice to the representative of the Credit Facility
and (B) the acceleration of any Indebtedness under the Credit Facility. In the
event of a declaration of acceleration because an Event of Default set forth in
clause (e) above has occurred and is continuing, such declaration of
acceleration shall be automatically rescinded and annulled if the event of
default triggering such Event of Default pursuant to clause (e) shall be
remedied or cured by the Company or the relevant Significant Guarantor or the
relevant Significant Subsidiary or waived by the holders of the relevant
Indebtedness within 60 days after the declaration of acceleration with respect
thereto. If an Event of Default specified in clause (g) or (h) above occurs with
respect to the Company or any Significant Guarantor or any Significant
Subsidiary, the principal of, premium, if any, and accrued interest on the Notes
then outstanding shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
The Holders of at least a majority in principal amount of the outstanding Notes
by written notice to the Company and to the Trustee, may waive all past defaults
and rescind and annul a declaration of acceleration and its consequences if (i)
all existing Events of Default, other than the nonpayment of the principal of,
premium, if any, and interest on the Notes that have become due solely by such
declaration of acceleration, have been cured or waived and (ii) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction. For information as to the waiver of defaults, see "--Modification
and Waiver."
The Holders of at least a majority in aggregate principal amount of the
outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or the Indenture, that may involve the Trustee
in personal liability, or that the Trustee determines in good faith may be
unduly prejudicial to the rights of Holders of Notes not joining in the giving
of such direction and may take any other action it deems proper that is not
inconsistent with any such direction received from Holders of Notes. A Holder
may not pursue any remedy with respect to the Indenture or the Notes unless: (i)
the Holder gives the Trustee written notice of a continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of outstanding
Notes make a written request to the Trustee to pursue the remedy; (iii) such
Holder or Holders offer the Trustee indemnity satisfactory to the Trustee
against any costs, liability or expense; (iv) the Trustee does not comply with
the request within 60 days after receipt of the request and the offer of
indemnity; and (v) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Notes do not give the Trustee a
direction that is inconsistent with the request. However, such limitations do
not apply to the right of any Holder of an Note to receive payment of the
principal of, premium, if any, or interest on, such Note or to bring suit for
the enforcement of any such payment, on or after the due date expressed in the
Notes, which right shall not be impaired or affected without the consent of the
Holder.
The Indenture will require certain officers of the Company to certify, on
or before a date not more than 120 days after the end of each fiscal year, that
a review has been conducted of the activities of the Company and its Restricted
Subsidiaries and the Company's and its Restricted Subsidiaries' performance
under the Indenture and that the Company has fulfilled all obligations
thereunder, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default and the nature and status thereof. The
Company will also be obligated to notify the Trustee of any default or defaults
in the performance of any covenants or agreements under the Indenture.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company will not consolidate with, merge with or into, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all of its property
and assets (as an entirety or substantially an entirety in one transaction or a
series of related transactions) to, any Person or permit any Person to merge
with or into the Company unless: (i) the Company shall be the continuing Person,
or the Person (if other than the Company)
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formed by such consolidation or into which the Company is merged or that
acquired or leased such property and assets of the Company shall be a
corporation organized and validly existing under the laws of the United States
of America or any jurisdiction thereof and shall expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, all of the
obligations of the Company on all of the Notes and under the Indenture; (ii)
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; (iii) immediately after giving
effect to such transaction on a pro forma basis the Company, or any Person
becoming the successor obligor of the Notes, as the case may be, could Incur at
least $1.00 of Indebtedness under the first paragraph of the "Limitation on
Indebtedness" covenant; provided that this clause (iii) shall not apply to a
consolidation, merger or sale of assets of the Company if all Liens and
Indebtedness of the Company or any Person becoming the successor obligor on the
Notes, as the case may be, and its Restricted Subsidiaries outstanding
immediately after such transaction would, if Incurred at such time, have been
permitted to be Incurred (and all such Liens and Indebtedness, other than Liens
and Indebtedness of the Company and its Restricted Subsidiaries outstanding
immediately prior to the transaction, shall be deemed to have been Incurred) for
all purposes of the Indenture; and (iv) the Company delivers to the Trustee an
Officers' Certificate (attaching the arithmetic computations to demonstrate
compliance with clause (iii)) and an Opinion of Counsel, in each case stating
that such consolidation, merger or transfer and such supplemental indenture
complies with this provision and that all conditions precedent provided for
herein relating to such transaction have been complied with; provided, however,
that clauses (iii) and (iv) above do not apply if, in the good faith
determination of the Board of Directors of the Company, whose determination
shall be evidenced by a Board Resolution, the principal purpose of such
transaction is to change the state of incorporation of the Company; and provided
further that any such transaction shall not have as one of its purposes the
evasion of the foregoing limitations.
Notwithstanding the foregoing, (i) any Restricted Subsidiary of the Company
may consolidate with, merge into or transfer all or part of its properties and
assets to the Company and (ii) the Company may merge with an Affiliate
incorporated solely for the purpose of reincorporating the Company in another
jurisdiction to realize tax or other similar benefits.
Each Guarantor will not consolidate with, merge with or into, or sell,
convey, transfer, lease or otherwise dispose of all or substantially all of its
property and assets (as an entirety or substantially an entirety in one
transaction or a series of related transactions) to, any Person (other than the
Company or another Guarantor) or permit any Person to merge with or into it
unless: (i) such Guarantor shall be the continuing Person or (ii) the Person (if
other than such Guarantor) formed by such consolidation or into which such
Guarantor is merged or that acquired or leased such property and assets of such
Guarantor shall be a corporation organized and validly existing under the laws
of the United States of America or any jurisdiction thereof and shall expressly
assume, by a supplemental indenture, executed and delivered to the Trustee, all
of the obligations of such Guarantor's Note Guarantee. Notwithstanding the
foregoing sentence, a Guarantor shall be discharged and released from all of its
obligations under its Note Guarantee if all or substantially all of its assets
are sold, or all of its Capital Stock is sold, in each case in a transaction in
compliance with the "Limitation on Asset Sales" covenant.
DEFEASANCE
Defeasance and Discharge. The Indenture will provide that the Company will
be deemed to have paid and will be discharged from any and all obligations in
respect of the Notes on the 123rd day after the deposit referred to below, and
the provisions of the Indenture will no longer be in effect with respect to the
Notes (except for, among other matters, certain obligations to register the
transfer or exchange of the Notes, to replace stolen, lost or mutilated Notes,
to maintain paying agencies and to hold monies for payment in trust) if, among
other things, (A) the Company has deposited with the Trustee, in trust, money
and/or Government Securities that through the payment of interest and principal
in respect thereof in accordance with their terms will provide money in an
amount sufficient to pay the principal of, premium, if any, and accrued interest
on the Notes on the Stated Maturity of such payments in accordance with the
terms of the Indenture and the Notes, (B) the Company has delivered to the
Trustee (i) either (x) an Opinion of Counsel to the effect that Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
the Company's exercise of
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its option under this "Defeasance' provision and will be subject to federal
income tax on the same amount and in the same manner and at the same times as
would have been the case if such deposit, defeasance and discharge had not
occurred, which Opinion of Counsel must be based upon (and accompanied by a copy
of) a ruling of the Internal Revenue Service to the same effect unless there has
been a change in applicable federal income tax law after the Closing Date such
that a ruling is no longer required or (y) a ruling directed to the Trustee
received from the Internal Revenue Service to the same effect as the
aforementioned Opinion of Counsel and (ii) an Opinion of Counsel to the effect
that the creation of the defeasance trust does not violate the Investment
Company Act of 1940 and after the passage of 123 days following the deposit, the
trust fund will not be subject to the effect of Section 547 of the United States
Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law, (C)
immediately after giving effect to such deposit on a pro forma basis, no Event
of Default, or event that after the giving of notice or lapse of time or both
would become an Event of Default, shall have occurred and be continuing on the
date of such deposit or during the period ending on the 123rd day after the date
of such deposit, and such deposit shall not result in a breach or violation of,
or constitute a default under, any other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound and (D) if at such time the Notes are listed on a
national securities exchange, the Company has delivered to the Trustee an
Opinion of Counsel to the effect that the Notes will not be delisted as a result
of such deposit, defeasance and discharge.
Defeasance of Certain Covenants and Certain Events of Default. The
Indenture further will provide that the provisions of the Indenture will no
longer be in effect with respect to clauses (iii) and (iv) under "Consolidation,
Merger and Sale of Assets" and all the covenants described herein under
"Covenants," clause (c) under "Events of Default" with respect to such clauses
(iii) and (iv) under "Consolidation, Merger and Sale of Assets," clause (d)
under "Events of Default" with respect to such other covenants and clauses (e)
and (f) under "Events of Default" shall be deemed not to be Events of Default
upon, among other things, the deposit with the Trustee, in trust, of money
and/or Government Securities that through the payment of interest and principal
in respect thereof in accordance with their terms will provide money in an
amount sufficient to pay the principal of, premium, if any, and accrued interest
on the Notes on the Stated Maturity of such payments in accordance with the
terms of the Indenture and the Notes, the satisfaction of the provisions
described in clauses (B)(ii), (C) and (D) of the preceding paragraph and the
delivery by the Company to the Trustee of an Opinion of Counsel to the effect
that, among other things, the Holders will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit and defeasance of
certain covenants and Events of Default and will be subject to federal income
tax on the same amount and in the same manner and at the same times as would
have been the case if such deposit and defeasance had not occurred.
Defeasance and Certain Other Events of Default. In the event the Company
exercises its option to omit compliance with certain covenants and provisions of
the Indenture with respect to the Notes as described in the immediately
preceding paragraph and the Notes are declared due and payable because of the
occurrence of an Event of Default that remains applicable, the amount of money
and/or Government Securities on deposit with the Trustee will be sufficient to
pay amounts due on the Notes at the time of their Stated Maturity but may not be
sufficient to pay amounts due on the Notes at the time of the acceleration
resulting from such Event of Default. However, the Company will remain liable
for such payments.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company,
the Guarantors and the Trustee with the consent of the Holders of not less than
a majority in aggregate principal amount of the outstanding Notes and any
provisions may be waived with the consent of the Holders of not less than a
majority in aggregate principal amount of the outstanding Notes; provided,
however, that no such modification or amendment may, without the consent of each
Holder affected thereby, (i) change the Stated Maturity of the principal of, or
any installment of interest on, any Note, (ii) reduce the principal amount of,
or premium, if any, or interest on, any Note, (iii) change the currency of
payment of principal of, or premium, if any, or interest on, any Note, (iv)
impair the right to institute suit for the enforcement of any payment on or
after the Stated Maturity (or, in the case of a redemption, on or after the
Redemption Date) of any Note, (v) reduce
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the above-stated percentage of outstanding Notes the consent of whose Holders is
necessary to modify or amend the Indenture, (vi) waive a default in the payment
of principal of, premium, if any, or interest on the Notes, (vii) reduce the
percentage or aggregate principal amount of outstanding Notes the consent of
whose Holders is necessary for waiver of compliance with certain provisions of
the Indenture or for waiver of certain defaults or (viii) remove the Note
Guarantee of any Guarantor.
NO PERSONAL LIABILITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS, OR
EMPLOYEES
The Indenture provides that no recourse for the payment of the principal
of, premium, if any, or interest on any of the Notes or for any claim based
thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in the Indenture, or in any of
the Notes or because of the creation of any Indebtedness represented thereby,
shall be had against any incorporator, stockholder, officer, director, employee
or controlling person of the Company or of any successor Person thereof. Each
Holder, by accepting the Notes, waives and releases all such liability.
NOTICES
All notices regarding the Notes will be deemed to have been duly given upon
(i) the mailing by first-class mail, postage prepaid, of such notices to each
holder at the address of such holder as it appears in the Security Register, in
each case not earlier than the earliest date and not later than the latest date
prescribed in the Indenture for the giving of such notice. In addition, so long
as the Notes are listed on the Luxembourg Stock Exchange and it is required by
the rules of the Luxembourg Stock Exchange, such notices shall be published in
English in a leading newspaper having general circulation in Luxembourg (which
is expected to be the Luxembourger Wort) or if in any such case this is not
practicable, in one other leading English language daily newspaper with general
circulation in Europe, such newspaper being published on each Business Day in
morning editions, whether or not it shall be published in Saturday, Sunday or
holiday editions. Notice so mailed shall be deemed to have been given on the
date of such mailing.
CONCERNING THE TRUSTEE
The Indenture provides that, except during the continuance of a Default,
the Trustee will not be liable, except for the performance of such duties as are
specifically set forth in such Indenture. If an Event of Default has occurred
and is continuing, the Trustee will use the same degree of care and skill in its
exercise of the rights and powers vested in it under the Indenture as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs.
The Indenture and provisions of the Trust Indenture Act of 1939, as
amended, incorporated by reference therein contain limitations on the rights of
the Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions; provided, however, that if it acquires any
conflicting interest, it must eliminate such conflict or resign.
AGENTS
For so long as the Notes are listed on the Luxembourg Stock Exchange and
the rules of such exchange shall so require, the Company shall maintain a paying
agent and a transfer agent in Luxembourg.
BOOK-ENTRY; DELIVERY AND FORM
Exchange Notes will be issued in the form of one or more registered notes
in global form, without interest coupons (collectively, the "Global Notes"). The
Global Notes will be deposited on the date of the closing of the Exchange Offer
with, or on behalf of, The Depository Trust Company ("DTC") and will remain in
the custody of the Trustee as custodian for DTC. The Global Notes will be
registered in the name of a nominee of DTC.
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Except as set forth below, the Global Notes may be transferred, in whole
and not in part, solely to another nominee of DTC or to a successor of DTC or
its nominee. Beneficial interests in the Global Notes may not be exchanged for
Notes in physical, certificated form ("Certificated Notes") except in the
limited circumstances described below.
All interests in the Global Notes may be subject to the procedures and
requirements of DTC.
Ownership of beneficial interests in a Global Note will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in the Global
Notes will be shown on, and the transfer of that ownership will be effected only
through, records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants). Holders of Notes may hold their interests in
the Global Notes directly through DTC if they are participants in such system,
or indirectly through organizations which are participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Global Notes, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Notes represented by the Global Notes for all
purposes under the Indenture and the Notes. No beneficial owner of an interest
in the Global Notes will be able to transfer that interest except in accordance
with DTC's applicable procedures, in addition to those provided for under the
Indenture and, if applicable, those of Euroclear and Cedel Bank.
Payments of the principal of, and interest on, the Global Notes will be
made to DTC or its nominee, as the case may be, as the registered owner thereof.
Neither the Company, the Trustee nor any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of the Global Notes, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of the Global Notes as shown on the records of
DTC or its nominee. The Company also expects that payments by participants to
owners of beneficial interests in the Global Notes held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in the names of nominees for such customers. Such payments will be the
responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds. If
applicable, transfers between participants in Euroclear and Cedel Bank will be
effected in the ordinary way in accordance with their respective rules and
operating procedures.
The Company expects that DTC will take any action permitted to be taken by
a holder of Notes (including the presentation of Notes for exchange as described
below) only at the direction of one or more participants to whose account the
DTC interests in the Global Notes is credited and only in respect of such
portion of the aggregate principal amount of Notes as to which such participant
or participants has or have given such direction. However, if there is an Event
of Default under the Notes, DTC will exchange the Global Notes for Certificated
Notes, which it will distribute to its participants.
The Company understands that: DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization'
within the meaning of New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "Clearing Agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC was created to hold securities for its participants
and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of certificates
and certain other organizations. Indirect access to the DTC system is available
to others such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly ("indirect participants").
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<PAGE> 98
Although DTC, Euroclear and Cedel Bank are expected to follow the foregoing
procedures in order to facilitate transfers of interests in the Global Notes
among participants of DTC, Euroclear and Cedel Bank, they are under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Company nor the Trustee
will have any responsibility for the performance by DTC, Euroclear or Cedel Bank
or their respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
If DTC is at any time unwilling or unable to continue as a depositary for
the Global Notes and a successor depositary is not appointed by the Company
within 90 days, the Company will issue Certificated Notes in exchange for the
Global Notes. Holders of an interest in the Global Notes may receive
Certificated Notes in accordance with the DTC's rules and procedures in addition
to those provided for under the Indenture.
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<PAGE> 99
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Original Notes where such Original Notes were acquired as a result
of market-making or other trading activities; however, this Prospectus may not
be used for resales of Notes acquired directly from the Company. The Company has
agreed that, for a period ending on the earlier to occur of 180 days after the
Expiration Date or the time when all persons subject to the prospectus delivery
requirements of the Securities Act have sold all Exchange Notes held by them, it
will make this Prospectus, as it may be amended or supplemented form time to
time, available to any broker-dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. Any
broker-dealer that resells Exchange Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit of any
such resale of Exchange Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period ending on the earlier to occur of 180 days after the
Expiration Date or the time when all persons subject to the prospectus delivery
requirements of the Securities Act have sold all Exchange Notes held by them,
the Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents. The Company has agreed to pay all expenses incident to the
Exchange Offer and to the Company's performance of, or compliance with, the
Registration Rights Agreement (other than commissions or concessions of any
brokers or dealers) and will indemnify the holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
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CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
The following is a summary of certain United States federal tax
consequences to initial purchasers of the Original Notes of (i) the exchange of
the Original Notes for the Exchange Notes and (ii) the ownership and disposition
of the Exchange Notes by a Non-United States Holder (as defined below). Except
where noted, the summary deals only with Exchange Notes held as capital assets
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended (the "Code"). As used herein, the term "Non-United States Holder" means
an owner of an Exchange Note that is, for United States federal income tax
purposes, (i) a nonresident alien individual, (ii) a foreign corporation, (iii)
a nonresident alien fiduciary of a foreign estate or trust or (iv) a foreign
partnership one or more of the members of which is, for United States federal
income tax purposes, a nonresident alien individual, a foreign corporation or a
nonresident alien fiduciary of a foreign estate or trust.
The following summary is based upon the provisions of the Code, and on
regulations, rulings and judicial decisions thereunder as of the date hereof,
and does not address any state, local or foreign tax consequences. This summary
does not discuss all aspects of United States federal taxation which may be
important to particular holders in light of their individual investment
circumstances, such as Exchange Notes held by investors subject to special tax
rules (e.g. financial institutions, insurance companies, broker-dealers, tax-
exempt organizations and private foundations) or to persons that will hold the
Exchange Notes as part of a straddle, hedge, or synthetic security transaction
for United States federal income tax purposes, all of whom may be subject to tax
rules that differ significantly from those summarized below. Special rules may
also apply to certain Non-United States Holders, such as "controlled foreign
corporations," "passive foreign investment companies" and "foreign personal
holding companies." Finally, prospective holders of Exchange Notes should be
aware that tax laws frequently change. When these changes occur, the statutes,
regulations, rulings and judicial decisions giving rise to such changes may have
a retroactive effect. Accordingly, there can be no assurance that future changes
in such tax laws will not cause the consequences of the exchange of the Original
Notes for the Exchange Notes or the ownership and disposition of the Exchange
Notes to differ significantly from the consequences summarized below. HOLDERS OF
EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED
STATES FEDERAL TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL
AS ANY CONSEQUENCES ARISING UNDER ANY STATE, LOCAL, FOREIGN OR OTHER LAWS OR ANY
APPLICABLE TAX TREATIES, WHICH MAY PROVIDE FOR A LOWER RATE OF WITHHOLDING TAX,
EXEMPTION FROM OR REDUCTION OF BRANCH PROFITS TAX, OR OTHER RULES DIFFERENT FROM
THOSE DESCRIBED BELOW.
EXCHANGE OFFER
The exchange of Original Notes for Exchange Notes pursuant to the Exchange
Offer should be treated as a continuation of the corresponding Original Notes
because the terms of the Exchange Notes are not materially different from the
terms of the Original Notes. Accordingly, such exchange should not constitute a
taxable event and, therefore, (i) no gain or loss should be realized upon
receipt of an Exchange Note, (ii) the holding period of the Exchange Note should
include the holding period of the Original Note exchanged therefor and (iii) the
adjusted tax basis of the Exchange Note should be the same as the adjusted tax
basis of the Original Note exchanged therefor immediately before the exchange.
NON-UNITED STATES HOLDERS
Non-United States Withholding Tax
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) no United States federal withholding tax will be imposed with
respect to the payment by the Company or its paying agent of principal,
premium, if any, or interest on an Exchange Note owned by a Non-United
States Holder (the "Portfolio Interest Exception"), provided that (i) such
Non-United States Holder does not actually or constructively own 10% or
more of the total combined voting power of
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<PAGE> 101
all classes of stock of the Company entitled to vote within the meaning of
section 871(h)(3) of the Code and the regulations thereunder, (ii) such
Non-United States Holder is not a controlled foreign corporation that is
related, directly or indirectly, to the Company through stock ownership,
(iii) such Non-United States Holder is not a bank whose receipt of interest
on an Exchange Note is described in section 881(c)(3)(A) of the Code and
(iv) such Non-United States Holder satisfies the statement requirement
(described generally below) set forth in section 871(h) and section 881(c)
of the Code and the regulations thereunder.
(b) no United States federal withholding tax will be imposed generally
with respect to any gain or income realized by a Non-United States Holder
upon the sale, exchange, redemption, retirement or other disposition of an
Exchange Note; and
(c) an Exchange Note beneficially owned by an individual who at the
time of death is a Non-United States Holder will not be subject to United
States federal estate tax as a result of such individual's death, provided
that such individual does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of the Company
entitled to vote within the meaning of Section 871(h)(3) of the Code and
provided that the interest payments with respect to such Exchange Note
would not have been, if received at the time of such individual's death,
effectively connected with the conduct of a United States trade or business
by such individual.
To satisfy the requirement referred to in (a)(iv) above, the beneficial
owner of such Exchange Note, or a financial institution holding the Exchange
Note on behalf of such owner, must provide, in accordance with specified
procedures, a paying agent of the Company with a statement to the effect that
the beneficial owner is not a United States person (as defined in the Code).
These requirements will be met if (1) the beneficial owner provides his name and
address, and certifies, under penalties of perjury, that he is not a United
States person (which certification may be made on an Internal Revenue Service
("IRS") Form W-8 (or substitute form)) or (2) a financial institution holding
the Exchange Note on behalf of the beneficial owner certifies, under penalties
of perjury, that such statement has been received by it and furnishes the
Company or its paying agent, as the case may be, with a copy thereof.
With respect to Exchange Notes held by a foreign partnership, under current
law, the Form W-8 may be provided by the foreign partnership. However, for
interest and disposition proceeds paid with respect to a Note after December 31,
1999, unless the foreign partnership has entered into a withholding agreement
with the IRS, a foreign partnership will be required, in addition to providing
an intermediary Form W-8, to attach an appropriate certification by each
partner. Prospective investors, including foreign partnerships and their
partners, should consult their tax advisors regarding possible additional
reporting requirements.
If a Non-United States Holder cannot satisfy the requirements of the
Portfolio Interest Exception described in (a) above, payments on an Exchange
Note made to such Non-United States Holder will be subject to a 30% withholding
tax unless the beneficial owner of the Exchange Note provides the Company or its
paying agent, as the case may be, with a properly executed (1) IRS Form 1001 (or
substitute form) claiming an exemption from or reduction of withholding tax
under the benefit of a tax treaty or (2) IRS Form 4224 (or substitute form)
stating that interest paid on the Exchange Note is not subject to withholding
tax because it is effectively connected with the beneficial owner's conduct of a
trade or business in the United States.
Treasury Regulations ("New Regulations") were recently issued that modify
the requirements imposed on a Non-United States Holder and certain
intermediaries for establishing the recipient's status as a Non-United States
Holder eligible for exemption from or reduction in United States withholding tax
and backup withholding (described below). In general, the New Regulations do not
significantly alter the substantive withholding and information reporting
requirements but rather unify current certification procedures and forms and
clarify reliance standards. The New Regulations are generally effective for
payments made after December 31, 1999, subject to certain transition rules. In
addition, the New Regulations impose different conditions on the ability of
financial intermediaries acting for a Non-United States Holder to provide
certifications on behalf of the Non-United States Holder, which may include
entering into an agreement with the IRS to audit certain documentation with
respect to such certifications. The Company or its paying agent may request new
withholding tax exemption forms from Non-United States Holders in order to
qualify for
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<PAGE> 102
continued exemption from withholding tax under the New Regulations when they
become effective. Non-United States Holders should consult their own tax
advisors to determine the effects of the application of the New Regulations to
their particular circumstances.
If a Non-United States Holder is engaged in a trade or business in the
United States and if interest on an Exchange Note is effectively connected with
the conduct of such trade or business, the Non-United States Holder, although
generally exempt from United States federal withholding tax if certain
procedures are followed as discussed above, will be subject to United States
federal income tax on such interest on a net income basis in the same manner as
if the holder were a United States holder. In addition, if such holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30% or
applicable lower tax treaty rate on its effectively connected earnings and
profits for the taxable year, subject to adjustments. For this purpose, interest
on an Exchange Note will be included in such foreign corporation's effectively
connected earnings and profits.
Any gain or income realized upon the sale, exchange, retirement or other
disposition of an Exchange Note by a Non-United States Holder generally will not
be subject to United States federal income tax unless (i) such gain or income is
effectively connected with a trade or business in the United States of the Non-
United States Holder, (ii) in the case of a Non-United States Holder who is an
individual, such individual is present in the United States for 183 days or more
in the taxable year of such sale, exchange, retirement or other disposition, and
certain other conditions are met, or (iii) the Non-United States Holder is
subject to tax pursuant to the provisions of United States tax law applicable to
certain United States expatriates.
Information Reporting and Backup Withholding
No information reporting or backup withholding will be required with
respect to payments made by the Company or its paying agent to Non-United States
Holders if a statement described in (a)(iv) above has been received and the
payor does not have actual knowledge that the beneficial owner is a United
States person.
In addition, backup withholding and information reporting will not apply if
payments on an Exchange Note are paid or collected by a foreign office of a
custodian, nominee or other foreign agent on behalf of the beneficial owner of
such Exchange Note, or if a foreign office of a broker (as defined in applicable
United States Treasury regulations) pays the proceeds of the sale of an Exchange
Note to the owner thereof. If, however, such nominee, custodian, agent or broker
is, for United States federal income tax purposes, a United States person, a
controlled foreign corporation or a foreign person that derives 50% or more of
its gross income for certain periods from the conduct of a trade or business in
the United States, such payments will be subject to information reporting (but
not backup withholding), unless (1) such custodian, nominee, agent or broker has
documentary evidence in its records that the beneficial owner is not a United
States person and certain other conditions are met or (2) the beneficial owner
otherwise establishes an exemption.
Payments on an Exchange Note paid to the beneficial owner of an Exchange
Note by a United States office of a custodian nominee or agent, or the payment
by the United States office of a broker of the proceeds of sale of an Exchange
Note, will be subject to both backup withholding at a rate of 31% and
information reporting unless the beneficial owner provides the statement
referred to in (a)(iv) above and the payor does not have actual knowledge that
the beneficial owner is a United States person or otherwise establishes an
exemption.
Recently issued Treasury regulations modify certain of the certification
and other requirements for backup withholding. These modifications will become
generally effective beginning January 1, 2000. It is possible that the Company
or its paying agent may request new withholding exemption forms from holders in
order to qualify for continued exemption from backup withholding under Treasury
regulations when they become effective.
Any amounts withheld under the backup withholding rules will be credited
toward such Non-United States Holder's United States federal income tax
liability, if any. To the extent that the amounts withheld exceed the Non-United
States Holder's tax liability, the excess may be refunded to the Non-United
States Holder provided the required information is furnished to the IRS. In
addition to providing the necessary information, the Non-United States Holder
must file a United States tax return in order to obtain a refund of the excess
backup withholding.
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LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon for
the Company by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts, special
counsel to the Company. Certain partners and associates of Testa, Hurwitz &
Thibeault, LLP, are the beneficial owners, in the aggregate, of 700 shares of
Common Stock of the Company. James C. Hamilton, a partner at Hamilton & Dahmen,
LLP, which is general counsel to the Company, is the Company's Clerk. He is the
beneficial owner of 8,910 shares of Common Stock of the Company. He is also the
co-trustee of certain irrevocable trusts for the benefit of members of the
family of Horace H. Irvine II, Chairman of the Board of the Company.
EXPERTS
The Company's audited consolidated financial statements and schedule
included in this Prospectus and elsewhere in this Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in its reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
The consolidated financial statements of Continental Circuits Corp. as of
July 31, 1997 and 1996 and for each of the three years in the period ended July
31, 1997, included in this Prospectus, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report appearing elsewhere herein,
and are included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company and the Guarantors have filed with the Commission a
Registration Statement on Form S-4 (together with all amendments, exhibits and
schedules thereto, the "Registration Statement") under the Securities Act with
respect to the Exchange Notes offered hereby. This Prospectus, which constitutes
part of the Registration Statement, does not contain all the information set
forth in the Registration Statement and the exhibit and schedules thereto,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission, and to which reference is hereby made. Statements contained
in this Prospectus as to the contents of the any contract or any other document
referred to are not necessarily complete. Reference is made to such contract or
other document filed, or incorporated by reference, as an exhibit to the
Registration Statement, and each such statement is qualified in all respects by
such reference.
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. The Registration Statement and all such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following regional offices of the Commission: 7 World Trade Center, 13th Floor,
New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such materials may also be
obtained from the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its
public reference facilities at New York, New York and Chicago, Illinois at
prescribed rates. The Company's common stock is listed on the Nasdaq National
Market Exchange, under the symbol "HDCO." In addition, the aforementioned
materials may also be inspected at the offices of the Nasdaq National Market at
1735 K Street, N.W., Washington, D.C. 20006. The Commission maintains a Web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the Commission's Web site is http://www.sec.gov.
The Indenture pursuant to which the Original Notes were, and the Exchange
Notes will be, issued requires the Company, whether or not it is then required
to file reports with the Commission, to so file such reports and other
information as it would be required to file by Sections 13(a) or 15(d) under the
Securities Exchange Act of 1934, as amended, if it were subject thereto. In
addition, the Company has agreed to supply the Trustee and each holder of Notes
with copies of such reports and other information including annual reports
containing audited consolidated financial statements of the Company, audited by
its independent
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public accountants, and quarterly reports containing unaudited condensed
consolidated financial data for the first three quarters of each fiscal year.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") are hereby incorporated by
reference into this Prospectus: (i) Annual Report on Form 10-K for the fiscal
year ended October 25, 1997; (ii) Quarterly Reports on Form 10-Q for the fiscal
quarters ended January 31, 1998 and May 2, 1998 and on Form 10-Q/A for the
fiscal quarter ended May 2, 1998; (iii) Current Reports on Form 8-K dated
February 17, 1998, February 20, 1998, May 1, 1998 and May 14, 1998; and (iv)
Current Report on Form 8-K dated March 20, 1998, as amended by Current Report on
Form 8-K/A dated May 1, 1998.
All documents subsequently filed by Hadco pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the Exchange Offer shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
such documents. Any statement contained herein or in a document incorporated by
reference or deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that such
statement is modified or superseded by any other subsequently filed document
which is incorporated or is deemed to be incorporated by reference herein. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. Hadco hereby undertakes to provide without charge
to each person, including any beneficial owner, to whom this Prospectus has been
delivered, on the written or oral request of such person, a copy of any or all
of the documents referred to above which have been or may be incorporated into
this Prospectus and deemed to be part hereof, other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference in
such documents. These documents are available upon request from Timothy P.
Losik, Senior Vice President, Chief Financial Officer and Treasurer, Hadco
Corporation, 12A Manor Parkway, Salem, New Hampshire 03079, (603) 898-8000.
LISTING AND GENERAL INFORMATION
The Original Notes have been accepted for clearance through the Euroclear
and Cedel Bank clearance systems. Application will be made to list the Notes on
the Luxembourg Stock Exchange. The Original Notes have been designated eligible
for trading in the PORTAL market.
In connection with the application to list the Notes on the Luxembourg
Stock Exchange, a legal notice relating to the issuance of the Notes and copies
of the Restated Articles of Organization, as amended, of the Company will be
deposited with the Registrar of the District Court of Luxembourg (Greffier en
Chef du Tribunal d'Arrondissement de et a Luxembourg) where such documents may
be examined and copies obtained.
Copies of the Restated Articles of Organization, as amended, of the
Company, the Registration Rights Agreement and the Indenture (including the
forms of Notes) will, so long as the Notes are listed on the Luxembourg Stock
Exchange, be available for inspection in the City of Luxembourg at the office of
the Luxembourg Paying Agent. In addition, so long as the Notes are listed on the
Luxembourg Stock Exchange, copies of the most recent audited annual and interim
unaudited financial statements of the Company may be obtained at that office.
In addition to being mailed to holders, copies of all notices to holders of
the Notes will be published in the Luxemburger Wort, so long as the Notes are
listed on the Luxembourg Stock Exchange and the rules of that exchange so
require.
Trades on the Luxembourg Stock Exchange must be capable of being settled
through Cedel Bank or Euroclear.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
HADCO CORPORATION:
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheets as of October 26, 1996 and
October 25, 1997 and May 2, 1998 (Unaudited).............. F-3
Consolidated Statements of Operations for the Years Ended
October 28, 1995, October 26, 1996 and October 25, 1997
and for the Six Months Ended April 26, 1997 (Unaudited)
and May 2, 1998 (Unaudited)............................... F-4
Consolidated Statements of Stockholders' Investment for the
Years Ended October 28, 1995, October 26, 1996 and October
25, 1997 and for the Six Months Ended May 2, 1998
(Unaudited)............................................... F-5
Consolidated Statements of Cash Flows for the Years Ended
October 28, 1995, October 26, 1996 and October 25, 1997
and for the Six Months Ended April 26, 1997 (Unaudited)
and May 2, 1998 (Unaudited)............................... F-6
Notes to Consolidated Financial Statements.................. F-7
CONTINENTAL CIRCUITS CORP.:
Report of Independent Auditors.............................. F-32
Consolidated Balance Sheets as of July 31, 1996 and 1997 and
January 31, 1998 (Unaudited).............................. F-33
Consolidated Statements of Income for the Years Ended July
31, 1995, 1996 and 1997 and the Six Months Ended February
2, 1997 (Unaudited) and January 31, 1998 (Unaudited)...... F-34
Consolidated Statements of Cash Flows for the Years Ended
July 31, 1995, 1996 and 1997 and the Six Months Ended
February 2, 1997 (Unaudited) and January 31, 1998
(Unaudited)............................................... F-35
Consolidated Statements of Shareholders' Equity for the
Years Ended July 31, 1995, 1996 and 1997 and the Six
Months Ended January 31, 1998 (Unaudited)................. F-36
Notes to Consolidated Financial Statements.................. F-37
</TABLE>
F-1
<PAGE> 106
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hadco Corporation:
We have audited the accompanying consolidated balance sheets of Hadco
Corporation (a Massachusetts corporation) and subsidiaries as of October 26,
1996 and October 25, 1997, and the related consolidated statements of
operations, stockholders' investment and cash flows for each of the three years
in the period ended October 25, 1997. 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 Hadco Corporation and
subsidiaries as of October 26, 1996 and October 25, 1997, and the results of
their operations and their cash flows for each of the three years in the period
ended October 25, 1997, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 14, 1997
F-2
<PAGE> 107
HADCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
<TABLE>
<CAPTION>
OCTOBER 26, OCTOBER 25, MAY 2,
1996 1997 1998
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.............................. $ 32,786 $ 12,171 $ 4,997
Short-term investments................................. 9,401 1,562 --
Accounts receivable, net of allowance for doubtful
accounts of $1,100 in 1996, $1,700 in 1997, and
$2,589 in 1998, respectively........................ 40,622 92,222 114,352
Inventories............................................ 21,786 46,000 75,095
Deferred tax asset..................................... 7,483 10,483 20,106
Prepaid expenses and other current assets.............. 1,483 4,245 8,058
-------- -------- --------
Total current assets........................... 113,561 166,683 222,608
Property, Plant and Equipment, net....................... 103,735 231,490 318,335
Deferred Tax Asset....................................... 2,117 -- --
Acquired Intangible Assets, net.......................... -- 101,131 195,026
Other Assets............................................. 88 3,213 3,472
-------- -------- --------
$219,501 $502,517 $739,441
======== ======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt...................... $ 1,907 $ 5,064 $ 4,837
Accounts payable....................................... 42,265 68,594 74,169
Accrued payroll and other employee benefits............ 17,592 28,279 29,246
Accrued taxes.......................................... -- 1,775 494
Other accrued expenses................................. 8,236 9,278 15,229
-------- -------- --------
Total current liabilities...................... 70,000 112,990 123,975
-------- -------- --------
Long-term Debt, net of current portion................... 1,515 109,716 359,037
-------- -------- --------
Deferred Tax Liability................................... -- 30,685 51,668
-------- -------- --------
Other Long-term Liabilities.............................. 9,145 9,214 9,192
-------- -------- --------
Commitments and Contingencies (Note 9)
Stockholders' Investment:
Common stock, $.05 par value;
Authorized -- 50,000 shares
Issued and outstanding -- 10,382 shares in 1996,
13,086 shares in 1997 and 13,212 shares in 1998... 521 655 662
Paid-in Capital........................................ 30,939 168,246 171,466
Deferred Compensation.................................. (240) (117) (75)
Retained Earnings...................................... 107,621 71,128 23,516
-------- -------- --------
Total stockholders' investment................. 138,841 239,912 195,569
-------- -------- --------
$219,501 $502,517 $739,441
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 108
HADCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS ENDED
----------------------------------------- -------------------------
OCTOBER 28, OCTOBER 26, OCTOBER 25, APRIL 26, MAY 2,
1995 1996 1997 1997 1998
----------- ----------- ----------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net Sales.......................... $265,168 $350,685 $648,705 $292,198 $407,863
Cost of Sales...................... 197,728 260,230 507,313 227,358 332,065
-------- -------- -------- -------- --------
Gross Profit..................... 67,440 90,455 141,392 64,840 75,798
Operating Expenses................. 33,534 38,923 64,586 28,819 39,310
Restructuring and Other
Non-Recurring Charges............ -- -- -- -- 5,947
Write-off of Acquired In-Process
Research and Development......... -- -- 78,000 78,000 63,050
-------- -------- -------- -------- --------
Income (Loss) From Operations.... 33,906 51,532 (1,194) (41,979) (32,509)
Interest and Other Income.......... 1,669 1,287 3,296 806 1,377
Interest Expense................... (537) (338) (10,923) (5,251) (6,294)
-------- -------- -------- -------- --------
Income (Loss) Before Provision
for Income Taxes.............. 35,038 52,481 (8,821) (46,424) (37,426)
Provision for Income Taxes......... 13,664 20,467 27,672 12,788 10,186
-------- -------- -------- -------- --------
Net Income (Loss)................ $ 21,374 $ 32,014 $(36,493) $(59,212) $(47,612)
======== ======== ======== ======== ========
Net Income (Loss) Per Share:
Basic............................ $ 2.18 $ 3.12 $ (3.18) $ (5.67) $ (3.63)
======== ======== ======== ======== ========
Diluted.......................... $ 1.98 $ 2.89 $ (3.18) $ (5.67) $ (3.63)
======== ======== ======== ======== ========
Weighted Average Shares
Outstanding:
Basic............................ 9,805 10,245 11,458 10,435 13,130
======== ======== ======== ======== ========
Diluted.......................... 10,806 11,084 11,458 10,435 13,130
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 109
HADCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
---------------------
NUMBER $.05 PAR PAID-IN DEFERRED RETAINED
OF SHARES VALUE CAPITAL COMPENSATION EARNINGS
--------- -------- -------- ------------ --------
<S> <C> <C> <C> <C> <C>
Balance, October 29, 1994............ 9,738 $487 $ 22,763 $(731) $ 54,921
Terminated stock options........... -- -- (37) 37 --
Exercise of stock options.......... 529 16 1,079 -- --
Tax benefit of exercise of
non-qualified stock options..... -- -- 1,597 -- --
Compensation expense associated
with granting non-qualified
stock options................... -- -- -- 287 --
Purchase and retirement of common
stock........................... (328) (6) (325) -- (688)
Net income......................... -- -- -- -- 21,374
------ ---- -------- ----- --------
Balance, October 28, 1995............ 9,939 497 25,077 (407) 75,607
Terminated stock options........... -- -- (13) 13 --
Exercise of stock options.......... 443 24 1,714 -- --
Tax benefit of exercise of
non-qualified stock options..... -- -- 4,161 -- --
Compensation expense associated
with granting non-qualified
stock options................... -- -- -- 154 --
Net income......................... -- -- -- -- 32,014
------ ---- -------- ----- --------
Balance, October 26, 1996............ 10,382 521 30,939 (240) 107,621
Terminated stock options........... -- -- (2) 2 --
Exercise of stock options.......... 263 12 1,291 -- --
Tax benefit of exercise of
non-qualified stock options..... -- -- 5,052 -- --
Compensation expense associated
with granting non-qualified
stock options................... -- -- -- 121 --
Sale of common shares in stock
offering, net of offering costs
of $1,033....................... 2,442 122 130,966 -- --
Net loss........................... -- -- -- -- (36,493)
------ ---- -------- ----- --------
Balance, October 25, 1997............ 13,087 655 168,246 (117) 71,128
Exercise of stock options
(unaudited)..................... 85 5 471 -- --
Compensation expense associated
with granting non-qualified
stock options (unaudited)....... -- -- -- 42 --
Tax benefit of exercise of
non-qualified stock options
(unaudited)..................... -- -- 1,271 -- --
Sale of Common Stock (unaudited)... 40 2 1,478 -- --
Net income (unaudited)............. -- -- -- -- (47,612)
------ ---- -------- ----- --------
Balance, May 2, 1998 (Unaudited)..... 13,212 $662 $171,466 $ (75) $ 23,516
====== ==== ======== ===== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 110
HADCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
FOR THE YEARS ENDED ENDED
--------------------------------------- ---------------------
OCTOBER 28, OCTOBER 26, OCTOBER 25, APRIL 26, MAY 2,
1995 1996 1997 1997 1998
----------- ----------- ----------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (loss)........................................ $ 21,374 $ 32,014 $ (36,493) $ (59,212) $ (47,612)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Write off of acquired in-process research and
development.......................................... -- -- 78,000 78,000 63,050
Depreciation, amortization, deferred compensation and
deferred taxes....................................... 11,218 17,330 40,972 16,679 31,425
Gain on sale of fixed assets............................... (415) (205) (1,862) -- 1,749
Changes in assets and liabilities, net of acquisition of
Zycon Corporation in 1997 and Continental Circuits Corp.
in 1998 -- 1,890
(Increase) decrease in accounts receivable............... (10,485) (4,825) (26,762) (19,698) (5,664)
Increase in inventories.................................. (3,009) (8,482) (12,824) (4,122) (17,665)
(Increase) decrease in prepaid expenses and other
expenses............................................... (364) 213 308 1,215 (3,984)
Decrease in other assets................................. 25 33 385 (584) 166
Increase in accounts payable and accrued expenses........ 15,291 17,720 8,873 1,642 (10,738)
Increase in long-term liabilities........................ 2,714 1,831 70 70 (22)
-------- -------- --------- --------- ---------
Net cash provided by operating activities.............. 36,349 55,629 50,667 13,990 12,595
-------- -------- --------- --------- ---------
Cash Flows from Investing Activities:
Purchases of short-term investments...................... (15,464) (8,402) (19,862) 9,401 (2,020)
Maturities of short-term investments..................... 12,796 14,168 27,701 -- 3,582
Purchases of property, plant and equipment............... (28,865) (53,966) (69,851) (29,611) (48,186)
Proceeds from sale of property, plant and equipment...... 429 290 2,760 -- --
Acquisition of Zycon Corporation in 1997 and Continental
Circuits Corp. in 1998, net of cash acquired........... -- -- (209,661) (209,661) (190,032)
-------- -------- --------- --------- ---------
Net cash used in investing activities.................. (31,104) (47,910) (268,913) (229,871) (236,656)
-------- -------- --------- --------- ---------
Cash Flows from Financing Activities:
Principal payments of long-term debt..................... (4,675) (2,139) (164,766) (36,621) (43,218)
Proceeds from issuance of long-term debt................. -- -- 224,954 225,000 256,878
Proceeds from exercise of stock options.................. 1,095 1,738 1,303 435 476
Sale of Common Stock, net of issuance costs.............. -- -- 131,088 -- 1,480
Tax benefit from exercise of stock options............... 1,597 4,161 5,052 1,387 1,271
Purchase and retirement of common stock.................. (1,019) -- -- -- --
-------- -------- --------- --------- ---------
Net cash (used in) provided by financing activities.... (3,002) 3,760 197,631 190,201 216,887
-------- -------- --------- --------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents....... 2,243 11,479 (20,615) (25,680) (7,174)
Cash and Cash Equivalents, Beginning of Period............. 19,064 21,307 32,786 32,786 12,171
-------- -------- --------- --------- ---------
Cash and Cash Equivalents, End of Period................... $ 21,307 $ 32,786 $ 12,171 $ 7,106 $ 4,997
======== ======== ========= ========= =========
Supplemental Schedule of Noncash Investing and Financing
Activities:
Machinery and equipment acquired under capital lease
obligations............................................ $ -- $ 1,032 $ -- $ -- $ --
======== ======== ========= ========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for --
Interest................................................. $ 576 $ 279 $ 10,270 $ 4,282 $ 4,689
======== ======== ========= ========= =========
Income taxes (net of refunds)............................ $ 13,609 $ 16,794 $ 21,099 $ 9,070 $ 10,906
======== ======== ========= ========= =========
Acquisition of Zycon Corporation in 1997 and Continental
Circuits Corp. in 1998:
Fair value of assets acquired............................ -- -- $ 206,009 $ 212,509 $ 140,123
Liabilities assumed...................................... -- -- (112,393) (114,993) (47,905)
Cash paid................................................ -- -- (204,885) (204,885) (186,083)
Acquisition costs incurred............................... -- -- (7,600) (7,600) (3,949)
Write-off of acquired in-process research and
development............................................ -- -- 78,000 78,000 63,050
-------- -------- --------- --------- ---------
Goodwill................................................. $ -- $ -- $ (40,869) $ (36,969) $ (34,764)
======== ======== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE> 111
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Hadco Corporation's (the "Company" or "Hadco") principal products are
complex multilayer rigid printed circuits and backplane assemblies. The
consolidated financial statements reflect the application of certain accounting
policies as described in this Note and elsewhere in the accompanying notes to
consolidated financial statements.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
Management 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.
Cash Equivalents and Short-Term Investments
The Company accounts for investments in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities. The Company considers all highly
liquid investment instruments purchased with a maturity of three months or less
to be cash equivalents. Short-term investments are carried at cost, which
approximates market, and have maturities of less than one year. Cash equivalents
consist primarily of money market funds and are approximately $29,696,000,
$9,850,000 and $700,000 as of October 1996 and 1997 and May 2, 1998,
respectively.
The Company classifies its investments in corporate and government debt
securities as held-to-maturity given the Company's intent and ability to hold
the securities to maturity. In accordance with SFAS No. 115, held-to-maturity
securities are carried at amortized cost.
The Company's investments in held-to-maturity securities are as follows:
<TABLE>
<CAPTION>
OCTOBER 26, 1996 OCTOBER 25, 1997 MAY 2, 1998
---------------- ------------------------ --------------
FAIR FAIR FAIR
MARKET MARKET MARKET
COST VALUE COST VALUE COST VALUE MATURITY
------ ------ ------ -------------- ---- ------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
US Government Securities..... $1,000 $ 999 $ -- $ -- $-- $-- Within 1 year
State and Local Securities... 5,270 5,271 -- -- -- -- Within 1 year
Corporate Debt Securities.... 3,131 3,069 -- -- -- -- Within 1 year
Certificate of Deposit....... -- -- 1,562 1,562 -- -- Within 1 year
------ ------ ------ -------------- -- --
$9,401 $9,339 $1,562 $ 1,562 $-- $--
====== ====== ====== ============== == ==
</TABLE>
The Company has no financial instruments requiring disclosure under
Financial Accounting Standards Board issued SFAS No. 119, Disclosure About
Derivative Financial Instruments and Fair Value of the Financial Instruments.
F-7
<PAGE> 112
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
Concentration of Credit Risk
SFAS No. 105, Disclosure of Information About Financial Instruments with
Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit
Risk, requires disclosure of any significant off-balance-sheet and credit risk
concentrations. As of October 25, 1997, the Company has no significant
off-balance-sheet concentrations of credit risk such as foreign currency
exchange contracts or other hedging arrangements. Financial instruments that
subject the Company to credit risk consist of cash and cash equivalents,
short-term investments and trade accounts receivable. The Company maintains the
majority of its cash and investment balances with financial institutions. The
Company has not experienced any losses on these investments to date.
Substantially all of the Company's accounts receivable are concentrated in the
high technology and electronics industry. The Company has not experienced
significant losses related to receivables from individual customers or groups of
customers in the high technology and electronics industry or by geographic
region. Due to these factors, no additional credit risk beyond amounts provided
for collection losses is believed by management to be inherent in the Company's
accounts receivable.
Depreciation and Amortization of Property, Plant and Equipment
The Company provides for depreciation and amortization by charges to
operations in amounts that allocate the cost of property, plant and equipment on
a straight-line basis over the following estimated useful lives:
<TABLE>
<CAPTION>
ESTIMATED
ASSET CLASSIFICATION USEFUL LIFE
- -------------------- -----------
<S> <C>
Land betterments............................................ 10-18 Years
Buildings and improvements.................................. 10-40 Years
Machinery and equipment..................................... 3-10 Years
Furniture and fixtures...................................... 5-7 Years
Computer software........................................... 3 Years
Vehicles.................................................... 3-5 Years
Capital leases.............................................. Lease term
</TABLE>
Net Income (Loss) per Share
The Company adopted SFAS No. 128, Earnings per share, effective for the
quarter ended January 31, 1998 which replaces the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share.
Prior period amounts have been restated to conform to the current period
presentation. Under SFAS No. 128, basic net income (loss) per common share is
computed based on income (loss) available to common stockholders and the
weighted average number of common shares outstanding during the period. The
dilutive net income (loss) per share is computed based on including the number
of additional common shares that would have been outstanding if the dilutive
potential of common shares had been issued.
F-8
<PAGE> 113
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
Basic and diluted income (loss) per share, as required by SFAS No. 128, are
as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS ENDED
----------------------------------------- -------------------------
OCTOBER 28, OCTOBER 26, OCTOBER 25, APRIL 26, MAY 2,
1995 1996 1997 1997 1998
----------- ----------- ----------- ----------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net income (loss).................. $21,374 $32,014 $(36,493) $(59,212) $(47,612)
======= ======= ======== ======== ========
Basic weighted average shares
outstanding...................... 9,805 10,245 11,458 10,435 13,130
Weighted average common equivalent
shares........................... 1,001 839 -- -- --
------- ------- -------- -------- --------
Diluted weighted average shares
outstanding...................... 10,806 11,084 11,458 10,435 13,130
======= ======= ======== ======== ========
Basic net income (loss) per
share............................ $ 2.18 $ 3.12 $ (3.18) $ (5.67) $ (3.63)
======= ======= ======== ======== ========
Diluted net income (loss) per
share............................ $ 1.98 $ 2.89 $ (3.18) $ (5.67) $ (3.63)
======= ======= ======== ======== ========
</TABLE>
Diluted weighted average shares outstanding does not include 484,000,
512,064 and 401,798 common equivalent shares at October 25, 1997, April 26, 1997
and May 2, 1998, respectively, as their effect would be anti-dilutive.
Revenue Recognition
The Company recognizes revenue at the time products are shipped.
Research and Development Expenses
The Company charges research and development expenses to operations as
incurred. For the fiscal years ended October 1995, 1996 and 1997, and the six
months ended fiscal April 1997 and 1998, research and development expenses were
approximately $2,945,000, $4,307,000, $6,929,000, $3,401,000 and $3,254,000,
respectively, and are included in operating expenses.
Stock Based Compensation
The Company has adopted SFAS No. 123, Accounting for Stock-Based
Compensation, in fiscal 1997. SFAS No. 123 defines a fair-value-based method of
accounting for employee stock options and other stock-based compensation. The
compensation expense arising from this method of accounting can be reflected in
the financial statements or, alternatively, the pro forma net income and
earnings per share effect of the fair-value-based accounting can be disclosed in
the financial footnotes. The Company has adopted the disclosure-only
alternative. (See Note 10).
Foreign Currency Translation
The functional currency of the Company's Malaysian subsidiary is the United
States dollar. Accordingly, all remeasurement gains and losses resulting from
transactions denominated in currencies other than United States dollars are
included in the consolidated statements of operations in accordance with SFAS
No. 52, Foreign Currency Translation. To date, the resulting gains and losses
have not been material.
F-9
<PAGE> 114
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
Reclassification
The Company has reclassified certain prior year information to conform with
the current year's presentation.
Interim Financial Statements
The accompanying consolidated balance sheet as of May 2, 1998, and the
consolidated statements of operations and cash flows for the six month periods
ended April 26, 1997 and May 2, 1998 and the statement of stockholders'
investment for the six months period ended May 2, 1998 are unaudited but, in the
opinion of management, include all adjustments (consisting of normal, recurring
adjustments) necessary for a fair presentation of results for these interim
periods. Results of operations of interim periods are not necessarily indicative
of results to be expected for the entire year of any future period.
New Accounting Standards
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income.
SFAS No. 130 requires disclosure of all components of comprehensive income on an
annual and interim basis. Comprehensive income is defined as the change in
equity of a business enterprise during a period from transactions and other
events and circumstances from nonowner sources. SFAS No. 130 is effective for
fiscal years beginning after December 15, 1997. The Company will adopt this
statement for its fiscal year ending October 1999.
In July 1997, the FASB issued SFAS No. 131, Disclosures About Segments of
an Enterprise and Related Information. SFAS No. 131 requires certain financial
and supplementary information to be disclosed on an annual and interim basis for
each reportable segment of an enterprise. SFAS No. 131 is effective for fiscal
years beginning after December 15, 1997. Unless impracticable, companies would
be required to restate prior period information upon adoption. The Company will
adopt this statement for its fiscal year ending October 1999.
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
This Statement is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5 Reporting on the Costs of Start-Up Activities
(SOP 98-5). SOP 98-5 provides guidance on the financial reporting of start-up
activities and organization costs to be expensed as incurred. SOP 98-5 will not
have a material impact on the Company's financial statements.
(2) ACQUISITIONS
On January 10, 1997 the Company acquired (the "Zycon Acquisition") all of
the outstanding common stock of Zycon Corporation ("Zycon"), and on March 20,
1998, the Company acquired (the "Continental Acquisition", and together with the
Zycon Acquisition, the "Acquisitions") all of the outstanding common stock of
Continental Circuit Corp. ("Continental"). These acquisitions were financed by
the $400 million unsecured senior revolving credit facility with a group of
banks, which amended and restated an existing credit facility (the "Amended
Credit Facility"), under which the Company borrowed approximately $215,000,000
upon consummation of the Zycon Acquisition and approximately $220,000,000 upon
consummation of the Continental Acquisition. These acquisitions were accounted
for as purchases in accordance with Accounting Principles Board Opinion No. 16
and accordingly, Zycon's and Continental's operating results since the
F-10
<PAGE> 115
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
respective dates of acquisition are included in the accompanying consolidated
financial statements. In accordance with APB Opinion No. 16, the Company
allocated the purchase price of the Acquisitions based on the fair value of
assets acquired and liabilities assumed. Significant portions of the purchase
price of both Acquisitions were identified in appraisals as intangible assets
using proven valuation procedures and techniques. These intangible assets
include approximately $78,000,000 and $63,050,000 for Zycon and Continental,
respectively, for acquired in-process research and development ("in-process
R&D") for projects that did not have a future alternative use. Acquired
intangibles included developed technology, customer relationships, assembled
workforce, trade names and trademarks. These intangibles are being amortized
over their estimated useful lives of 12 to 30 years.
The aggregate purchase prices of $212,485,000 and $190,032,000, including
acquisition costs, for the Zycon and Continental Acquisitions, respectively,
were allocated as follows:
<TABLE>
<CAPTION>
ZYCON CONTINENTAL
--------- -----------
(IN THOUSANDS)
<S> <C> <C>
Current assets.............................................. $ 41,790 $ 26,556
Property, plant and equipment............................... 95,193 67,144
Acquired intangibles........................................ 65,500 46,190
In-process R&D.............................................. 78,000 63,050
Other assets................................................ 3,526 233
Goodwill.................................................... 40,869 34,764
Liabilities assumed......................................... (112,393) (47,905)
--------- --------
$ 212,485 $190,032
========= ========
</TABLE>
Unaudited pro forma operating results for the Company, assuming the
acquisition of Zycon occurred on October 28, 1995 and Continental occurred on
October 26, 1996 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
-------------------------- ---------------------
OCTOBER 26, OCTOBER 25, APRIL 26, MAY 2,
1996 1997 1997 1998
----------- ----------- --------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales.............................. $570,345 $830,468 $414,633 $459,814
Net income............................. 27,222 36,210 16,275 8,880
Basic Net Income per Share............. 2.66 3.16 1.56 0.68
Diluted Net Income per Share........... 2.46 3.03 1.49 0.66
</TABLE>
For purposes of these pro forma operating results, the in-process research
and development was assumed to have been written off prior to October 29, 1995,
so that the operating results presented include only recurring costs.
F-11
<PAGE> 116
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(3) INVENTORIES
Inventories are stated at the lower of cost, first-in, first-out (FIFO), or
market and consist of the following:
<TABLE>
<CAPTION>
OCTOBER 26, OCTOBER 25, MAY 2,
1996 1997 1998
----------- ----------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Raw materials...................................... $ 8,008 $14,167 $33,656
Work-in-process.................................... 13,778 31,833 41,439
------- ------- -------
$21,786 $46,000 $75,095
======= ======= =======
</TABLE>
The work-in-process consists of materials, labor and manufacturing
overhead.
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
OCTOBER 26, OCTOBER 25, MAY 2,
1996 1997 1998
----------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Land betterments................................ $ 1,991 $ 2,174 $ 5,760
Buildings and improvements...................... 52,961 74,172 142,344
Construction-in-progress........................ 22,543 38,716 23,029
Machinery and equipment......................... 126,878 262,113 402,434
Furniture and fixtures.......................... 14,082 18,611 6,767
Computer software............................... 2,662 3,152 5,536
Vehicles........................................ 159 626 661
Capital leases.................................. 14,972 45,154 13,125
--------- --------- ---------
236,248 444,718 599,656
Accumulated depreciation and amortization....... (132,513) (213,228) (281,321)
--------- --------- ---------
$ 103,735 $ 231,490 $ 318,335
========= ========= =========
</TABLE>
(5) INTANGIBLE ASSETS
The Company assesses the realizability of intangible assets in accordance
with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of. Under SFAS No. 121, the Company is required
to assess the valuation of its long-lived assets, including intangible assets,
based on the estimated cash flows to be generated by such assets. Based on its
most recent analysis, the
F-12
<PAGE> 117
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
Company believes that no material impairment of intangible assets exists as of
October 25, 1997. Intangible assets are amortized on a straight-line basis,
based on their estimated lives, as follows:
<TABLE>
<CAPTION>
ESTIMATED LIFE OCTOBER 25, 1997 MAY 2, 1998
-------------- ---------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Developed technology....................... 12 years $ 30,000 $ 52,190
Customer relationships..................... 20-25 years 19,000 37,000
Assembled workforce........................ 12-15 years 10,000 16,000
Trade names/trademarks..................... 30 years 6,500 6,500
Goodwill................................... 20 years 40,869 94,109
-------- --------
106,369 205,799
Less -- Accumulated amortization........... (5,238) (10,773)
-------- --------
$101,131 $195,026
======== ========
</TABLE>
(6) INCOME TAXES
The Company accounts for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes.
The provision for income taxes shown in the accompanying consolidated
statements of operations is comprised of the following:
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER
-----------------------------
1995 1996 1997
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Federal
Current............................................. $14,331 $18,341 $24,072
Deferred............................................ (2,954) (1,206) 1,369
------- ------- -------
11,377 17,135 25,441
------- ------- -------
State
Current............................................. 2,928 3,611 2,273
Deferred............................................ (641) (279) (42)
------- ------- -------
2,287 3,332 2,231
------- ------- -------
$13,664 $20,467 $27,672
======= ======= =======
</TABLE>
The tax rate used in the computation of the provision for federal and state
income taxes differs from the statutory federal and state rates due to the
following:
F-13
<PAGE> 118
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
<TABLE>
<CAPTION>
1995 1996 1997(1)
---- ---- -------
<S> <C> <C> <C>
Provision for statutory rate................................ 34.0% 34.0% 35.0%
Increase in tax resulting from --
State income taxes, net of federal tax benefit............ 4.5 4.4 4.3
Tax-exempt interest income................................ (0.5) (0.4) (0.3)
Other, net................................................ 1.0 1.0 1.0
---- ---- ----
Provision for income taxes................................ 39.0% 39.0% 40.0%
==== ==== ====
</TABLE>
- ---------------
(1) Calculated based on pre-tax income, before non-deductible charges for
in-process research and development, of $69.2 million for 1997.
In accordance with generally accepted accounting principles, the Company
provides for income taxes using its effective annual income tax rate. Although
the Company has incurred a loss before income taxes during the year ended
October 25, 1997, the Company has recorded an income tax provision because the
write-off of in-process research and development is not deductible for income
tax purposes. Without taking into consideration the write-off of in-process
research and development, the effective annual income tax rate for fiscal 1997
is 40%, which is approximately equal to the expected combined federal and state
statutory rates. The Company is providing for income taxes in fiscal 1998 at an
effective tax rate of 39.75%, which is lower than the combined federal and state
statutory rates. The effective rate is increased by amortization of goodwill and
acquired intangibles which is not tax deductible, and this item was offset by
the tax benefit of the Company's Foreign Sales Corporation and various state
investment tax credits.
The deferred provision for income taxes results from the following:
<TABLE>
<CAPTION>
1995 1996 1997
------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Difference between book and tax depreciation........... $ (144) $ (46) $1,939
Deferred compensation.................................. 73 266 146
Amortization of acquired intangible assets............. -- -- (1,210)
Reserves and expenses recognized in different periods
for book and tax purposes............................ (3,506) (1,658) 480
Other, net............................................. (18) (47) (28)
------- ------- ------
$(3,595) $(1,485) $1,327
======= ======= ======
</TABLE>
F-14
<PAGE> 119
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
The tax effects of temporary differences that give rise to significant
portions of the current and long-term deferred tax assets and liabilities at
October 26, 1996 and October 25, 1997 are as follows:
<TABLE>
<CAPTION>
1996 1997
------ --------
(IN THOUSANDS)
<S> <C> <C>
Deferred Tax Assets --
Not currently deductible reserves......................... $7,475 $ 11,592
Not currently deductible environmental accruals........... 3,907 4,127
Deferred compensation plans............................... 275 1,140
------ --------
Total gross deferred tax assets........................ 11,657 16,859
Less -- valuation allowance............................... (137) (54)
------ --------
11,520 16,805
Deferred Tax Liability --
Acquisition related intangibles........................... -- (24,096)
Property, plant and equipment, principally due to
differences in depreciation............................ (1,920) (12,911)
------ --------
Net deferred tax asset (liability)..................... $9,600 $(20,202)
====== ========
</TABLE>
Due to the uncertainty relating to the actual value of the favorable tax
benefits of deferred compensation from stock options, the Company has recorded a
valuation allowance of approximately $137,000 and $54,000 as of October 26, 1996
and October 25, 1997, respectively. The decrease of this allowance for the year
ended October 25, 1997 is a result of the decrease in the deferred tax asset
relating to deferred compensation.
(7) LINES OF CREDIT
The Company's $400 million Amended Credit Facility is pursuant to an
Amended and Restated Revolving Credit Agreement, as amended (the "Agreement").
The Agreement provides for direct borrowings or letters of credit for up to $400
million and expires January 8, 2002. Borrowings under the Agreement bear
interest, at the Company's option, at either: (i) the Eurodollar Rate plus the
Applicable Eurodollar Rate Margin (both as defined in the Agreement), ranging
between .5% and 1.1375%, based on certain financial ratios of the Company, or
(ii) the Base Rate (as defined in the Agreement). The Company is required to pay
a quarterly commitment fee ranging from .2% to .375% per annum, based on certain
financial ratios of the Company, of the unused commitment under the Agreement.
If the Company obtains certain debt financing, as defined, the banks may require
the Company to repay up to $150,000,000 of amounts outstanding under the
Agreement. At October 25, 1997 and May 2, 1998, borrowings of $100,000,000 and
$345,000,000, respectively, were outstanding under the Agreement at weighted
average interest rates of 6.26% and 6.56%, respectively.
The Agreement places several restrictions on the Company, including
limitations on mergers, acquisitions and sales of a substantial portion of its
assets, as well as certain limitations on liens, guarantees, additional
borrowings, changes in the Company's capitalization, as defined, and
investments. The Agreement also requires the Company to maintain certain
financial covenants, including, among other things, minimum levels of
consolidated net worth, a maximum ratio of consolidated funded debt to EBITDA,
maximum capital expenditures and minimum interest coverage, as defined, during
the term of the Agreement. At October 25, 1997 and May 2, 1998, the Company was
in compliance with all loan covenants.
The Company has a line of credit arrangement with a Malaysian bank
denominated in Malaysian ringgits and U.S. dollars for aggregate borrowings of
approximately $3,400,000 for the purpose of acquiring land,
F-15
<PAGE> 120
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
facilities and equipment for the Company's Malaysian subsidiary. The arrangement
is renewable annually. At October 25, 1997 and May 2, 1998, there were no
amounts outstanding under this arrangement.
(8) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
OCTOBER
------------------- APRIL
1996 1997 1998
------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Loan agreements in connection with the expansion of a
building. The loans bear interest at rates from 1%
to 7% through March 2011 and are collateralized by
property and an irrevocable letter of credit.
Payments of principal and interest are due
quarterly.......................................... $ 916 $ 820 $ 778
Revolving credit agreement (Note 7).................. -- 100,000 345,000
Obligations under capital leases..................... 2,506 13,960 18,096
------ -------- --------
3,422 114,780 363,874
Less -- Current portion.............................. 1,907 5,064 4,837
------ -------- --------
$1,515 $109,716 $359,037
====== ======== ========
</TABLE>
Maturities of long-term debt and capital lease obligations are as follows
as of October 25, 1997:
<TABLE>
<CAPTION>
YEAR ENDING OCTOBER -- AMOUNT
- ---------------------- --------------
(IN THOUSANDS)
<S> <C>
1998........................................................ $ 5,064
1999........................................................ 4,008
2000........................................................ 2,506
2001........................................................ 2,221
2002........................................................ 100,710
Thereafter.................................................. 271
--------
$114,780
========
</TABLE>
F-16
<PAGE> 121
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(9) COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases manufacturing equipment and space under noncancelable
operating leases with terms expiring through 2009. Future minimum lease payments
under these leases as of October 25, 1997 (in thousands) are as follows:
<TABLE>
<CAPTION>
YEAR ENDING OCTOBER -- EQUIPMENT REAL ESTATE TOTAL
- ---------------------- --------- ----------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
1998................................................ $123 $ 5,500 $ 5,623
1999................................................ 9 5,371 5,380
2000................................................ -- 4,894 4,894
2001................................................ -- 4,558 4,558
2002................................................ -- 4,670 4,670
Thereafter.......................................... -- 29,665 29,665
---- ------- -------
Future minimum lease payments....................... $132 $54,658 $54,790
==== ======= =======
</TABLE>
Total rental expense of approximately $1,447,000, $1,434,000, $6,628,000,
$3,720,000 and $4,346,000 was incurred for the fiscal years ended October 1995,
1996, and 1997 and the six months ended April 26, 1997 and May 2, 1998,
respectively.
These operating leases include office and manufacturing space leased from a
partnership in which the Chairman of the Board has an interest. Two of the
leases are for terms of five years, and expire in October 2000 with options to
extend until October 2006. The remaining lease expires in March 2000 with
options to extend until 2006. For the fiscal years ended October 1995, 1996 and
1997, and the six months ended April 26, 1997 and May 2, 1998 the related rental
expense was approximately $479,000, $529,000, $533,000, $273,000 and $327,000,
respectively.
Environmental Matters
During March 1995, the Company received a Record of Decision ("ROD") from
the New York State Department of Environmental Conservation ("NYSDEC"),
regarding soil and groundwater contamination at its Owego, New York facility.
Based on a Remedial Investigation and Feasibility Study ("RIFS") for apparent
on-site contamination at that facility and a Focused Feasibility Study ("FFS"),
each prepared by environmental consultants of the Company, the NYSDEC has
approved a remediation program of groundwater withdrawal and treatment and
iterative soil flushing. The Company has executed a Modification of the Order on
Consent to implement the approved ROD. The cost, based upon the FFS, to
implement this remediation is estimated to be $4.6 million, and is expected to
be expended as follows: $260,000 for capital equipment and $4.3 million for
operation and maintenance costs which will be incurred and expended over the
estimated life of the program of 30 years. NYSDEC has notified the Company that
it will take additional samples from a wetland area near the Company's Owego
facility. Analytical reports of earlier sediment samples indicated the presence
of certain inorganics. There can be no assurance that the Company and/or other
third parties will not be required to conduct additional investigations and
remediation at that location, the costs of which are currently indeterminable
due to the numerous variables described in the fifth paragraph of this
Environmental Matters note.
From 1974 to 1980, the Company operated a printed circuit manufacturing
facility in Florida as a lessee of property that is now the subject of a pending
lawsuit (the "Florida Lawsuit") and investigation by the Florida Department of
Environmental Protection ("FDEP"). Hadco and others are participating in
alternative dispute resolution regarding the site with an independent mediator.
In connection with the mediation, in
F-17
<PAGE> 122
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
February 1992 the FDEP presented computer-generated estimates of remedial costs,
for activities expected to be spread over a number of years, that ranged from
approximately $3.3 million to $9.7 million. Mediation sessions were conducted in
March 1992 but have been suspended during the ongoing assessment and feasibility
activities. On June 9, 1992, the Company entered into a Cooperating Parties
Agreement in which it and Gould, Inc., another prior lessee of the site, agreed
to fund certain assessment and feasibility study activities at the site. The
cost of such activities is not expected to be material to the Company.
Management believes it is likely that it will participate in implementing a
continuing remedial program for the site, the costs of which are currently
unknown. Also see the seventh paragraph of this Environmental Matters Note
relating to the Company's having been named as a third-party defendant in the
Florida Lawsuit.
The Company has commenced the operation of a groundwater extraction system
at its Derry, New Hampshire facility to address certain groundwater
contamination and migration control issues. Further investigation is underway to
determine the areal extent of the groundwater contaminant plume. Because of the
uncertainty regarding both the quantity of contaminants beneath the building at
the site and the long-term effectiveness of the groundwater migration control
system the Company has installed, it is not possible to make a reliable estimate
of the length of time remedial activity will have to be performed. However, it
is anticipated that the groundwater extraction system will be operated for at
least 30 years. There can be no assurance that the Company will not be required
to conduct additional investigations and remediation relating to the Derry
facility. The total costs of such groundwater extraction system and of
conducting any additional investigations and remediation relating to the Derry
facility are not fully determinable due to the numerous variables described in
the fifth paragraph of this Environmental Matters note.
Included in operating expenses are charges for actual expenditures and
accruals, based on estimates, for environmental matters. During fiscal 1995,
1996 and 1997, and the six months ended April 26, 1997 and May 2, 1998, the
Company made, and charged to operating expenses, actual payments of
approximately $1,111,000, $680,000, $296,000, $249,000 and $20,000,
respectively, for environmental matters. In 1995 and 1996, the Company also
accrued and charged to operating expenses approximately $2,740,000 and
$1,825,000, respectively, as cost estimates for environmental matters.
The Company accrues estimated costs associated with known environmental
matters, when such costs can be reasonably estimated. The cost estimates
relating to future environmental clean-up are subject to numerous variables, the
effects of which can be difficult to measure, including the stage of the
environmental investigations, the nature of potential remedies, possible joint
and several liability, the magnitude of possible contamination, the difficulty
of determining future liability, the time over which remediation might occur,
and the possible effects of changing laws and regulations. The total reserve for
environmental matters currently identified by the Company amounted to $10.0
million at October 26, 1996 and $10.6 million at October 25, 1997 and May 2,
1998. The current portion of these costs amounted to approximately $900,000 as
of October 26, 1996 and $1.4 million as of October 25, 1997 and May 2, 1998, and
is included in other accrued expenses. The long-term portion of these costs
amounted to approximately $9.1 million, as of October 26, 1996, and $9.2 million
as of October 25, 1997 and May 2, 1998, respectively, and is reported under the
caption Other Long-Term Liabilities. Based on its assessment at the current
time, management estimates the cost of ultimate disposition of the above known
environmental matters to range from approximately $7.0 million to $12.0 million,
and is expected to be spread over a number of years. Management believes the
ultimate disposition of the above known environmental matters will not have a
material adverse effect on the liquidity, capital resources, business or
consolidated financial position of the Company. However, one or more of such
environmental matters could have a significant negative impact on the Company's
consolidated financial results for a particular reporting period.
The Company is one of 33 entities which have been named as potentially
responsible parties in a lawsuit pending in the federal district court of New
Hampshire concerning environmental conditions at the Auburn
F-18
<PAGE> 123
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
Road, Londonderry, New Hampshire landfill site. Local, state and federal
entities and certain other parties to the litigation seek contribution for past
costs, totaling approximately $20 million, allegedly incurred to assess and
remedy the Auburn Road site. In December 1996, following publication and comment
period, the U.S. Environmental Protection Agency (EPA) amended the ROD to change
the remedy at the Auburn Road site from active groundwater remediation to future
monitoring. Other parties to the lawsuit also allege that future monitoring will
be required. The Company is contesting liability, but is participating in
mediation with 27 other parties in an effort to resolve the lawsuit.
In connection with the Florida Lawsuit (as described in the second
paragraph of this Environmental Matters section), pending in the Circuit Court
of Broward County, Florida, Hadco and Gould, Inc., another prior lessee of the
site of the printed circuit manufacturing facility in Florida, was each served
with a third party complaint in June 1995, as third-party defendants in such
pending Florida Lawsuit by a party who had previously been named as a defendant
when the Florida Lawsuit was commenced in 1993 by the FDEP. The Florida Lawsuit
seeks damages relating to environmental pollution and FDEP costs and expenses,
civil penalties, and declaratory and injunctive relief to require the parties to
complete assessment and remediation of soil and groundwater contamination. The
other parties include alleged owners of the property and Fleet Credit
Corporation, a secured lender to a prior lessee of the property.
In March 1993, the EPA notified Hadco Santa Clara (formerly Zycon) of its
potential liability for maintenance and remediation costs in connection with a
hazardous waste disposal facility operated by Casmalia Resources, a California
Limited Partnership, in Santa Barbara County, California. The EPA identified
Hadco Santa Clara as one of the 65 generators which had disposed the greatest
amounts of materials at the site. Based on the total tonnage contributed by all
generators, Hadco Santa Clara's share is estimated at approximately 0.2% of the
total weight.
The Casmalia site was regulated by the EPA during the period when the
material was accepted. There is no allegation that Hadco Santa Clara violated
any law in the disposal of material at the site, rather the EPA's actions
stemmed from the fact that Casmalia Resources may not have the financial means
to implement a closure plan for the site and because of Hadco Santa Clara's
status as a generator of hazardous waste.
In June 1997, the United States District Court in Los Angeles, California
approved and entered a Consent Decree among the EPA and 49 entities (including
Hadco Santa Clara) acting through the Casmalia Steering Committee ("CSC"). The
Consent Decree sets forth the terms and conditions under which the CSC will
carry out work aimed at final closure of the site. Certain closure activities
will be performed by the CSC. Later work will be performed by the CSC, if funded
by other parties. Under the Consent Decree, the settling parties will work with
the EPA to pursue the non-settling parties to ensure they participate in
contributing to the closure and long-term operation and maintenance of the
facility.
The future costs in connection with the lawsuits described in the above
paragraphs are currently indeterminable due to such factors as the unknown
timing and extent of any future remedial actions which may be required, the
extent of any liability of the Company and of other potentially responsible
parties, and the financial resources of the other potentially responsible
parties. Management currently believes, based on the facts currently known to
it, that it is probable that the ultimate dispositions of the above lawsuits
will not have a material adverse effect on the Company's business and financial
condition; however, there can be no assurance that this will be the case.
Purchase Commitments
The Company had commitments to purchase approximately $16,497,000 of
manufacturing equipment and approximately $1,289,000 of leasehold improvements
as of October 25, 1997. The majority of these commitments is expected to be
completed by the end of fiscal 1998.
F-19
<PAGE> 124
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(10) STOCKHOLDERS' INVESTMENT
Stock Options
The following table summarizes stock option activity with respect to the
non-qualified stock options:
<TABLE>
<CAPTION>
WEIGHTED
NUMBER EXERCISE AVERAGE
OF SHARES PRICE RANGE EXERCISE PRICE
--------- --------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Outstanding, October 29, 1994.............. 1,690 $ 2.00 - $ 9.00 $ 4.78
Options granted............................ 223 8.50 - 25.69 9.39
Options exercised.......................... (320) 2.00 - 11.06 3.61
Options canceled........................... (147) 2.10 - 8.81 7.91
----- --------------- ------
Outstanding, October 28, 1995.............. 1,446 2.00 - 25.69 5.44
Options granted............................ 150 27.00 - 31.50 30.98
Options exercised.......................... (443) 2.00 - 11.06 3.92
Options canceled........................... (45) 2.00 - 31.50 6.75
----- --------------- ------
Outstanding, October 26, 1996.............. 1,108 2.00 - 31.50 9.45
Options granted............................ 265 45.31 - 67.00 48.52
Options exercised.......................... (261) 2.00 - 31.50 4.98
Options canceled........................... (42) 2.00 - 51.88 19.68
----- --------------- ------
Outstanding, October 25, 1997.............. 1,070 2.10 - 67.00 19.87
Options granted............................ 487 36.56 - 63.50 49.99
Options exercised.......................... (85) 2.10 - 11.06 5.58
Options canceled........................... (46) 17.19 - 67.00 46.10
----- --------------- ------
Outstanding, May 2, 1998................... 1,426 $ 2.40 - $67.00 $30.21
===== =============== ======
</TABLE>
The following table summarizes information about stock options outstanding
at October 25, 1997:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
REMAINING WEIGHTED
RANGE OF OPTIONS CONTRACT LIFE AVERAGE
EXERCISE PRICES OUTSTANDING (YEARS) EXERCISE PRICE
--------------- ----------- -------------- --------------
<S> <C> <C> <C>
$ 2.10 - $ 3.15............................... 88,830 1.2 $ 2.60
3.38 - 4.00............................... 97,595 2.6 3.73
4.94 - 6.69............................... 83,120 4.2 5.15
8.00 - 12.00............................... 406,500 6.3 8.79
17.19................................... 1,750 7.6 17.19
27.00 - 31.50............................... 136,975 7.9 30.93
47.44 - 67.00............................... 255,250 8.8 48.56
--------- ------
1,070,020 $19.87
========= ======
</TABLE>
F-20
<PAGE> 125
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
The following table summarizes information about stock options exercisable
at October 25, 1997:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
RANGE OF OPTIONS EXERCISE
EXERCISE PRICES EXERCISABLE PRICE
--------------- ----------- --------
<S> <C> <C>
$ 2.10 - $ 3.15............................................. 88,830 $ 2.60
3.38 - 4.00............................................. 82,755 3.68
4.94 - 6.69............................................. 50,520 5.20
8.00 - 12.00............................................. 130,675 8.97
17.19............................................. -- --
27.00 - 31.50............................................. 17,220 29.85
47.44 - 67.00............................................. 9,000 46.02
------- ------
Exercisable October 25, 1997................................ 379,000 $ 7.65
======= ======
Exercisable October 26, 1996................................ 506,885 $ 4.52
======= ======
Exercisable October 28, 1995................................ 830,516 $ 4.71
======= ======
</TABLE>
The Company has reserved as of October 25, 1997, a total of 2,005,270
shares of common stock for issuance under the non-qualified stock option plans
listed in the above charts. During fiscal 1995, 1996 and 1997, approximately
$287,000, $154,000 and $121,000, respectively, were charged against income as
compensation expense associated with the granting of these options. For the
first six months of each of fiscal 1997 and 1998, $64,000 and $42,000,
respectively were charged against income as compensation with the granting of
those options.
The Company has computed the pro forma disclosures required under SFAS No.
123 using the Black-Scholes option pricing model. The assumptions used, weighted
average information and the pro forma effect of applying SFAS No. 123 for the
years ended October 26, 1996 and October 25, 1997 are as follows:
<TABLE>
<CAPTION>
1996 1997
------------ ------------
<S> <C> <C>
Risk-free interest rates............................... 6.20% - 6.73% 6.20% - 6.66%
Expected dividend yield................................ -- --
Expected lives......................................... 6.53 years 6.77 years
Expected volatility.................................... 43.6% 43.6%
Weighted average grant-date fair value of options
granted during the period, net of an estimated
termination rate of 32.70%........................... $ 24.54 $ 26.51
Weighted average exercise price of options granted
during the period, net of an estimated termination
rate of 32.70%....................................... $ 45.26 $ 48.15
Weighted average remaining contractual life of options
outstanding.......................................... 8.92 years 8.66 years
Weighted average exercise price of 506,885 and 379,000
options exercisable at October 26, 1996 and October
25, 1997, respectively............................... $ 4.52 $ 7.65
Pro forma net income (loss)............................ $31,802 $(37,088)
Pro forma -- basic net income (loss) per share......... $ 3.10 $ (3.24)
Pro forma -- diluted net income (loss) per share....... $ 2.87 $ (3.24)
</TABLE>
F-21
<PAGE> 126
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
The Company has the following non-qualified stock option plans:
December 1985 Plan and December 1986 Plan
The options under these plans are exercisable immediately, and have various
vesting periods up to 10 years according to each individual option agreement
with an expiration date no later than 10 years and 90 days from the date of
grant. Upon termination of employment under certain circumstances, the Company
may, at its option, repurchase the exercised but unvested shares at the original
purchase price. The Board of Directors has determined to make no further grants
under these plans.
September 1990 Plan
This plan provides for the granting of options at a price equal to the fair
market value at the date of grant. The options vest over periods of up to seven
years and become exercisable according to each option agreement, and they expire
no later than 10 years from the date of grant. The Board of Directors has
determined to make no further grants under this plan.
December 1991 Director Plan
This plan originally provided for the granting of options to purchase up to
150,000 shares of common stock at a price equal to the fair market value at the
date of grant. These options are exercisable ratably over a five-year period and
expire no later than seven years from the date of grant. This plan has been
amended to (i) increase the number of shares available to 300,000, (ii) provide
that any current non-employee director who had five years of service in such
capacity on February 26, 1997 be automatically granted, on such date and on each
anniversary of service thereafter, a vested option to purchase 3,000 shares and
(iii) provide that any current non-employee director who did not have five years
of service in such capacity on February 26, 1997 and any future non-employee
director each be automatically granted, on the date such non-employee director
achieves five years of service in such capacity and on each anniversary of
service thereafter, a vested option to purchase 3,000 shares.
November 1995 Plan
This plan provides for the granting of options to purchase up to 1,000,000
shares of common stock at a price equal to fair market value at the date of
grant. The options vest according to each option agreement and they expire no
later than 10 years from the date of grant.
Stockholder Rights Plan
The Company adopted a Stockholder Rights Plan in August 1995 pursuant to
which the Company declared the distribution of one Common Stock Purchase Right
("Right") for each share of outstanding common stock. Under certain conditions,
each Right may be exercised for one share of common stock at an exercise price
of $130, subject to adjustment. Under circumstances defined in the Stockholder
Rights Plan, the Rights entitle holders to purchase stock having a value of
twice the exercise price of the Rights. Until they become exercisable, the
Rights are not transferable apart from the common stock. The Rights may be
redeemed by the Company at any time prior to the occurrence of certain events at
$.01 per Right. The Stockholder Rights Plan will expire on September 11, 2005,
unless the Rights are earlier redeemed by the Company.
F-22
<PAGE> 127
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(11) RETIREMENT PLAN
The Hadco Corporation Retirement Plan (the "Plan"), as amended, covers all
employees with at least six months of continuous service, as defined. Annual
profit sharing contributions are determined at the discretion of the Board of
Directors but cannot exceed the amount allowable for federal income tax
purposes. The Company made profit sharing contributions of $2,285,000,
$3,335,000 and $4,016,000 to the Plan for the years ended October 1995, 1996 and
1997, respectively.
The Plan permits participants to elect to have contributions made to the
Plan in the form of reductions in salary under Section 401(k) of the Internal
Revenue Code subject to limitations set out in the Plan. Under the Plan, the
Company will match employee contributions up to a set percentage. Employee
contributions become vested when made, and Company contributions become vested
at the rate of 33 1/3 for each year of service with the Company. The Company
matched employee contributions in the amount of approximately $600,000,
$736,000, $834,000 and $1,642,000 during fiscal 1995, 1996, and 1997 and the six
months ended May 2, 1998, respectively.
(12) QUARTERLY RESULTS (UNAUDITED)
The following summarized unaudited results of operations for the fiscal
quarters in the years ended October 1996 and 1997 and through the first quarter
of fiscal 1998 have been accounted for using generally accepted principles for
interim reporting purposes and include adjustments (consisting of normal
recurring adjustments) that the Company considers necessary for the fair
presentation of results for these interim periods.
<TABLE>
<CAPTION>
1996 1997
--------- ----------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
First Fiscal Quarter --
Net sales................................................. $76,481 $111,536
Gross profit.............................................. 20,463 26,377
Net income (loss)......................................... 7,191 (69,161)
Diluted Net income (loss) per share....................... .65 (6.64)
Diluted Weighted average shares outstanding............... 11,104 10,413
Second Fiscal Quarter --
Net sales................................................. $88,096 $180,662
Gross profit.............................................. 22,951 38,463
Net income................................................ 7,895 9,953
Diluted Net income per share.............................. .71 .91
Diluted Weighted average shares outstanding............... 11,135 10,956
Third Fiscal Quarter --
Net sales................................................. $88,225 $183,274
Gross profit.............................................. 22,419 39,254
Net income................................................ 7,994 11,369
Diluted Net income per share.............................. .72 .93
Diluted Weighted average shares outstanding............... 11,100 12,254
</TABLE>
F-23
<PAGE> 128
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
<TABLE>
<CAPTION>
1996 1997
--------- ----------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
Fourth Fiscal Quarter --
Net sales................................................. $97,883 $173,233
Gross profit.............................................. 24,623 37,298
Net income................................................ 8,934 11,346
Diluted Net income per share.............................. .81 .84
Diluted Weighted average shares outstanding............... 11,008 13,528
</TABLE>
(13) CUSTOMERS
During fiscal year 1995, no customer accounted for more than 7% of
consolidated net sales. During fiscal years 1996 and 1997, one customer
accounted for 15% of consolidated net sales. The Company's five largest
customers accounted for 28%, 34% and 34% of consolidated net sales during fiscal
1995, 1996 and 1997, respectively. For the first six months of each of fiscal
1997 and 1998 one customer accounted for more than 10% of consolidated sales.
(14) RESTRUCTURING AND OTHER NON-RECURRING CHARGES
On April 6, 1998, the Company announced the planned consolidation of its
two East Coast quick-turn prototype facilities into the larger of the two
facilities located at Haverhill, MA. The Company incurred and recorded in the
fiscal quarter ended May 2, 1998 non-recurring charges in connection with the
consolidation totaling $5.9 million. The component of this charge classified as
restructuring-related met the criteria set forth in Emerging Issues and Task
Force Issue ("EITF") 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The amount recorded as a liability, which
totaled $1.5 million, relates to severance and other payroll-related costs, as
well as lease termination costs. Non-recurring costs include costs associated
with the abandonment of assets at one of the facilities. The components of the
restructuring and other non-recurring costs during the three months ended May 2,
1998 are as follows:
<TABLE>
<CAPTION>
AMOUNT
--------------
(IN THOUSANDS)
<S> <C>
Loss on abandonment of assets............................... $1,965
Severance benefits and associated legal costs............... 129
Lease termination loss...................................... 1,336
------
Total Restructuring Charges................................. 3,430
Other Non-recurring Charges................................. 2,517
------
Total Restructuring and Other Charges....................... $5,947
======
</TABLE>
Included in the restructuring and other charges is $2.5 million, which
represents the write-down of existing assets to their net realizable value, in
accordance with SFAS 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of."
(15) SUBSEQUENT EVENT -- DEBT OFFERING
On May 18, 1998, the Company sold $200.0 million aggregate principal amount
of its 9 1/2% Senior Subordinated Notes due 2008 (the "Notes") to certain
purchasers. The purchasers subsequently resold the Notes to "qualified
institutional buyers" in reliance upon Rule 144A under the Securities Act of
1933, as
F-24
<PAGE> 129
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
amended (the "Securities Act"), and offshore purchasers pursuant to Rule 904 of
Regulation S under the Securities Act. The Notes were sold at a price equal to
99.66% of their principal amount.
Interest on the Notes is payable semiannually on each June 15 and December
15, commencing December 15, 1998. The Notes are redeemable at the option of the
Company, in whole or in part, at any time on or after June 15, 2003, at 104.75%
of their principal amount, plus accrued interest, with such percentages
declining ratably to 100% of their principal amount, plus accrued interest. At
any time on or prior to June 15, 2001 and subject to certain conditions, up to
35% of the aggregate principal amount of the Notes may be redeemed, at the
option of the Company, with the proceeds of certain equity offerings of the
Company at 109.50% of the principal amount thereof, plus accrued interest. In
addition, at any time prior to June 15, 2003, the Company may redeem the Notes,
at its option, in whole or in part, at a price equal to the principal amount
thereof, together with accrued interest, plus the Applicable Premium (as defined
in the Indenture governing the Notes).
The Notes are guaranteed, on a senior subordinated basis, by each of the
Company's U.S. Restricted Subsidiaries (as defined in the Indenture) (the
"Guarantors"). The net proceeds received by the Company from the issuance and
sale of the Notes, approximately $193.82 million, was used to repay outstanding
indebtedness under the Amended Credit Facility previously incurred to, among
other things, finance the Acquisitions.
The Indenture under that which the Notes were issued (the "Indenture")
imposes certain limitations on the ability of the Company, its subsidiaries and,
in certain circumstances, the Guarantors, to, among other things, incur
indebtedness, pay dividends, prepay subordinated indebtedness, repurchase
capital stock, make investments, create liens, engage in transactions with
stockholders and affiliates, sell assets and engage in mergers and
consolidations.
F-25
<PAGE> 130
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(16) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING BALANCE SHEET
<TABLE>
<CAPTION>
AS OF OCTOBER 25, 1997
------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR PARENT ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES CORPORATION ENTRIES TOTAL
------------ ------------- ----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents......... $ (1,603) $ 2,249 $ 11,525 $ -- $ 12,171
Short-term investments............ -- -- 1,562 -- 1,562
Accounts receivable, net.......... 145 56 92,021 -- 92,222
Inventories....................... 11,229 5,116 29,655 -- 46,000
Deferred tax asset................ -- -- 10,483 -- 10,483
Prepaid expenses and other current
assets......................... 2,271 113 1,861 -- 4,245
-------- ------- -------- --------- --------
Total current assets...... 12,042 7,534 147,107 166,683
Property, Plant and Equipment,
net............................... 67,525 33,462 130,503 231,490
Intercompany Receivable............. 12,184 -- 863 (13,047) --
Investments in subsidiaries......... 23,435 -- 142,560 (165,995) --
Acquired Intangible Assets, net..... 101,131 -- -- -- 101,131
Other Assets........................ 619 1,852 742 -- 3,213
-------- ------- -------- --------- --------
$216,936 $42,848 $421,775 $(179,042) $502,517
======== ======= ======== ========= ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term
debt........................... $ 4,215 $ 104 $ 745 $ -- $ 5,064
Accounts payable.................. 21,608 4,745 42,241 -- 68,594
Intercompany payable.............. -- 13,047 -- (13,047) --
Accrued payroll and other employee
benefits....................... 5,693 225 22,361 -- 28,279
Accrued taxes..................... 3,880 269 (2,374) -- 1,775
Other accrued expenses............ 1,514 56 7,708 -- 9,278
-------- ------- -------- --------- --------
Total current
liabilities............. 36,910 18,446 70,681 (13,047) 112,990
-------- ------- -------- --------- --------
Long-term Debt, net of current
portion........................... 8,278 353 101,085 -- 109,716
-------- ------- -------- --------- --------
Deferred Tax Liability.............. 29,802 -- 883 -- 30,685
-------- ------- -------- --------- --------
Other Long-term Liabilities......... -- -- 9,214 -- 9,214
-------- ------- -------- --------- --------
Stockholders' Investment:
Common stock, $.05 par value;
Authorized -- 25,000 shares
Issued and outstanding --
13,086 shares in 1997.......... 11 29,654 655 (29,665) 655
Paid-in Capital..................... 212,474 -- 168,246 (212,474) 168,246
Deferred Compensation............... -- -- (117) -- (117)
Retained Earnings................... (70,539) (5,605) 71,128 76,144 71,128
-------- ------- -------- --------- --------
Total stockholders'
investment.............. 141,946 24,049 239,912 (165,995) 239,912
-------- ------- -------- --------- --------
$216,936 $42,848 $421,775 $(179,042) $502,517
======== ======= ======== ========= ========
</TABLE>
F-26
<PAGE> 131
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 25, 1997
---------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR PARENT ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES CORPORATION ENTRIES TOTAL
------------ ------------- ----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net Sales..................... $195,411 $26,411 $426,883 $ -- $648,705
Cost of Sales................. 164,069 18,773 324,471 -- 507,313
-------- ------- -------- ------- --------
Gross Profit................ 31,342 7,638 102,412 -- 141,392
Operating Expenses............ 12,821 7,696 44,069 -- 64,586
Write-off of Acquired
In-Process Research and
Development................. 78,000 -- -- -- 78,000
-------- ------- -------- ------- --------
Income (Loss) From
Operations............... (59,479) (58) 58,343 -- (1,194)
Interest and Other Income..... 655 -- 2,641 -- 3,296
Interest Expense.............. (2,003) (557) (8,363) -- (10,923)
-------- ------- -------- ------- --------
Income (Loss) Before
Provision for Income
Taxes.................... (60,827) (615) 52,621 -- (8,821)
Provision for Income Taxes.... 6,860 275 20,537 -- 27,672
Equity in income (loss) of
subsidiary.................. (2,852) -- (68,577) 71,429 --
-------- ------- -------- ------- --------
Net Income (Loss)........... $(70,539) $ (890) $(36,493) $71,429 $(36,493)
======== ======= ======== ======= ========
</TABLE>
F-27
<PAGE> 132
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 25, 1997
---------------------------------------------------------------------------
GUARANTOR NON-GUARANTOR PARENT ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES CORPORATION ENTITIES TOTAL
------------ ------------- ----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities................. $44,591 $ 9,978 $ (3,902) $ -- $ 50,667
------- ------- --------- ------- ---------
Cash Flows from Investing Activities:
Purchases of short-term
investments....................... -- -- (19,862) -- (19,862)
Maturities of short-term
investments....................... -- -- 27,701 -- 27,701
Investments in subsidiaries.......... 9,496 726 (10,222) -- --
Purchases of property, plant and
equipment......................... (19,976) (4,092) (45,783) -- (69,851)
Proceeds from sale of property, plant
and equipment..................... -- -- 2,760 -- 2,760
Foreign Sales Corp. dividend......... -- (1,962) 1,962 -- --
Acquisition of Zycon Corporation in
1997, net of cash acquired........ -- -- (209,661) -- (209,661)
------- ------- --------- ------- ---------
Net cash used in investing
activities........................ (10,480) (5,328) (253,105) -- (268,913)
------- ------- --------- ------- ---------
Cash Flows from Financing Activities:
Principal payments of long-term
debt.............................. (35,714) (2,505) (126,547) -- (164,766)
Proceeds from issuance of long-term
debt.............................. -- -- 224,954 -- 224,954
Proceeds from exercise of stock
options........................... -- -- 1,303 -- 1,303
Sale of common stock, net of issuance
costs............................. -- -- 131,088 -- 131,088
Tax benefit from exercise of stock
options........................... -- -- 5,052 -- 5,052
------- ------- --------- ------- ---------
Net cash (used in) provided by
financing activities............ (35,714) (2,505) 235,850 -- 197,631
------- ------- --------- ------- ---------
Net Increase (Decrease) in Cash and
Cash Equivalents..................... (1,603) 2,145 (21,157) -- (20,615)
Cash and Cash Equivalents, Beginning of
Period............................... -- 104 32,682 -- 32,786
------- ------- --------- ------- ---------
Cash and Cash Equivalents, End of
Period............................... $(1,603) $ 2,249 $ 11,525 $ -- $ 12,171
======= ======= ========= ======= =========
</TABLE>
F-28
<PAGE> 133
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (UNAUDITED)
CONDENSED CONSOLIDATING BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
AS OF MAY 2, 1998
-----------------------------------------------------------------------
GUARANTOR NON-GUARANTOR PARENT ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES CORPORATION ENTRIES TOTAL
------------ ------------- ----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................ $ 927 $ 1,534 $ 2,536 $ -- $ 4,997
Accounts receivable, net................. 18,776 441 95,135 -- 114,352
Inventories.............................. 28,696 6,815 40,095 (511) 75,095
Deferred tax asset....................... 8,623 -- 11,483 -- 20,106
Prepaid expenses and other current
assets................................ 2,015 4,173 1,870 -- 8,058
-------- ------- -------- --------- --------
Total current assets............. 59,037 12,963 151,119 (511) 222,608
Property, Plant and Equipment, net......... 139,696 43,481 135,158 -- 318,335
Intercompany Receivable.................... 5,218 87 54,694 (59,999) --
Investments in subsidiaries................ 24,106 -- 274,044 (298,150) --
Acquired Intangible Assets, net............ 195,026 -- -- -- 195,026
Other Assets............................... 2,036 330 1,106 -- 3,472
-------- ------- -------- --------- --------
$425,119 $56,861 $616,121 $(358,660) $739,441
======== ======= ======== ========= ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt........ $ 3,899 $ 107 $ 831 $ -- $ 4,837
Accounts payable......................... 30,237 6,313 37,619 -- 74,169
Intercompany payable..................... 35,219 26,699 -- (61,918) --
Accrued payroll and other employee
benefits.............................. 3,755 167 25,324 -- 29,246
Accrued taxes............................ 12,388 368 (12,262) -- 494
Other accrued expenses................... 3,080 80 12,069 -- 15,229
-------- ------- -------- --------- --------
Total current liabilities........ 88,578 33,734 63,581 (61,918) 123,975
Long-term Debt, net of current portion..... 12,326 327 346,384 -- 359,037
Deferred Tax Liability..................... 50,785 -- 883 -- 51,668
Other Long-term Liabilities................ -- -- 9,192 -- 9,192
Stockholders' Investment:
Common stock, $0.05 par value;
Authorized -- 50,000 shares
Issued and outstanding -- 13,212 in
1998................................ 11 29,654 662 (29,665) 662
Paid-in Capital.......................... 400,616 -- 171,466 (400,616) 171,466
Deferred Compensation.................... -- -- (75) -- (75)
Retained Earnings........................ (127,197) (6,854) 24,028 133,539 23,516
-------- ------- -------- --------- --------
Total stockholders' investment... 273,430 22,800 196,081 (296,742) 195,569
-------- ------- -------- --------- --------
$425,119 $56,861 $616,121 $(358,660) $739,441
======== ======= ======== ========= ========
</TABLE>
F-29
<PAGE> 134
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDING MAY 2, 1998
-----------------------------------------------------------------------
GUARANTOR NON-GUARANTOR PARENT ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES CORPORATION ENTRIES TOTAL
------------ ------------- ----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net Sales......................................... $152,103 $17,278 $240,078 $(1,596) $407,863
Cost of Sales..................................... 129,926 16,112 187,112 (1,085) 332,065
-------- ------- -------- ------- --------
Gross Profit.................................... 22,177 1,166 52,966 (511) 75,798
Operating Expenses................................ 7,444 1,836 30,030 -- 39,310
Restructuring and Other Non-Recurring Charges..... -- -- 5,947 -- 5,947
Write-off of Acquired In-Process Research and
Development..................................... 63,050 -- -- -- 63,050
-------- ------- -------- ------- --------
Income (Loss) From Operations................... (48,317) (670) 16,989 (511) (32,509)
Interest and Other Income......................... 822 612 (57) -- 1,377
Interest Expense.................................. (390) (390) (5,514) -- (6,294)
-------- ------- -------- ------- --------
Income (Loss) Before Provision for Income
Taxes......................................... (47,885) (448) 11,418 (511) (37,426)
Provision for Income Taxes........................ 7,524 98 2,564 -- 10,186
Equity in income (loss) of subsidiary............. (1,249) -- (55,955) 57,204 --
-------- ------- -------- ------- --------
Net Income (Loss)............................... $(56,658) $ (546) $(47,101) $56,693 $(47,612)
======== ======= ======== ======= ========
</TABLE>
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDING MAY 2, 1998
-----------------------------------------------------------------------
GUARANTOR NON-GUARANTOR PARENT ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES CORPORATION ENTRIES TOTAL
------------ ------------- ----------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating
activities...................................... $ 206 $(2,017) $ 14,917 $ (511) $ 12,595
-------- ------- -------- ------- --------
Cash Flows from Investing Activities:
Purchases of short-term investments............. -- -- (2,020) -- (2,020)
Maturities of short-term investments............ -- -- 3,582 -- 3,582
Foreign Sales Corp. dividend.................... -- (703) 703 -- --
Purchases of property, plant and equipment...... (11,735) (11,491) (24,960) -- (48,186)
Investments in subsidiaries..................... 5,691 -- (6,202) 511 --
Acquisition of Continental Circuits in 1998, net
of cash acquired.............................. -- -- (190,032) -- (190,032)
-------- ------- -------- ------- --------
Net cash used in investing activities......... (6,044) (12,194) (218,929) 511 (236,656)
-------- ------- -------- ------- --------
Cash Flows from Financing Activities:
Principal payments of long-term debt............ (42,433) (22) (763) -- (43,218)
Proceeds from issuance of long-term debt........ 10,730 -- 246,148 -- 256,878
Proceeds from exercise of stock options......... -- -- 476 -- 476
Increase (Decrease) of intercompany payable..... 40,071 13,518 (53,589) -- --
Sale of common stock, net of issuance costs..... -- -- 1,480 -- 1,480
Tax benefit from exercise of stock options...... -- -- 1,271 -- 1,271
Net cash provided by financing activities..... 8,368 13,496 195,023 -- 216,887
-------- ------- -------- ------- --------
Net Increase (Decrease) in Cash and Cash
Equivalents..................................... 2,530 (715) (8,989) 3,085 (7,174)
Cash and Cash Equivalents, Beginning of Period.... (1,603) 2,249 11,525 -- 12,171
-------- ------- -------- ------- --------
Cash and Cash Equivalents, End of Period.......... $ 927 $ 1,534 $ 2,536 $ 3,085 $ 4,997
======== ======= ======== ======= ========
</TABLE>
F-30
<PAGE> 135
HADCO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
Basis of presentation. In connection with the acquisition of Continental
Circuits Corp., which was financed with approximately $184 million of borrowings
from the Credit Facility, the Company on May 18, 1998 sold $200,000,000
aggregate principal amount of 9 1/2% Senior Subordinated Notes due in 2008 (the
Notes). The Notes are fully and unconditionally guaranteed on a senior
subordinated basis, jointly and severally, by certain of the Company's direct
wholly-owned domestic subsidiaries (the Guarantors). The Guarantors are Hadco
Santa Clara, Inc., Hadco Phoenix, Inc., CCIR of Texas Corp., and CCIR of
California Corp. The condensed consolidating financial statements of the
Guarantors are presented above and should be read in connection with the
Consolidated Financial Statements of the Company. Separate financial statements
of the Guarantors are not presented because (i) the Guarantors are wholly-owned
and have fully and unconditionally guaranteed the Notes on a joint and several
basis and (ii) the Company's management has determined such separate financial
statements are not material to investors and believes the condensed
consolidating financial statements presented are more meaningful in
understanding the financial position of the Guarantors.
There are no significant restrictions on the ability of the Guarantors to
make distributions to the Company.
Condensed consolidating financial information has not been presented for
1996 and 1995 because the Guarantors were not subsidiaries of the Company in its
1996 and 1995 fiscal years.
F-31
<PAGE> 136
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Continental Circuits Corp.
We have audited the accompanying consolidated balance sheets of Continental
Circuits Corp. and subsidiaries as of July 31, 1996 and 1997, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended July 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Continental
Circuits Corp. and subsidiaries at July 31, 1996 and 1997, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended July 31, 1997 in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Phoenix, Arizona
August 22, 1997
F-32
<PAGE> 137
CONTINENTAL CIRCUITS CORP.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JULY 31, JULY 31, JANUARY 31,
1996 1997 1998
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 3,851 $ 85 $ 180
Accounts receivable, less allowance of $167 in 1996 and
$152 in 1997........................................... 15,114 21,431 20,150
Inventories............................................... 4,796 8,805 13,081
Refundable income taxes................................... 240 420 420
Deferred income taxes..................................... 714 125 125
Prepaid expenses and other................................ 259 946 1,109
------- ------- --------
Total current assets.............................. 24,974 31,812 35,065
Property, plant, and equipment:
Land...................................................... 2,899 3,586 3,586
Buildings and improvements................................ 18,353 24,677 30,733
Machinery and equipment................................... 53,065 69,123 80,333
------- ------- --------
74,317 97,386 114,652
Accumulated Depreciation.................................. 40,200 46,422 50,774
------- ------- --------
34,117 50,964 63,878
Other assets................................................ 495 83 3,340
------- ------- --------
Total assets...................................... $59,586 $82,859 $102,283
======= ======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 7,193 $14,665 $ 15,774
Accrued vacation expense.................................. 720 688 497
Other accrued expenses.................................... 1,332 2,443 1,965
Current portion of long-term debt......................... 1,000 -- --
------- ------- --------
Total current liabilities......................... 10,245 17,796 18,236
Long-term debt, less current portion...................... 3,333 10,312 29,375
Deferred income taxes..................................... 1,976 2,507 2,507
Commitments and contingencies Shareholders' equity:
Preferred stock, $.01 par value -- Authorized shares
1,000,000.............................................. -- -- --
Issued and outstanding shares none
Common stock, $.01 par value -- Authorized shares
20,000,000
Issued and outstanding shares -- 7,194,000 in 1996,
7,252,000 in 1997, and 7,292,000 1998................ 72 73 73
Additional paid-in capital.................................. 10,077 10,266 10,511
Retained earnings........................................... 33,883 41,905 41,581
------- ------- --------
Total shareholders' equity.................................. 44,032 52,244 52,165
------- ------- --------
Total liabilities and shareholders' equity........ $59,586 $82,859 $102,283
======= ======= ========
</TABLE>
See accompanying notes
F-33
<PAGE> 138
CONTINENTAL CIRCUITS CORP.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JULY 31, JULY 31, JULY 31, FEBRUARY 2, JANUARY 31,
1995 1996 1997 1997 1998
-------- -------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales........................... $95,372 $108,362 $120,752 $56,685 $69,650
Cost of products sold............... 76,174 89,502 98,698 47,052 58,763
------- -------- -------- ------- -------
Gross profit........................ 19,198 18,860 22,054 9,633 10,887
Selling, general and administrative
expense........................... 7,381 7,991 8,487 3,839 4,616
In-process research and
development....................... -- -- -- -- 4,300
------- -------- -------- ------- -------
11,817 10,869 13,567 5,794 1,971
Other expense:
Interest............................ 878 470 354 123 734
Other............................... 25 123 365 325 15
------- -------- -------- ------- -------
Income before income taxes.......... 10,914 10,276 12,848 5,346 1,222
Income taxes........................ 4,260 3,993 4,826 2,096 1,546
------- -------- -------- ------- -------
Net income (loss)................... $ 6,654 $ 6,283 $ 8,022 $ 3,250 $ (324)
======= ======== ======== ======= =======
Net income (loss) per share
Basic............................... $ 0.93 $ 0.88 $ 1.11 $ 0.45 $ (0.04)
======= ======== ======== ======= =======
Diluted............................. $ 0.90 $ 0.85 $ 1.08 $ 0.44 $ (0.04)
======= ======== ======== ======= =======
Number of shares used in computing
Basic............................... 7,120 7,152 7,213 7,206 7,267
======= ======== ======== ======= =======
Diluted............................. 7,409 7,430 7,432 7,428 7,267
======= ======== ======== ======= =======
</TABLE>
See accompanying notes
F-34
<PAGE> 139
CONTINENTAL CIRCUITS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOW
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JULY 31, JULY 31, JULY 31, FEBRUARY 2, JANUARY 31,
1995 1996 1997 1997 1998
-------- -------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)............................ $ 6,654 $ 6,283 $ 8,022 $ 3,250 $ (324)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation............................... 5,612 6,572 6,292 2,838 4,351
In process research and development
write-off............................... -- -- -- -- 4,300
Loss on sale of property, plant, and
equipment............................... 70 139 6 -- --
Deferred income taxes...................... 101 (418) 1,120 -- --
Provision (recovery) for doubtful
accounts................................ 24 424 (15) (133) 16
Changes in operating assets and liabilities:
Accounts receivable........................ (1,327) (1,040) (6,302) (2,971) 2,136
Inventories................................ (1,129) 320 (4,009) (1,919) (3,881)
Refundable income taxes.................... -- (240) (180) -- --
Prepaid expenses and other................. (417) 365 (687) 154 (163)
Other assets............................... 77 (801) 412 291 (1,870)
Accounts payable........................... 1,135 (1,513) 7,472 3,748 535
Accrued expenses........................... 418 (158) 1,079 (72) (1,061)
Income taxes............................... 164 (386) -- 692 --
-------- ------- -------- ------- -------
Net cash provided by operating activities.... 11,382 9,547 13,210 5,878 4,039
INVESTING ACTIVITIES
Purchases of property, plant, and
equipment.................................. (11,676) (8,682) (20,562) (7,589) (16,361)
Proceeds from disposal of property, plant,
and equipment.............................. 31 102 17 -- --
Acquisition of Flexible Circuits
Technology................................. -- -- -- -- (6,891)
Acquisition of a division of Radian
International LLC.......................... -- -- (2,600) -- --
-------- ------- -------- ------- -------
Net cash used in investing activities........ (11,645) (8,580) (23,145) (7,589) (23,252)
FINANCING ACTIVITIES
Borrowings under line of credit agreement.... -- -- 9,312 1,000 19,063
Principal payments on long-term debt......... (11,143) (4,167) (4,333) (500) --
Borrowings under long-term debt.............. -- 5,000 1,000 -- --
Proceeds from issuance of common stock, net
of issuance cost........................... 9,504 13 190 135 245
Payments to repurchase common stock.......... (57) -- -- -- --
-------- ------- -------- ------- -------
Net cash provided by (used in) financing
activities................................. (1,696) 846 6,169 635 19,308
-------- ------- -------- ------- -------
Net increase (decrease) in cash and cash
equivalents................................ (1,959) 1,813 (3,766) (1,076) 95
Cash and cash equivalents at beginning of
period..................................... 3,997 2,038 3,851 3,851 85
-------- ------- -------- ------- -------
Cash and cash equivalents at end of period... $ 2,038 $ 3,851 $ 85 $ 2,775 $ 180
======== ======= ======== ======= =======
</TABLE>
See accompanying notes
F-35
<PAGE> 140
CONTINENTAL CIRCUITS CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
---------------- ADDITIONAL RETAINED
SHARES AMOUNT PAID-IN-CAPITAL EARNINGS TOTAL
------ ------ --------------- -------- -------
<S> <C> <C> <C> <C> <C>
BALANCE AT JULY 31, 1994................ 6,133 $61 $ 581 $20,993 $21,635
Cash proceeds from issuance of common
stock, net of share issuance costs.... 1,000 10 9,396 -- 9,406
Shares issued in connection with options
exercised............................. 10 -- 98 -- 98
Shares repurchased and canceled......... (13) -- (10) (47) (57)
Net income.............................. -- -- -- 6,654 6,654
----- --- ------- ------- -------
BALANCE AT JULY 31, 1995................ 7,130 71 10,065 27,600 37,736
Shares issued in connection with options
exercised............................. 64 1 199 -- 200
Share issuance costs.................... -- -- (187) -- (187)
Net income.............................. -- -- -- 6,283 6,283
----- --- ------- ------- -------
BALANCE AT JULY 31, 1996................ 7,194 72 10,077 33,883 44,032
Shares issued in connection with options
exercised and for employee stock
purchase plan......................... 58 1 189 -- 190
Net income.............................. -- -- -- 8,022 8,022
----- --- ------- ------- -------
BALANCE AT JULY 31, 1997................ 7,252 73 10,266 41,905 52,244
Shares issued in connection with options
exercised and for employee stock
purchase plan (unaudited)............. 40 -- 245 -- 245
Net loss (unaudited).................... -- -- -- (324) (324)
----- --- ------- ------- -------
BALANCE AT JANUARY 31, 1998
(UNAUDITED)........................... 7,292 $73 $10,511 $41,581 $52,165
===== === ======= ======= =======
</TABLE>
See accompanying notes
F-36
<PAGE> 141
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1997
(THE INFORMATION FOR THE SIX MONTHS ENDED FEBRUARY 2, 1997 AND JANUARY 31, 1998
IS UNAUDITED)
1. ACCOUNTING POLICIES
Description Of Business
The Company is in one line of business as a manufacturer of complex
multilayer, surface mount circuit boards used in sophisticated electronic
equipment in the computer, communications, instrumentation and industrial
controls industries. The Company sells its products primarily to leading
original equipment manufacturers and to contract assemblers in the United States
and abroad.
Principles Of Consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries, which are wholly owned. Significant intercompany accounts
and transactions have been eliminated in consolidation.
Cash And Cash Equivalents
Cash and cash equivalents consists of checking accounts and funds invested
in overnight repurchase agreements and is stated at cost, which approximates
market value. The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash equivalents.
Inventories
Inventories are carried at the lower of cost or market using the first-in,
first-out (FIFO) method.
Property, Plant, And Equipment
Property, plant, and equipment is stated at cost. Depreciation is computed
using the double declining balance and the straight-line methods based on the
estimated useful lives of the related assets ranging from three to forty years.
Fair Value Of Financial Instruments
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments," requires that the Company disclose
estimated fair values of financial instruments. Cash and cash equivalents,
accounts receivable, accounts payable and accrued liabilities are carried at
amounts that reasonably approximate their fair values. The carrying amounts of
the Company's borrowings under its line of credit arrangement approximates its
fair value based on the variable nature of its interest rates.
Revenue Recognition
Sales are recorded at the time individual items are shipped.
Advertising Costs
Advertising costs are expensed as incurred. Advertising expense for the
years ended July 31, 1995, 1996, and 1997 and for the six months ended January
31, 1998 were $55,000, $54,000, $47,000 and $64,000, respectively.
Income Taxes
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes".
F-37
<PAGE> 142
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share" ("SFAS No. 128"), adopted by the Company in the second
quarter of fiscal year 1998. SFAS No. 128 replaced the previously reported
primary or fully diluted pro forma earnings per share with basic and diluted
earnings per share. Unlike primary earnings per share, basic earnings per share
excludes any dilutive effects of options, warrants, and convertible securities.
Diluted earnings per share is very similar to the previously reported primary
earnings per share. All earnings per share amounts for all periods have been
presented, and where necessary, restated to conform to the SFAS No. 128
requirements. The impact of SFAS No. 128 on the calculation of fully diluted
earnings per share for each of the periods presented was not material.
Supplemental Earnings Per Share
Supplemental earnings per share, assuming the proceeds from the issuance of
922,000 common shares at the public offering of $10.50, net of issuance costs,
were used to repay $9.0 million of the Company's indebtedness as of August 1,
1994, would have reduced diluted earnings per share from $0.90 to $0.85 in 1995.
Stock Based Compensation
The Company grants stock options for a fixed number of shares to employees
with an exercise price equal to the fair value of the shares at the date of
grant. The Company accounts for stock option grants to employees in accordance
with APB Opinion No. 25, "Accounting for Stock Issued to Employees," (APB 25)
and, accordingly, recognizes no compensation expense for the stock option
grants.
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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Interim Financial Information
The consolidated financial statements for the six months ended February 2,
1997 and January 31, 1998 are unaudited but include all adjustments (consisting
only of normal recurring adjustments) that the Company considers necessary for a
fair presentation of financial position and results of operations. Operating
results for the six months ended January 31, 1998 are not necessarily indicative
of the results that may be expected for any future periods.
2. ACQUISITIONS
In April 1997, the Company acquired the assets and assumed certain
liabilities of a division of Radian International LLC (Radian) for $2,600,000.
The acquisition was accounted for as a purchase, and accordingly, the results of
its operations have been included in the consolidated results of operations
since the transaction date. The purchase price has been allocated to the assets
and liabilities acquired based on fair values at acquisition. The results of
operations of Radian were not significant in relation to the Company for periods
prior to the acquisition.
On November 17, 1997, the Company acquired substantially all of the assets
of Flexible Circuits Technology, dba Dynaflex Technology, for approximately $6.9
million in cash. The purchase price has been allocated to the assets acquired
and included an allocation of $4.3 million to in process research and
development. The results of the acquired business were not significant in
relation to the Company for periods prior to the acquisition.
F-38
<PAGE> 143
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
JULY 31, JULY 31, JANUARY 31,
1996 1997 1998
-------- -------- -----------
<S> <C> <C> <C>
Raw material................................... $ 649 $2,117 $ 2,943
Work-in-process................................ 2,487 4,878 8,344
Finished Goods................................. 1,660 1,810 1,794
------ ------ -------
$4,796 $8,805 $13,081
====== ====== =======
</TABLE>
4. LONG-TERM DEBT
On July 25, 1997, the Company entered into a $45,000,000 long-term line of
credit agreement with a bank. Up to $25,000,000 of the line of credit agreement
can be converted into a long-term note payable. At July 31, 1997 there were no
amounts converted to a long-term note. The line of credit bears interest at
LIBOR plus a fixed rate factor, as defined, and/or the prime rate, payable
monthly, and the interest rate can be converted by the Company to a fixed rate
when the Company draws above $2,000,000. The line of credit expires on October
31, 2000 and provides for maximum borrowings of the lessor of $45,000,000 less
any converted long-term note payable amounts. At July 31, 1997, amounts
available under the line of credit were approximately $34,700,000. The weighted
average interest rate under the line of credit was 8.5 percent in 1997. The
above long-term debt agreements are collateralized by substantially all
available assets of the Company.
The line of credit agreement contains covenants which place various
restrictions on financial ratios, transactions with related parties, and
prohibits the payment of dividends. In addition, the line of credit agreement
contains an event of default provision whereby all outstanding amounts would be
due and payable should there be a change in ownership control.
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
JULY 31, JULY 31, JANUARY 31,
1996 1997 1998
-------- -------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
$45,000,000 long-term line of credit agreement with a
bank, interest payable monthly at LIBOR plus a fixed
rate factor, as defined, and/or the prime rate,
maturing October 31, 2000........................... $ -- $ 9,312 $28,375
$1,000,000 long-term adjustable rate industrial
development revenue bond, interest payable monthly
at a variable rate until September 1, 2011 when all
outstanding interest and principal is due and
payable; secured by $1,000,000 irrevocable letter of
credit; bond is subject to certain optional and
mandatory redemption, as defined.................... -- 1,000 1,000
$5,000,000 long-term note payable to a bank, paid in
full during 1997.................................... 4,333 -- --
------ ------- -------
4,333 10,312 29,375
Less current portion.................................. 1,000 -- --
------ ------- -------
$3,333 $10,312 $29,375
====== ======= =======
</TABLE>
Maturities of long-term debt for the five years succeeding July 31, 1997
are as follows: July 31, 1998 $0, 1999 $0, 2000 $0, 2001 $9,312,000, 2002 $0,
and thereafter $1,000,000. Interest payments approximated interest expense
during the years ended July 31, 1995, 1996, 1997 and for the six months ended
January 31, 1997 and 1998.
F-39
<PAGE> 144
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. STOCK OPTIONS
The Company has elected to follow APB 25 and related Interpretations in
accounting for its employee stock options because, as discussed below, the
alternative fair value accounting provided for under FASB Statement No. 123,
Accounting for Stock-Based Compensation (Statement 123), requires use of option
valuation models that were not developed for use in valuing employee stock
options. Under APB 25, because the exercise price of the Company's employee
stock options equals the market price of the underlying stock on the date of
grant, no compensation is recognized.
During 1987, the Company's stockholders adopted a stock option plan (the
1987 Plan) that provides for the granting of options to employees (including
officers) and non-employee directors at fair value at the date of the grant. The
1987 Plan provides for the issuance of options at fair value to purchase a
maximum of 750,000 shares of common stock. All options under the 1987 Plan are
exercisable cumulatively, beginning on the third anniversary of the date of
grant. Generally, after three years from the date of grant, the optionee may
purchase 40 percent of the shares granted; an additional 20 percent after four
years; an additional 20 percent after five years; and the final 20 percent after
six years. However, with respect to 200,000 options granted on August 25, 1994,
the options become exercisable at the rate of 15 percent a year. All options
expire between seven and ten years after the date of grant. The options granted
under the 1987 Plan become fully exercisable if the Company is dissolved,
liquidated, merged, consolidated, or undergoes a change in control as defined in
the Plan document.
During 1996, the Company's stockholders adopted a second stock option plan
(the 1996 Plan) that provides for the granting of options to employees
(including officers) and non-employee directors at fair value at the date of the
grant. The 1996 plan provides for the issuance of options at fair value at the
date of the grant. The 1996 plan provides for the issuance of options at fair
value to purchase a maximum of 1,000,000 shares of common stock. All options
under the 1996 plan are exercisable cumulatively, beginning on the first
anniversary of the date of grant. Generally, after one year from the date of
grant, the optionee may purchase 20 percent of the shares granted; an additional
20 after two years; an additional 20 percent after three years; an additional 20
percent after four years; and the final 20 percent after five years. All options
expire ten years after the date of grant. The options granted under the 1996
Plan become fully exercisable if the Company is dissolved, liquidated, merged,
consolidated, or undergoes a change in control as defined in the Plan document.
Pro forma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of that
Statement. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 1997 and 1996: risk-free interest rate of 5.5 percent, dividend
yield of zero percent, volatility factor of the expected market price of the
Company's common stock of .46, and a weighted-average expected life of the
option of 6.26 years and seven years, respectively.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.
Because Statement No. 123 is applicable to options granted subsequent to
December 31, 1994, its pro forma effect will not be fully reflected until
approximately 2003. For purposes of pro forma disclosures, the
F-40
<PAGE> 145
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
estimated fair value of the options is amortized to expense over the option's
vesting period. The Company's pro forma information follows (in thousands except
for earnings per share information):
<TABLE>
<CAPTION>
JULY 31, JULY 31,
1996 1997
--------- ---------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Net income, as reported.................................... $6,283 $8,022
Pro forma compensation expense for options................. 74 142
------ ------
Pro forma net income....................................... $6,209 $7,880
====== ======
Diluted earnings per share, as reported.................... $ 0.85 $ 1.08
Diluted earnings per share, pro forma...................... $ 0.84 $ 1.06
</TABLE>
Information regarding stock options outstanding under the Plans are as
follows:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
SHARES EXERCISE PRICE
-------- ----------------
<S> <C> <C>
Outstanding at July 31, 1994.............................. 186,000 $ 3.11
Granted................................................. 225,000 3.27
Exercised............................................... (9,600) 6.72
Forfeited (canceled).................................... (25,000) 3.10
-------- ------
Outstanding at July 31, 1995.............................. 376,400 3.11
Granted................................................. 110,000 15.00
Exercised............................................... (64,040) 3.12
Forfeited (canceled).................................... (24,000) 12.50
-------- ------
Outstanding at July 31, 1996.............................. 398,360 5.69
Granted................................................. 432,000 14.03
Exercised............................................... (40,960) 2.50
Forfeited (canceled).................................... (26,750) 12.85
-------- ------
Outstanding at July 31, 1997.............................. 762,650 $10.48
======== ======
</TABLE>
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ------------------------------------------------ ---------------------------------------------
WEIGHTED-
AVERAGE WEIGHTED- WEIGHTED-
RANGE OF NUMBER REMAINING AVERAGE NUMBER AVERAGE
EXERCISE PRICE OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- -------------- ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 2.50 - $ 3.25 258,900 6.83 years $ 3.14 15,100 $2.50
4.00 5,000 7.29 years $ 4.00 -- --
10.63 - 15.00 368,750 9.24 years $12.85 -- --
18.00 130,000 9.99 years $18.00 -- --
</TABLE>
Exercise prices for options outstanding at July 31, 1997, range from $2.50
to $18.00. The weighted-average fair value of options granted during 1997 and
1996 was $7.43 and $8.36, respectively.
F-41
<PAGE> 146
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
JULY 31
----------------
1996 1997
------ ------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities:
Tax over book depreciation.................................. $1,970 $2,499
Receivables adjustments..................................... -- 493
Other, net.................................................. 52 52
------ ------
Total deferred tax liabilities.................... 2,022 3,044
------ ------
Deferred tax assets:
Receivables allowances...................................... 227 61
Inventory allowances........................................ 116 136
Accrued vacation............................................ 227 220
Accrued expenses............................................ 80 87
Unicap and other............................................ 110 158
------ ------
Total deferred tax assets......................... 760 662
------ ------
Net deferred taxes.......................................... $1,262 $2,382
====== ======
</TABLE>
Significant components of the federal and state income tax expense are:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31
--------------------------
1995 1996 1997
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal................................................ $3,287 $3,486 $3,053
State.................................................. 872 925 653
------ ------ ------
Total current.................................. 4,159 4,411 3,706
Deferred:
Federal................................................ 84 (347) 929
State.................................................. 17 (71) 191
------ ------ ------
Total deferred................................. 101 (418) 1,120
------ ------ ------
$4,260 $3,993 $4,826
====== ====== ======
</TABLE>
Total income tax payments, net of any refunds received, during the years
ended July 31, 1995, 1996 and 1997, were approximately $3,962,000, $5,037,000
and $3,997,000, respectively.
F-42
<PAGE> 147
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A reconciliation of the Company's effective income tax rate to the federal
statutory rate follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED JULY 31 JANUARY 31
-------------------- ------------
1995 1996 1997 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Federal statutory rate............................ 34% 34% 34% 34% 34%
State tax net of federal benefit.................. 7 7 7 7 5
In process research and development write-offs.... -- -- -- -- 136
Tax credits....................................... -- -- -- -- (48)
Other............................................. (2) (2) (3) (2) --
-- -- -- -- ---
39% 39% 38% 39% 127%
== == == == ===
</TABLE>
The effective income tax rate for the six months ended January 31, 1998
includes a year to date adjustment to reflect one time and ongoing tax credits
available to the Company, which reduced its estimated income tax rate for the
year ending July 31, 1998 to approximately 28% based on estimated earnings for
the year.
7. SIGNIFICANT CUSTOMERS AND EXPORT SALES
The percentages of total sales to significant customers were as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31
--------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Customer A.............................................. 0% 5% 15%
Customer B.............................................. 15 11 7
Customer C.............................................. 15 21 20
</TABLE>
The amount of total export sales by geographic area was as follows:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31
-----------------------------
1995 1996 1997
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Canada........................................ $ 3,500 $ 3,800 $ 2,700
Singapore..................................... 10,800 6,900 5,800
United Kingdom and others..................... 10,100 9,600 15,600
------- ------- -------
Total export sales.................. $24,400 $20,300 $24,100
======= ======= =======
</TABLE>
The Company performs ongoing credit risk evaluations of its customers'
financial conditions and generally does not require collateral. The Company's
significant customers are major, well-known businesses in the electronic
equipment industry. Credit losses have been provided for in the financial
statements and have been within management's expectations.
8. COMMITMENTS AND CONTINGENCIES
The Company leases certain equipment and buildings under noncancelable
operating leases that expire in various years through 2004. Total rental expense
for all operating leases was approximately $122,000, $357,000 and $397,000,
during the years ended July 31, 1995, 1996 and 1997, respectively. Future
minimum payments
F-43
<PAGE> 148
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
under noncancelable operating leases with initial terms of one year or more
consisted of the following at July 31, 1997:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
1998....................................... $ 672,115
1999....................................... 636,480
2000....................................... 636,480
2001....................................... 636,480
2002....................................... 636,480
Thereafter................................. 1,092,624
----------
$4,310,659
==========
</TABLE>
The Company is a party to certain litigation in the normal course of
business. Management does not anticipate any material adverse impact from the
resolution of such matters.
9. BENEFIT PLANS
The Company has a 401(k) Retirement Plan (Plan) covering all employees who
reside in the United States, have completed six months of service, and have
attained age 21. Under the terms of the Plan, employees may contribute up to 15
percent of their annual compensation, subject to Internal Revenue Service
limitations. The Company matched 25 percent of employee contributions up to 6
percent of the employee's annual compensation. Additional contributions to the
Plan can be made at the discretion of the Board of Directors. Company
contributions to the Plan during the years ended July 31, 1995, 1996, and 1997,
were approximately $164,000, $198,000 and $212,000, respectively.
During 1996, the Company adopted the Continental Circuits Corp. Employee
Stock Purchase Plan. All employees who are regularly scheduled to work at least
20 hours per week and have completed at least six (6) months of continuous
service with the Company are eligible to participate in the plan. Eligible
employees are entitled to purchase shares of common stock through payroll
deductions of up to 10 percent of their compensation. The price paid for the
common stock is equal to 85 percent of the fair market value of the Company's
common stock on the last business day of the quarterly investment period. At the
Company's option, common stock can either be purchased on the open market or
through new shares issued. Total shares reserved for issuance are 200,000, with
17,937 purchased through July 31, 1997 at a market price ranging from $10.75 to
$13.88 per share.
10. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
A summary of the quarterly results of operations for the years ended July
31, 1996 and 1997 follows:
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1997:
Net sales............................ $27,123 $29,562 $31,862 $32,205
Gross margin......................... $ 4,463 $ 5,170 $ 6,148 $ 6,273
Net income........................... $ 1,433 $ 1,817 $ 2,379 $ 2,393
Earnings per share................... $ .19 $ .24 $ .32 $ .32
Weighted average common and
equivalent shares outstanding...... 7,424 7,432 7,457 7,497
</TABLE>
F-44
<PAGE> 149
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1996:
Net sales............................ $28,508 $28,860 $26,464 $24,530
Gross margin......................... $ 5,733 $ 6,215 $ 4,406 $ 2,506
Net income........................... $ 2,248 $ 2,305 $ 1,380 $ 350
Earnings per share................... $ .30 $ .31 $ .19 $ .05
Weighted average common and
equivalent shares outstanding...... 7,430 7,431 7,413 7,420
</TABLE>
The 1997 quarterly results for net earnings per share, when totaled, do not
equal the net earnings per share for the year ended July 31, 1997 due to
rounding.
11. SUBSEQUENT EVENT
On February 9, 1998, the Company announced that it had completed the
purchase of substantially all of the assets of a wholly owned subsidiary of CCIR
of California Corp., named PCA Design. PCA Design has annual sales of
approximately $2.0 million.
On February 11, 1998, the Company, through one of its recently acquired
businesses, obtained $6.0 million in tax-exempt revenue bonds.
On March 20, 1998, Hadco Corporation acquired all of the outstanding
capital stock of the Company for approximately $188 million (including costs).
F-45
<PAGE> 150
======================================================
NO DEALER, SALESPERSON, OR OTHER PERSONS HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY HADCO CORPORATION OR ANY OF ITS SUBSIDIARIES. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR SOLICITATION OF AN OFFER TO
BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Forward-Looking Statements.......... iv
Prospectus Summary.................. 1
Risk Factors........................ 13
Use of Proceeds..................... 23
Capitalization...................... 24
Pro Forma Condensed Consolidated
Financial Statements.............. 25
Selected Historical Consolidated
Financial Data.................... 28
Management's Discussion and Analysis
of Financial Condition and Results
of Operations..................... 30
Business............................ 38
Management.......................... 51
Description of Certain
Indebtedness...................... 53
The Exchange Offer.................. 55
Description of the Notes............ 64
Plan of Distribution................ 93
Certain United States Federal Tax
Consequences...................... 94
Legal Matters....................... 97
Experts............................. 97
Additional Information.............. 97
Incorporation of Certain Documents
by Reference...................... 98
Listing and General Information..... 98
Index to Consolidated Financial
Statements........................ F-1
</TABLE>
======================================================
======================================================
HADCO CORPORATION
OFFER TO EXCHANGE ITS 9 1/2% SENIOR
SUBORDINATED NOTES DUE 2008,
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS
AMENDED, FOR ANY AND ALL OF ITS
OUTSTANDING 9 1/2% SENIOR
SUBORDINATED NOTES DUE 2008.
--------------------
PROSPECTUS
--------------------
, 1998
======================================================
<PAGE> 151
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 67 of Chapter 156B of the Massachusetts Business Corporation Law
provides:
"Indemnification of directors, officers, employees and other agents of a
corporation, and persons who serve at its request as directors, officers,
employees or other agents of another organization, or who serve at its request
in any capacity with respect to any employee benefit plan, may be provided by it
to whatever extent shall be specified in or authorized by (i) the articles of
organization or (ii) a by-law adopted by the stockholders or (iii) a vote
adopted by the holders of a majority of the shares of stock entitled to vote on
the election of directors. Except as the articles of organization or by-laws
otherwise require, indemnification of any persons referred to in the preceding
sentence who are not directors of the corporation may be provided by it to the
extent authorized by the directors. Such indemnification may include payment by
the corporation of expenses incurred in defending a civil or criminal action or
proceeding in advance of the final disposition of such action or proceeding,
upon receipt of an undertaking by the person indemnified to repay such payment
if he shall be adjudicated to be not entitled to indemnification under this
section which undertaking may be accepted without reference to the financial
ability of such person to make repayment. Any such indemnification may be
provided although the person to be indemnified is no longer an officer,
director, employee or agent of the corporation or of such other organization or
no longer serves with respect to any such employee benefit plan.
No indemnification shall be provided for any person with respect to any
matter as to which he shall have been adjudicated in any proceeding not to have
acted in good faith in the reasonable belief that his action was in the best
interest of the corporation or to the extent that such matter relates to service
with respect to any employee benefit plan, in the best interests of the
participants or beneficiaries of such employee benefit plan.
The absence of any express provision for indemnification shall not limit
any right of indemnification existing independently of this section.
A corporation shall have power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or other agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or other agent of another organization or with
respect to any employee benefit plan, against any liability incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability."
The Company's Restated Articles of Organization, as amended, provide:
"The Corporation eliminates the personal liability of each director to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director notwithstanding any statutory provision or other law imposing
such liability; provided, that nothing in this paragraph shall eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or knowing violation of
law, (iii) under Section sixty-one or sixty-two of Chapter 156B of the
Massachusetts General Laws, or (iv) for any transaction from which the director
derived an improper personal benefit."
Article V, Section 2 of the Company's By-Laws provides:
"2. Indemnification. Each Director, officer, employee and other agent of
the corporation, and any person who, at the request of the corporation, serves
as a director, officer, employee or other agent of another organization in which
the corporation directly or indirectly owns shares or of which it is a creditor
shall be indemnified by the corporation against any cost, expense (including
attorney's fees), judgment, liability and/or amount paid in settlement
reasonably incurred by or imposed upon him in connection with any action, suit
or proceeding (including any proceeding before any administrative or legislative
body or agency), to which he may be made a party or otherwise involved or with
which he shall be threatened, by reason of his being, or related to his status
as, a director, officer, employee or other agent of the corporation or of any
other
II-1
<PAGE> 152
organization in which the corporation directly or indirectly owns shares or of
which the corporation is a creditor, which other organization he serves or has
served as director, officer, employee or other agent at the request of the
corporation (whether or not he continues to be an officer, director, employee or
other agent of the corporation or such other organization at the time such
action, suit or proceeding is brought or threatened), unless such
indemnification is prohibited by the Business Corporation Law of the
Commonwealth of Massachusetts. The foregoing right of indemnification shall be
in addition to any rights to which any such person may otherwise be entitled and
shall inure to the benefit of the executors or administrator of each such
person. The corporation may pay the expenses incurred by any such person in
defending a civil or criminal action, suit or proceeding in advance of the final
disposition of such action, suit or proceeding in advance of the final
disposition of such action, suit or proceeding, upon receipt of an undertaking
by such person to repay such payment if it is determined that such person is not
entitled to indemnification hereunder. This section shall be subject to
amendment or repeal only by action of the stockholders."
Hadco Santa Clara, Inc. ("Hadco SC") and Hadco Phoenix, Inc. ("Hadco
Phoenix") are each Delaware corporations.
Section 145 of the Delaware General Corporation Law (the "Delaware Code")
empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.
Section 145 also empowers a corporation to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation
unless, and only to the extent that, the Court of Chancery or the court in which
such action was brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to indemnify for such
expenses which the court shall deem proper.
Section 145 further provides that to the extent that a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to above or in the defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation is empowered to purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liabilities under Section 145.
Article Seventh of each of Hadco Phoenix's Restated Certificate of
Incorporation and Hadco SC's Amended and Restated Certificate of Incorporation,
as amended, states that such Corporation eliminates the personal liability of
each member of its Board of Directors to such Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director, provided,
however, that, to the extent provided by applicable law, the foregoing shall not
eliminate the liability of a director (i) for any breach of such director's duty
of loyalty to such Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of Title 8 of the Delaware Code or (iv) for any
transaction from which such director derived an improper personal benefit.
II-2
<PAGE> 153
Article V of each of Hadco Phoenix's and Hadco SC's By-Laws provides
generally as follows:
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or contemplated
action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
entity, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceedings, had no reasonable cause to believe his conduct was unlawful;
provided, however, that with respect to actions by or in the right of the
corporation, no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be
liable unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the
Court of Chancery of the State of Delaware or such other court shall deem
proper.
CCIR of California Corp. ("CCIR of CA") is a California corporation.
Section 204 of the California Corporations Code (the "CCC") generally
provides that articles of incorporation may set forth provisions eliminating or
limiting the personal liability of a director for monetary damages in an action
brought by or in the right of the corporation for breach of a director's duties
to the corporation and its shareholders as set forth in Section 309 of the CCC,
provided, however, that (A) such provision may not eliminate or limit the
liability of directors (i) for acts or omissions that involve intentional
misconduct or a knowing and culpable violation of law, (ii) for acts or
omissions that a director believes to be contrary to the best interests of the
corporation or its shareholders or that involve the absence of good faith on the
part of the director, (iii) for any transaction from which a director derived an
improper personal benefit, (iv) for acts or omissions that show a reckless
disregard for the director's duty to the corporation or its shareholders in
circumstances in which the director was aware, or should have been aware, in the
ordinary course of performing a director's duties, of a risk of serious injury
to the corporation or its shareholders, (v) for acts or omissions that
constitute an unexcused pattern of inattention that amounts to an abdication of
the director's duty to the corporation or its shareholders, (vi) under Section
310 of the CCC or (vii) under Section 316 of the CCC; (B) no such provision
shall eliminate or limit the liability of a director for any act or omission
occurring prior to the date when the provision becomes effective; and (C) no
such provision shall eliminate or limit the liability of an officer for any act
or omission as a officer notwithstanding that the officer is also a director or
that his actions, if negligent or improper, have been ratified by the directors.
Articles V and VI of CCIR of CA's articles of incorporation provide that
(i) the liability of the directors of CCIR of CA for monetary damages shall be
eliminated to the fullest extent permissible under California law and (ii) CCIR
of CA is authorized to provide indemnification of directors, officers, and
agents of CCIR of CA through Bylaw provisions, agreements with agents, vote of
shareholders or disinterested directors, or otherwise, to the fullest extent
permissible under California law. In addition, Section 6.1 of the Bylaws of CCIR
of CA provides that CCIR of CA shall to the maximum extent permitted by the CCC,
have the power to indemnify each of its agents against expenses, judgments,
fines, settlements and other amounts actually and reasonably incurred in
connection with any proceeding arising by reason of the fact any such person is
or was an agent of CCIR of CA and shall have power to advance to each such agent
expenses incurred in defending any such proceeding to the maximum extent
permitted by that law. "Agent" includes any person who is or was a director,
officer, employee or other agent of CCIR of CA (or its predecessor(s)) or is or
was serving at the request of CCIR of CA (or its predecessor(s)) as a director,
officer, employee or agent of another entity.
CCIR of Texas Corp. ("CCIR of TX") is a Texas corporation.
Article 2.02 of the Texas Business Corporation Act (the "TBC") generally
provides that a corporation shall have the power to indemnify directors,
officers, employees, and agents of the corporation and purchase and maintain
liability insurance for such persons. Article 2.02-1 of the TBC generally
provides that a
II-3
<PAGE> 154
corporation may indemnify a person who was, is, or is threatened to be made a
named defendant or respondent in a proceeding because the person (i) is or was a
director, officer, employee or agent of the corporation or (ii) while a director
of the corporation, is or was serving at the request of the corporation as a
director, officer, venturer, proprietor, trustee, employee, agent, or similar
functionary of another corporation or other entity, provided that such person
(1) conducted himself in good faith, (2) reasonably believed (a) in the case of
conduct in his official capacity as a director of the corporation, that his
conduct was in the corporation's best interest and (b) in all other cases, that
his conduct was at least not opposed to the corporation's best interests, and
(3) in the case of any criminal proceeding, had no reasonable cause to believe
his conduct was unlawful. A corporation's ability to indemnify a person as set
forth above is limited in cases where such person is found liable on the basis
that a personal benefit was improperly received by him or in cases in which the
person is found liable to the corporation.
Section 2.02-1 of the TBC further provides that a corporation shall
indemnify a director or officer against reasonable expenses incurred by him in
connection with a proceeding in which such person is a named defendant or
respondent because such person is or was a director or officer if such person
has been wholly successful, on the merits or otherwise, in the defense of the
proceeding; that a corporation may advance expenses to persons entitled to
indemnification under the statute; and the corporation may purchase and maintain
insurance on behalf of any person who is a director, officer, partner, or agent
of the corporation or who is serving at the request of the corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent or
similar functionary of another corporation or entity, against any liability
asserted against him and incurred by him in such capacity or arising out of his
status as such a person, whether or not the corporation would have the power to
indemnify him against that liability under Section 2.02-1 of the TBC.
Article XI of CCIR of TX's Articles of Incorporation provides that the
corporation shall indemnify any person who (i) is or was a director, officer,
employee, or agent of the corporation, or (ii) while a director, officer,
employee, or agent of the corporation, is or was serving at the request of the
corporation as a director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise, to the fullest extent that a corporation may
or is required to grant indemnification to a director under the Texas Business
Corporation Act as now written or as hereafter amended. In addition, the
corporation may indemnify any person to such further extent as permitted by law.
Article XII of such Articles provides that a director of the corporation shall
not be liable to the corporation or its shareholders for monetary damages for an
act or omission in the director's capacity as director, except that this Article
XII does not eliminate or limit the liability of a director for:
(a) a breach of a director's loyalty to the corporation or its
shareholders;
(b) an act or omission not in good faith or that involves intentional
misconduct or a knowing violation of the law;
(c) a transaction from which a director received an improper benefit,
whether or not the benefit resulted from an action taken within the scope
of the director's office;
(d) an act or omission for which the liability of a director is
expressly provided for by statute; or
(e) an act related to an unlawful stock repurchase or payment of a
dividend.
II-4
<PAGE> 155
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
This Registration Statement includes the following exhibits:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
3.1.1 Restated Articles of Organization of the Company (filed as
Exhibit 3.1 to the Registration Statement No. 333-21977 on
Form S-3 and incorporated herein by reference).
3.1.2 Articles of Amendment to the Articles of Organization of the
Company (filed as Exhibit 3.1 to Form 10-Q, File No.
0-12102, for fiscal quarter ended January 31, 1998 and
incorporated herein by reference).
3.2 By-laws of the Company, as amended (filed as Exhibit 3.2 to
the Registration Statement No. 333-21977 on Form S-3 and
incorporated herein by reference).
3.3 Restated Certificate of Incorporation of Hadco Santa Clara,
Inc.
3.4 Amended and Restated By-laws of Zycon Corporation (n/k/a
Hadco Santa Clara, Inc.)
3.5 Restated Certificate of Incorporation of Hadco Phoenix, Inc.
3.6 By-laws of Hadco Phoenix, Inc.
3.7 Articles of Incorporation of CCIR of California Corp.
3.8 By-laws of CCIR of California Corp.
3.9 Articles of Incorporation of CCIR of Texas Corp.
3.10 By-laws of CCIR of Texas Corp.
4.1 Indenture (including Form of Exchange Note) dated as of May
18, 1998 by and among the Company, the Guarantors and State
Street Bank and Trust Company, as trustee.
4.2 Registration Rights Agreement dated May 13, 1998 among the
Company, the Guarantors, Morgan Stanley & Co. Incorporated,
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
BancAmerica Robertson Stephens, and BT Alex. Brown
Incorporated, as initial purchasers.
5.1 Opinion of Testa, Hurwitz & Thibeault, LLP as to the
legality of the securities to be offered.
10.1 Placement Agreement dated May 13, 1998 by and among the
Company, the Guarantors, Morgan Stanley & Co. Incorporated,
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
BancAmerica Robertson Stephens, and BT Alex. Brown
Incorporated, as initial purchasers.
11.1 Statement re: Computation of Per Share Earnings.
12.1 Statement re: Computation of the Ratio of Earnings to Fixed
Charges.
23.1 Consent of Testa, Hurwitz & Thibeault, LLP (included as part
of Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Ernst & Young, LLP.
24.1 Powers of Attorney (included on signature pages to this
Registration Statement).
25.1 Statement of Eligibility of State Street Bank and Trust
Company, as Trustee, on Form T-1.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Exchange Agency Agreement.
</TABLE>
(b) Financial Statement Schedules:
Report of Independent Public Accountants on Schedule
Schedule II -- Valuation and Qualifying Accounts
(c) Not Applicable.
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<PAGE> 156
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of any
such registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of any of the
registrants pursuant to provisions described in Item 20 above, or otherwise, the
registrants have been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by any registrant of expenses
incurred or paid by a director, officer or controlling person of any registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(b) The undersigned registrants hereby undertake to respond to requests for
information that are incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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<PAGE> 157
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Salem, State of New
Hampshire on June 23, 1998.
HADCO CORPORATION
By: /s/ ANDREW E. LIETZ
--------------------------------------
Andrew E. Lietz
President, Chief Executive
Officer and Director
Each person whose signature appears below in so signing also makes,
constitutes and appoints Andrew E. Lietz and Timothy P. Losik, and each of them,
his true and lawful attorney-in-fact, with full power of substitution, for him
in any and all capacities, to execute and cause to be filed with the Securities
and Exchange Commission any and all amendments and post-effective amendments to
this Registration Statement, with exhibits thereto, and to the documents in
connection therewith, and hereby ratifies and confirms all that said
attorney-in-fact or his substitute or substitutes may do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ HORACE H. IRVINE II Chairman of the Board and June 23, 1998
- --------------------------------------------------- Director
(Horace H. Irvine II)
/s/ ANDREW E. LIETZ President, Chief Executive June 23, 1998
- --------------------------------------------------- Officer and Director (Principal
(Andrew E. Lietz) Executive Officer)
/s/ TIMOTHY P. LOSIK Senior Vice President, Chief June 23, 1998
- --------------------------------------------------- Financial Officer and Treasurer
(Timothy P. Losik) (Principal Financial Officer
and Principal Accounting
Officer)
/s/ OLIVER O. WARD Director June 23, 1998
- ---------------------------------------------------
(Oliver O. Ward)
/s/ PATRICK SWEENEY Director June 23, 1998
- ---------------------------------------------------
(Patrick Sweeney)
/s/ LAWRENCE COOLIDGE Director June 23, 1998
- ---------------------------------------------------
(Lawrence Coolidge)
/s/ JOHN F. SMITH Director June 23, 1998
- ---------------------------------------------------
(John F. Smith)
/s/ JOHN E. POMEROY Director June 23, 1998
- ---------------------------------------------------
(John E. Pomeroy)
/s/ JAMES C. TAYLOR Director June 23, 1998
- ---------------------------------------------------
(James C. Taylor)
/s/ MAURO J. WALKER Director June 23, 1998
- ---------------------------------------------------
(Mauro J. Walker)
</TABLE>
II-7
<PAGE> 158
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Salem, State of New
Hampshire on June 23, 1998.
HADCO SANTA CLARA, INC.
By: /s/ ANDREW E. LIETZ
--------------------------------------
Andrew E. Lietz
President
Each person whose signature appears below in so signing also makes,
constitutes and appoints Andrew E. Lietz and Timothy P. Losik, and each of them,
his true and lawful attorney-in-fact, with full power of substitution, for him
in any and all capacities, to execute and cause to be filed with the Securities
and Exchange Commission any and all amendments and post-effective amendments to
this Registration Statement, with exhibits thereto, and to the documents in
connection therewith, and hereby ratifies and confirms all that said
attorney-in-fact or his substitute or substitutes may do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ANDREW E. LIETZ President (Principal Executive June 23, 1998
- --------------------------------------------------- Officer)
(Andrew E. Lietz)
/s/ TIMOTHY P. LOSIK Senior Vice President, Chief June 23, 1998
- --------------------------------------------------- Financial Officer, Treasurer
(Timothy P. Losik) and Director (Principal
Financial Officer and Principal
Accounting Officer)
</TABLE>
II-8
<PAGE> 159
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Salem, State of New
Hampshire on June 23, 1998.
HADCO PHOENIX, INC.
By: /s/ ANDREW E. LIETZ
------------------------------------
Andrew E. Lietz
President and Chief Executive
Officer
Each person whose signature appears below in so signing also makes,
constitutes and appoints Andrew E. Lietz and Joseph G. Andersen, and each of
them, his true and lawful attorney-in-fact, with full power of substitution, for
him in any and all capacities, to execute and cause to be filed with the
Securities and Exchange Commission any and all amendments and post-effective
amendments to this Registration Statement, with exhibits thereto, and to the
documents in connection therewith, and hereby ratifies and confirms all that
said attorney-in-fact or his substitute or substitutes may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ TIMOTHY P. LOSIK Director June 23, 1998
- ---------------------------------------------------
(Timothy P. Losik)
/s/ ANDREW E. LIETZ President and Chief Executive June 23, 1998
- --------------------------------------------------- Officer (Principal Executive
(Andrew E. Lietz) Officer)
/s/ JOSEPH G. ANDERSEN Vice President and Chief June 23, 1998
- --------------------------------------------------- Financial Officer (Principal
(Joseph G. Andersen) Financial Officer and Principal
Accounting Officer)
</TABLE>
II-9
<PAGE> 160
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Salem, State of New
Hampshire on June 23, 1998.
CCIR OF CALIFORNIA CORP.
By: /s/ FREDERICK G. MCNAMEE III
------------------------------------
Frederick G. McNamee III
President
Each person whose signature appears below in so signing also makes,
constitutes and appoints Frederick G. McNamee III and Timothy P. Losik, and each
of them, his true and lawful attorney-in-fact, with full power of substitution,
for him in any and all capacities, to execute and cause to be filed with the
Securities and Exchange Commission any and all amendments and post-effective
amendments to this Registration Statement, with exhibits thereto, and to the
documents in connection therewith, and hereby ratifies and confirms all that
said attorney-in-fact or his substitute or substitutes may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOSEPH G. ANDERSEN Director June 23, 1998
- ---------------------------------------------------
(Joseph G. Andersen)
/s/ FREDERICK G. MCNAMEE III President (Principal Executive June 23, 1998
- --------------------------------------------------- Officer)
(Frederick G. McNamee III)
/s/ TIMOTHY P. LOSIK Chief Financial Officer June 23, 1998
- --------------------------------------------------- (Principal Financial Officer
(Timothy P. Losik) and Principal Accounting
Officer)
</TABLE>
II-10
<PAGE> 161
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Salem, State of New
Hampshire on June 23, 1998.
CCIR OF TEXAS CORP.
By: /s/ FREDERICK G. MCNAMEE III
------------------------------------
Frederick G. McNamee III
President
Each person whose signature appears below in so signing also makes,
constitutes and appoints Frederick G. McNamee III and Timothy P. Losik, and each
of them, his true and lawful attorney-in-fact, with full power of substitution,
for him in any and all capacities, to execute and cause to be filed with the
Securities and Exchange Commission any and all amendments and post-effective
amendments to this Registration Statement, with exhibits thereto, and to the
documents in connection therewith, and hereby ratifies and confirms all that
said attorney-in-fact or his substitute or substitutes may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ FREDERICK G. MCNAMEE III President (Principal Executive June 23, 1998
- --------------------------------------------------- Officer)
(Frederick G. McNamee III)
/s/ TIMOTHY P. LOSIK Chief Financial Officer and June 23, 1998
- --------------------------------------------------- Director (Principal Financial
(Timothy P. Losik) Officer and Principal
Accounting Officer)
</TABLE>
II-11
<PAGE> 162
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To Hadco Corporation:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Hadco Corporation included in this
registration statement and have issued our report thereon dated November 14,
1997. Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in Item 16(b) is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states, in all material respects, the financial data required to
be set forth therein, in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 14, 1997
S-1
<PAGE> 163
SCHEDULE II
HADCO CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO DEDUCTIONS BALANCE AT
BEGINNING COSTS AND FROM END OF
OF PERIOD EXPENSES RESERVES(1) PERIOD
---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Allowance for Doubtful Accounts
October 28, 1995............................. $725 277 (152) $ 850
October 26, 1996............................. $850 329 (79) $1,100
October 25, 1997............................. 1,100 922 (322) 1,700
</TABLE>
- ---------------
(1) Amounts deemed uncollectible.
S-2
<PAGE> 164
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
3.1.1 Restated Articles of Organization of the Company (filed as
Exhibit 3.1 to the Registration Statement No. 333-21977 on
Form S-3 and incorporated herein by reference).
3.1.2 Articles of Amendment to the Articles of Organization of the
Company (filed as Exhibit 3.1 to Form 10-Q, File No.
0-12102, for fiscal quarter ended January 31, 1998 and
incorporated herein by reference).
3.2 By-laws of the Company, as amended (filed as Exhibit 3.2 to
the Registration Statement No. 333-21977 on Form S-3 and
incorporated herein by reference).
3.3 Restated Certificate of Incorporation of Hadco Santa Clara,
Inc.
3.4 Amended and Restated By-laws of Zycon Corporation (n/k/a
Hadco Santa Clara, Inc.)
3.5 Restated Certificate of Incorporation of Hadco Phoenix, Inc.
3.6 By-laws of Hadco Phoenix, Inc.
3.7 Articles of Incorporation of CCIR of California Corp.
3.8 By-laws of CCIR of California Corp.
3.9 Articles of Incorporation of CCIR of Texas Corp.
3.10 By-laws of CCIR of Texas Corp.
4.1 Indenture (including Form of Exchange Note) dated as of May
18, 1998 by and among the Company, the Guarantors and State
Street Bank and Trust Company, as trustee.
4.2 Registration Rights Agreement dated May 13, 1998 by and
among the Company, the Guarantors, Morgan Stanley & Co.
Incorporated, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, BancAmerica Robertson Stephens, and BT Alex.
Brown Incorporated, as initial purchasers.
5.1 Opinion of Testa, Hurwitz & Thibeault, LLP as to the
legality of the securities to be offered.
10.1 Placement Agreement dated May 13, 1998 by and among the
Company, the Guarantors, Morgan Stanley & Co. Incorporated,
Merrill Lynch, Pierce, Fenner & Smith Incorporated,
BancAmerica Robertson Stephens, and BT Alex. Brown
Incorporated, as initial purchasers.
11.1 Statement re: Computation of Per Share Earnings.
12.1 Statement re: Computation of the Ratio of Earnings to Fixed
Charges.
23.1 Consent of Testa, Hurwitz & Thibeault, LLP (included as part
of Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Ernst & Young, LLP.
24.1 Powers of Attorney (included on signature pages to this
Registration Statement).
25.1 Statement of Eligibility of State Street Bank and Trust
Company, as Trustee, on Form T-1.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Exchange Agency Agreement.
</TABLE>
<PAGE> 1
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION
* * * * *
Zycon Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by the unanimous
written consent of its members, filed with the minutes of the Board,
adopted a resolution proposing and declaring advisable the following
amendment to the Amended and Restated Certificate of Incorporation of
said corporation: RESOLVED, that the Certificate of Incorporation of
Zycon Corporation be amended by changing the First Article thereof so
that, as amended, said Article shall be and read as follows:
"The name of the Corporation (hereinafter called the 'Corporation')
is Hadco Santa Clara, Inc."
SECOND: That in lieu of a meeting and vote of stockholders, the stockholders
have given unanimous written consent to said amendment in accordance
with the provisions of Section 228 of the General Corporation Law of
the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Sections 242 and 228 of the General
Corporation Law of the State of Delaware.
<PAGE> 2
IN WITNESS WHEREOF, said Zycon Corporation has caused this certificate
to be signed by Timothy P. Losik, its Vice President, this 9th day of July,
1997.
ZYCON CORPORATION
By: /s/ Timothy P. Losik
____________________
Timothy P. Losik
Vice President
<PAGE> 3
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF ZYCON CORPORATION
A DELAWARE CORPORATION
(Pursuant to Secs. 242 and 245 of
the General Corporation Law of the State of Delaware)
Zycon Corporation, a corporation organized and existing under the General
Corporation Law of the State of Delaware, and which filed its original
Certificate of Incorporation with the Secretary of State of Delaware on May 22,
1995, DOES HEREBY CERTIFY:
FIRST. The name of the corporation is Zycon Corporation (the
"Corporation").
SECOND. The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, Wilmington, Delaware. The name of its
registered agent at such address is The Corporation Trust Company.
THIRD. The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware.
FOURTH. The total number of shares of stock which the Corporation shall
have authority to issue is 3,000 shares of Common Stock with a par value of One
Cent ($.01) per share.
FIFTH. The Corporation is to have perpetual existence.
SIXTH. In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware:
A. The Board of Directors of the Corporation is expressly authorized
to adopt, amend or repeal the By-Laws of the Corporation.
B. Elections of directors need not be by written ballot unless the
By-Laws of the Corporation shall so provide.
C. The books of the Corporation may be kept at such place within or
without the State of Delaware as the By-Laws of the Corporation
may provide or as may be designated from time to time by the
Board of Directors of the Corporation.
<PAGE> 4
SEVENTH. The Corporation eliminates the personal liability of each member
of its Board of Directors to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided, however, that, to
the extent provided by applicable law, the foregoing shall not eliminate the
liability of a director (i) for any breach of such director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of Title 8 of the Delaware Code or (iv) for any
transaction from which such director derived an improper personal benefit. No
amendment to or repeal of this provision shall apply to or have any effect on
the liability or alleged liability of any director for or with respect to any
acts or omissions of such director occurring prior to such amendment or repeal.
EIGHTH. The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon a stockholder
herein are granted subject to this reservation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 5
IN WITNESS WHEREOF, the Company has caused this certificate to be
signed by Timothy P. Losik, Vice President, this 10th day of January, 1997.
ZYCON CORPORATION
/s/ Timothy P. Losik
____________________
Timothy P. Losik
Vice President,
Treasurer and Secretary
<PAGE> 1
Exhibit 3.4
AMENDED AND RESTATED
BY-LAWS OF
ZYCON CORPORATION
*****************
A DELAWARE CORPORATION
Dated: January 10, 1997
<PAGE> 2
ARTICLE I MEETINGS OF STOCKHOLDERS...................................... 1
SECTION 1. PLACE OF MEETINGS.............................................. 1
SECTION 2. ANNUAL MEETING................................................. 1
SECTION 3. SPECIAL MEETINGS............................................... 1
SECTION 4. NOTICE OF MEETINGS............................................. 1
SECTION 5. VOTING LIST.................................................... 2
SECTION 6. QUORUM......................................................... 2
SECTION 7. ADJOURNMENTS................................................... 2
SECTION 8. ACTION AT MEETINGS............................................. 2
SECTION 9. VOTING AND PROXIES............................................. 3
SECTION 10. ACTION WITHOUT MEETING........................................ 3
ARTICLE II DIRECTORS.................................................... 3
SECTION 1. NUMBER, ELECTION, TENURE AND QUALIFICATION..................... 3
SECTION 2. ENLARGEMENT.................................................... 3
SECTION 3. VACANCIES...................................................... 4
SECTION 4. RESIGNATION AND REMOVAL........................................ 4
SECTION 5. GENERAL POWERS................................................. 4
SECTION 6. CHAIRMAN OF THE BOARD.......................................... 4
SECTION 7. PLACE OF MEETINGS.............................................. 4
SECTION 8. REGULAR MEETINGS............................................... 4
SECTION 9. SPECIAL MEETINGS............................................... 4
SECTION 10. QUORUM, ACTION AT MEETING, ADJOURNMENTS....................... 5
SECTION 11. ACTION BY CONSENT............................................. 5
SECTION 12. TELEPHONIC MEETINGS........................................... 5
SECTION 13. COMMITTEES.................................................... 5
SECTION 14. COMPENSATION.................................................. 6
ARTICLE III OFFICERS.................................................... 6
SECTION 1. ENUMERATION.................................................... 6
SECTION 2. ELECTION....................................................... 6
SECTION 3. TENURE......................................................... 6
SECTION 4. PRESIDENT...................................................... 7
SECTION 5. VICE-PRESIDENTS................................................ 7
SECTION 6. SECRETARY...................................................... 7
SECTION 7. ASSISTANT SECRETARIES.......................................... 8
SECTION 8. TREASURER...................................................... 8
SECTION 9. ASSISTANT TREASURERS........................................... 8
SECTION 10. BOND.......................................................... 8
ARTICLE IV NOTICES...................................................... 9
SECTION 1. DELIVERY....................................................... 9
SECTION 2. WAIVER OF NOTICE............................................... 9
i
<PAGE> 3
ARTICLE V INDEMNIFICATION............................................... 9
SECTION 1. ACTIONS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION....... 9
SECTION 2. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION.................. 10
SECTION 3. SUCCESS ON THE MERITS.......................................... 10
SECTION 4. SPECIFIC AUTHORIZATION......................................... 10
SECTION 5. ADVANCE PAYMENT................................................ 10
SECTION 6. NON-EXCLUSIVITY................................................ 11
SECTION 7. INSURANCE...................................................... 11
SECTION 8. CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.... 11
SECTION 9. SEVERABILITY................................................... 11
SECTION 10. INTENT OF ARTICLE............................................. 11
ARTICLE VI CAPITAL STOCK................................................ 11
SECTION 1. CERTIFICATES OF STOCK.......................................... 11
SECTION 2. LOST CERTIFICATES.............................................. 12
SECTION 3. TRANSFER OF STOCK.............................................. 12
SECTION 4. RECORD DATE.................................................... 12
SECTION 5. REGISTERED STOCKHOLDERS........................................ 13
ARTICLE VII CERTAIN TRANSACTIONS........................................ 13
SECTION 1. TRANSACTIONS WITH INTERESTED PARTIES........................... 13
SECTION 2. QUORUM......................................................... 14
ARTICLE VIII GENERAL PROVISIONS......................................... 14
SECTION 1. DIVIDENDS...................................................... 14
SECTION 2. RESERVES....................................................... 14
SECTION 3. CHECKS......................................................... 14
SECTION 4. FISCAL YEAR.................................................... 14
SECTION 5. SEAL........................................................... 14
ARTICLE IX AMENDMENTS................................................... 15
Addendum
Register of Amendments to the By-Laws
ii
<PAGE> 4
ZYCON CORPORATION
* * * * *
AMENDED AND RESTATED
BY-LAWS
* * * * *
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of the stockholders shall be
held at such place within or without the State of Delaware as may be fixed from
time to time by the board of directors or the chief executive officer, or if not
so designated, at the registered office of the corporation.
Section 2. Annual Meeting. Annual meetings of stockholders shall be
held on the second Tuesday of March in each year if not a legal holiday, and if
a legal holiday, then on the next secular day following, at 10:00 a.m., or at
such other date and time as shall be designated from time to time by the board
of directors or the chief executive officer, at which meeting the stockholders
shall elect by a plurality vote a board of directors and shall transact such
other business as may properly be brought before the meeting. If no annual
meeting is held in accordance with the foregoing provisions, the board of
directors shall cause the meeting to be held as soon thereafter as convenient,
which meeting shall be designated a special meeting in lieu of annual meeting.
Section 3. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, may, unless otherwise prescribed by statute or by the
certificate of incorporation, be called by the board of directors or the chief
executive officer and shall be called by the chief executive officer or
secretary at the request in writing of a majority of the board of directors, or
at the request in writing of stockholders owning a majority in amount of the
entire capital stock of the corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the proposed meeting.
Business transacted at any special meeting shall be limited to matters relating
to the purpose or purposes stated in the notice of meeting.
Section 4. Notice of Meetings. Except as otherwise provided by law,
written notice of each meeting of stockholders, annual or special, stating the
place, date and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given not less
than ten or more than sixty days before the date of the meeting, to each
stockholder entitled to vote at such meeting.
<PAGE> 5
Section 5. Voting List. The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city or town where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 6. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business, except as otherwise provided by statute, the
certificate of incorporation or these by-laws. Where a separate vote by a class
or classes is required, a majority of the outstanding shares of such class or
classes, present in person or represented by proxy, shall constitute a quorum
entitled to take action with respect to that vote on that matter. If no quorum
shall be present or represented at any meeting of stockholders, such meeting may
be adjourned in accordance with Section 7 hereof, until a quorum shall be
present or represented.
Section 7. Adjournments. Any meeting of stockholders may be adjourned
from time to time to any other time and to any other place at which a meeting of
stockholders may be held under these by-laws, which time and place shall be
announced at the meeting, by a majority of the stockholders present in person or
represented by proxy at the meeting and entitled to vote (whether or not a
quorum is present), or, if no stockholder is present or represented by proxy, by
any officer entitled to preside at or to act as secretary of such meeting,
without notice other than announcement at the meeting. At such adjourned
meeting, any business may be transacted which might have been transacted at the
original meeting, provided that a quorum either was present at the original
meeting or is present at the adjourned meeting. If the adjournment is for more
than thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 8. Action at Meetings. When a quorum is present at any meeting,
the affirmative vote of the holders of a majority of the stock present in person
or represented by proxy, entitled to vote and voting on the matter (or where a
separate vote by a class or classes is required, the affirmative vote of the
majority of shares of such class or classes present in person or represented by
proxy at the meeting) shall decide any matter (other than the election of
directors) brought before such meeting, unless the matter is one upon which by
express provision of law, the certificate of incorporation or these by-laws, a
different vote is required, in which case such express provision shall govern
and control the decision of such matter. The stock of holders who abstain from
voting on any matter shall be deemed not to have been voted on such matter.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting, entitled to vote and voting on
the election of directors.
2
<PAGE> 6
Section 9. Voting and Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote for each share of capital stock having
voting power held of record by such stockholder. Each stockholder entitled to
vote at a meeting of stockholders, or to express consent or dissent to corporate
action in writing without a meeting, may authorize another person or persons to
act for him by proxy, but no such proxy shall be voted or acted upon after three
years from its date, unless the proxy provides for a longer period.
Section 10. Action Without Meeting. Any action required to be taken at
any annual or special meeting of stockholders, or any action which may be taken
at any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be (1) signed and dated by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted and (2) delivered to
the corporation within sixty days of the earliest dated consent by delivery to
its registered office in the State of Delaware (in which case delivery shall be
by hand or by certified or registered mail, return receipt requested), its
principal place of business, or an officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE II
DIRECTORS
Section 1. Number, Election, Tenure and Qualification. The number of
directors which shall constitute the whole board shall be not less than one.
Within such limit, the number of directors shall be determined by resolution of
the board of directors or by the stockholders at the annual meeting or at any
special meeting of stockholders. The directors shall be elected at the annual
meeting or at any special meeting of the stockholders, except as provided in
Section 3 of this Article, and each director elected shall hold office until his
successor is elected and qualified, unless sooner displaced. Directors need not
be stockholders.
Section 2. Enlargement. The number of the board of directors may be
increased at any time by vote of a majority of the directors then in office.
Section 3. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in office, then an
election of directors may be held in the manner provided by statute. In the
event of a vacancy in the board
3
<PAGE> 7
of directors, the remaining directors, except as otherwise provided by law or
these by-laws, may exercise the powers of the full board until the vacancy is
filled.
Section 4. Resignation and Removal. Any director may resign at any time
upon written notice to the corporation at its principal place of business or to
the chief executive officer or secretary. Such resignation shall be effective
upon receipt unless it is specified to be effective at some other time or upon
the happening of some other event. Any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors, unless otherwise
specified by law or the certificate of incorporation.
Section 5. General Powers. The business and affairs of the corporation
shall be managed by its board of directors, which may exercise all powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
Section 6. Chairman of the Board. If the board of directors appoints a
chairman of the board, he shall, when present, preside at all meetings of the
stockholders and the board of directors. He shall perform such duties and
possess such powers as are customarily vested in the office of the chairman of
the board or as may be vested in him by the board of directors.
Section 7. Place of Meetings. The board of directors may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 8. Regular Meetings. Regular meetings of the board of directors
may be held without notice at such time and at such place as shall from time to
time be determined by the board; provided that any director who is absent when
such a determination is made shall be given prompt notice of such determination.
A regular meeting of the board of directors may be held without notice
immediately after and at the same place as the annual meeting of stockholders.
Section 9. Special Meetings. Special meetings of the board may be
called by the chief executive officer, secretary, or on the written request of
two or more directors, or by one director in the event that there is only one
director in office. Two days' notice to each director, either personally or by
telegram, cable, telecopy, commercial delivery service, telex or similar means
sent to his business or home address, or three days' notice by written notice
deposited in the mail, shall be given to each director by the secretary or by
the officer or one of the directors calling the meeting. A notice or waiver of
notice of a meeting of the board of directors need not specify the purposes of
the meeting.
Section 10. Quorum, Action at Meeting, Adjournments. At all meetings of
the board a majority of directors then in office, but in no event less than one
third of the entire board, shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the board of directors, except as
may be otherwise specifically provided by law or by the certificate of
incorporation. For purposes of this section, the term "entire board" shall mean
the number of directors last fixed
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by the stockholders or directors, as the case may be, in accordance with law and
these by-laws; provided, however, that if less than all the number so fixed of
directors were elected, the "entire board" shall mean the greatest number of
directors so elected to hold office at any one time pursuant to such
authorization. If a quorum shall not be present at any meeting of the board of
directors, a majority of the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present.
Section 11. Action by Consent. Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board or committee.
Section 12. Telephonic Meetings. Unless otherwise restricted by the
certificate of incorporation or these by-laws, members of the board of directors
or of any committee thereof may participate in a meeting of the board of
directors or of any committee, as the case may be, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
Section 13. Committees. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution designating such committee or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and make such reports to the board of
directors as the board of directors may request. Except as the board of
directors may otherwise determine, any committee may make rules for the conduct
of its business, but unless otherwise provided by the directors or in such
rules, its business shall be conducted as nearly as possible in the same manner
as is provided in these by-laws for the conduct of its business by the board of
directors.
Section 14. Compensation. Unless otherwise restricted by the
certificate of incorporation or these by-laws, the board of directors shall have
the authority to fix from time to
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time the compensation of directors. The directors may be paid their expenses, if
any, of attendance at each meeting of the board of directors and the performance
of their responsibilities as directors and may be paid a fixed sum for
attendance at each meeting of the board of directors and/or a stated salary as
director. No such payment shall preclude any director from serving the
corporation or its parent or subsidiary corporations in any other capacity and
receiving compensation therefor. The board of directors may also allow
compensation for members of special or standing committees for service on such
committees.
ARTICLE III
OFFICERS
Section 1. Enumeration. The officers of the corporation shall be chosen
by the board of directors and shall be a president, a secretary and a treasurer
and such other officers with such titles, terms of office and duties as the
board of directors may from time to time determine, including a chairman of the
board, one or more vice-presidents, and one or more assistant secretaries and
assistant treasurers. If authorized by resolution of the board of directors, the
chief executive officer may be empowered to appoint from time to time assistant
secretaries and assistant treasurers. Any number of offices may be held by the
same person, unless the certificate of incorporation or these by-laws otherwise
provide.
Section 2. Election. The board of directors at its first meeting after
each annual meeting of stockholders shall choose a president, a secretary and a
treasurer. Other officers may be appointed by the board of directors at such
meeting, at any other meeting, or by written consent.
Section 3. Tenure. The officers of the corporation shall hold office
until their successors are chosen and qualify, unless a different term is
specified in the vote choosing or appointing him, or until his earlier death,
resignation or removal. Any officer elected or appointed by the board of
directors or by the chief executive officer may be removed at any time, with or
without cause, by the affirmative vote of a majority of the board of directors
or a committee duly authorized to do so, except that any officer appointed by
the chief executive officer may also be removed at any time, with or without
cause, by the chief executive officer. Any vacancy occurring in any office of
the corporation may be filled by the board of directors, at its discretion. Any
officer may resign by delivering his written resignation to the corporation at
its principal place of business or to the chief executive officer or the
secretary. Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some other
event.
Section 4. President. The president shall be the chief operating
officer of the corporation. He shall also be the chief executive officer unless
the board of directors otherwise provides. If no chief executive officer shall
have been appointed by the board of directors, all references herein to the
"chief executive officer" shall be to the president. The president shall, unless
the board of directors provides otherwise in a specific instance or generally,
preside at all
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meetings of the stockholders and the board of directors, have general and active
management of the business of the corporation and see that all orders and
resolutions of the board of directors are carried into effect. The president
shall execute bonds, mortgages, and other contracts requiring a seal, under the
seal of the corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and execution thereof
shall be expressly delegated by the board of directors to some other officer or
agent of the corporation.
Section 5. Vice-Presidents. In the absence of the president or in the
event of his or her inability or refusal to act, the vice-president, or if there
be more than one vice-president, the vice-presidents in the order designated by
the board of directors or the chief executive officer (or in the absence of any
designation, then in the order determined by their tenure in office) shall
perform the duties of the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the president. The
vice-presidents shall perform such other duties and have such other powers as
the board of directors or the chief executive officer may from time to time
prescribe.
Section 6. Secretary. The secretary shall have such powers and perform
such duties as are incident to the office of secretary. The secretary shall
maintain a stock ledger and prepare lists of stockholders and their addresses as
required and shall be the custodian of corporate records. The secretary shall
attend all meetings of the board of directors and all meetings of the
stockholders and record all the proceedings of the meetings of the corporation
and of the board of directors in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. The secretary
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the board of directors, and shall perform such other duties
as may be from time to time prescribed by the board of directors or chief
executive officer, under whose supervision the secretary shall be. The secretary
shall have custody of the corporate seal of the corporation and the secretary,
or an assistant secretary, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by his or her
signature or by the signature of such assistant secretary. The board of
directors may give general authority to any other officer to affix the seal of
the corporation and to attest the affixing by his or her signature.
Section 7. Assistant Secretaries. The assistant secretary, or if there
be more than one, the assistant secretaries in the order determined by the board
of directors, the chief executive officer or the secretary (or if there be no
such determination, then in the order determined by their tenure in office),
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors, the chief executive officer or the secretary may from time to time
prescribe. In the absence of the secretary or any assistant secretary at any
meeting of stockholders or directors, the person presiding at the meeting shall
designate a temporary or acting secretary to keep a record of the meeting.
Section 8. Treasurer. The treasurer shall perform such duties and shall
have such powers as may be assigned to him or her by the board of directors or
the chief executive officer. In addition, the treasurer shall perform such
duties and have such powers as are incident to the
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office of treasurer. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors. He shall
disburse the funds of the corporation as may be ordered by the board of
directors, taking proper vouchers for such disbursements, and shall render to
the chief executive officer and the board of directors, when the chief executive
officer or board of directors so requires, an account of all his or her
transactions as treasurer and of the financial condition of the corporation.
Section 9. Assistant Treasurers. The assistant treasurer, or if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, the chief executive officer or the treasurer (or if there be
no such determination, then in the order determined by their tenure in office),
shall, in the absence of the treasurer or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the treasurer
and shall perform such other duties and have such other powers as the board of
directors, the chief executive officer or the treasurer may from time to time
prescribe.
Section 10. Bond. If required by the board of directors, any officer
shall give the corporation a bond in such sum and with such surety or sureties
and upon such terms and conditions as shall be satisfactory to the board of
directors, including without limitation a bond for the faithful performance of
the duties of his office and for the restoration to the corporation of all
books, papers, vouchers, money and other property of whatever kind in his
possession or under his control and belonging to the corporation.
ARTICLE IV
NOTICES
Section 1. Delivery. Whenever, under the provisions of law, or of the
certificate of incorporation or these by-laws, written notice is required to be
given to any director or stockholder, such notice may be given by mail,
addressed to such director or stockholder, at his address as it appears on the
records of the corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the United
States mail. Unless written notice by mail is required by law, written notice
may also be given by telegram, cable, telecopy, commercial delivery service,
telex or similar means, addressed to such director or stockholder at his address
as it appears on the records of the corporation, in which case such notice shall
be deemed to be given when delivered into the control of the persons charged
with effecting such transmission, the transmission charge to be paid by the
corporation or the person sending such notice and not by the addressee. Oral
notice or other in-hand delivery (in person or by telephone) shall be deemed
given at the time it is actually given.
Section 2. Waiver of Notice. Whenever any notice is required to be
given under the provisions of law or of the certificate of incorporation or of
these by-laws, a waiver thereof in
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writing, signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE V
INDEMNIFICATION
Section 1. Actions other than by or in the Right of the Corporation.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceedings, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 2. Actions by or in the Right of the Corporation. The
corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he or she is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit if such person acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable unless and only to the extent that the Court of Chancery
of the State of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
of the State of Delaware or such other court shall deem proper.
Section 3. Success on the Merits. To the extent that any person
described in Section 1 or 2 of this Article V has been successful on the merits
or otherwise in defense of any
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action, suit or proceeding referred to in said Sections, or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
Section 4. Specific Authorization. Any indemnification under Section 1
or 2 of this Article V (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of any person described in said Sections is proper in the
circumstances because he has met the applicable standard of conduct set forth in
said Sections. Such determination shall be made (1) by the board of directors by
a majority vote of directors who were not parties to such action, suit or
proceeding (even though less than a quorum), or (2) if there are no
disinterested directors or if a majority of disinterested directors so directs,
by independent legal counsel (who may be regular legal counsel to the
corporation) in a written opinion, or (3) by the stockholders of the
corporation.
Section 5. Advance Payment. Expenses incurred in defending a pending or
threatened civil or criminal action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of any person
described in said Section to repay such amount if it shall ultimately be
determined that he or she is not entitled to indemnification by the corporation
as authorized in this Article V.
Section 6. Non-Exclusivity. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other Sections of this Article
V shall not be deemed exclusive of any other rights to which those provided
indemnification or advancement of expenses may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office.
Section 7. Insurance. The board of directors may authorize, by a vote
of the majority of the full board, the corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of this Article V.
Section 8. Continuation of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article V shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 9. Severability. If any word, clause or provision of this
Article V or any award made hereunder shall for any reason be determined to be
invalid, the provisions hereof shall not otherwise be affected thereby but shall
remain in full force and effect.
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Section 10. Intent of Article. The intent of this Article V is to
provide for indemnification and advancement of expenses to the fullest extent
permitted by Section 145 of the General Corporation Law of Delaware. To the
extent that such Section or any successor section may be amended or supplemented
from time to time, this Article V shall be amended automatically and construed
so as to permit indemnification and advancement of expenses to the fullest
extent from time to time permitted by law.
ARTICLE VI
CAPITAL STOCK
Section 1. Certificates of Stock. Every holder of stock in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the chairman or vice-chairman of the board of directors,
or the president or a vice-president and the treasurer or an assistant
treasurer, or the secretary or an assistant secretary of the corporation,
certifying the number of shares owned by such holder in the corporation. Any or
all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue. Certificates may be issued for partly
paid shares and in such case upon the face or back of the certificates issued to
represent any such partly paid shares, the total amount of the consideration to
be paid therefor, and the amount paid thereon shall be specified.
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed. When authorizing such issue of a new certificate or
certificates, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal representative, to give
reasonable evidence of such loss, theft or destruction, to advertise the same in
such manner as it shall require and/or to give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen or
destroyed or the issuance of such new certificate.
Section 3. Transfer of Stock. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares, duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and proper evidence of compliance with other conditions to rightful
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 4. Record Date. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the
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board of directors may fix a record date, which shall not precede the date upon
which the resolution fixing the record date is adopted by the board of
directors, and which shall not be more than sixty days nor less then ten days
before the date of such meeting. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the board of directors may
fix a new record date for the adjourned meeting. If no record date is fixed, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day before the
day on which notice is given, or, if notice is waived, at the close of business
on the day before the day on which the meeting is held. In order that the
corporation may determine the stockholders entitled to consent to corporate
action in writing without a meeting, the board of directors may fix a record
date, which shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors, and which shall not be more
than ten days after the date upon which the resolution fixing the record date is
adopted by the board of directors. If no record date is fixed, the record date
for determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation as
provided in Section 10 of Article I. If no record date is fixed and prior action
by the board of directors is required, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the date on which the board of
directors adopts the resolution taking such prior action. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment of any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purpose of any other lawful action, the board of directors
may fix a record date, which shall not precede the date upon which the
resolution fixing the record date is adopted, and which shall be not more than
sixty days prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the board of directors adopts the resolution relating to
such purpose.
Section 5. Registered Stockholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
ARTICLE VII
CERTAIN TRANSACTIONS
Section 1. Transactions with Interested Parties. No contract or
transaction between the corporation and one or more of its directors or
officers, or between the corporation and any other corporation, partnership,
association, or other organization in which one or more of its
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directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the board or
committee thereof which authorizes the contract or transaction or solely because
his or their votes are counted for such purpose, if:
(a) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the board of
directors or the committee, and the board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or
(b) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified, by the board of directors, a
committee thereof, or the stockholders.
Section 2. Quorum. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of directors or
of a committee which authorizes the contract or transaction.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, if any, may be declared by the board of directors at any regular or
special meeting or by written consent, pursuant to law. Dividends may be paid in
cash, in property, or in shares of the capital stock, subject to the provisions
of the certificate of incorporation.
Section 2. Reserves. The directors may set apart out of any funds of
the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve.
Section 3. Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
Section 4. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
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Section 5. Seal. The board of directors may, by resolution, adopt a
corporate seal. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the word "Delaware." The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise. The seal may be altered from time to time by the board
of directors.
ARTICLE IX
AMENDMENTS
These by-laws may be altered, amended or repealed or new by-laws may be
adopted by the stockholders or by the board of directors, when such power is
conferred upon the board of directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors provided,
however, that in the case of a regular or special meeting of stockholders,
notice of such alteration, amendment, repeal or adoption of new by-laws be
contained in the notice of such meeting.
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Register of Amendments to the By-laws
Date Section Affected Change
15
<PAGE> 1
Exhibit 3.5
RESTATED CERTIFICATE OF INCORPORATION
OF HADCO PHOENIX, INC.
A DELAWARE CORPORATION
FIRST. The name of the corporation is Hadco Phoenix, Inc. (the
"Corporation").
SECOND. The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, Wilmington, Delaware. The name of its
registered agent at such address is The Corporation Trust Company (New Castle
County).
THIRD. The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH. The total number of shares of stock which the Corporation shall
have authority to issue is 3,000 shares of Common Stock with a par value of One
Cent ($.01) per share.
FIFTH. The Corporation is to have perpetual existence.
SIXTH. In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware:
A. The Board of Directors of the Corporation is expressly authorized
to adopt, amend or repeal the By-Laws of the Corporation.
B. Elections of directors need not be by written ballot unless the
By-Laws of the Corporation shall so provide.
C. The books of the Corporation may be kept at such place within or
without the State of Delaware as the By-Laws of the Corporation may
provide or as may be designated from time to time by the Board of
Directors of the Corporation.
SEVENTH. The Corporation eliminates the personal liability of each
member of its Board of Directors to the Corporation or its stockholders for
monetary damages for
<PAGE> 2
breach of fiduciary duty as a director, provided, however, that, to the extent
provided by applicable law, the foregoing shall not eliminate the liability of a
director (i) for any breach of such director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of Title 8 of the Delaware Code or (iv) for any transaction from
which such director derived an improper personal benefit. No amendment to or
repeal of this provision shall apply to or have any effect on the liability or
alleged liability of any director for or with respect to any acts or omissions
of such director occurring prior to such amendment or repeal.
EIGHTH. The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon a stockholder
herein are granted subject to this reservation.
<PAGE> 1
Exhibit 3.6
BY-LAWS OF
HADCO PHOENIX, INC.
*****************
A DELAWARE CORPORATION
Dated: March 20, 1998
<PAGE> 2
<TABLE>
<S> <C>
ARTICLE I MEETINGS OF STOCKHOLDERS..............................................................................1
SECTION 1. PLACE OF MEETINGS......................................................................................1
SECTION 2. ANNUAL MEETING.........................................................................................1
SECTION 3. SPECIAL MEETINGS.......................................................................................1
SECTION 4. NOTICE OF MEETINGS.....................................................................................1
SECTION 5. VOTING LIST............................................................................................2
SECTION 6. QUORUM.................................................................................................2
SECTION 7. ADJOURNMENTS...........................................................................................2
SECTION 8. ACTION AT MEETINGS.....................................................................................2
SECTION 9. VOTING AND PROXIES.....................................................................................3
SECTION 10. ACTION WITHOUT MEETING................................................................................3
ARTICLE II DIRECTORS............................................................................................3
SECTION 1. NUMBER, ELECTION, TENURE AND QUALIFICATION.............................................................3
SECTION 2. ENLARGEMENT............................................................................................3
SECTION 3. VACANCIES..............................................................................................4
SECTION 4. RESIGNATION AND REMOVAL................................................................................4
SECTION 5. GENERAL POWERS.........................................................................................4
SECTION 6. CHAIRMAN OF THE BOARD..................................................................................4
SECTION 7. PLACE OF MEETINGS......................................................................................4
SECTION 8. REGULAR MEETINGS.......................................................................................4
SECTION 9. SPECIAL MEETINGS.......................................................................................4
SECTION 10. QUORUM, ACTION AT MEETING, ADJOURNMENTS...............................................................5
SECTION 11. ACTION BY CONSENT.....................................................................................5
SECTION 12. TELEPHONIC MEETINGS...................................................................................5
SECTION 13. COMMITTEES............................................................................................5
SECTION 14. COMPENSATION..........................................................................................6
ARTICLE III OFFICERS............................................................................................6
SECTION 1. ENUMERATION............................................................................................6
SECTION 2. ELECTION...............................................................................................6
SECTION 3. TENURE.................................................................................................6
SECTION 4. PRESIDENT..............................................................................................7
SECTION 5. VICE-PRESIDENTS........................................................................................7
SECTION 6. SECRETARY..............................................................................................7
SECTION 7. ASSISTANT SECRETARIES..................................................................................8
SECTION 8. TREASURER..............................................................................................8
SECTION 9. ASSISTANT TREASURERS...................................................................................8
SECTION 10. BOND..................................................................................................8
ARTICLE IV NOTICES..............................................................................................9
SECTION 1. DELIVERY...............................................................................................9
SECTION 2. WAIVER OF NOTICE.......................................................................................9
</TABLE>
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<TABLE>
<S> <C>
ARTICLE V INDEMNIFICATION.......................................................................................9
SECTION 1. ACTIONS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION...............................................9
SECTION 2. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION.........................................................10
SECTION 3. SUCCESS ON THE MERITS.................................................................................10
SECTION 4. SPECIFIC AUTHORIZATION................................................................................10
SECTION 5. ADVANCE PAYMENT.......................................................................................10
SECTION 6. NON-EXCLUSIVITY.......................................................................................11
SECTION 7. INSURANCE.............................................................................................11
SECTION 8. CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES...........................................11
SECTION 9. SEVERABILITY..........................................................................................11
SECTION 10. INTENT OF ARTICLE....................................................................................11
ARTICLE VI CAPITAL STOCK.......................................................................................11
SECTION 1. CERTIFICATES OF STOCK.................................................................................11
SECTION 2. LOST CERTIFICATES.....................................................................................12
SECTION 3. TRANSFER OF STOCK.....................................................................................12
SECTION 4. RECORD DATE...........................................................................................12
SECTION 5. REGISTERED STOCKHOLDERS...............................................................................13
ARTICLE VII CERTAIN TRANSACTIONS...............................................................................13
SECTION 1. TRANSACTIONS WITH INTERESTED PARTIES..................................................................13
SECTION 2. QUORUM................................................................................................14
ARTICLE VIII GENERAL PROVISIONS................................................................................14
SECTION 1. DIVIDENDS.............................................................................................14
SECTION 2. RESERVES..............................................................................................14
SECTION 3. CHECKS................................................................................................14
SECTION 4. FISCAL YEAR...........................................................................................14
SECTION 5. SEAL..................................................................................................14
ARTICLE IX AMENDMENTS..........................................................................................15
</TABLE>
Addendum
Register of Amendments to the By-Laws
ii
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HADCO PHOENIX, INC.
* * * * *
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of the stockholders shall be
held at such place within or without the State of Delaware as may be fixed from
time to time by the board of directors or the chief executive officer, or if not
so designated, at the registered office of the corporation.
Section 2. Annual Meeting. Annual meetings of stockholders shall be
held on the second Tuesday of March in each year if not a legal holiday, and if
a legal holiday, then on the next secular day following, at 10:00 a.m., or at
such other date and time as shall be designated from time to time by the board
of directors or the chief executive officer, at which meeting the stockholders
shall elect by a plurality vote a board of directors and shall transact such
other business as may properly be brought before the meeting. If no annual
meeting is held in accordance with the foregoing provisions, the board of
directors shall cause the meeting to be held as soon thereafter as convenient,
which meeting shall be designated a special meeting in lieu of annual meeting.
Section 3. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, may, unless otherwise prescribed by statute or by the
certificate of incorporation, be called by the board of directors or the chief
executive officer and shall be called by the chief executive officer or
secretary at the request in writing of a majority of the board of directors, or
at the request in writing of stockholders owning a majority in amount of the
entire capital stock of the corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the proposed meeting.
Business transacted at any special meeting shall be limited to matters relating
to the purpose or purposes stated in the notice of meeting.
Section 4. Notice of Meetings. Except as otherwise provided by law,
written notice of each meeting of stockholders, annual or special, stating the
place, date and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be given not less
than ten or more than sixty days before the date of the meeting, to each
stockholder entitled to vote at such meeting.
Section 5. Voting List. The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged
<PAGE> 5
in alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city or town where the meeting is
to be held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business, except as otherwise provided by statute, the
certificate of incorporation or these by-laws. Where a separate vote by a class
or classes is required, a majority of the outstanding shares of such class or
classes, present in person or represented by proxy, shall constitute a quorum
entitled to take action with respect to that vote on that matter. If no quorum
shall be present or represented at any meeting of stockholders, such meeting may
be adjourned in accordance with Section 7 hereof, until a quorum shall be
present or represented.
Section 7. Adjournments. Any meeting of stockholders may be adjourned
from time to time to any other time and to any other place at which a meeting of
stockholders may be held under these by-laws, which time and place shall be
announced at the meeting, by a majority of the stockholders present in person or
represented by proxy at the meeting and entitled to vote (whether or not a
quorum is present), or, if no stockholder is present or represented by proxy, by
any officer entitled to preside at or to act as secretary of such meeting,
without notice other than announcement at the meeting. At such adjourned
meeting, any business may be transacted which might have been transacted at the
original meeting, provided that a quorum either was present at the original
meeting or is present at the adjourned meeting. If the adjournment is for more
than thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 8. Action at Meetings. When a quorum is present at any meeting,
the affirmative vote of the holders of a majority of the stock present in person
or represented by proxy, entitled to vote and voting on the matter (or where a
separate vote by a class or classes is required, the affirmative vote of the
majority of shares of such class or classes present in person or represented by
proxy at the meeting) shall decide any matter (other than the election of
directors) brought before such meeting, unless the matter is one upon which by
express provision of law, the certificate of incorporation or these by-laws, a
different vote is required, in which case such express provision shall govern
and control the decision of such matter. The stock of holders who abstain from
voting on any matter shall be deemed not to have been voted on such matter.
Directors shall be elected by a
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plurality of the votes of the shares present in person or represented by proxy
at the meeting, entitled to vote and voting on the election of directors.
Section 9. Voting and Proxies. Unless otherwise provided in the
certificate of incorporation, each stockholder shall at every meeting of the
stockholders be entitled to one vote for each share of capital stock having
voting power held of record by such stockholder. Each stockholder entitled to
vote at a meeting of stockholders, or to express consent or dissent to corporate
action in writing without a meeting, may authorize another person or persons to
act for him by proxy, but no such proxy shall be voted or acted upon after three
years from its date, unless the proxy provides for a longer period.
Section 10. Action Without Meeting. Any action required to be taken at
any annual or special meeting of stockholders, or any action which may be taken
at any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be (1) signed and dated by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted and (2) delivered to
the corporation within sixty days of the earliest dated consent by delivery to
its registered office in the State of Delaware (in which case delivery shall be
by hand or by certified or registered mail, return receipt requested), its
principal place of business, or an officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE II
DIRECTORS
Section 1. Number, Election, Tenure and Qualification. The number of
directors which shall constitute the whole board shall be not less than one.
Within such limit, the number of directors shall be determined by resolution of
the board of directors or by the stockholders at the annual meeting or at any
special meeting of stockholders. The directors shall be elected at the annual
meeting or at any special meeting of the stockholders, except as provided in
Section 3 of this Article, and each director elected shall hold office until his
successor is elected and qualified, unless sooner displaced. Directors need not
be stockholders.
Section 2. Enlargement. The number of the board of directors may be
increased at any time by vote of a majority of the directors then in office.
Section 3. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the
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directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. In the event of a
vacancy in the board of directors, the remaining directors, except as otherwise
provided by law or these by-laws, may exercise the powers of the full board
until the vacancy is filled.
Section 4. Resignation and Removal. Any director may resign at any time
upon written notice to the corporation at its principal place of business or to
the chief executive officer or secretary. Such resignation shall be effective
upon receipt unless it is specified to be effective at some other time or upon
the happening of some other event. Any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors, unless otherwise
specified by law or the certificate of incorporation.
Section 5. General Powers. The business and affairs of the corporation
shall be managed by its board of directors, which may exercise all powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
Section 6. Chairman of the Board. If the board of directors appoints a
chairman of the board, he shall, when present, preside at all meetings of the
stockholders and the board of directors. He shall perform such duties and
possess such powers as are customarily vested in the office of the chairman of
the board or as may be vested in him by the board of directors.
Section 7. Place of Meetings. The board of directors may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 8. Regular Meetings. Regular meetings of the board of directors
may be held without notice at such time and at such place as shall from time to
time be determined by the board; provided that any director who is absent when
such a determination is made shall be given prompt notice of such determination.
A regular meeting of the board of directors may be held without notice
immediately after and at the same place as the annual meeting of stockholders.
Section 9. Special Meetings. Special meetings of the board may be
called by the chief executive officer, secretary, or on the written request of
two or more directors, or by one director in the event that there is only one
director in office. Two days' notice to each director, either personally or by
telegram, cable, telecopy, commercial delivery service, telex or similar means
sent to his business or home address, or three days' notice by written notice
deposited in the mail, shall be given to each director by the secretary or
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by the officer or one of the directors calling the meeting. A notice or waiver
of notice of a meeting of the board of directors need not specify the purposes
of the meeting.
Section 10. Quorum, Action at Meeting, Adjournments. At all meetings of
the board a majority of directors then in office, but in no event less than one
third of the entire board, shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the board of directors, except as
may be otherwise specifically provided by law or by the certificate of
incorporation. For purposes of this section, the term "entire board" shall mean
the number of directors last fixed by the stockholders or directors, as the case
may be, in accordance with law and these by-laws; provided, however, that if
less than all the number so fixed of directors were elected, the "entire board"
shall mean the greatest number of directors so elected to hold office at any one
time pursuant to such authorization. If a quorum shall not be present at any
meeting of the board of directors, a majority of the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 11. Action by Consent. Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board or committee.
Section 12. Telephonic Meetings. Unless otherwise restricted by the
certificate of incorporation or these by-laws, members of the board of directors
or of any committee thereof may participate in a meeting of the board of
directors or of any committee, as the case may be, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
Section 13. Committees. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution designating such committee or
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the certificate of incorporation expressly so provide, no such committee shall
have the power or authority to declare a dividend or to authorize the issuance
of stock. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of directors.
Each committee shall keep regular minutes of its meetings and make such reports
to the board of directors as the board of directors may request. Except as the
board of directors may otherwise determine, any committee may make rules for the
conduct of its business, but unless otherwise provided by the directors or in
such rules, its business shall be conducted as nearly as possible in the same
manner as is provided in these by-laws for the conduct of its business by the
board of directors.
Section 14. Compensation. Unless otherwise restricted by the
certificate of incorporation or these by-laws, the board of directors shall have
the authority to fix from time to time the compensation of directors. The
directors may be paid their expenses, if any, of attendance at each meeting of
the board of directors and the performance of their responsibilities as
directors and may be paid a fixed sum for attendance at each meeting of the
board of directors and/or a stated salary as director. No such payment shall
preclude any director from serving the corporation or its parent or subsidiary
corporations in any other capacity and receiving compensation therefor. The
board of directors may also allow compensation for members of special or
standing committees for service on such committees.
ARTICLE III
OFFICERS
Section 1. Enumeration. The officers of the corporation shall be chosen
by the board of directors and shall be a president, a secretary and a treasurer
and such other officers with such titles, terms of office and duties as the
board of directors may from time to time determine, including a chairman of the
board, one or more vice-presidents, and one or more assistant secretaries and
assistant treasurers. If authorized by resolution of the board of directors, the
chief executive officer may be empowered to appoint from time to time assistant
secretaries and assistant treasurers. Any number of offices may be held by the
same person, unless the certificate of incorporation or these by-laws otherwise
provide.
Section 2. Election. The board of directors at its first meeting after
each annual meeting of stockholders shall choose a president, a secretary and a
treasurer. Other officers may be appointed by the board of directors at such
meeting, at any other meeting, or by written consent.
Section 3. Tenure. The officers of the corporation shall hold office
until their successors are chosen and qualify, unless a different term is
specified in the vote choosing or appointing him, or until his earlier death,
resignation or removal. Any officer
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elected or appointed by the board of directors or by the chief executive officer
may be removed at any time, with or without cause, by the affirmative vote of a
majority of the board of directors or a committee duly authorized to do so,
except that any officer appointed by the chief executive officer may also be
removed at any time, with or without cause, by the chief executive officer. Any
vacancy occurring in any office of the corporation may be filled by the board of
directors, at its discretion. Any officer may resign by delivering his written
resignation to the corporation at its principal place of business or to the
chief executive officer or the secretary. Such resignation shall be effective
upon receipt unless it is specified to be effective at some other time or upon
the happening of some other event.
Section 4. President. The president shall be the chief operating
officer of the corporation. He shall also be the chief executive officer unless
the board of directors otherwise provides. If no chief executive officer shall
have been appointed by the board of directors, all references herein to the
"chief executive officer" shall be to the president. The president shall, unless
the board of directors provides otherwise in a specific instance or generally,
preside at all meetings of the stockholders and the board of directors, have
general and active management of the business of the corporation and see that
all orders and resolutions of the board of directors are carried into effect.
The president shall execute bonds, mortgages, and other contracts requiring a
seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
Section 5. Vice-Presidents. In the absence of the president or in the
event of his or her inability or refusal to act, the vice-president, or if there
be more than one vice-president, the vice-presidents in the order designated by
the board of directors or the chief executive officer (or in the absence of any
designation, then in the order determined by their tenure in office) shall
perform the duties of the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the president. The
vice-presidents shall perform such other duties and have such other powers as
the board of directors or the chief executive officer may from time to time
prescribe.
Section 6. Secretary. The secretary shall have such powers and perform
such duties as are incident to the office of secretary. The secretary shall
maintain a stock ledger and prepare lists of stockholders and their addresses as
required and shall be the custodian of corporate records. The secretary shall
attend all meetings of the board of directors and all meetings of the
stockholders and record all the proceedings of the meetings of the corporation
and of the board of directors in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. The secretary
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the board of directors, and shall perform such other duties
as may be from time to time prescribed by the board of directors or chief
executive officer, under whose supervision the secretary shall be. The secretary
shall have custody of the corporate seal of the corporation and the secretary,
or an assistant secretary, shall have
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authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his or her signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
or her signature.
Section 7. Assistant Secretaries. The assistant secretary, or if there
be more than one, the assistant secretaries in the order determined by the board
of directors, the chief executive officer or the secretary (or if there be no
such determination, then in the order determined by their tenure in office),
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors, the chief executive officer or the secretary may from time to time
prescribe. In the absence of the secretary or any assistant secretary at any
meeting of stockholders or directors, the person presiding at the meeting shall
designate a temporary or acting secretary to keep a record of the meeting.
Section 8. Treasurer. The treasurer shall perform such duties and shall
have such powers as may be assigned to him or her by the board of directors or
the chief executive officer. In addition, the treasurer shall perform such
duties and have such powers as are incident to the office of treasurer. The
treasurer shall have the custody of the corporate funds and securities and shall
keep full and accurate accounts of receipts and disbursements in books belonging
to the corporation and shall deposit all moneys and other valuable effects in
the name and to the credit of the corporation in such depositories as may be
designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, taking proper vouchers
for such disbursements, and shall render to the chief executive officer and the
board of directors, when the chief executive officer or board of directors so
requires, an account of all his or her transactions as treasurer and of the
financial condition of the corporation.
Section 9. Assistant Treasurers. The assistant treasurer, or if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, the chief executive officer or the treasurer (or if there be
no such determination, then in the order determined by their tenure in office),
shall, in the absence of the treasurer or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the treasurer
and shall perform such other duties and have such other powers as the board of
directors, the chief executive officer or the treasurer may from time to time
prescribe.
Section 10. Bond. If required by the board of directors, any officer
shall give the corporation a bond in such sum and with such surety or sureties
and upon such terms and conditions as shall be satisfactory to the board of
directors, including without limitation a bond for the faithful performance of
the duties of his office and for the restoration to the corporation of all
books, papers, vouchers, money and other property of whatever kind in his
possession or under his control and belonging to the corporation.
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ARTICLE IV
NOTICES
Section 1. Delivery. Whenever, under the provisions of law, or of the
certificate of incorporation or these by-laws, written notice is required to be
given to any director or stockholder, such notice may be given by mail,
addressed to such director or stockholder, at his address as it appears on the
records of the corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the United
States mail. Unless written notice by mail is required by law, written notice
may also be given by telegram, cable, telecopy, commercial delivery service,
telex or similar means, addressed to such director or stockholder at his address
as it appears on the records of the corporation, in which case such notice shall
be deemed to be given when delivered into the control of the persons charged
with effecting such transmission, the transmission charge to be paid by the
corporation or the person sending such notice and not by the addressee. Oral
notice or other in-hand delivery (in person or by telephone) shall be deemed
given at the time it is actually given.
Section 2. Waiver of Notice. Whenever any notice is required to be
given under the provisions of law or of the certificate of incorporation or of
these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE V
INDEMNIFICATION
Section 1. Actions other than by or in the Right of the Corporation.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceedings, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the
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corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 2. Actions by or in the Right of the Corporation. The
corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he or she is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit if such person acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable unless and only to the extent that the Court of Chancery
of the State of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
of the State of Delaware or such other court shall deem proper.
Section 3. Success on the Merits. To the extent that any person
described in Section 1 or 2 of this Article V has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in said
Sections, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
Section 4. Specific Authorization. Any indemnification under Section 1
or 2 of this Article V (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of any person described in said Sections is proper in the
circumstances because he has met the applicable standard of conduct set forth in
said Sections. Such determination shall be made (1) by the board of directors by
a majority vote of directors who were not parties to such action, suit or
proceeding (even though less than a quorum), or (2) if there are no
disinterested directors or if a majority of disinterested directors so directs,
by independent legal counsel (who may be regular legal counsel to the
corporation) in a written opinion, or (3) by the stockholders of the
corporation.
Section 5. Advance Payment. Expenses incurred in defending a pending or
threatened civil or criminal action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of any person
described in said Section to repay such amount if it shall ultimately be
determined that he or she is not entitled to indemnification by the corporation
as authorized in this Article V.
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Section 6. Non-Exclusivity. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other Sections of this Article
V shall not be deemed exclusive of any other rights to which those provided
indemnification or advancement of expenses may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office.
Section 7. Insurance. The board of directors may authorize, by a vote
of the majority of the full board, the corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of this Article V.
Section 8. Continuation of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article V shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 9. Severability. If any word, clause or provision of this
Article V or any award made hereunder shall for any reason be determined to be
invalid, the provisions hereof shall not otherwise be affected thereby but shall
remain in full force and effect.
Section 10. Intent of Article. The intent of this Article V is to
provide for indemnification and advancement of expenses to the fullest extent
permitted by Section 145 of the General Corporation Law of Delaware. To the
extent that such Section or any successor section may be amended or supplemented
from time to time, this Article V shall be amended automatically and construed
so as to permit indemnification and advancement of expenses to the fullest
extent from time to time permitted by law.
ARTICLE VI
CAPITAL STOCK
Section 1. Certificates of Stock. Every holder of stock in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the chairman or vice-chairman of the board of directors,
or the president or a vice-president and the treasurer or an assistant
treasurer, or the secretary or an assistant secretary of the corporation,
certifying the number of shares owned by such holder in the corporation.
11
<PAGE> 15
Any or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue. Certificates may be issued for partly
paid shares and in such case upon the face or back of the certificates issued to
represent any such partly paid shares, the total amount of the consideration to
be paid therefor, and the amount paid thereon shall be specified.
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed. When authorizing such issue of a new certificate or
certificates, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal representative, to give
reasonable evidence of such loss, theft or destruction, to advertise the same in
such manner as it shall require and/or to give the corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen or
destroyed or the issuance of such new certificate.
Section 3. Transfer of Stock. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares, duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and proper evidence of compliance with other conditions to rightful
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 4. Record Date. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the board of directors may fix a record date, which
shall not precede the date upon which the resolution fixing the record date is
adopted by the board of directors, and which shall not be more than sixty days
nor less then ten days before the date of such meeting. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the board of directors may fix a new record date for the adjourned meeting.
If no record date is fixed, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day before the day on which notice is given, or, if
notice is waived, at the close of business on the day before the day on which
the meeting is held. In order that the corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the board of directors may fix a record date, which shall not precede
the date upon which the resolution fixing the record date is adopted by the
board of directors, and which shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the board of
directors. If
12
<PAGE> 16
no record date is fixed, the record date for determining stockholders entitled
to consent to corporate action in writing without a meeting, when no prior
action by the board of directors is required by statute, shall be the first date
on which a signed written consent setting forth the action taken or proposed to
be taken is delivered to the corporation as provided in Section 10 of Article I.
If no record date is fixed and prior action by the board of directors is
required, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the date on which the board of directors adopts the resolution taking such
prior action. In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the board of directors may fix a record date, which shall not
precede the date upon which the resolution fixing the record date is adopted,
and which shall be not more than sixty days prior to such action. If no record
date is fixed, the record date for determining stockholders for any such purpose
shall be at the close of business on the day on which the board of directors
adopts the resolution relating to such purpose.
Section 5. Registered Stockholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
ARTICLE VII
CERTAIN TRANSACTIONS
Section 1. Transactions with Interested Parties. No contract or
transaction between the corporation and one or more of its directors or
officers, or between the corporation and any other corporation, partnership,
association, or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the board or committee thereof
which authorizes the contract or transaction or solely because his or their
votes are counted for such purpose, if:
(a) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the board of
directors or the committee, and the board or committee in good faith
authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or
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<PAGE> 17
(b) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(c) The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified, by the board of directors, a
committee thereof, or the stockholders.
Section 2. Quorum. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of directors or
of a committee which authorizes the contract or transaction.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, if any, may be declared by the board of directors at any regular or
special meeting or by written consent, pursuant to law. Dividends may be paid in
cash, in property, or in shares of the capital stock, subject to the provisions
of the certificate of incorporation.
Section 2. Reserves. The directors may set apart out of any funds of
the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve.
Section 3. Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
Section 4. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
Section 5. Seal. The board of directors may, by resolution, adopt a
corporate seal. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the word "Delaware." The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise. The seal may be altered from time to time by the board
of directors.
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<PAGE> 18
ARTICLE IX
AMENDMENTS
These by-laws may be altered, amended or repealed or new by-laws may be
adopted by the stockholders or by the board of directors, when such power is
conferred upon the board of directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors provided,
however, that in the case of a regular or special meeting of stockholders,
notice of such alteration, amendment, repeal or adoption of new by-laws be
contained in the notice of such meeting.
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<PAGE> 19
Register of Amendments to the By-laws
Date Section Affected Change
16
<PAGE> 1
Exhibit 3.7
ARTICLES OF INCORPORATION
OF
CCIR OF CALIFORNIA CORP.
I
The name of this corporation is CCIR OF CALIFORNIA CORP.
II
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
III
The name and address in the State of California of this corporation's
initial agent for service of process is:
Richard A. Saffir
c/o Bronson, Bronson & McKinnon LLP
505 Montgomery Street
San Francisco, CA 94111
IV
This corporation is authorized to issue only one class of shares of
stock; and the total number of shares which the corporation is authorized to
issue is one thousand (1,000).
V
The liability of the directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
<PAGE> 2
VI
The corporation is authorized to provide indemnification of directors,
officers, and agents of the corporation through Bylaw provisions, agreements
with agents, vote of shareholders or disinterested directors, or otherwise, to
the fullest extent permissible under California law.
Dated: November 3, 1997.
/s/ Richard A. Saffir
----------------------------------
Richard A. Saffir, Incorporator
<PAGE> 1
Exhibit 3.8
BYLAWS
OF
CCIR OF CALIFORNIA CORPORATION
A California corporation
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE 1. - OFFICES....................................................... 1
1.1 Principal Executive Office........................................ 1
1.2 Other Offices..................................................... 1
ARTICLE 2. - MEETINGS OF SHAREHOLDERS...................................... 1
2.1 Place of Meetings................................................. 1
2.2 Annual Meetings................................................... 1
2.3 Special Meetings.................................................. 1
2.4 Notice of Shareholders' Meetings.................................. 2
2.5 Manner of Giving Notice; Affidavit of Notice...................... 2
2.6 Adjourned Meetings and Notice Thereof............................. 3
2.7 Voting at Meetings of Shareholders................................ 3
2.8 Record Date for Shareholder Notice, Voting and Giving Consents.... 4
2.9 Quorum............................................................ 4
2.10 Consent of Absentees............................................. 4
2.11 Action Without Meeting........................................... 5
2.12 Proxies.......................................................... 5
2.13 Inspectors of Election........................................... 6
ARTICLE 3. - DIRECTORS..................................................... 7
3.1 Powers of Directors............................................... 7
3.2 Number of Directors............................................... 8
3.3 Election and Term of Office....................................... 8
3.4 Vacancies......................................................... 9
3.5 Place of Meeting.................................................. 9
3.6 Annual Meeting.................................................... 9
3.7 Special Meetings.................................................. 9
3.8 Adjournment of Meetings........................................... 10
3.9 Notice of Adjournment............................................. 10
3.10 Waiver of Notice................................................. 10
3.11 Quorum........................................................... 10
3.12 Fees and Compensation............................................ 10
3.13 Action Without Meeting........................................... 10
ARTICLE 4 - OFFICERS....................................................... 11
4.1 Officers.......................................................... 11
4.2 Election.......................................................... 11
4.3 Subordinate Officers.............................................. 11
4.4 Removal and Resignation of Officers............................... 11
4.5 Vacancies......................................................... 11
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<PAGE> 3
4.6 Duties of Officers................................................ 11
4.6.1 Chairman of the Board........................................ 11
4.6.2 President.................................................... 11
4.6.3 Vice Presidents.............................................. 12
4.6.4 Secretary.................................................... 12
4.6.5 Assistant Secretaries........................................ 12
4.6.6 Treasurer.................................................... 12
4.6.7 Assistant Financial Officers................................. 13
ARTICLE 5 - SHARES OF STOCK................................................ 13
5.1 Share Certificates................................................ 13
5.2 Fractional Shares................................................. 13
5.3 Transfer of Shares................................................ 13
5.4 Lost or Destroyed Certificate..................................... 14
ARTICLE 6 - MISCELLANEOUS.................................................. 14
6.1. Indemnity of Officers, Directors, Employees and Other Agents..... 14
6.2 Shareholder Inspection of Bylaws.................................. 14
6.3 Maintenance and Inspection of Records of Shareholders............. 14
6.4 Shareholder Inspection of Corporate Records....................... 15
6.5 Inspection by Directors........................................... 15
6.6 Checks, Drafts, etc............................................... 15
6.7 Contracts, etc., How Executed..................................... 15
6.8 Representation of Shares of Other Corporations.................... 16
6.9 Annual Report..................................................... 16
6.10 Annual Statement of General Information.......................... 16
ARTICLE 7 - AMENDMENTS TO BYLAWS........................................... 16
7.1 Amendment by Shareholders......................................... 16
7.2 Amendment by Directors............................................ 16
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<PAGE> 4
BYLAWS
OF
CCIR OF CALIFORNIA CORP.
ARTICLE 1.
OFFICES
1.1 Principal Executive Office. The address of the initial principal
executive office for the transaction of the business of CCIR of California
Corp., a California corporation (the "Corporation"), is hereby fixed as: CCIR of
California Corp., 1758 East Junction Ave., San Jose, California. The board of
directors may from time to time change said principal executive office from one
location to another within the State of California.
1.2 Other Offices. Branch or subordinate offices may at any time be
established by the board of directors at any place or places where the
Corporation is qualified to do business.
ARTICLE 2.
MEETINGS OF SHAREHOLDERS
2.1 Place of Meetings. All meetings of the shareholders of the
Corporation shall be held at the principal executive office of the Corporation,
or at any other place within or without the State of California which may be
designated either by the board of directors or by the written consent of all
shareholders entitled to vote thereat, provided such shareholder consent is
given either before or after the meeting and filed with the secretary of the
Corporation.
2.2 Annual Meetings. The annual meetings of shareholders shall be held
on the last Tuesday of January of each year, or on such other date as may be
subsequently determined by the board of directors of the Corporation. At such
meetings, directors shall be elected, reports of the affairs of the Corporation
shall be considered and any other business may be transacted which is within the
powers of the shareholders.
2.3 Special Meetings. Special meetings of the shareholders, for any
purpose or purposes whatsoever, may be called at any time by the president or by
the board of directors or by the chairman of the board or by one or more
shareholders holding shares in the aggregate entitled to cast not less than ten
percent (10%) of the votes at that meeting. If a special meeting is called by
any person or persons other than the board of directors, the request shall be in
writing, specifying the time of such meeting and the general nature of the
business proposed to be transacted, and shall be delivered personally or sent by
registered mail or by telegraphic or other facsimile transmission to the
chairman of the board, the president, any vice president or the secretary of the
Corporation. The officer receiving the request shall cause notice to be promptly
given to the
<PAGE> 5
shareholders entitled to vote, in accordance with the provisions of sections 2.4
and 2.5 of this Article 2, and the notice shall set forth that a meeting will be
held at the time requested by the person or persons calling the meeting,
provided such time is not less than thirty-five (35) or more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, the person or persons requesting the
meeting may give the notice. Nothing contained in this section 2.3 shall be
construed as limiting; fixing or affecting the time when a meeting of
shareholders called by action of the board of directors may be held.
2.4 Notice of Shareholders' Meetings. All notices of meetings of
shareholders shall be sent or otherwise given in accordance with section 2.5 of
this Article 2 not less than ten (10) or more than sixty (60) days before the
date of the meeting. The notice shall specify the place, date and hour of the
meeting and, (i) in the case of a special meeting, the general nature of the
business to be transacted or, (ii) in the case of the annual meeting, those
matters which the board of directors, at the time of giving the notice, intends
to present for action by the shareholders. The notice of any meeting at which
directors are to be elected shall include the name of any nominee or nominees
whom, at the time of the notice, management intends to present for election.
Pursuant to the California Corporations Code (the "Corporations Code"),
the notice shall also state the general nature of the proposal if action is
proposed to be taken at any meeting for approval of (i) a contract or
transaction in which a director has a direct or indirect financial interest,
(ii) an amendment of the Articles of Incorporation, (iii) a reorganization of
the Corporation, (iv) a voluntary dissolution of the Corporation under section
1900 of that Code or (v) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares of the Corporation's stock.
2.5 Manner of Giving Notice: Affidavit of Notice. Notice of any
shareholders' meeting shall be given either personally or by first-class mail,
charges prepaid, or by facsimile transmission, addressed to the shareholder at
the address of that shareholder appearing on the books of the Corporation or
given by the shareholder to the Corporation for the purpose of notice. If no
such address appears on the Corporation's books or has been so given, notice
shall be deemed to have been given if sent to that shareholder by first-class
mail or by facsimile transmission to the Corporation's principal executive
office, or if published at least once in a newspaper of general circulation in
the country where that office is located. Notice shall be deemed to have been
given at the time when delivered personally, deposited in the mail, delivered to
a common carrier for transmission to the recipient, actually transmitted by
electronic means to the recipient by the person giving the notice or sent by
other means of written communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the Corporation is returned to the
Corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the shareholder
at that address, all future notices or reports shall be deemed to have been duly
given without further mailing if such notices or reports shall be available to
the shareholder on written
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<PAGE> 6
demand of the shareholder at the principal executive office of the Corporation
for a period of one (1) year from the date of the giving of the notice or
report.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meeting may be executed by the secretary, assistant secretary, or
any transfer agent of the Corporation giving the notice, and filed and
maintained in the minute book of the Corporation.
2.6 Adjourned Meetings and Notice Thereof. Any annual or special
shareholders' meeting may be adjourned from time to time, whether or not a
quorum is present, by the vote of the majority of the shares, the holders of
which are either present in person or represented by proxy thereat, but in the
absence of a quorum, no other business may be transacted at such meeting except
in the case of the withdrawal of a shareholder from a quorum as provided in
section 2.9 of this Article 2.
When any shareholders' meeting, either annual or special, is adjourned
for more than forty-five (45) days, or if after the adjournment a new record
date is fixed for the adjourned meeting, notice of the adjourned meeting shall
be given to each shareholder of record entitled to vote at the adjourned meeting
in accordance with the provisions of sections 2.4 and 2.5 of this Article 2.
Save as aforesaid, it shall not be necessary to give any notice of an
adjournment or of the business to be transacted at an adjourned meeting other
than by announcement at the meeting at which such adjournment is taken. At any
adjourned meeting, the shareholders may transact any business that might have
been transacted at the regular meeting.
2.7 Voting at Meetings of Shareholders. The shareholders entitled to
vote at any meeting of shareholders shall be determined in accordance with the
provisions of section 2.8 of this Article 2, subject to all applicable
provisions of the Corporations Code (relating to voting shares held by a
fiduciary, in the name of a Corporation, or in joint ownership). The
shareholders' vote may be by voice vote or by ballot; provided, however, that
any election for directors must be by ballot if demanded by any shareholder
before the voting has begun. On any matter other than the election of directors,
any shareholder may vote part of the shares in favor of the proposal and refrain
from voting the remaining shares or vote them against the proposal, but if the
shareholder fails to specify the number of shares which the shareholder is
voting affirmatively, it will be conclusively presumed that the shareholder's
approving vote is with respect to all shares that the shareholder is entitled to
vote. If a quorum is present (or if a quorum had been present earlier at the
meeting but some shareholders had withdrawn), the affirmative vote of a majority
of the shares represented and voting, provided such shares voting affirmatively
also constitutes a majority of the number of shares required for a quorum, shall
be the act of the shareholders, unless the vote of a greater number or voting by
classes is required by the Corporations Code or by the Corporation's Articles of
Incorporation.
Each shareholder shall be entitled to cumulate votes only if the
procedures set forth in Section 708 of the Corporations Code have been
satisfied.
2.8 Record Date for Shareholder Notice, Voting and Giving Consents. For
purposes of determining the shareholders entitled to notice of any meeting or to
vote or entitled to give consent to corporate action without a meeting, the
board of directors may fix, in advance, a
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<PAGE> 7
record date, which shall not be more than sixty (60) days or less than ten (10)
days before the date of any such meeting or more than sixty (60) days before any
such action without a meeting, and in this event only those shareholders of
record at the close of business on the date so fixed shall be entitled to notice
and to vote or to give consent, as the case may be, notwithstanding any transfer
of any shares on the books of the Corporation after the record date, except as
otherwise provided by the Corporations Code.
If the board of directors does not so fix a record date:
(a) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held; and
(b) The record date for determining shareholders entitled to
give consent to corporate action in writing without a meeting shall be (i) when
no prior action by the board has been taken, the day on which the first written
consent is given, or (ii) when prior action of the board has been taken, at the
close of business on the day on which the board adopts the resolution relating
to that action, or the sixtieth (60th) day before the date of such other action,
whichever is later.
2.9 Quorum. The presence in person or by proxy of persons entitled to
vote a majority of the voting shares at any meeting shall constitute a quorum of
the shareholders for the transaction of business. The shareholders present at a
duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
2.10 Consent of Absentees. The transactions of any meeting of
shareholders, either annual or special, however called and noticed and wherever
held, shall be as valid as though had at a meeting duly held after regular call
and notice, if a quorum be present either in person or by proxy, and if, either
before or after the meeting, each of the shareholders entitled to vote, who was
not present in person or by proxy, signs a written waiver of notice or a consent
to the holding of such meeting or an approval of the minutes thereof. The waiver
of notice or consent need not specify either the business to be transacted or
the purpose of any annual or special meeting of shareholders, except that if
action is taken or proposed to be taken for approval of any of those matters
specified in the second paragraph of section 2.4 of this Article 2, the waiver
of notice or consent shall state the general nature of the proposal. All such
waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the persons objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened, and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by law to be
included in the notice of the meeting, but not so included, if that objection is
expressly made at the meeting.
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<PAGE> 8
2.11 Action Without Meeting. Any action which may be taken at any
annual or special meeting of shareholders may be taken without a meeting and
without prior notice if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Notwithstanding the previous sentence, directors may be elected by
written consent without a meeting only if the written consent of all outstanding
shares entitled to vote is obtained, except that a vacancy in the board (other
than a vacancy created by removal of a director) not filled by the board may be
filled by the written consent of the holders of a majority of the outstanding
shares entitled to vote.
All such consents shall be filed with the secretary of the Corporation
and shall be maintained in the corporate records. Any shareholder giving a
written consent, or the shareholder's proxyholders, or a transferee of the
shares or a personal representative of the shareholder or their respective
proxyholders, may revoke the consent by a writing received by the Corporation
prior to the time that written consent of the number of shares required to
authorize the proposed action has been filed with the secretary of the
Corporation, but may not do so thereafter. Such revocation is effective upon its
receipt by the secretary of the Corporation.
If the consents of all shareholders entitled to vote have been
solicited in writing, and corporate action has been approved without a meeting
by less than the unanimous written consent of those shareholders entitled to
vote on such action, then the secretary shall give to those shareholders
entitled to vote who have not consented in writing:
(a) Notice of such approval at least ten (10) calendar days
before the consummation of the action authorized by such approval, if the
corporate action concerns (i) contracts or transactions in which a director has
a direct or indirect financial interest, (ii) indemnification of agents of the
Corporation, (iii) a reorganization, or (iv) a distribution in dissolution other
than in accordance with the rights of the outstanding preferred shares; and
(b) Prompt notice of any other corporate action. The notice
required by this section 2.11 shall conform to the requirements of paragraph (b)
of section 2.8 of this Article 2.
2.12 Proxies. Every person entitled to vote for directors or on any
other matter shall have the right to do so either in person or by one or more
agents authorized by a written proxy signed by the person and filed with the
secretary of the Corporation. A proxy shall be deemed signed if the
shareholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the shareholder or the
shareholder's attorney-in-fact. A validly executed proxy that does not state
that it is irrevocable shall continue in full force and effect unless (i)
revoked by the person executing it, before the vote pursuant to that proxy, by a
writing delivered to the Corporation stating that the proxy is revoked, or by
attendance at the meeting and voting in person by the person executing the proxy
or by a subsequent proxy executed by the same person and presented at the
meeting; or (ii) written notice of the death or incapacity of the maker of that
proxy is received by the Corporation before the vote pursuant to that proxy is
counted; provided, however, that no proxy shall be valid after
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the expiration of eleven (11) months from the date of the proxy, unless
otherwise provided in the proxy. The revocability of a proxy that states on its
face that it is irrevocable shall be governed by the provisions of the
Corporations Code.
2.13 Inspectors of Election. Before any meeting of shareholders, the
board of directors may appoint any persons other than nominees for office to act
as inspectors of election at the meeting or its adjournment. If inspectors of
election are not so appointed, the chairman of the meeting may, and on the
request of any shareholder or shareholder's proxy shall, appoint inspectors of
election at the meeting. The number of inspectors shall be either one (1) or
three (3). If inspectors are appointed at a meeting on the request of one or
more shareholders or proxies, the holders of a majority of shares or their
proxies present at the meeting shall determine whether one (1) or three (3)
inspectors are to be appointed. If any person appointed as inspector fails to
appear or fails or refuses to act, the chairman of the meeting may, and upon the
request of any shareholder or shareholder's proxy shall, appoint a person to
fill that vacancy.
These inspectors shall:
(a) Determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of a quorum,
and the authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the results; and
(g) Do any other acts that may be proper to conduct the
election or vote with fairness to all shareholders.
ARTICLE 3.
DIRECTORS
3.1 Powers of Directors. Subject to limitations of the Articles of
Incorporation, of these Bylaws and of the Corporations Code as to actions which
shall be authorized or approved by the shareholders, by the outstanding shares
or by a less than majority vote of a class or series of preferred shares, and
subject to the duties of directors as prescribed by these Bylaws, all corporate
powers shall be exercised by or under the authority of, and the business and
affairs of the Corporation shall be controlled by, the board of directors.
Without prejudice to such general powers but subject to the same limitations, it
is hereby expressly declared that the directors shall have the following powers,
to wit:
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First: To conduct, manage and control the affairs and business of
the Corporation and to make such rules and regulations therefor not inconsistent
with law or with the Articles of Incorporation or with these Bylaws, as they may
deem best.
Second: To select and remove all the other officers, agents and
employees of the Corporation, to prescribe such powers and duties for them as
may not be inconsistent with law, with the Articles of Incorporation or with
these Bylaws, to fix their compensation and to require from them security for
faithful service.
Third: To change the principal executive office for the
transaction of the business of the Corporation from one location to another
within the State of California, as provided in Article I, section 1.1, hereof;
to fix and locate from time to time one or more subsidiary offices of the
Corporation within or without the State of California, as provided in Article 1,
section 1.2, hereof; to designate any place within or without the State of
California for the holding of any shareholders' meeting or meetings except
annual meetings; and to adopt, make and use a corporate seal, to prescribe the
forms of certificates of stock and to alter the form of such seal and of such
certificates from time to time as in their judgment they may deem best, provided
that such seal and such certificates shall at all times comply with the
provisions of law.
Fourth: To authorize the issuance of shares of stock of the
Corporation from time to time, upon such terms as may be lawful, as dividends or
in consideration of money paid, labor done or services actually rendered to the
Corporation or for its benefit or in its formation or reorganization, debts or
securities canceled, or tangible or intangible property actually received, but
neither promissory notes of the purchaser, unless secured by property other than
the shares acquired or otherwise permitted by the Corporations Code, nor future
services shall constitute payment or part payment for shares of the Corporation.
Fifth: To borrow money and incur indebtedness for the purposes of
the Corporation and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of debt and securities therefor.
Sixth: To designate, by resolution adopted by a majority of the
authorized number of directors, one or more committees, each consisting of two
or more directors, to serve at the pleasure of the board. The board may
designate one or more directors as alternative members of any committee, who may
replace any absent member at any meeting of the committee. Any such committee
shall have all the authority of the board to the extent provided in the
resolution of the board or in these Bylaws, except with respect to:
(a) The approval of any action for which, under the
Corporations Code, shareholders' approval or approval of the outstanding shares
is also required;
(b) The filling of vacancies on the board or in any committee;
(c) The fixing of compensation of the directors for serving on
the board or on any committee;
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(d) The amendment or repeal of bylaws or the adoption of new
Bylaws;
(e) The amendment or repeal of any resolution of the board
which by its express terms is not so amendable or repealable;
(f) A distribution to the shareholder of the Corporation,
except at a rate, in a periodic amount or within a price range set forth or
determined by the board; or
(g) The appointment of other committees of the board or the
members thereof.
Seventh: To declare dividends at such times and in such amounts as
the condition of the affairs of the Corporation may warrant.
Eighth: Generally to exercise all of the powers and to perform all
of the acts and duties that from time to time may be permitted by law
appertaining to their office.
3.2 Number of Directors. The authorized number of directors of the
Corporation shall be one (1) unless and until, as may be required by the
Corporations Code, additional members are elected to the Board by the
shareholders of the Corporation and this section 3.2 is properly amended;
provided, however, that if the number of directors is increased, it cannot
thereafter be decreased to less than that number if the votes cast against the
adoption of a resolution decreasing said number at a meeting of the
shareholders, or the shares not consenting in the case of action by written
consent, equals more than 16-2/3 percent of the outstanding shares entitled to
vote.
3.3 Election and Term of Office. The directors shall be elected at each
annual meeting of shareholders, but if any such annual meeting is not held or
the directors are not elected thereat, the directors may be elected at any
special meeting of shareholders held for that purpose. All directors shall hold
office until their respective successors are elected.
3.4 Vacancies. Vacancies in the board of directors may be filled by a
majority of the remaining directors, though less than a quorum, or by a sole
remaining director. Each director so elected shall hold office until his
successor is elected at an annual or a special meeting of the shareholders.
A vacancy or vacancies in the board of directors shall be deemed to
exist in case of the death, resignation or removal of any director or if the
authorized number of directors be increased or if the shareholders fail, at any
annual or special meeting of shareholders at which any director or directors are
elected, to elect the full authorized number of directors to be voted for at
that meeting.
The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors. If the board of directors
accepts the resignation of a director tendered to take effect at a future time,
the board or the shareholders shall have the power to elect a successor to take
office when the resignation is to become effective.
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No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.
3.5 Place of Meeting. Regular meetings of the board of directors shall
be held at any place within or without the State of California which has been
designated from time to time by resolution of the board or by written consent of
all members of the board. In the absence of such designation, regular meetings
shall be held at the principal executive office of the Corporation. Special
meetings of the board may be held either at a place so designated or at the
principal executive office. Members of the board may participate in a meeting
through use of conference telephone or similar communication equipment, so long
as all members participating in such meeting can hear one another. Participation
in a meeting by means of the above-described procedure shall constitute presence
in person at such meeting.
3.6 Annual Meeting. Immediately following each annual meeting of
shareholders, the board of directors shall hold a regular meeting for the
purpose of organization, election of officers and the transaction of other
business. Notice of such meeting is hereby dispensed with.
3.7 Special Meetings. Special meetings of the board of directors for
any purpose or purposes shall be called at any time by the chairman of the
board, or the president, or any vice president, or the secretary, or any two
directors.
Written notice of the time and place of a special meeting shall be
delivered personally to the directors or sent to each director by mail or by
other form of written communication, charges prepaid, addressed to him at his
address as it appears upon the records of the Corporation or, if it is not so
shown or is not readily ascertainable, at the place in which the meetings of
directors are regularly held. In case such notice is mailed, it shall be
deposited with the United States Postal Service in the place in which the
principal executive office of the Corporation is located at least four (4) days
prior to the time of the meeting. In case such notice is delivered personally or
telegraphed, it shall be so delivered or deposited with the telegraph company at
least forty-eight (48) hours prior to the time of the meeting. Such mailing,
telegraphing or delivery, as above provided, shall be due, legal and personal
notice to such director.
3.8 Adjournment of Meetings. A majority of the directors present,
whether or not a quorum is present, may adjourn any directors' meeting to
another time and place.
3.9 Notice of Adjournment. If a meeting is adjourned for more than
twenty-four (24) hours, notice of any adjournment to another time or place shall
be given prior to the time of the adjourned meeting to the directors who were
not present at the time of adjournment.
3.10 Waiver of Notice. The transactions at any meeting of the board of
directors, however called and noticed, or wherever held, shall be as valid as
though such transactions had occurred at a meeting duly held after regular call
and notice if a quorum be present and if, either before or after the meeting,
each of the directors not present signs a written waiver of notice of or consent
to holding the meeting or an approval of the minutes thereof. All such waiver,
consents or approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
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3.11 Quorum. A majority of the authorized number of directors shall be
necessary to constitute a quorum for the transaction of business, except to
adjourn as hereinabove provided. Every act or decision done or made by a
majority of the directors at a meeting duly held at which a quorum is present
shall be regarded as an act of the board of directors unless a greater number be
required by law or by the Articles of Incorporation. However, a meeting at which
a quorum is initially present may continue to transact business notwithstanding
the withdrawal of directors, if any action taken is approved by at least a
majority of the required quorum for such meeting.
3.12 Fees and Compensation. Directors shall not receive any stated
salary for their services as directors but, by resolution of the board, a fixed
fee, with or without expenses of attendance, may be allowed to directors not
receiving monthly compensation for attendance at each meeting. Nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity, as an officer, agent, employee or otherwise,
and from receiving compensation therefor.
3.13 Action Without Meeting. Any action required or permitted to be
taken by the board of directors under the Corporations Code may be taken without
a meeting if all members of the board individually or collectively consent in
writing to such action. Such consent or consents shall be filed with the minutes
of the meetings of the board. Any certificate or other document filed under the
provision of the Corporations Code which relates to action so taken shall state
that the action was taken by unanimous written consent of the board of directors
without a meeting and that these Bylaws authorized the directors to so do.
ARTICLE 4
OFFICERS
4.1 Officers. The officers of the Corporation shall be a chairman of
the board or a president or both, a secretary and a chief financial officer
(treasurer) and such other officers with such titles and duties as may be
appointed in accordance with the provisions of section 4.3 of this Article 4.
Any number of offices may be held by the same person.
4.2 Election. The officers of the Corporation, except such officers as
may be appointed in accordance with the provisions of section 4.3 or section 4.5
of this Article 4, shall be chosen annually by the board of directors, and each
shall hold his office until he shall resign or shall be removed or otherwise
disqualified to serve or his successor shall be elected and qualified.
4.3 Subordinate Officers. The board of directors may appoint such other
officers as the business of the Corporation may require, each of whom shall hold
office for such period, have such authority and perform such duties as are
provided in these Bylaws or as the board of directors may from time to time
determine.
4.4 Removal and Resignation of Officers. Any officer may be removed,
either with or without cause, by a majority of the directors at the time in
office, at any regular or special meeting of the board or, except in the case of
an officer chosen by the board of directors, by any officer upon whom such power
of removal may be conferred by the board of directors.
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Any office may resign at any time by giving written notice to the board
of directors or to the president or to the secretary of the Corporation. Any
such resignation shall take effect on the date of the receipt of such notice or
any later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
4.5 Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled in the manner
prescribed in these Bylaws for regular appointments to such office.
4.6 Duties of Officers.
4.6.1 Chairman of the Board. The chairman of the board, if there
shall be such an officer, shall, if present, preside at all meetings of the
board of directors and shall exercise and perform all such other powers and
duties as may from time to time be assigned to him by the board of directors or
prescribed by the Bylaws.
4.6.2 President. The president shall be the chief executive office
of the Corporation and shall, subject to the board of directors, have general
supervision, direction and control of the business and of other officers and
employees of the Corporation. The president shall preside at all meetings of the
shareholders and, if there is no regular, appointed chairman of the board or if
such chairman is absent, at all meetings of the board of directors. The
president shall be ex officio a member of all standing committees, including the
executive committee, if any, and shall have general powers and duties of
management, together with such other powers and duties as may be prescribed by
the board of directors.
4.6.3 Vice Presidents. In the absence or disability of the
president, the vice presidents in order of their rank as fixed by the board of
directors or, if not ranked, the vice president designated by the board of
directors shall perform all the duties of the president and, when so acting,
shall have all the powers of and be subject to all the restrictions upon the
president. Each vice president shall have such other powers and shall perform
such other duties as from time to time may be prescribed for him by the board of
directors or these Bylaws.
4.6.4 Secretary. The secretary shall keep, or cause to be kept, a
book of minutes at the principal executive office of the Corporation, or such
other place as the board of directors my order, of all meetings of directors and
shareholders, with the time and place of holding, whether regular or special
and, if special, how authorized, the notice thereof given, the names of those
present at directors' meetings, the number of shares present or represented at
shareholders' meetings and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the Corporation or at the office of the Corporation's
transfer agent, a share register or a duplicate share register showing the names
of the shareholders and their addresses, the number and classes of shares held
by each, the number and the date of certificates issued for the same, and the
number and date of cancellation of every certificate surrendered for
cancellation.
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The secretary shall give, or cause to be given, notice of all the
meetings of the shareholders and of the board of directors required by these
Bylaws or by law to be given, shall keep the seal of the Corporation in safe
custody and shall have such other powers and shall perform such other duties as
may be prescribed by the board of directors or these Bylaws.
4.6.5 Assistant Secretaries. In the absence or disability of the
secretary, the assistant secretaries in order of their rank as fixed by the
board of directors or, if not ranked, the assistant secretary designated by the
board of directors shall perform all the duties of the secretary and, when so
acting, shall have all the powers of and be subject to all the restrictions upon
the secretary. Each assistant secretary shall have such other powers and shall
perform such other duties as from time to time may be prescribed for him by the
board of directors or these Bylaws.
4.6.6 Treasurer. The chief financial officer of the Corporation
shall be the treasurer. The treasurer shall keep and maintain, or cause to be
kept and maintained, adequate and correct accounts of the properties and
business transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, surplus and
shares. The treasurer shall deposit all moneys and other valuables in the name
and to the credit of the Corporation with such depositaries as may be designated
by the board of directors. The treasurer shall be responsible for the proper
disbursement of the funds of the Corporation as may be ordered by the board of
directors and shall render to the president or the board, whenever requested, an
account of all transactions as treasurer and of the financial condition of the
Corporation. The treasurer shall prepare a proper annual budget of income and
expenses for each calendar year, revised quarterly, for approval of or revision
by the board of directors and shall be responsible for the handling of finances
in connection therewith. The treasurer shall have such other powers and shall
perform such other duties as may be prescribed by the board of directors. The
treasurer shall see that all officers signing checks are bonded in such amounts
as may be fixed from time to time by the board of directors.
4.6.7 Assistant Financial Officers. In the absence of or
disability of the chief financial officer, the assistant financial officers in
order of their rank or, if not ranked, the assistant financial officer
designated by the board of directors shall perform all the duties of the chief
financial officer and, when so acting, shall have the powers of and be subject
to all the restrictions upon the chief financial officer. Each assistant
financial officer shall have such other powers and perform such other duties as
from time to time may be prescribed for him by the board of directors or these
Bylaws.
ARTICLE 5
SHARES OF STOCK
5.1 Share Certificates. The certificates of shares of the capital stock
of the Corporation shall be in such form as is consistent with the Articles of
Incorporation and the laws of the State of California and as shall be approved
by the board of directors. A certificate or certificates for shares of the
capital stock of the Corporation shall be issued to each shareholder when the
shares are fully paid, and the board of directors may authorize the issuance of
certificates or shares as
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partly paid provided that such certificates shall state the amount of the
consideration to be paid for them and the amount paid. All such certificates
shall be signed by the chairman of the board, or the president, or any vice
president, and by the chief financial officer, or any assistant financial
officer, or the secretary, or any assistant secretary, certifying to the number
of shares and the class or series of shares issued to the shareholder. Any or
all of the signatures on a certificate may be facsimile.
5.2 Fractional Shares. The Corporation shall not issue, sell or
transfer fractional shares of its capital stock.
5.3 Transfer of Shares. Subject to the provisions of law, upon the
surrender to the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
5.4 Lost or Destroyed Certificate. The holder of any shares of the
Stock of Corporation shall immediately notify the Corporation of any loss or
destruction of the certificate therefore, and the Corporation may issue a new
certificate in the place of any certificate theretofore issued by it alleged to
have been lost or destroyed, upon approval of the board of directors. The board
may, in its discretion, and as a condition to authorizing the issuance of such
new certificate, require the owner of the lost or destroyed certificate, or his
legal representative, to make proof satisfactory to the board of directors of
the loss or destruction thereof and to give the Corporation a bond or other
security, in such amount and with such surety or sureties as the board of
directors may determine, as indemnity against any claim that may be made against
the Corporation on account of any such certificate so alleged to have been lost
or destroyed.
ARTICLE 6
MISCELLANEOUS
6.1 Indemnity of Officers, Directors, Employees and Other Agents. The
Corporation shall, to the maximum extent permitted by the Corporations Code,
have power to indemnify each of its agents against expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with any proceeding arising by reason of the fact any such person is or was an
agent of the Corporation and shall have power to advance to each such agent
expenses incurred in defending any such proceeding to the maximum extent
permitted by that law. For purposes of this Article, an "agent" of the
Corporation includes any person who is or was a director, officer, employee or
other agent of the Corporation; or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise; or was a director,
officer, employee or agent of a corporation which was a predecessor corporation
of the Corporation or of another enterprise at the request of such predecessor
corporation.
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6.2 Shareholder Inspection of Bylaws. The Corporation shall keep at its
principal executive office in this state, the original or a copy of the Bylaws
and any amendments thereto, certified by the secretary, which shall be open to
inspection by shareholders at all reasonable times during office hours.
6.3 Maintenance and Inspection of Records of Shareholders. The
Corporation shall keep at its principal executive office, or at the office of
its transfer agent or registrar, if either be appointed and as determined by
resolution of the board of directors, a record of its shareholders, which sets
forth the names and addresses of all shareholders and the number and class of
shares held by each shareholder. A shareholder or shareholders of the
Corporation holding at least five percent (5%) in the aggregate of the
outstanding voting shares of the Corporation may (i) inspect and copy the
records of shareholders' names, addresses and shareholdings during usual
business hours on five (5) days' prior written demand on the Corporation, and
(ii) obtain from the transfer agent of the Corporation, on written demand and on
the tender of such transfer agent's usual charges for such list, a list of the
names and addresses of shareholders, who are entitled to vote for the election
of directors, and their shareholdings, as of the most recent record date for
which that list has been compiled or as of a date specified by the shareholder
after the date of demand. This list shall be made available to any such
shareholder or shareholders by the transfer agent on or before the later of five
(5) days after the demand is received or the date specified in the demand as the
date as of which the list is to be compiled. The record of shareholders shall
also be open to inspection on the written demand of any shareholder or holder of
a voting trust certificate, at any time during usual business hours, for a
purpose reasonably related to the holder's interests as a shareholder or as the
holder of a voting trust certificate. Any inspection and copying under this
section 6.3 may be made in person or by an agent or attorney of the shareholder
or holder of a voting trust certificate making the demand.
6.4 Shareholder Inspection of Corporate Records. The accounting books
and records and minutes of proceedings of the shareholders and the board of
directors and any committee or committees of the board of directors shall be
kept at such place or places designated by the board of directors or, in the
absence of such designation, at the principal executive office of the
Corporation. The minutes shall be kept in written form and the accounting books
and records shall be kept either in written form or in any other form capable of
being converted into written form. The minutes and accounting books and records
shall be open to inspection upon the written demand of any shareholder or holder
of a voting trust certificate, at any reasonable time during usual business
hours, for a purpose reasonably related to the holder's interests as a
shareholder or as the holder of a voting trust certificate. The inspection may
be made in person or by an agent or attorney and shall include the right to copy
and make extracts. These rights of inspection shall extend to the records of
each subsidiary corporation of the Corporation.
6.5 Inspection by Directors. Every director shall have the absolute
right at any reasonable time to inspect all books, records and documents of
every kind and the physical properties of the Corporation and each of its
subsidiary corporations. This inspection by a director may be made in person or
by an agent or attorney, and the right of inspection includes the right to copy
and make extracts of documents.
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6.6 Checks, Drafts, etc. All checks, drafts or other orders for payment
of money, notes or other evidences of indebtedness, issued in the name of or
payable to the Corporation, shall be signed or endorsed by such person or
persons and in such manner as from time to time shall be determined by the
resolution of the board of directors.
6.7 Contracts, etc., How Executed. Except as otherwise provided in
these Bylaws, the board of directors may authorize any officer or agent to enter
into any contract or execute any instrument in the name of and on behalf of the
Corporation. Such authority may be general or confined to specific instances,
and, unless so authorized by the board of directors, no officer, agent or
employee shall have any power or authority to bind the Corporation by any
contract or engagement or to pledge its credit to render it liable for any
purpose or to any amount.
6.8 Representation of Shares of Other Corporations. The chairman of the
board, the president, any vice president, or any other person authorized by
resolution of the board of directors, is authorized to represent and exercise,
on behalf of this Corporation, all rights incidental to any and all shares of
any other corporation or corporations, foreign or domestic, standing in the name
of this Corporation. The authority herein granted to said officers to vote or
represent on behalf of this Corporation any and all shares held by this
Corporation in any other corporation or corporations may be exercised either by
such officers in person or by any person authorized to do so by proxy or
power-of-attorney duly executed by said officers.
6.9 Annual Report. The annual report to shareholders referred to by the
Corporations Code, and subject to the limitations thereof, is expressly waived,
but the board of directors of the Corporation may cause to be sent to the
shareholders, not later than one hundred twenty (120) days after the close of
the fiscal or calendar year, an annual report in such form as may be deemed
appropriate by the board of directors.
6.10 Annual Statement of General Information. The Corporation shall,
each year, during the calendar month in which its Articles of Incorporation
originally were filed with the California Secretary of State, or during the
preceding five (5) calendar months, file with the Secretary of State, on the
prescribed form, a statement setting forth the authorized number of directors,
the names and complete business or residence addresses of all incumbent
directors, the names and complete business or residence addresses of the chief
executive officer, secretary and chief financial officer, the street address of
its principal executive office or principal business office in this state, and
the general type of business constituting the principal business activity of the
Corporation, together with a designation of the agent of the Corporation for the
purpose of service of process, all in compliance with the Corporations Code.
ARTICLE 7
AMENDMENTS TO BYLAWS
7.1 Amendment by Shareholders. Unless otherwise provided herein or in
the Articles of Incorporation, these bylaws may be altered, amended or repealed
upon, and only upon the approval of the holders of not less than two-thirds of
the voting capital stock of the Corporation.
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7.2 Amendment by Directors. Subject to the rights of the shareholders
as provided in section 7.1 of this Article 7 to adopt, amend or repeal the
bylaws, these bylaws may be adopted, amended, or repealed by the board of
directors; provided, however, that the board of directors may adopt a bylaw or
amend a bylaw changing the authorized number of directors only for the purpose
of fixing the exact number of directors within the limits specified in the
Articles of Incorporation or in Section 3.2 of Article 3 of the bylaws.
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CERTIFICATE OF SECRETARY
The undersigned, being the duly elected, qualified and acting Secretary
of CCIR of California Corp., a California corporation, does hereby certify the
foregoing Bylaws, comprising sixteen (16) pages, are the Bylaws of said
Corporation, as duly adopted by the unanimous written consent of the first Board
of Directors, effective November 6, 1997.
Dated: Effective as of November 6, 1997.
/s/ Joseph G. Andersen
------------------------------------
Joseph G. Andersen, Secretary
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Exhibit 3.9
ARTICLES OF INCORPORATION
OF
CCIR OF TEXAS CORP.
The undersigned natural person of the age of eighteen (18) years or
more, acting as an incorporator of a corporation under the Texas Business
Corporation Act, hereby adopts the following Articles of Incorporation for such
corporation:
ARTICLE I. NAME
The name of the corporation is CCIR OF TEXAS CORP.
ARTICLE II. DURATION
The period of its duration is perpetual.
ARTICLE III. PURPOSE
The purpose of purposes for which the corporation is organized are to
transact any and all lawful business for which corporations may be incorporated
under the Texas Business Corporation Act.
ARTICLE IV. SHARES
The aggregate number of shares which the corporation has authority to
issue is 1,000 shares of no par value per share. Such shares are designated as
common stock and shall have identical rights and privileges in every respect.
ARTICLE V. DENIAL OF PREEMPTIVE RIGHTS
Shareholders of the corporation shall have no preemptive right to
acquire additional, unissued or treasury shares of the corporation or securities
of the corporation convertible into or carrying a right to subscribe to or
acquire shares of the corporation.
ARTICLE VI. NONCUMULATIVE VOTING
Directors shall be elected by majority vote. No holder of any class of
shares of the corporation shall have the right to cumulate his votes in the
election of directors.
ARTICLE VII. COMMENCEMENT OF BUSINESS
The corporation will not commence business until it has received for
the issuance of its shares consideration of the value of One Thousand Dollars
($1,000.00), consisting of money, labor done, or property actually received.
<PAGE> 2
ARTICLE VIII. REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
in the State of Texas is c/o Corporation Service Company, d/b/a CSC-Lawyers
Incorporating Service Company, 400 North St. Paul, Dallas, Texas 75201, and the
name of its initial registered agent at such address is Corporation Service
Company, d/b/a CSC-Lawyers Incorporating Service Company, 400 North St. Paul,
Dallas, Texas 75201.
ARTICLE IX. INCORPORATOR
The name and address of the incorporator is :
Joseph G. Andersen
3502 E. Roeser Road
Phoenix, AZ 85040
ARTICLE X. INITIAL DIRECTORS
The number of directors constituting the initial Board of Directors is
one (1) and the name and address of the person who is to serve as director until
the first annual meeting of the shareholders, or until his successor or
successors are elected and qualified is:
Angelo A. DeCaro, Jr.
3502 E. Roeser Road
Phoenix, AZ 85040
The number of directors may hereafter be increased or decreased as
provided in the bylaws of the corporation.
ARTICLE XI. LIABILITY OF DIRECTORS
The corporation shall indemnify any person who (i) is or was a
director, officer, employee, or agent of the corporation, or (ii) while a
director, officer, employee, or agent of the corporation, is or was serving at
the request of the corporation as a director, officer, partner, venturer,
proprietor, trustee, employee, agent or similar functionary of another foreign
or domestic corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan, or other enterprise, to the fullest extent that a
corporation may or is required to grant indemnification to a director under the
Texas Business Corporation Act as now written or as hereafter amended. The
corporation may indemnify any person to such further extent as permitted by law.
<PAGE> 3
ARTICLE XII. INDEMNIFICATION
A director of the corporation shall not be liable to the corporation or
its shareholders for monetary damages for an act or omission in the director's
capacity as director, except that this Article does not eliminate or limit the
liability of a director for:
(a) a breach of a director's loyalty to the corporation or its
shareholders;
(b) an act or omission not in good faith or that involves intentional
misconduct or a knowing violation of the law;
(c) a transaction from which a director received an improper benefit,
whether or not the benefit resulted from an action taken within the
scope of the director's office;
(d) an act or omission for which the liability of a director is
expressly provided for by statute; or
(e) an act related to an unlawful stock repurchase or payment of a
dividend.
ARTICLE XIII. ACTIONS BY SHAREHOLDERS WITHOUT A MEETING
Any action required by the Texas Business Corporation Act to
be taken at any annual or special meeting of shareholders, or any
action which may be taken at any annual or special meeting of
shareholders, may be taken without a meeting, without prior notice, and
without a vote, if a consent or consents in writing, setting forth the
action so taken, shall be signed by the holder or holders of shares
having not less than the minimum number of votes that would be
necessary to take such action at a meeting at which the holders of all
shares entitled to vote on the action were present and voted.
IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of March,
1997.
/s/ Joseph G. Andersen
---------------------------------
Joseph G. Andersen
<PAGE> 4
STATEMENT OF CHANGE OF REGISTERED OFFICE
BY
REGISTERED AGENT
To the Secretary of State
State of Texas
Pursuant to the provisions of Article 2.10.1 of the Texas Business Corporation
Act, the undersigned registered agent, for the corporation named below submits
the following statement for the purpose of changing the registered office
address for such corporation in the State of Texas:
Charter No. See attached list
1. The name of the corporation (hereinafter called the "Corporation")
represented by the said registered agent is:
See attached list
2. The address at which the said registered agent has maintained the
registered office for the corporation is
400 N. St. Paul
Dallas, Texas 75201
3. The new address at which the said registered agent will hereafter
maintain the registered office for the corporation is
800 Brazos
Austin, Texas 78701
4. Notice of this change of address has been given in writing to the above
corporation at least 10 days prior to the date of filing of this
Statement.
Dated: July 11, 1997
Corporation Service Company
d/b/a CSC-Lawyers Incorporating Service Company
/s/ John H. Pelletier
John H. Pelletier, Assistant Vice President
<PAGE> 1
Exhibit 3.10
BYLAWS
CCIR OF TEXAS CORP.
Adopted as of March 27, 1997
ARTICLE I SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders shall
be held in the month of December in each year or at such other time as shall be
fixed by the Board of Directors, for the purpose of electing directors and for
the transaction of such other business as may come before the meeting.
Section 2. Notice of Meeting. Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall, unless otherwise prescribed by statute,
be delivered not less than ten (10) nor more than sixty (60) days before the
date of the meeting, either personally or by mail, or at the direction of the
president, or the secretary, or the officer or other persons calling the
meeting.
ARTICLE II BOARD OF DIRECTORS
Section 1. Number, Tenure and Qualifications. The number of directors
of the corporation shall be not less than one (1) nor more than four (4) as
established by the Board of Directors from time to time. Each director shall
hold office until the next annual meeting of shareholders and until his
successor shall have been elected and qualified. Directors need not be residents
of the State of Texas or shareholders of the corporation.
Section 2. Regular and Special Meetings. The Board of Directors may
call regular and special meetings.
ARTICLE III OFFICERS
Section 1. Number. The officers of the corporation shall be a
president, vice president, a secretary and a treasurer, all of whom shall be
elected or appointed by the Board of Directors. Such other officers and
assistant officers as may be deemed necessary may be elected or appointed by the
Board of Directors. Any two or more offices may be held by the same person.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the Board of Directors. Each officer shall hold
office until his successor shall have been elected and shall have qualified or
until his death or until he shall resign or shall have been removed in the
manner hereinafter provided.
ARTICLE IV FISCAL YEAR
The fiscal year of the corporation shall begin on the 1st day of August
and end on the 31st day of July each year.
<PAGE> 1
EXHIBIT 4.1
================================================================================
HADCO CORPORATION,
Issuer
and
HADCO SANTA CLARA, INC.,
HADCO PHOENIX, INC.,
CCIR OF CALIFORNIA CORP. and
CCIR OF TEXAS CORP.,
Guarantors
and
STATE STREET BANK AND TRUST COMPANY,
Trustee
----------------
Indenture
Dated as of May 18, 1998
----------------
9 1/2% Senior Subordinated Notes due 2008
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
---------------------
Tia Sections Indenture Sections
- ------------ ------------------
ss. 310(a)(1)............................................ 7.10
(a)(2)............................................ 7.10
(b)............................................... 7.03; 7.08
ss. 311(a)............................................... 7.03
(b)............................................... 7.03
ss. 312(a)............................................... 2.04
(b)............................................... 12.02
(c)............................................... 12.02
ss. 313(a)............................................... 7.06
(b)(2)............................................ 7.07
(c)............................................... 7.05; 7.06; 12.02
(d)............................................... 7.06
ss. 314(a)............................................... 7.05; 12.02
(a)(4)............................................ 4.17; 12.02
(c)(1)............................................ 12.03
(c)(2)............................................ 12.03
(e)............................................... 4.17; 12.04
ss. 315(a)............................................... 7.02
(b)............................................... 7.05; 12.02
(c)............................................... 7.02
(d)............................................... 7.02
(e)............................................... 6.11
ss. 316(a)(1)(A)......................................... 6.05
(a)(1)(B)......................................... 6.04
(b)............................................... 6.07
(c)............................................... 9.03
ss. 317(a)(1)............................................ 6.08
(a)(2)............................................ 6.09
(b)............................................... 2.05
ss. 318(a)............................................... 12.01
(c)............................................... 12.01
Note: The Cross-Reference Table shall not for any purpose be deemed to be a
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
SECTION 1.01. Definitions...........................................................................1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act....................................22
SECTION 1.03. Rules of Construction................................................................22
ARTICLE TWO THE NOTES
SECTION 2.01. Form and Dating......................................................................23
SECTION 2.02. Restrictive Legends..................................................................24
SECTION 2.03. Execution, Authentication and Denominations..........................................26
SECTION 2.04. Registrar and Paying Agent...........................................................27
SECTION 2.05. Paying Agent to Hold Money in Trust..................................................28
SECTION 2.06. Transfer and Exchange................................................................28
SECTION 2.07. Book-Entry Provisions for Global Notes...............................................29
SECTION 2.08. Special Transfer Provisions..........................................................31
SECTION 2.09. Replacement Notes....................................................................33
SECTION 2.10. Outstanding Notes....................................................................34
SECTION 2.11. Temporary Notes......................................................................34
SECTION 2.12. Cancellation.........................................................................35
SECTION 2.13. CUSIP Numbers........................................................................35
SECTION 2.14. Defaulted Interest...................................................................35
SECTION 2.15. Issuance of Additional Notes.........................................................35
ARTICLE THREE REDEMPTION
SECTION 3.01. Right of Redemption..................................................................36
SECTION 3.02. Notices to Trustee...................................................................36
SECTION 3.03. Selection of Notes to Be Redeemed....................................................37
SECTION 3.04. Notice of Redemption.................................................................37
SECTION 3.05. Effect of Notice of Redemption.......................................................38
SECTION 3.06. Deposit of Redemption Price..........................................................38
SECTION 3.07. Payment of Notes Called for Redemption...............................................39
SECTION 3.08. Notes Redeemed in Part...............................................................39
ARTICLE FOUR COVENANTS
SECTION 4.01. Payment of Notes.....................................................................39
</TABLE>
- ----------
Note: The Table of Contents shall not for any purposes be deemed to be a part
of the Indenture.
<PAGE> 4
ii
<TABLE>
<S> <C> <C>
SECTION 4.02. Maintenance of Office or Agency......................................................39
SECTION 4.03. Limitation on Indebtedness...........................................................40
SECTION 4.04. Limitation on Senior Subordinated Indebtedness.......................................42
SECTION 4.05. Limitation on Restricted Payments....................................................42
SECTION 4.06. Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries.........................................................................44
SECTION 4.07. Limitation on the Issuance and Sale of Capital Stock of Restricted Subsidiaries......45
SECTION 4.08. Limitation on Issuances of Guarantees by Restricted Subsidiaries.....................46
SECTION 4.09. Limitation on Transactions with Shareholders and Affiliates..........................46
SECTION 4.10. Limitation on Liens..................................................................47
SECTION 4.11. Limitation on Asset Sales............................................................48
SECTION 4.12. Repurchase of Notes upon a Change of Control.........................................49
SECTION 4.13. Existence............................................................................49
SECTION 4.14. Payment of Taxes and Other Claims....................................................49
SECTION 4.15. Maintenance of Properties and Insurance..............................................49
SECTION 4.16. Notice of Defaults...................................................................50
SECTION 4.17. Compliance Certificates..............................................................50
SECTION 4.18. Commission Reports and Reports to Holders............................................51
SECTION 4.19. Waiver of Stay, Extension or Usury Laws..............................................51
ARTICLE FIVE SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc..........................................................51
SECTION 5.02. Successor Substituted................................................................53
ARTICLE SIX DEFAULT AND REMEDIES
SECTION 6.01. Events of Default....................................................................53
SECTION 6.02. Acceleration.........................................................................54
SECTION 6.03. Other Remedies.......................................................................55
SECTION 6.04. Waiver of Past Defaults..............................................................56
SECTION 6.05. Control by Majority..................................................................56
SECTION 6.06. Limitation on Suits..................................................................56
SECTION 6.07. Rights of Holders to Receive Payment.................................................57
SECTION 6.08. Collection Suit by Trustee...........................................................57
SECTION 6.09. Trustee May File Proofs of Claim.....................................................57
SECTION 6.10. Priorities...........................................................................58
SECTION 6.11. Undertaking for Costs................................................................58
SECTION 6.12. Restoration of Rights and Remedies...................................................58
SECTION 6.13. Rights and Remedies Cumulative.......................................................59
SECTION 6.14. Delay or Omission Not Waiver.........................................................59
</TABLE>
<PAGE> 5
iii
<TABLE>
<CAPTION>
ARTICLE SEVEN TRUSTEE
<S> <C> <C>
SECTION 7.01. General..............................................................................59
SECTION 7.02. Certain Rights of Trustee............................................................59
SECTION 7.03. Individual Rights of Trustee.........................................................60
SECTION 7.04. Trustee's Disclaimer.................................................................60
SECTION 7.05. Notice of Default....................................................................60
SECTION 7.06. Reports by Trustee to Holders........................................................61
SECTION 7.07. Compensation and Indemnity...........................................................61
SECTION 7.08. Replacement of Trustee...............................................................62
SECTION 7.09. Successor Trustee by Merger, Etc.....................................................63
SECTION 7.10. Eligibility..........................................................................63
SECTION 7.11. Money Held in Trust..................................................................63
ARTICLE EIGHT DISCHARGE OF INDENTURE
SECTION 8.01. Termination of Company's Obligations.................................................63
SECTION 8.02. Defeasance and Discharge of Indenture................................................64
SECTION 8.03. Defeasance of Certain Obligations....................................................67
SECTION 8.04. Application of Trust Money...........................................................68
SECTION 8.05. Repayment to Company.................................................................68
SECTION 8.06. Reinstatement........................................................................69
ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders...........................................................69
SECTION 9.02. With Consent of Holders..............................................................70
SECTION 9.03. Revocation and Effect of Consent.....................................................71
SECTION 9.04. Notation on or Exchange of Notes.....................................................72
SECTION 9.05. Trustee to Sign Amendments, Etc......................................................72
SECTION 9.06. Conformity with Trust Indenture Act..................................................72
ARTICLE TEN SUBORDINATION OF NOTES
SECTION 10.01. Notes and Note Guarantees Subordinated to Senior Indebtedness.......................72
SECTION 10.02. No Payment on Notes in Certain Circumstances........................................73
SECTION 10.03. Payment over Proceeds upon Dissolution, Bankruptcy, Etc.............................74
SECTION 10.04. Subrogation.........................................................................76
SECTION 10.05. Obligations of Company Unconditional................................................77
SECTION 10.06. Notice to Trustee...................................................................77
SECTION 10.07. Reliance on Judicial Order or Certificate of Liquidating Agent......................78
SECTION 10.08. Trustee's Relation to Senior Indebtedness...........................................78
SECTION 10.09. Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Indebtedness...........................................78
SECTION 10.10. Holders Authorize Trustee to Effectuate Subordination of Notes......................79
SECTION 10.11. Not to Prevent Events of Default....................................................79
</TABLE>
<PAGE> 6
iv
<TABLE>
<S> <C> <C>
SECTION 10.12. Trustee's Compensation Not Prejudiced...............................................79
SECTION 10.13. No Waiver of Subordination Provisions...............................................79
SECTION 10.14. Payments May Be Paid Prior to Dissolution...........................................79
SECTION 10.15. Consent of Holders of Senior Indebtedness Under the Credit Facility.................80
SECTION 10.16. Trust Moneys Not Subordinated.......................................................80
ARTICLE ELEVEN GUARANTEE OF NOTES
SECTION 11.01. Note Guarantee......................................................................80
SECTION 11.02. Obligations Unconditional...........................................................82
SECTION 11.04. This Article Not to Prevent Events of Default.......................................82
SECTION 11.05. Fraudulent Conveyance Limitation....................................................82
SECTION 11.06. Additional Guarantors...............................................................82
SECTION 11.07. Subordination.......................................................................83
ARTICLE TWELVE MISCELLANEOUS
SECTION 12.01. Trust Indenture Act of 1939.........................................................83
SECTION 12.02. Notices.............................................................................83
SECTION 12.03. Certificate and Opinion as to Conditions Precedent..................................84
SECTION 12.04. Statements Required in Certificate or Opinion.......................................84
SECTION 12.05. Rules by Trustee, Paying Agent or Registrar.........................................85
SECTION 12.06. Payment Date Other Than a Business Day..............................................85
SECTION 12.07. Governing Law.......................................................................85
SECTION 12.08. No Adverse Interpretation of Other Agreements.......................................85
SECTION 12.09. No Recourse Against Others..........................................................85
SECTION 12.10. Successors..........................................................................86
SECTION 12.11. Duplicate Originals.................................................................86
SECTION 12.12. Separability........................................................................86
SECTION 12.13. Table of Contents, Headings, Etc....................................................86
</TABLE>
<PAGE> 7
v
EXHIBIT A Form of Note.................................................A-1
EXHIBIT B Form of Certificate..........................................B-1
EXHIBIT C Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors.................C-1
EXHIBIT D Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S........................D-1
<PAGE> 8
INDENTURE, dated as of May 18, 1998, between HADCO CORPORATION, a
corporation organized under the laws of the Commonwealth of Massachusetts (the
"COMPANY"), HADCO SANTA CLARA, INC. a Delaware corporation, HADCO PHOENIX, INC.
a Delaware corporation, CCIR of California CORP., a California corporation, and
CCIR OF TEXAS CORP., a Texas corporation, as guarantors (collectively, the
"Guarantors") and STATE STREET BANK AND TRUST COMPANY, a trust company organized
under the laws of the Commonwealth of Massachusetts, as trustee (the "TRUSTEE").
RECITALS
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance initially of up to $200,000,000 aggregate
principal amount of the Company's 9 1/2% Senior Subordinated Notes due 2008 (the
"NOTES") issuable as provided in this Indenture. All things necessary to make
this Indenture a valid agreement of the Company, in accordance with its terms,
have been done, and the Company has done all things necessary to make the Notes,
when executed by the Company and authenticated and delivered by the Trustee
hereunder and duly issued by the Company, valid obligations of the Company as
hereinafter provided. Each of the Guarantors has authorized the making of a Note
Guarantee (as defined below) by it.
This Indenture is subject to, and shall be governed by, the provisions of
the Trust Indenture Act of 1939, as amended, that are required to be a part of
and to govern indentures qualified under the Trust Indenture Act of 1939, as
amended.
AND THIS INDENTURE FURTHER WITNESSETH
For and in consideration of the premises and the purchase of the Notes by
the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders, as follows.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person (including an Unrestricted Subsidiary) becomes a Restricted
Subsidiary or assumed in connection with an Asset Acquisition by a Restricted
Subsidiary and not Incurred in connection with such Person becoming a Restricted
Subsidiary or such Asset Acquisition; provided that Indebtedness of such Person
which is redeemed, defeased, retired or otherwise repaid at the
<PAGE> 9
2
time of or immediately upon consummation of the transactions by which such
Person becomes a Restricted Subsidiary or such Asset Acquisition shall not be
Acquired Indebtedness.
"Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of the Company and its Restricted Subsidiaries for such period
determined in conformity with GAAP; provided that the following items shall be
excluded in computing Adjusted Consolidated Net Income (without duplication):
(i) the net income of any Person that is not a Restricted Subsidiary, except to
the extent of the amount of dividends or other distributions actually paid to
the Company or any of its Restricted Subsidiaries by such Person during such
period; (ii) solely for the purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (C) of the first paragraph of
Section 4.05 (and in such case, except to the extent includable pursuant to
clause (i) above), the net income (or loss) of any Person accrued prior to the
date it becomes a Restricted Subsidiary or is merged into or consolidated with
the Company or any of its Restricted Subsidiaries or all or substantially all of
the property and assets of such Person are acquired by the Company or any of its
Restricted Subsidiaries; (iii) the net income of any Restricted Subsidiary to
the extent that the declaration or payment of dividends or similar distributions
by such Restricted Subsidiary of such net income is not at the time permitted by
the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such Restricted Subsidiary; (iv) any gains or losses (on an after-tax basis)
attributable to Asset Sales; (v) except for purposes of calculating the amount
of Restricted Payments that may be made pursuant to clause (C) of the first
paragraph of Section 4.05, any amount paid or accrued as dividends on Preferred
Stock of the Company or any Restricted Subsidiary owned by Persons other than
the Company and any of its Restricted Subsidiaries; (vi) all extraordinary gains
and extraordinary losses; (vii) gains or losses on the repurchase or redemption
of any securities (including in connection with the retirement or defeasance of
any Indebtedness); and (viii) non-cash expenses arising from the write-off of
goodwill, in-process research and development costs and inventory and fixed
asset charges, in each case associated with Asset Acquisitions.
"Adjusted Consolidated Net Tangible Assets" means, as of any date of
determination, the total amount of assets of the Company and its Restricted
Subsidiaries (less applicable depreciation, amortization and other valuation
reserves), except to the extent resulting from write-ups of capital assets
(excluding write-ups in connection with accounting for acquisitions in
conformity with GAAP and excluding the effects of foreign currency exchange
adjustments under Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 52), after deducting therefrom (i) all current
liabilities of the Company and its Restricted Subsidiaries (excluding
intercompany items) and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense, deferred financing costs and other like
intangibles, all as set forth on the most recent quarterly or annual
consolidated balance sheet of the Company and its Restricted Subsidiaries,
prepared in conformity with GAAP and filed with the Commission or provided to
the Trustee pursuant to Section 4.18.
<PAGE> 10
3
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means any Registrar, Co-Registrar, Paying Agent or authenticating
agent.
"Agent Members" has the meaning provided in Section 2.07(a).
"Applicable Premium" means, with respect to a Note and Early Redemption
Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the
excess of (A) the present value at such time of (1) the redemption price of such
Note at June 15, 2003 as set forth in Section 3.01 plus (2) all semiannual
payments of interest through, June 15, 2003 computed using a discount rate equal
to the Treasury Rate plus 50 basis points over (B) the principal amount of such
Note.
"Asset Acquisition" means (i) an investment by the Company or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged into or consolidated with the
Company or any of its Restricted Subsidiaries or (ii) an acquisition by the
Company or any of its Restricted Subsidiaries of the property and assets of any
Person other than the Company or any of its Restricted Subsidiaries that
constitute substantially all of a division or line of business of such Person.
"Asset Disposition" means the sale or other disposition by the Company or
any of its Restricted Subsidiaries (other than to the Company or another
Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of
any Restricted Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of the Company or any of its
Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by
way of merger, consolidation or sale-leaseback transaction) in one transaction
or a series of related transactions by the Company or any of its Restricted
Subsidiaries to any Person other than the Company or any of its Restricted
Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Restricted Subsidiaries
or (iii) any other property and assets (other than the Capital Stock or other
Investment in an Unrestricted Subsidiary) of the Company or any of its
Restricted Subsidiaries outside the ordinary course of business of the Company
or such Restricted Subsidiary and, in each case, that is not governed by Article
Five;
<PAGE> 11
4
provided that "Asset Sale" shall not include (a) sales or other dispositions of
inventory, receivables and other current assets (including, without limitation
Temporary Cash Investments), (b) sales, transfers or other dispositions of
assets constituting a Restricted Payment permitted to be made under Section
4.05, (c) sales or other dispositions of assets for consideration at least equal
to the fair market value of the assets sold or disposed of, to the extent that
the consideration received would satisfy clause (B) of Section 4.11, (d)
dispositions of equipment that is no longer useful in the conduct of the
business of the Company or any of its Restricted Subsidiaries, and (e) sales,
leases, conveyances, transfers, or other dispositions to the Company or to a
Restricted Subsidiary to any other Person if after giving effect to such sale,
lease, conveyance, transfer or other disposition such other Person is or becomes
a Restricted Subsidiary.
"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Board of Directors" means the Board of Directors of the Company or any
committee of such Board of Directors duly authorized to act under this
Indenture.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in The City of New York, or in the city of the Corporate
Trust Office of the Trustee, are authorized by law to close.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents (however designated, whether voting or non-voting) in equity of such
Person, whether outstanding on the Closing Date or issued thereafter including,
without limitation, all Common Stock and Preferred Stock.
"Capitalized Lease Obligations" means indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Change of Control" means such time as (i) a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the
ultimate "beneficial owner"
<PAGE> 12
5
(as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total
voting power of the Voting Stock of the Company on a fully diluted basis; or
(ii) individuals who on the Closing Date constitute the Board of Directors
(together with any new directors whose election by the Board of Directors or
whose nomination by the Board of Directors for election by the Company's
stockholders was approved by a vote of at least a majority of the members of (A)
the Board of Directors then in office who either were members of the Board of
Directors on the Closing Date or whose election or nomination for election was
previously so approved or (B) the nominating committee of the Board of Directors
whose members were elected pursuant to the foregoing clause (A)) cease for any
reason to constitute a majority of the members of the Board of Directors then in
office.
"Closing Date" means the date on which the Notes are originally issued
under this Indenture.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the TIA, then the body performing such duties at
such time.
"Company" means the party named as such in the first paragraph of this
Indenture until a successor replaces it pursuant to Article Five of this
Indenture and thereafter means the successor.
"Company Order" means a written request or order signed in the name of the
Company (i) by its Chairman, a Vice Chairman, its President or a Vice President
and (ii) by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary and delivered to the Trustee; provided, however, that such written
request or order may be signed by any two of the officers or directors listed in
clause (i) above in lieu of being signed by one of such officers or directors
listed in such clause (i) and one of the officers listed in clause (ii) above.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus the following (to the extent deducted in calculating
such Adjusted Consolidated Net Income), (i) Consolidated Interest Expense, (ii)
income taxes (other than income taxes (either positive or negative) attributable
to extraordinary and non-recurring gains or losses or sales of assets), (iii)
depreciation expense, (iv) amortization expense and (v) all other non-cash
items, including, without limitation, any non-cash charge reflecting
compensation expense relating to employee stock option or similar plans,
reducing Adjusted Consolidated Net Income (other than items that will require
cash payments and for which an accrual or reserve is, or is required by GAAP to
be, made), less all non-cash items increasing Adjusted Consolidated Net Income,
all as determined on a consolidated basis for the Company and its Restricted
Subsidiaries in conformity with GAAP; provided that, if any Restricted
<PAGE> 13
6
Subsidiary is not a Wholly Owned Restricted Subsidiary, Consolidated EBITDA
shall be reduced (to the extent not otherwise reduced in accordance with GAAP)
by an amount equal to (A) the amount of the Adjusted Consolidated Net Income
attributable to such Restricted Subsidiary multiplied by (B) the percentage
ownership interest in the income of such Restricted Subsidiary not owned on the
last day of such period by the Company or any of its Restricted Subsidiaries.
"Consolidated Interest Expense" means, without duplication, for any period,
the aggregate amount of interest which, in conformity with GAAP, would be set
forth opposite the caption "interest expense" or any like caption on a statement
of operations (including, without limitation, amortization of debt discount and
debt issuance cost; the interest portion of any deferred payment obligation; all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing; the net costs associated with
Interest Rate Agreements; amortization of other financing fees and expenses;
interest on Indebtedness that is Guaranteed or secured by the Company or any of
its Restricted Subsidiaries; capitalized interest and accrued interest;
dividends in respect of all Disqualified Stock of the Company and all Preferred
Stock of Subsidiaries; and all other non-cash interest expense) and all but the
principal component of rentals in respect of Capitalized Lease Obligations paid,
accrued or scheduled to be paid or to be accrued by the Company and its
Restricted Subsidiaries during such period; excluding, however, (i) any amount
of such interest of any Restricted Subsidiary if the net income of such
Restricted Subsidiary is excluded in the calculation of Adjusted Consolidated
Net Income pursuant to clause (iii) of the definition thereof (but only in the
same proportion as the net income of such Restricted Subsidiary is excluded from
the calculation of Adjusted Consolidated Net Income pursuant to clause (iii) of
the definition thereof) and (ii) any premiums, fees and expenses (and any
amortization thereof) payable in connection with the offering of the Notes, all
as determined on a consolidated basis (without taking into account Unrestricted
Subsidiaries) in conformity with GAAP.
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at Two International Place - 4th Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Department and so long as the Notes are listed on the
Luxembourg Stock Exchange, at State Street Bank, Luxembourg, S.A., 47 Boulevard
Royal, L-2449, Luxembourg; Attention: Hadco Senior Subordinated Notes due 2008.
"Credit Facility" means the Amended and Restated Revolving Credit Agreement
dated as of December 8, 1997 among the Company, the lending institutions listed
on Schedule 1 thereto, and BankBoston, N.A., as Agent, as guaranteed by the
Guarantors, as amended, as such agreement, facility or credit, in whole or in
part, may be amended, renewed, extended, substituted, refinanced, restructured,
replaced supplemented or otherwise modified from time
<PAGE> 14
7
to time and whether by the same or another agent, lender or group of lenders
(including, without limitation, any successive renewals, extensions,
substitutions, refinancings, restructurings, replacements, supplementations or
other modifications of the foregoing) for the Company or any Restricted
Subsidiary.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees, and their
respective successors.
"Designated Senior Indebtedness" means Indebtedness under the Credit
Facility and any Indebtedness constituting Senior Indebtedness that, at the date
of determination, has an aggregate principal amount outstanding of at least $25
million owed by the Company or the Guarantors and that is specifically
designated by the Company or any Guarantor, in the instrument creating or
evidencing such Senior Indebtedness as "Designated Senior Indebtedness".
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (i) required to be redeemed prior to
the Stated Maturity of the Notes, (ii) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Stated Maturity
of the Notes or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; provided that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in Section 4.11 and Section 4.12 and
such Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provision prior to the Company's
repurchase of such Notes as are required to be repurchased pursuant to Section
4.11 and Section 4.12.
"Early Redemption Date" has the meaning provided in Section 3.01.
"Equity Offering" means (i) a public offering by the Company of its Capital
Stock (other than Disqualified Stock) or (ii) the issuance and sale of Capital
Stock of the Company to
<PAGE> 15
8
a Person engaged primarily in a business that is related, ancillary or
complementary to the businesses of the Company and its Restricted Subsidiaries
on the date of such issuance or sale, provided that such person has a market
capitalization of at least $50 million.
"Event of Default" has the meaning provided in Section 6.01.
"Excess Proceeds" has the meaning provided in Section 4.11.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means any securities of the Company containing terms
identical to the Notes (except that such Exchange Notes shall be registered
under the Securities Act) that are issued and exchanged for the Notes pursuant
to the Registration Rights Agreement and this Indenture.
"fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by the Board of Directors, whose determination shall be conclusive if
evidenced by a Board Resolution.
"Foreign Subsidiary" means any Subsidiary of the Company organized under
laws other than the laws of the United States of America or any jurisdiction
thereof.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations contained or referred to in
this Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants and with other provisions of this Indenture shall be
made without giving effect to (i) the amortization of any expenses incurred in
connection with the offering of the Notes and (ii) except as otherwise provided,
the amortization or write-off of any amounts required or permitted (as of the
Closing Date) by Accounting Principles Board Opinion Nos. 16 and 17.
"Global Notes" has the meaning provided in Section 2.01.
"Government Securities" means direct obligations of, obligations fully
guaranteed by, or participations in pools consisting solely of obligations or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and
<PAGE> 16
9
credit of the United States of America is pledged and which are not callable or
redeemable at the option of the issuer thereof.
"Guarantee" means an obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guaranteed Indebtedness" has the meaning provided in Section 4.08.
"Guarantor" means each party named as such in the first paragraph of this
Indenture as well as any Person that becomes a Guarantor pursuant to Section
11.06 until such Guarantor is discharged and released from its Note Guarantee
pursuant to Section 5.01.
"Holder" or "Noteholder" means the registered holder of any Note.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to incur, create, issue, assume, Guarantee or otherwise become liable
for or with respect to, or become responsible for, the payment of, contingently
or otherwise, such Indebtedness or other obligation or the recording, as
required pursuant to GAAP or otherwise, of such Indebtedness or other obligation
on the balance sheet of such Person, including an "Incurrence" of Acquired
Indebtedness; provided that neither the accrual of interest nor the accretion of
original issue discount shall be considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto, but excluding obligations with
respect to letters of credit (including trade letters of credit) securing
obligations (other than obligations described in (i) or (ii) above or (v), (vi)
or (vii) below) entered into in the ordinary course of business of such Person
to the extent such letters of credit are not drawn upon or, if drawn
<PAGE> 17
10
upon, to the extent such drawing is reimbursed no later than the third Business
Day following receipt by such Person of a demand for reimbursement), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services, which purchase price is due more than six months after the
date of placing such property in service or taking delivery and title thereto or
the completion of such services, except Trade Payables, (v) all Capitalized
Lease Obligations, (vi) all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided that the amount of such Indebtedness shall be the lesser of (A)
the fair market value of such asset at such date of determination and (B) the
amount of such Indebtedness, (vii) all Indebtedness of other Persons Guaranteed
by such Person to the extent such Indebtedness is Guaranteed by such Person and
(viii) to the extent not otherwise included in this definition, obligations
under Currency Agreements and Interest Rate Agreements. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and, with respect to
contingent obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation, provided (A) that the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the face amount of such Indebtedness less the remaining unamortized portion
of the original issue discount of such Indebtedness at the time of its issuance
as determined in conformity with GAAP, (B) that money borrowed and set aside at
the time of the Incurrence of any Indebtedness in order to prefund the payment
of the interest on such Indebtedness shall not be deemed to be "Indebtedness"
and (C) that Indebtedness shall not include (i) any liability for federal,
state, local or other taxes; (ii) any Trade Payables and other accrued
liabilities arising in the ordinary course of business; or (iii) any
indemnification obligation, purchase price adjustment, earn out or other similar
obligation of the Person to third parties if such indemnification obligation
would not appear as a liability upon a balance sheet of the Person prepared in
accordance with GAAP.
"Indenture" means this Indenture as originally executed or as it may be
amended or supplemented from time to time by one or more indentures supplemental
to this Indenture entered into pursuant to the applicable provisions of this
Indenture.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Coverage Ratio" means, on any Transaction Date, the ratio of (i)
the aggregate amount of Consolidated EBITDA for the then most recent four fiscal
quarters prior to such Transaction Date for which reports have been filed with
the Commission pursuant to Section 4.18 (the "Four Quarter Period") to (ii) the
aggregate Consolidated Interest Expense during such Four Quarter Period. In
making the foregoing calculation, (A) pro forma effect shall be given to any
Indebtedness Incurred or repaid during the period (the "Reference Period")
commencing on the first day of the Four Quarter Period and ending on the
<PAGE> 18
11
Transaction Date (other than Indebtedness Incurred or repaid under a revolving
credit or similar arrangement to the extent of the commitment thereunder (or
under any predecessor revolving credit or similar arrangement) in effect on the
last day of such Four Quarter Period unless any portion of such Indebtedness is
projected, in the reasonable judgment of the senior management of the Company,
to remain outstanding for a period in excess of 12 months from the date of the
Incurrence thereof), in each case as if such Indebtedness had been Incurred or
repaid on the first day of such Reference Period; (B) Consolidated Interest
Expense attributable to interest on any Indebtedness (whether existing or being
Incurred) computed on a pro forma basis and bearing a floating interest rate
shall be computed as if the rate in effect on the Transaction Date (taking into
account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term in excess of 12 months or, if
shorter, at least equal to the remaining term of such Indebtedness) had been the
applicable rate for the entire period; (C) pro forma effect shall be given to
Asset Dispositions and Asset Acquisitions (including giving pro forma effect to
the application of proceeds of any Asset Disposition) that occur during such
Reference Period as if they had occurred and such proceeds had been applied on
the first day of such Reference Period; and (D) pro forma effect shall be given
to asset dispositions and asset acquisitions (including giving pro forma effect
to the application of proceeds of any asset disposition) that have been made by
any Person that has become a Restricted Subsidiary or has been merged with or
into the Company or any Restricted Subsidiary during such Reference Period and
that would have constituted Asset Dispositions or Asset Acquisitions had such
transactions occurred when such Person was a Restricted Subsidiary as if such
asset dispositions or asset acquisitions were Asset Dispositions or Asset
Acquisitions that occurred on the first day of such Reference Period; provided
that to the extent that clause (C) or (D) of this sentence requires that pro
forma effect be given to an Asset Acquisition or Asset Disposition, such pro
forma calculation shall be based upon the four full fiscal quarters immediately
preceding the Transaction Date of the Person, or division or line of business of
the Person, that is acquired or disposed for which financial information is
available.
"Interest Payment Date" means each semiannual interest payment date on June
15 and December 15 of each year, commencing December 15, 1998.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (including, without limitation, by way of Guarantee or
similar arrangement; but excluding payment obligations of customers in the
ordinary course of business that are, in conformity with GAAP, recorded as
accounts receivable on the balance sheet of the Company
<PAGE> 19
12
or its Restricted Subsidiaries) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, bonds, notes, debentures or other similar instruments issued by,
such Person and shall include (i) the designation or redesignation of a
Restricted Subsidiary as an Unrestricted Subsidiary and (ii) the fair market
value of the Capital Stock (or any other Investment), held by the Company or any
of its Restricted Subsidiaries, of (or in) any Person that has ceased to be a
Restricted Subsidiary, including without limitation, by reason of any
transaction permitted by clause (iii) of Section 4.07; provided that the fair
market value of the Investment remaining in any Person that has ceased to be a
Restricted Subsidiary shall not exceed the aggregate amount of Investments
previously made in such Person valued at the time such Investments were made
less the net reduction of such Investments. For purposes of the definition of
"Unrestricted Subsidiary" and Section 4.05, (i) "Investment" shall include the
fair market value of the assets (net of liabilities (other than liabilities to
the Company or any of its Restricted Subsidiaries)) of any Restricted Subsidiary
at the time that such Restricted Subsidiary is designated an Unrestricted
Subsidiary, (ii) the fair market value of the assets (net of liabilities (other
than liabilities to the Company or any of its Restricted Subsidiaries)) of any
Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is
designated a Restricted Subsidiary shall be considered a reduction in
outstanding Investments and (iii) any property transferred to or from an
Unrestricted Subsidiary shall be valued at its fair market value at the time of
such transfer.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest). Notwithstanding the foregoing, the following will
be deemed not to be Liens with respect to any Person: (a) pledges or deposits by
such Person under workmen's compensation laws, unemployment insurance laws or
similar legislation, or good faith deposits in connection with bids, tenders,
contracts or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits or cash or Government
Securities to secure surety or appeal bonds to which such Person is a party, or
deposits as security for contested taxes or import duties or for the payment of
rent, in each case Incurred in the ordinary course of business; (b) Liens
imposed by law, including carriers', warehousemens' and mechanics' Liens, or
other Liens arising out of judgments or awards against such person with respect
to which such Person is then proceeding with an appeal or other proceedings for
review; (c) Liens for taxes, assessments or other governmental charges which are
not yet due or which are being contested in good faith by appropriate
proceedings provided appropriate reserves have been taken on the books of the
Company; (d) Liens in favor of issurers of surety bonds or letters of credit
issued pursuant to the request of and for the account of such person in the
ordinary course of its business; (e) encumbrances, easements or reservations of,
or rights of others for, licenses, rights of way, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or zoning or other
restrictions as to the use of real properties or liens
<PAGE> 20
13
incidental to the conduct of the business of such Person or to the ownership of
its properties which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the operation of the
business of such Person; (f) Liens securing an Interest Rate Agreement or
Currency Agreement so long as the related Indebtedness is, and is permitted to
be under this Indenture, secured by a Lien on the same property securing the
Interest Rate Agreement or Currency Agreement; and (g) leases and subleases of
real property which do not materially interfere with the ordinary conduct of the
business of the Company or any of its Restricted Subsidiaries; (h) judgment
Liens not giving rise to an Event of Default so long as such Lien is adequately
bonded and any appropriate legal proceedings which may have been duly initiated
for the review of such judgment have not been finally terminated or the period
within which such proceedings may be initiated has not expired; (i) Liens for
the purpose of securing the payment (or the refinancing of the payment) of all
or a part of the purchase price of, or Capitalized Lease Obligations with
respect to, assets or property acquired or constructed that are otherwise
permitted under this Indenture; (j) Liens to secure Purchase Money Indebtedness
that is otherwise permitted under this Indenture; (k) Liens arising solely by
virtue of any statutory or common law provision relating to banker's Liens,
rights of set-off or similar rights and remedies as to deposit accounts or other
funds maintained with a creditor expository institution; (i) Liens arising from
Uniform Commercial Code financing statement filings regarding operating leases
entered into by the Company and its Restricted Subsidiaries in the ordinary
course of business; (m) Liens existing on the Closing Date; (n) Liens on
property or shares of stock of a Person at the time such Person becomes a
Subsidiary; provided, however, that such Liens are not created, Incurred or
assumed in connection with, or in contemplation of, such other Person becoming a
Subsidiary; provided further, however, that any such Lien may not extent to any
other property owned by the Company or any Restricted Subsidiary; (o) Liens on
property at the time the Company or a Subsidiary acquired the property;
including any acquisition by means of a merger of consolidation with or into the
Company or any Restricted Subsidiary; provided, however, that such Liens are not
created, Incurred or assumed in connection with, or in contemplation of, such
acquisition; PROVIDED FURTHER, HOWEVER, that such Liens may not extend to any
other property owned by the Company or any Restricted Subsidiary; (p) Liens
securing Indebtedness or other obligations of a Subsidiary owning to the Company
or a Wholly Owned Subsidiary; (q) Liens securing Indebtedness Incurred in
exchange for, or the net proceeds of which are used to refinance Indebtedness
that was previously so secured, provided that any such Lien is limited to all or
part of the same property or assets (plus improvements, accessions, proceeds or
dividends or distributions in respect thereof) that secured (or, under the
written arrangements under which the original Lien arose, could secure) the
obligations to which such Liens relate and promissory notes received as proceeds
of Assets Sales or Permitted Investments; and (r) Liens on margin stock or
margin securities, as such terms are defined in Regulations U and X of the Board
of Governors of the Federal Reserve System.
"Luxembourg Paying Agent" means State Street Bank, Luxembourg, S.A., and
any
<PAGE> 21
14
successor thereof.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the proceeds
of such Asset Sale in the form of cash or cash equivalents, including payments
in respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary) and proceeds
from the conversion of other property received when converted to cash or cash
equivalents, net of (i) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (ii) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of the Company and its Restricted
Subsidiaries, taken as a whole, (iii) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Sale that either (A) is
secured by a Lien on the property or assets sold or (B) is required to be paid
as a result of such sale and (iv) appropriate amounts to be provided by the
Company or any Restricted Subsidiary as a reserve against any liabilities
associated with such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as determined in conformity with GAAP and (b) with respect
to any issuance or sale of Capital Stock, the direct or indirect proceeds of
such issuance or sale in the form of cash or cash equivalents, net of attorney's
fees, accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees incurred in connection with
such issuance or sale and net of taxes paid or payable as a result thereof.
"Note Guarantee " means the joint and several guarantee of the Notes by the
Guarantors hereunder.
"Non-U.S. Person" means a person who is not a "U.S. person" (as defined in
Regulation S).
"Notes" means any of the securities, as defined in the first paragraph of
the recitals hereof, that are authenticated and delivered under this Indenture.
For all purposes of this Indenture, the term "Notes" shall include the Notes
initially issued on the Closing Date, any Exchange Notes to be issued and
exchanged for any Notes pursuant to the Registration Rights Agreement and this
Indenture and any other Notes issued after the Closing Date under this
Indenture. For purposes of this Indenture, all Notes shall vote together as one
series of Notes under this Indenture.
<PAGE> 22
15
"Offer to Purchase" means an offer to purchase Notes by the Company from the
Holders commenced by mailing a notice to the Trustee and each Holder stating:
(i) the covenant pursuant to which the offer is being made and that all Notes
validly tendered will be accepted for payment on a pro rata basis; (ii) the
purchase price and the date of purchase (which shall be a Business Day no
earlier than 30 days nor later than 60 days from the date such notice is mailed)
(the "Payment Date"); (iii) that any Note not tendered will continue to accrue
interest pursuant to its terms; (iv) that, unless the Company defaults in the
payment of the purchase price, any Note accepted for payment pursuant to the
Offer to Purchase shall cease to accrue interest on and after the Payment Date;
(v) that Holders electing to have a Note purchased pursuant to the Offer to
Purchase will be required to surrender the Note, together with the form entitled
"Option of the Holder to Elect Purchase" on the reverse side of the Note
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the Business Day immediately preceding the Payment
Date; (vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the third
Business Day immediately preceding the Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Notes delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased; and (vii) that Holders
whose Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered; provided
that each Note purchased and each new Note issued shall be in a principal amount
of $1,000 or integral multiples thereof. On the Payment Date, the Company shall
(i) accept for payment on a pro rata basis Notes or portions thereof tendered
pursuant to an Offer to Purchase; (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof so
accepted; and (iii) deliver, or cause to be delivered, to the Trustee all Notes
or portions thereof so accepted together with an Officers' Certificate
specifying the Notes or portions thereof accepted for payment by the Company.
The Paying Agent shall promptly mail to the Holders of Notes so accepted payment
in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Note equal in principal amount to
any unpurchased portion of the Note surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of $1,000 or
integral multiples thereof. The Company will publicly announce the results of an
Offer to Purchase as soon as practicable after the Payment Date. The Trustee
shall act as the Paying Agent for an Offer to Purchase. The Company will comply
with 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 the event that the Company is required to repurchase Notes pursuant to an
Offer to Purchase.
"Officer" means, with respect to the Company, (i) the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President or the
Chief Financial Officer, and (ii) the Treasurer or any Assistant Treasurer, or
the Secretary or any Assistant Secretary.
<PAGE> 23
16
"Officers' Certificate" means a certificate signed by one Officer listed in
clause (i) of the definition thereof and one Officer listed in clause (ii) of
the definition thereof or two officers listed in clause (i) of the definition
thereof. Each Officers' Certificate (other than certificates provided pursuant
to TIA Section 314(a)(4)) shall include the statements provided for in TIA
Section 314(e).
"Offshore Global Note" has the meaning provided in Section 2.01.
"Offshore Physical Notes" has the meaning provided in Section 2.01.
"Opinion of Counsel" means a written opinion signed by legal counsel, who
may be an employee of or counsel to the Company, that meets the requirements of
Section 10.04 hereof. Each such Opinion of Counsel shall include the statements
provided for in TIA Section 314(e).
"Paying Agent" has the meaning provided in Section 2.04, except that, for
the purposes of Article Eight, the Paying Agent shall not be the Company or a
Subsidiary of the Company or an Affiliate of any of them. The term "Paying
Agent" includes the Luxembourg Paying Agent and any additional Paying Agent.
"Payment Blockage Period" has the meaning provided in Section 10.02.
"Payment Date" has the meaning provided in the definition of Offer to
Purchase.
"Permanent Offshore Global Notes" has the meaning provided in Section 2.01.
"Permitted Investment" means (i) an Investment in the Company or a
Restricted Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted Subsidiary or be merged or consolidated with or
into or transfer or convey all or substantially all its assets to, the Company
or a Restricted Subsidiary; (ii) cash and Temporary Cash Investments; (iii)
payroll, travel, relocation and similar loans or advances; (iv) stock,
obligations or securities received in the settlement of debts incurred in the
ordinary course of business and in satisfaction of judgments; (v) an Investment
in an Unrestricted Subsidiary consisting solely of an Investment in another
Unrestricted Subsidiary; (vi) Interest Rate Agreements and Currency Agreements
designed solely to protect the Company or its Restricted Subsidiaries against
fluctuations in interest rates or foreign currency exchange rates; (vii)
Investments in the Notes (or the notes issued upon the exchange of the Notes);
and (viii) Investments in an aggregate amount outstanding at any time not to
exceed $100 million.
"Permitted Junior Securities" means any securities of the Company, any
Guarantor or any other business entity that are equity securities or are
subordinated in right of payment to
<PAGE> 24
17
all Senior Indebtedness that may at the time be outstanding, to substantially
the same extent as, or to a greater extent than, the Notes and the Note
Guarantees are so subordinated as provided herein; provided that Permitted
Junior Securities may not have terms less favorable in any material respect to
the Company or the holders of the Senior Indebtedness than the terms of this
Indenture and the Notes.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Physical Notes" has the meaning provided in Section 2.01.
"Preferred Stock" of any Person means any Capital Stock such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemption or upon liquidation.
"principal" of a debt security, including the Notes, means the principal
amount due on the Stated Maturity as shown on such debt security.
"Private Placement Legend" means the legend initially set forth on the
Notes in the form set forth in Section 2.02.
"Purchase Money Indebtedness" means any Indebtedness Incurred in the
ordinary course of business by a Person to finance the cost (including the cost
of construction) of an item of property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Redemption Date" means, when used with respect to any Note to be redeemed,
the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" means, when used with respect to any Note to be
redeemed, the price at which such Note is to be redeemed pursuant to this
Indenture.
"Registrar" has the meaning provided in Section 2.04.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated May 13, 1998 between the Company and Morgan Stanley & Co. Incorporated,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bancamerica Robertson
Stephens and BT Alex. Brown
<PAGE> 25
18
Incorporated and certain permitted assigns specified therein.
"Registration Statement" means the Registration Statement as defined and
described in the Registration Rights Agreement.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the June 1 or December 1 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Responsible Officer", when used with respect to the Trustee, means any
vice president, any assistant vice president, any assistant secretary, any
assistant treasurer, any trust officer or assistant trust officer, or any other
officer of the Trustee in its corporate trust department 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 or her knowledge of and
familiarity with the particular subject.
"Restricted Payments" has the meaning provided in Section 4.05.
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" has the meaning provided in Section 2.04.
"Senior Indebtedness" means the following obligations of the Company and
any Guarantor, whether outstanding on the Closing Date or thereafter Incurred:
(i) all Indebtedness and all other monetary obligations (including principal,
interest, expenses, fees, costs, enforcement expenses (including legal fees and
disbursements) reimbursement or indemnity obligations and other monetary
obligations) of the Company or any Guarantor under or in respect of the Credit
Facility, any and all interest accruing or out of pocket costs incurred after
the date of any filing by or against the Company or any Guarantor of any
petition or under any bankruptcy, insolvency or reorganization act, regardless
of whether the claim of the holders of such Senior Indebtedness is allowed or
allowable in the case or proceeding relating thereto, (ii) all obligations of
the Company or any Guarantor with respect to any Interest Rate Agreement or
Currency Agreement, (iii) all obligations of the Company or any Guarantor to
reimburse any bank or other Person in respect of amounts paid under letters of
credit,
<PAGE> 26
19
acceptances or other similar instruments, (iv) all Indebtedness and all
expenses, fees and other monetary obligations of the Company or any Guarantor
(other than the Notes), including principal and interest on such Indebtedness,
unless such Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such Indebtedness is issued, is pari passu with, or
subordinated in right of payment to, the Notes and (v) in addition to and
without limiting the foregoing clauses (i) through (iv), all deferrals,
renewals, extensions, replacements, substitutions and refundings of, and
amendments, modifications and supplements to, with or without the same parties,
any of the Senior Indebtedness described above; provided that the term "Senior
Indebtedness" shall not include (a) any Indebtedness of the Company or any
Guarantor that, when Incurred, was without recourse to the Company or such
Guarantor, (b) any Indebtedness of the Company or any Guarantor to a Subsidiary
of the Company, or to a joint venture in which the Company or such Guarantor has
an interest, (c) any Indebtedness of the Company or any Guarantor, to the extent
not permitted by Section 4.03 or Section 4.04, (d) any repurchase, redemption or
other obligation in respect of Disqualified Stock, (e) any Indebtedness to any
employee of the Company or any of its Subsidiaries, (f) any liability for taxes
owed or owing by the Company or any Guarantor or (g) any Trade Payables. Senior
Indebtedness will also include interest accruing subsequent to events of
bankruptcy of the Company or any Guarantor at the rate provided for in the
document governing such Senior Indebtedness, whether or not such interest is an
allowed claim enforceable against the debtor in a bankruptcy case under
bankruptcy law.
"Senior Subordinated Obligations" means any (i) principal of, premium, if
any, or interest on the Notes, (ii) the Note Guarantees and (iii) other amounts
(including fees and indemnity rights) payable pursuant to the terms of the Notes
or the Note Guarantees or this Indenture or upon acceleration, including any
amounts received upon the exercise of rights of rescission or other rights of
action (including claims for damages) or otherwise, to the extent relating to
the purchase price or the acquisition, repurchase or redemption of the Notes or
amounts corresponding to such principal, premium, if any, or interest or other
amounts on the Notes.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"Significant Guarantor" has the meaning provided in Section 6.01.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (ii) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year.
<PAGE> 27
20
"S&P" means Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, and its successors.
"Stated Maturity" means with respect to any security, the date specified in
such debt security as the fixed date on which the final installment of principal
of such debt security is due and payable, including pursuant to any mandatory
redemption provision.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Subsidiary Guarantee" has the meaning provided in Section 4.08.
"Temporary Cash Investment" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof, (ii) time deposit accounts, certificates of deposit and money
market deposits issued by a bank or trust company (including the Trustee) which
is organized under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States of America, and which
bank or trust company has capital, surplus and undivided profits aggregating in
excess of $50 million (or the foreign currency equivalent thereof) and with
respect to any such entity organized under the laws of any foreign country has
outstanding debt which is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act) or any money-market fund sponsored
by a registered broker dealer or mutual fund distributor, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank or trust
company (including the Trustee) meeting the qualifications described in clause
(ii) above, (iv) commercial paper issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to Moody's or "A-1"
(or higher) according to S&P, and (v) securities with maturities of five years
or less from the date of acquisition issued or fully and unconditionally
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least investment grade by S&P or Moody's.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939 (15
U.S. Codess.ss. 77aaa-77bbbb), as in effect on the date this Indenture was
executed, except as provided in Section 9.06.
<PAGE> 28
21
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Release H.15 (519) which has become
publicly available at least two business days prior to the date fixed for
repayment (or, if such Statistical Release is no longer published, any publicly
available source or similar market data)), most nearly equal to then remaining
Average Life to Stated Maturity of the Notes, provided, however, that if the
Average Life to Stated Maturity of the Notes is not equal to the constant
maturity of the United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given.
"Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
Article Seven of this Indenture and thereafter means such successor.
"United States Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended and as codified in Title 11 of the United States Code, as amended from
time to time hereafter, or any successor federal bankruptcy law.
"Unrestricted Subsidiary" means (i) Hadco Foreign Sales Corporation, CCIR
International, Inc., Zycon Corporation and Continental Circuits Corp.; (ii) any
Subsidiary of the Company that at the time of determination shall be designated
an Unrestricted Subsidiary by the Board of Directors in the manner provided
below; and (iii) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Restricted Subsidiary (including any newly acquired
or newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on
any property of, the Company or any Restricted Subsidiary; provided that either
(i) the Subsidiary to be so designated has total assets of $20,000 or less or
(II) if such Subsidiary has assets greater than $20,000, such designation would
be permitted under Section 4.05. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately
after giving effect to such designation (i) no Default or Event of Default shall
have occurred and be continuing at the time of or after giving effect to
<PAGE> 29
22
such designation and (ii) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately after such designation would, if Incurred at
such time, have been permitted to be Incurred (and shall be deemed to have been
Incurred) for all purposes of this Indenture. Any such designation by the Board
of Directors shall be evidenced to the Trustee by promptly filing with the
Trustee a copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions. Notwithstanding anything herein contained to the contrary,
no Guarantor may be designated an Unrestricted Subsidiary unless all or
substantially all of the assets of such Guarantor are transferred to another
Guarantor or a Person who upon such transfer becomes a Guarantor.
"U.S. Global Notes" has the meaning provided in Section 2.01.
"U.S. Physical Notes" has the meaning provided in Section 2.01.
"Voting Stock" means with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person.
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
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 or a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company or any other
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA
<PAGE> 30
23
reference to another statute or defined by a rule of the Commission and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the plural
include the singular;
(v) provisions apply to successive events and transactions;
(vi) "herein", "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision;
(vii) all ratios and computations based on GAAP contained in this
Indenture shall be computed in accordance with the definition of GAAP set
forth in Section 1.01; and
(viii) all references to Sections or Articles refer to Sections or
Articles of this Indenture unless otherwise indicated.
ARTICLE TWO
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form annexed hereto as Exhibit A with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture. The Notes may have notations, legends or
endorsements required by law, stock exchange agreements to which the Company is
subject or usage. The Company shall approve the form of the Notes and any
notation, legend or endorsement on the Notes. Each Note shall be dated the date
of its authentication.
The terms and provisions contained in the form of the Notes annexed
hereto as Exhibit A
<PAGE> 31
24
shall constitute, and are hereby expressly made, a part of this Indenture. To
the extent applicable, each of the Company, the Guarantors and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A shall be issued initially
in the form of one or more permanent global Notes in registered form,
substantially in the form set forth in Exhibit A (the "U.S. GLOBAL NOTES"),
registered in the name of the nominee of the Depositary, deposited with the
Trustee, as custodian for the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of the U.S. Global Notes may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for the
Depositary or its nominee, in accordance with the instructions given by the
Holder thereof, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on Regulation S
shall be issued initially in the form of one or more permanent global Notes in
registered form substantially in the form set forth in Exhibit A (the "OFFSHORE
GLOBAL NOTES"), registered in the name of the nominee of the Depositary,
deposited with the Trustee, as custodian for the Depositary, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Offshore Global Notes may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided.
Notes offered and sold in reliance on Regulation D under the Securities Act
shall be issued in the form of permanent certificated Notes in registered form
in substantially the form set forth in Exhibit A (the "U.S. PHYSICAL NOTES").
Notes issued pursuant to Section 2.07 in exchange for interests in the
Offshore Global Notes shall be in the form of permanent certificated Notes in
registered form substantially in the form set forth in Exhibit A (the "OFFSHORE
PHYSICAL NOTES").
The Offshore Physical Notes and U.S. Physical Notes are sometimes
collectively herein referred to as the "PHYSICAL NOTES". The U.S. Global Notes
and the Offshore Global Notes are sometimes referred to herein as the "GLOBAL
NOTES".
The definitive Notes shall be typed, printed, lithographed or engraved or
produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on which the Notes may
be listed, all as determined by the Officers executing such Notes, as evidenced
by their execution of such Notes.
<PAGE> 32
25
2.02. RESTRICTIVE LEGENDS.
Unless and until a Note is exchanged for an Exchange Note or sold in
connection with an effective Registration Statement pursuant to the Registration
Rights Agreement, (i) the U.S. Global Notes and U.S. Physical Notes shall bear
the legend set forth below on the face thereof and (ii) the Offshore Physical
Notes and Offshore Global Notes shall bear the legend set forth below on the
face thereof until at least the 41st day after the Closing Date and receipt by
the Company and the Trustee of a certificate substantially in the form of
Exhibit B hereto.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION
D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD
REFERRED TO UNDER RULE 144(k) UNDER THE SECURITIES ACT AS IN EFFECT ON
THE DATE OF TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN
$100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN
<PAGE> 33
26
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD
REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH
ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS
AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
Each Global Note, whether or not an Exchange Note, shall also bear the
following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, 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 IN SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 2.08 OF THE INDENTURE.
<PAGE> 34
27
SECTION 2.03. EXECUTION, AUTHENTICATION AND DENOMINATIONS.
Subject to Article Four and applicable law, the aggregate principal amount
of Notes which may be authenticated and delivered under this Indenture is
unlimited. The Notes shall be executed by two Officers of the Company. The
signature of these Officers on the Notes may be by facsimile or manual signature
in the name and on behalf of the Company.
If an Officer whose signature is on a Note no longer holds that office at
the time the Trustee or authenticating agent authenticates the Note, the Note
shall be valid nevertheless.
A Note shall not be valid until the Trustee manually signs the certificate
of authentication on the Note. The manually executed certificate of
authentication of the Trustee shall be conclusive evidence that the Note has
been authenticated under this Indenture.
At any time and from time to time after the execution of this Indenture,
the Trustee shall upon receipt of a Company Order authenticate for original
issue Notes in the aggregate principal amount specified in such Company Order;
provided that the Trustee shall be entitled to receive an Officers' Certificate
and an Opinion of Counsel of the Company in connection with such authentication
of Notes. Such Company Order shall specify the amount of Notes to be
authenticated and the date on which the original issue of Notes is to be
authenticated and, in case of an issuance of Notes pursuant to Section 2.15,
shall certify that such issuance is in compliance with Article Four.
The Trustee may appoint an authenticating agent 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 authenticating agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate of the Company.
The Notes shall be issuable only in registered form without coupons and
only in denominations of $1,000 in principal amount and any integral multiple
thereof.
SECTION 2.04. REGISTRAR AND PAYING AGENT
The Company shall maintain an office or agency where Notes may be presented
for registration of transfer or for exchange (the "REGISTRAR"), an office or
agency where Notes may be presented for payment (the "PAYING Agent") and an
office or agency where notices and demands to or upon the Company in respect of
the Notes and this Indenture may be served, which shall be in Boston,
Massachusetts and so long as the Notes are listed on the Luxembourg Stock
Exchange, in Luxembourg. The Company shall cause the Registrar to keep a
register of the Notes and of their transfer and exchange (the "SECURITY
REGISTER"). The Security Register shall be in written form or any other form
capable of being converted into written form within
<PAGE> 35
28
a reasonable time. The Company may have one or more co-Registrars and one or
more additional Paying Agents.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture. The agreement shall implement the provisions of
this Indenture that relate to such Agent. The Company shall give prompt written
notice to the Trustee of the name and address of any such Agent and any change
in the address of such Agent. If the Company fails to maintain a Registrar,
Paying Agent and/or agent for service of notices and demands, the Trustee shall
act as such Registrar, Paying Agent and/or agent for service of notices and
demands. The Company may remove any Agent upon written notice to such Agent and
the Trustee; provided that no such removal shall become effective until (i) the
acceptance of an appointment by a successor Agent to such Agent as evidenced by
an appropriate agency agreement entered into by the Company and such successor
Agent and delivered to the Trustee or (ii) notification to the Trustee that the
Trustee shall serve as such Agent until the appointment of a successor Agent in
accordance with clause (i) of this proviso. The Company, any Subsidiary of the
Company, or any Affiliate of any of them may act as Paying Agent, Registrar or
co-Registrar, and/or agent for service of notice and demands.
The Company initially appoints the Trustee as Registrar, Paying Agent,
authenticating agent and agent for service of notice and demands. 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 Holders and shall otherwise
comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company
shall furnish to the Trustee as of each Regular Record Date and at such other
times as the Trustee may reasonably request the names and addresses of Holders
as they appear in the Security Register, including the aggregate principal
amount of Notes held by each Holder.
SECTION 2.05. PAYING AGENT TO HOLD MONEY.
Not later than 11:00 a.m. (New York City time) each due date of the
principal, premium, if any, and interest on any Notes, the Company shall deposit
with the Paying Agent money in immediately available funds sufficient to pay
such principal, premium, if any, and interest so becoming due. The Company shall
require each Paying Agent other than the Trustee to agree in writing that such
Paying Agent shall hold for the benefit of the Holders or the Trustee all money
held by the Paying Agent for the payment of principal of, premium, if any, and
interest on the Notes (whether such money has been paid to it by the Company or
any other obligor on the Notes), and such Paying Agent shall promptly notify the
Trustee of any default by the Company (or any other obligor on the Notes) in
making any such payment. The Company at any time may require a Paying Agent to
pay all money held by it to the Trustee and account for any funds disbursed, and
the Trustee may at any time during the continuance of any payment default, upon
written request to a Paying Agent, require such Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed. Upon doing
<PAGE> 36
29
so, the Paying Agent shall have no further liability for the money so paid over
to the Trustee. If the Company or any Subsidiary of the Company or any Affiliate
of any of them acts as Paying Agent, it will, on or before each due date of any
principal of, premium, if any, or interest on the Notes, segregate and hold in a
separate trust fund for the benefit of the Holders a sum of money sufficient to
pay such principal, premium, if any, or interest so becoming due until such sum
of money shall be paid to such Holders or otherwise disposed of as provided in
this Indenture, and will promptly notify the Trustee of its action or failure to
act.
SECTION 2.06. TRANSFER AND EXCHANGE.
The Notes are issuable only in registered form. A Holder may transfer a
Note only by written application to the Registrar stating the name of the
proposed transferee and otherwise complying with the terms of this Indenture. No
such transfer shall be effected until, and such transferee shall succeed to the
rights of a Holder only upon, final acceptance and registration of the transfer
by the Registrar in the Security Register. Prior to the registration of any
transfer by a Holder as provided herein, the Company, the Trustee, and any agent
of the Company shall treat the person in whose name the Note is registered as
the owner thereof for all purposes whether or not the Note shall be overdue, and
neither the Company, the Trustee, nor any such agent shall be affected by notice
to the contrary. Furthermore, any Holder of a Global Note shall, by acceptance
of such Global Note, agree that transfers of beneficial interests in such Global
Note may be effected only through a book entry system maintained by the Holder
of such Global Note (or its agent) and that ownership of a beneficial interest
in the Note shall be required to be reflected in a book entry. When Notes are
presented to the Registrar or a co-Registrar with a request to register the
transfer or to exchange them for an equal principal amount of Notes of other
authorized denominations (including an exchange of Notes for Exchange Notes),
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met (including that such Notes are
duly endorsed or accompanied by a written instrument of transfer in form
satisfactory to the Trustee and Registrar duly executed by the Holder thereof or
by an attorney who is authorized in writing to act on behalf of the Holder);
provided that no exchanges of Notes for Exchange Notes shall occur until a
Registration Statement shall have been declared effective by the Commission and
that any Notes that are exchanged for Exchange Notes shall be canceled by the
Trustee. To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Notes at the Registrar's request. No
service charge shall be made for any registration of transfer or exchange or
redemption of the Notes, 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 other similar governmental
charge payable upon exchanges pursuant to Section 2.11, 3.08 or 9.04).
The Registrar shall not be required (i) to issue, register the transfer of
or exchange any Note during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Notes selected
for redemption under Section 3.03 and
<PAGE> 37
30
ending at the close of business on the day of such mailing, or (ii) to register
the transfer of or exchange any Note so selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
SECTION 2.07. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTES.
(a) The U.S. Global Notes and Offshore Global Notes initially shall (i) be
registered in the name of the Depositary for such Global Notes or the nominee of
such Depositary, (ii) be delivered to the Trustee as custodian for such
Depositary and (iii) bear legends as set forth in Section 2.02.
Members of, or participants in, the Depositary ("AGENT MEMBERS") shall have
no rights under this Indenture with respect to any Global Note held on their
behalf by the Depositary, or the Trustee as its custodian, or under such Global
Note, and the Depositary may be treated by the Company, the Guarantors, the
Trustee and any agent of the Company, the Guarantors or the Trustee as the
absolute owner of such Global Note for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Company, the Guarantors, the
Trustee or any agent of the Company, the Guarantors or the Trustee, from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers of such Global
Note in whole, but not in part, to the Depositary, its successors or their
respective nominees. Interests of beneficial owners in Global Notes may be
transferred in accordance with the rules and procedures of the Depositary and
the provisions of Section 2.08. In addition, U.S. Physical Notes and Offshore
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in the U.S. Global Notes or the Offshore Global
Notes, as the case may be, if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for the U.S. Global Notes or the
Offshore Global Notes, as the case may be, and a successor depositary is not
appointed by the Company within 90 days of such notice, (ii) an Event of Default
has occurred and is continuing and the Registrar has received a request from the
Depositary or (iii) in accordance with the rules and procedures of the
Depositary and the provisions of Section 2.08.
(c) Any beneficial interest in one of the Global Notes that is transferred
to a person who takes delivery in the form of an interest in another Global Note
will, upon transfer, cease to be an interest in such Global Note and become an
interest in such other Global Note and, accordingly, will thereafter be subject
to all transfer restrictions, if any, and other procedures applicable to
beneficial interests in such other Global Note for as long as it remains such an
interest.
<PAGE> 38
31
(d) In connection with any transfer of a portion of the beneficial
interests in a Global Note to beneficial owners pursuant to paragraph (b) of
this Section 2.07, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of such Global Note in an amount equal to
the principal amount of the beneficial interest in such Global Note to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more U.S. Physical Notes or Offshore Physical Notes, as the
case may be, of like tenor and amount.
(e) In connection with the transfer of the U.S. Global Notes or the
Offshore Global Notes, in whole, to beneficial owners pursuant to paragraph (b)
of this Section 2.07, the U.S. Global Notes or Offshore Global Notes, as the
case may be, shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall authenticate and deliver,
to each beneficial owner identified by the Depositary in exchange for its
beneficial interest in the U.S. Global Notes or Offshore Global Notes, as the
case may be, an equal aggregate principal amount of U.S. Physical Notes or
Offshore Physical Notes, as the case may be, of authorized denominations.
(f) Any U.S. Physical Note delivered in exchange for an interest in the
U.S. Global Notes pursuant to paragraph (b), (d) or (e) of this Section 2.07
shall, except as otherwise provided by paragraph (e) of Section 2.08, bear the
legend regarding transfer restrictions applicable to the U.S. Physical Note set
forth in Section 2.02.
(g) Any Offshore Physical Note delivered in exchange for an interest in the
Offshore Global Notes pursuant to paragraph (b), (d) or (e) of this Section 2.07
shall, except as otherwise provided by paragraph (f) of Section 2.08, bear the
legend regarding transfer restrictions applicable to the Offshore Physical Note
set forth in Section 2.02.
(h) The registered holder of a Global Note may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
SECTION 2.08. SPECIAL TRANSFER PROVISIONS.
Unless and until a Note is exchanged for an Exchange Note or sold in
connection with an effective Registration Statement pursuant to the Registration
Rights Agreement, the following provisions shall apply:
(a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS. The following
provisions shall apply with respect to the registration of any proposed transfer
of a Note to any Institutional Accredited Investor which is not a QIB (excluding
Non-U.S. Persons):
<PAGE> 39
32
(i) The Registrar shall register the transfer of any Note, whether or
not such Note bears the Private Placement Legend, if (x) the requested
transfer is after the time period referred to in Rule 144(k) under the
Securities Act or (y) the proposed transferee has delivered to the
Registrar (A) a certificate substantially in the form of Exhibit C hereto
and (B) if the aggregate principal amount of the Notes being transferred is
less than $100,000, an opinion of counsel acceptable to the Company that
such transfer is in compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Notes, upon receipt by the Registrar
of (x) the documents, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the U.S. Global Notes in an
amount equal to the principal amount of the beneficial interest in the U.S.
Global Notes to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more U.S. Physical Notes of
like tenor and amount.
(b) TRANSFERS TO QIBS. The following provisions shall apply with respect to
the registration of any proposed transfer of a Note to a QIB (excluding Non-U.S.
Persons):
(i) If the Note to be transferred consists of (x) either Offshore
Physical Notes prior to the removal of the Private Placement Legend or U.S.
Physical Notes, the Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has checked the box provided for
on the form of Note stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Note for
its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A or (y) an
interest in the U.S. Global Notes, the transfer of such interest may be
effected only through the book entry system maintained by the Depositary.
(ii) If the proposed transferee is an Agent Member, and the Note to be
transferred consists of U.S. Physical Notes, upon receipt by the Registrar
of the documents referred to in paragraph (i) above and instructions given
in accordance with
<PAGE> 40
33
the Depositary's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and an increase in the principal
amount of U.S. Global Notes in an amount equal to the principal amount of
the U.S. Physical Notes to be transferred, and the Trustee shall cancel the
U.S. Physical Notes so transferred.
(c) TRANSFERS OF INTERESTS IN THE OFFSHORE GLOBAL NOTES OR OFFSHORE
PHYSICAL NOTES. The following provisions shall apply with respect to any
transfer of interests in Offshore Global Notes or Offshore Physical Notes:
(i) prior to the removal of the Private Placement Legend from the
Offshore Global Notes or Offshore Physical Notes pursuant to Section 2.02,
the Registrar shall refuse to register such transfer unless such transfer
complies with Section 2.08(b) or Section 2.08(d), as the case may be, and
(ii) after such removal, the Registrar shall register the transfer of
any such Note without requiring any additional certification.
(d) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following provisions
shall apply with respect to any transfer of a Note to a Non-U.S. Person:
(i) The Registrar shall register any proposed transfer to any Non-U.S.
Person if the Note to be transferred is a U.S. Physical Note or an interest
in U.S. Global Notes, upon receipt of a certificate substantially in the
form of Exhibit D hereto from the proposed transferor.
(ii) (a) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Notes, upon receipt by the Registrar
of (x) the documents, if any, required by paragraph (ii) and (y)
instructions in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the U.S. Global Notes in an
amount equal to the principal amount of the beneficial interest in the U.S.
Global Notes to be transferred, and (b) if the proposed transferee is an
Agent Member, upon receipt by the Registrar of instructions given in
accordance with the Depositary's and the Registrar's procedures, the
Registrar shall reflect on its books and records the date and an increase
in the principal amount of the Offshore Global Notes in an amount equal to
the principal amount of the U.S. Physical Notes or the U.S. Global Notes,
as the case may be, to be transferred, and the Trustee shall cancel the
Physical Note, if any, so transferred or decrease the amount of the U.S.
Global Notes.
(e) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or replacement of
Notes not bearing the Private Placement Legend, the Registrar shall deliver
Notes that do not
<PAGE> 41
34
bear the Private Placement Legend. Upon the transfer, exchange or replacement of
Notes bearing the Private Placement Legend, the Registrar shall deliver only
Notes that bear the Private Placement Legend unless either (i) the circumstances
contemplated by paragraph (a)(i)(x) or (c)(ii) of this Section 2.08 exist or
(ii) there is delivered to the Registrar an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act.
(f) GENERAL. By its acceptance of any Note bearing the Private Placement
Legend, each Holder of such a Note acknowledges the restrictions on transfer of
such Note set forth in this Indenture and in the Private Placement Legend and
agrees that it will transfer such Note only as provided in this Indenture. The
Registrar shall not register a transfer of any Note unless such transfer
complies with the restrictions on transfer of such Note set forth in this
Indenture. In connection with any transfer of Notes, each Holder agrees by its
acceptance of the Notes to furnish the Registrar or the Company such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that the Registrar shall not be required to
determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such certifications, legal opinions or other information.
The Registrar shall retain copies of all letters, notices and other written
communications received pursuant to Section 2.07 or this Section 2.08. The
Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
SECTION 2.09. REPLACEMENT NOTES SECTION.
If a mutilated Note is surrendered to the Trustee or if the Holder claims
that the Note has been lost, destroyed or wrongfully taken, then, in the absence
of notice to the Company or the Trustee that such Note has been acquired by a
bona fide purchaser, the Company shall issue and the Trustee shall authenticate
a replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding; provided that the requirements of this Section
2.09 are met. If required by the Trustee or the Company, an indemnity bond must
be furnished that is sufficient in the judgment of both the Trustee and the
Company to protect the Company, the Trustee or any Agent from any loss that any
of them may suffer if a Note is replaced. The Company may charge such Holder for
its expenses and the expenses of the Trustee in replacing a Note. In case any
such mutilated, lost, destroyed or wrongfully taken Note has become or is about
to become due and payable, the Company in its discretion may pay such Note
instead of issuing a new Note in replacement thereof.
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35
Every replacement Note is an additional obligation of the Company and shall
be entitled to the benefits of this Indenture.
SECTION 2.10. OUTSTANDING NOTES.
Notes outstanding at any time are all Notes that have been authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation and those described in this Section 2.10 as not outstanding.
If a Note is replaced pursuant to Section 2.09, it ceases to be outstanding
unless and until the Trustee and the Company receive proof satisfactory to them
that the replaced Note is held by a bona fide purchaser.
If the Paying Agent (other than the Company or an Affiliate of the Company)
holds on the maturity date money sufficient to pay Notes payable on that date,
then on and after that date such Notes cease to be outstanding and interest on
them shall cease to accrue.
A Note does not cease to be outstanding because the Company or one of its
Affiliates holds such Note, provided, however, that in determining whether the
Holders of the requisite principal amount of the outstanding Notes have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder, Notes owned by the Company or any other obligor upon the Notes or any
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes which the Trustee has actual
knowledge to be so owned shall be so disregarded. Notes so owned which have been
pledged in good faith may be regarded as outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Notes and that the pledgee is not the Company or any other obligor upon the
Notes or any Affiliate of the Company or of such other obligor.
SECTION 2.11. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare and
execute and the Trustee shall authenticate temporary Notes. Temporary Notes
shall be substantially in the form of definitive Notes but may have insertions,
substitutions, omissions and other variations determined to be appropriate by
the Officers executing the temporary Notes, as evidenced by their execution of
such temporary Notes. If temporary Notes are issued, the Company will cause
definitive Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be exchangeable for
definitive Notes upon surrender of the temporary Notes at the office or agency
of the Company designated for such purpose pursuant to Section 4.02, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Notes
<PAGE> 43
36
of authorized denominations. Until so exchanged, the temporary Notes shall be
entitled to the same benefits under this Indenture as definitive Notes.
SECTION 2.12. CANCELLATION.
The Company at any time may deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder which the Company may
have acquired in any manner whatsoever, and may deliver to the Trustee for
cancellation any Notes previously authenticated hereunder which the Company has
not issued and sold. The Registrar and the Paying Agent shall forward to the
Trustee any Notes surrendered to them for transfer, exchange or payment. The
Trustee shall cancel all Notes surrendered for transfer, exchange, payment or
cancellation and shall destroy them in accordance with its normal procedure.
SECTION 2.13. CUSIP NUMBERS.
The Company in issuing the Notes may use "CUSIP", "CINS" or "ISIN" numbers
(if then generally in use), and the Company and the Trustee shall use CUSIP,
CINS or ISIN numbers, as the case may be, in notices of redemption or exchange
as a convenience to Holders; provided that any such notice shall state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of redemption or exchange and that
reliance may be placed only on the other identification numbers printed on the
Notes. The Company shall promptly notify the Trustee of any change in "CUSIP",
"CINS" or "ISIN" numbers for the Notes.
SECTION 2.14. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall
pay, or shall deposit with the Paying Agent money in immediately available funds
sufficient to pay, the defaulted interest, plus (to the extent lawful) any
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date. A special record date, as used in this Section
2.14 with respect to the payment of any defaulted interest, shall mean the 15th
day next preceding the date fixed by the Company for the payment of defaulted
interest, whether or not such day is a Business Day. At least 15 days before the
subsequent special record date, the Company shall mail to each Holder and to the
Trustee a notice that states the subsequent special record date, the payment
date and the amount of defaulted interest to be paid.
SECTION 2.15. ISSUANCE OF ADDITIONAL NOTES.
The Company may, subject to Article Four of this Indenture and applicable
law, issue additional Notes under this Indenture. The Notes issued on the
Closing Date and any additional Notes subsequently issued shall be treated as a
single class for all purposes under this Indenture.
<PAGE> 44
37
ARTICLE THREE
REDEMPTION
SECTION 3.01. RIGHT OF REDEMPTION.
(a) The Notes are redeemable, at the Company's option, in whole or in part,
at any time or from time to time, on or after June 15, 2003 and prior to
maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first-class mail to each Holder's last address, as it appears in the Security
Register, at the following Redemption Prices (expressed in percentages of
principal amount), plus accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant Regular Record
Date that is prior to the Redemption Date to receive interest due on an Interest
Payment Date), if redeemed during the 12-month period commencing June 15 of the
years set forth below:
Redemption
Year Price
---- ----------
2003............................... 104.750%
2004............................... 103.167
2005............................... 101.583
2006 and thereafter................ 100.000
(b) In addition, at any time prior to June 15, 2001, the Company may redeem
up to 35% of the aggregate principal amount of the Notes with the proceeds of
one or more Equity Offerings, at a Redemption Price of 109.50%, plus accrued and
unpaid interest to the Redemption Date (subject to the rights of Holders of
record on the relevant Regular Record Date that is prior to the Redemption Date
to receive interest due on an Interest Payment Date); provided that (i) Notes
representing 65% of the principal amount of Notes initially issued remain
outstanding after each such redemption and (ii) notice of such redemption is
mailed within 60 days of the related Equity Offering.
(c) Prior to June 15, 2003, the Notes will be redeemable at the Company's
option, in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice mailed by first class mail to each
Holder's registered address, at a redemption price (expressed as a percentage of
principal amount) equal to the sum of the principal amount such Notes plus the
Applicable Premium thereon at the time of redemption (an "Early Redemption
Date") (subject to the right of holders of record on the relevant record date to
receive due on the relevant interest payment date).
SECTION 3.02. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to Section 3.01, it shall
notify the Trustee in writing of the Redemption Date and the principal amount of
Notes to be redeemed and the clause of this Indenture pursuant to which
redemption shall occur.
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The Company shall give each notice provided for in this Section 3.02 in an
Officers' Certificate at least 45 days before the Redemption Date (unless a
shorter period shall be satisfactory to the Trustee).
SECTION 3.03. SELECTION OF NOTES TO BE REDEEMED.
In the case of partial redemption, selection of the Notes for redemption
shall be made by the Trustee in compliance with the requirements, as certified
to it by the Company, of the principal national securities exchange, if any, on
which the Notes are listed or, if the Notes are not listed on a national
securities exchange or automated quotation system, by lot, pro rata or by such
other method as the Trustee in its sole discretion shall deem fair and
appropriate or, as to any Notes in global form, in accordance with the
procedures of the Depository; provided that no Note of $1,000 in principal
amount or less shall be redeemed in part.
The Trustee shall make the selection from the Notes outstanding and not
previously called for redemption. Notes in denominations of $1,000 in principal
amount may only be redeemed in whole. The Trustee may select for redemption
portions (equal to $1,000 in principal amount or any integral multiple thereof)
of Notes that have denominations larger than $1,000 in principal amount.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption. The Trustee shall notify the
Company and the Registrar promptly in writing of the Notes or portions of Notes
to be called for redemption.
SECTION 3.04. NOTICE OF REDEMPTION.
With respect to any redemption of Notes pursuant to Section 3.01, at least
30 days but not more than 60 days before a Redemption Date, the Company shall
mail a notice of redemption by first-class mail to each Holder whose Notes are
to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the name and address of the Paying Agent;
(iv) that Notes called for redemption must be surrendered to the
Paying Agent in order to collect the Redemption Price;
(v) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the Redemption
<PAGE> 46
39
Date and the only remaining right of the Holders is to receive payment of
the Redemption Price plus accrued interest to the Redemption Date upon
surrender of the Notes to the Paying Agent;
(vi) that, if any Note is being redeemed in part, the portion of the
principal amount (equal to $1,000 in principal amount or any integral
multiple thereof) of such Note to be redeemed and that, on and after the
Redemption Date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be reissued;
and
(vii) that, if any Note contains a CUSIP, CINS or ISIN number as
provided in Section 2.13, no representation is being made as to the
correctness of the CUSIP, CINS or ISIN number either as printed on the
Notes or as contained in the notice of redemption and that reliance may be
placed only on the other identification numbers printed on the Notes.
At the Company's request (which request may be revoked by the Company at
any time prior to the time at which the Trustee shall have given such notice to
the Holders), made in writing to the Trustee at least 45 days (or such shorter
period as shall be satisfactory to the Trustee) before a Redemption Date, the
Trustee shall give the notice of redemption in the name and at the expense of
the Company. If, however, the Company gives such notice to the Holders, the
Company shall concurrently deliver to the Trustee an Officers' Certificate
stating that such notice has been given.
SECTION 3.05. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed, Notes called for redemption become due
and payable on the Redemption Date and at the Redemption Price. Upon surrender
of any Notes to the Paying Agent, such Notes shall be paid at the Redemption
Price, plus accrued interest, if any, to the Redemption Date.
Notice of redemption shall be deemed to be given when mailed, whether or
not the Holder receives the notice. In any event, failure to give such notice,
or any defect therein, shall not affect the validity of the proceedings for the
redemption of Notes held by Holders to whom such notice was properly given.
SECTION 3.06. DEPOSIT OF REDEMPTION PRICE.
On or prior to the Business Day immediately preceding any Redemption Date,
the Company shall deposit with the Paying Agent (or, if the Company is acting as
its own Paying Agent, shall segregate and hold in trust as provided in Section
2.05) money sufficient to pay the Redemption Price of and accrued interest on
all Notes to be redeemed on that date other than Notes or portions thereof
called for redemption on that date that have been delivered by the Company to
the Trustee for cancellation.
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SECTION 3.07. PAYMENT OF NOTES CALLED FOR REDEMPTION.
If notice of redemption has been given in the manner provided above, the
Notes or portion of Notes specified in such notice to be redeemed shall become
due and payable on the Redemption Date at the Redemption Price stated therein,
together with accrued interest to such Redemption Date, and on and after such
date (unless the Company shall default in the payment of such Notes at the
Redemption Price and accrued interest to the Redemption Date, in which case the
principal, until paid, shall bear interest from the Redemption Date at the rate
prescribed in the Notes), such Notes shall cease to accrue interest. Upon
surrender of any Note for redemption in accordance with a notice of redemption,
such Note shall be paid and redeemed by the Company at the Redemption Price,
together with accrued interest, if any, to the Redemption Date; provided that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders registered as such at the close of business
on the relevant Regular Record Date.
SECTION 3.08. NOTES REDEEMED IN PART.
Upon surrender and cancellation of any Note that is redeemed in part, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder without service charge, a new Note equal in principal amount to the
unredeemed portion of such surrendered Note.
ARTICLE FOUR
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay the principal of, premium, if any, and interest on
the Notes on the dates and in the manner provided in the Notes and this
Indenture. An installment of principal, premium, if any, or interest shall be
considered paid on the date due if the Trustee or Paying Agent (other than the
Company, a Subsidiary of the Company, or any Affiliate of any of them) holds on
that date money designated for and sufficient to pay the installment. If the
Company or any Subsidiary of the Company or any Affiliate of any of them acts as
Paying Agent, an installment of principal, premium, if any, or interest shall be
considered paid on the due date if the entity acting as Paying Agent complies
with the last sentence of Section 2.05. As provided in Section 6.09, upon any
bankruptcy or reorganization procedure relative to the Company, the Trustee
shall serve as the Paying Agent, if any, for the Notes.
The Company shall pay interest on overdue principal and premium, if any,
and interest on overdue installments of interest, to the extent lawful, at the
rate per annum specified in the Notes.
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SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in Boston, Massachusetts and, so long as the
Notes are listed on the Luxembourg Stock Exchange, in Luxembourg, an office or
agency where Notes may be surrendered for registration of transfer or exchange
or for presentation for payment and where notices and demands to or upon the
Company in respect of the Notes and this Indenture may be served. The Company
will 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 address of the Trustee set forth in Section
10.02.
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 that no
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in Boston, Massachusetts and, so long
as the Notes are listed on the Luxembourg Stock Exchange, in Luxembourg, for
such purposes. The Company 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 initially designates the Corporate Trust Office of the
Trustee as such office of the Company in accordance with Section 2.04.
SECTION 4.03. LIMITATION ON INDEBTEDNESS.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness (other than the Notes and Indebtedness
existing on the Closing Date, whether or not any such Indebtedness existing on
the Closing Date is repaid or reborrowed ); provided that the Company and any
Guarantor may Incur Indebtedness if, after giving effect to the Incurrence of
such Indebtedness and the receipt and application of the proceeds therefrom, the
Interest Coverage Ratio would be greater than 3:1.
Notwithstanding the foregoing and, in addition to Indebtedness permitted by
the foregoing paragraph, the Company and any Restricted Subsidiary (except as
specified below) may Incur each and all of the following: (i) Indebtedness of
the Company and the Guarantors outstanding at any time in an aggregate principal
amount not to exceed the commitments under the Credit Facility on the Closing
Date; (ii) Indebtedness owed (A) to the Company evidenced by an unsubordinated
promissory note or (B) to any Restricted Subsidiary; provided that any event
which results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of such Indebtedness (other than to the
Company or another Restricted Subsidiary) shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness not permitted by this clause (ii);
(iii) Indebtedness issued in exchange for, or the net proceeds of
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42
which are used to refinance or refund, then outstanding Indebtedness (other than
Indebtedness Incurred under clause (i), (ii), (iv), (vi) or (vii) of this
paragraph; it being understood that Indebtedness Incurred under such clauses can
be refinanced thereunder) and any refinancings thereof in an amount not to
exceed the amount so refinanced or refunded (plus premiums, accrued interest,
fees and expenses); provided that Indebtedness the proceeds of which are used to
refinance or refund the Notes or Indebtedness that is pari passu with, or
subordinated in right of payment to, the Notes shall only be permitted under
this clause (iii) if (A) in case the Notes are refinanced in part or the
Indebtedness to be refinanced is pari passu with the Notes, such new
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is outstanding, is expressly made pari
passu with, or subordinate in right of payment to, the remaining Notes, (B) in
case the Indebtedness to be refinanced is subordinated in right of payment to
the Notes, such new Indebtedness, by its terms or by the terms of any agreement
or instrument pursuant to which such new Indebtedness is issued or remains
outstanding, is expressly made subordinate in right of payment to the Notes at
least to the extent that the Indebtedness to be refinanced is subordinated to
the Notes and (C) such new Indebtedness, determined as of the date of Incurrence
of such new Indebtedness, does not mature prior to the Stated Maturity of the
Indebtedness to be refinanced or refunded, and the Average Life of such new
Indebtedness is at least equal to the remaining Average Life of the Indebtedness
to be refinanced or refunded; and provided further that in no event may
Indebtedness of the Company be refinanced by means of any Indebtedness of any
Restricted Subsidiary pursuant to this clause (iii); (iv) Indebtedness (A) in
respect of performance, surety or appeal bonds provided in the ordinary course
of business, (B) under Currency Agreements and Interest Rate Agreements;
provided that such agreements (a) are designed solely to protect the Company or
its Restricted Subsidiaries against fluctuations in foreign currency exchange
rates or interest rates and (b) do not increase the Indebtedness of the obligor
outstanding at any time other than as a result of fluctuations in foreign
currency exchange rates or interest rates or by reason of fees, indemnities and
compensation payable thereunder; and (C) arising from agreements providing for
indemnification, adjustment of purchase price, earn outs or similar obligations,
or from Guarantees or letters of credit, surety bonds or performance bonds
securing any obligations of the Company or any of its Restricted Subsidiaries
pursuant to such agreements, in any case Incurred in connection with the
disposition of any business, assets or Restricted Subsidiary (other than
Guarantees of Indebtedness Incurred by any Person acquiring all or any portion
of such business, assets or Restricted Subsidiary for the purpose of financing
such acquisition), in a principal amount not to exceed the gross proceeds
actually received by the Company or any Restricted Subsidiary in connection with
such disposition; (v) Indebtedness of the Company and any Guarantor, to the
extent the net proceeds thereof are promptly (A) used to purchase Notes tendered
in an Offer to Purchase made as a result of a Change in Control or (B) deposited
to defease the Notes pursuant to Article Eight; (vi) Guarantees of the Notes and
Guarantees of Indebtedness of the Company by any Restricted Subsidiary provided
the Guarantee of such Indebtedness is permitted by and made in accordance with
Section 4.08;
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(vii) Indebtedness under the Notes and the Note Guarantees (as well as the notes
issued upon the exchange of the Notes); (viii) Indebtedness of the Company or
any Guarantor constituting Purchase Money Indebtedness or Capitalized Lease
Obligations that do not, at any one time outstanding, exceed 10% of the Adjusted
Consolidated Net Tangible Assets of the Company and the Guarantors; (ix)
Indebtedness of the Company, the Guarantors and the Foreign Subsidiaries of the
Company outstanding at any time in the aggregate principal amount not to exceed
$100 million; and (x) Indebtedness of the Company and the Guarantors (in
addition to Indebtedness permitted under clauses (i) through (ix) above) in an
aggregate principal amount outstanding at any time not to exceed $50 million.
(b) With respect to any particular Indebtedness, notwithstanding any other
provision of this Section 4.03, the maximum amount of Indebtedness that the
Company or a Restricted Subsidiary may Incur pursuant to this Section 4.03 shall
not be deemed to be exceeded due solely to the result of fluctuations in the
exchange rates of currencies.
(c) For purposes of determining any particular amount of Indebtedness under
this Section 4.03, (1) Guarantees, Liens or obligations with respect to letters
of credit supporting Indebtedness otherwise included in the determination of
such particular amount shall not be included and (2) any Liens granted pursuant
to the equal and ratable provisions referred to in Section 4.10 shall not be
treated as Indebtedness. For purposes of determining compliance with this
Section 4.10, in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described in the above clauses, the
Company, in its sole discretion, shall classify, and from time to time may
reclassify, such item of Indebtedness and only be required to include the amount
and type of such Indebtedness in one of such clauses. No Indebtedness incurred
pursuant to the first paragraph of Section (a) of this Section 4.03 shall be
included in calculating any limitation set forth in clauses (i) through (x), of
such Section (a).
SECTION 4.04. LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS.
The Company and the Guarantors shall not Incur any Indebtedness that is
subordinate in right of payment to any Senior Indebtedness unless such
Indebtedness is pari passu with, or subordinated in right of payment to, the
Notes or the Note Guarantee of such Guarantor, as the case may be; provided that
the foregoing limitation shall not apply to distinctions between categories of
Senior Indebtedness that exist by reason of any Liens or Guarantees arising or
created in respect of some but not all Senior Indebtedness.
SECTION 4.05. LIMITATION ON RESTRICTED PAYMENTS.
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, (i) declare or pay any dividend or make any distribution
on or with respect to its Capital Stock (other than (x) dividends or
distributions payable solely in shares of its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to
<PAGE> 51
44
acquire shares of such Capital Stock and (y) pro rata dividends or distributions
on Common Stock of Restricted Subsidiaries held by minority stockholders) held
by Persons other than the Company or any of its Restricted Subsidiaries, (ii)
purchase, redeem, retire or otherwise acquire for value any shares of Capital
Stock of (A) the Company or an Unrestricted Subsidiary (including options,
warrants or other rights to acquire such shares of Capital Stock) held by any
Person or (B) a Restricted Subsidiary (including options, warrants or other
rights to acquire such shares of Capital Stock) held by any Affiliate of the
Company (other than a Wholly Owned Restricted Subsidiary) or any holder (or any
Affiliate of such holder) of 5% or more of the Capital Stock of the Company,
(iii) make any voluntary or optional principal payment, or voluntary or optional
redemption, repurchase, defeasance, or other acquisition or retirement for
value, of Indebtedness of the Company that is subordinated in right of payment
to the Notes or (iv) make any Investment, other than a Permitted Investment, in
any Person (such payments or any other actions described in clauses (i) through
(iv) above being collectively "Restricted Payments") if, at the time of, and
after giving effect to, the proposed Restricted Payment: (A) a Default or Event
of Default shall have occurred and be continuing, (B) the Company could not
Incur at least $1.00 of Indebtedness under the first paragraph of Section 4.03
or (C) the aggregate amount of all Restricted Payments (the amount, if other
than in cash, to be determined in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a Board Resolution) made
after the Closing Date shall exceed the sum of (1) 50% of the aggregate amount
of the Adjusted Consolidated Net Income (or, if the Adjusted Consolidated Net
Income is a loss, minus 100% of the amount of such loss) (determined by
excluding income resulting from transfers of assets by the Company or a
Restricted Subsidiary to an Unrestricted Subsidiary) accrued on a cumulative
basis during the period (taken as one accounting period) beginning on the first
day of the fiscal quarter immediately following the Closing Date and ending on
the last day of the last fiscal quarter preceding the Transaction Date for which
reports have been filed with the Commission or provided to the Trustee pursuant
to Section 4.18 plus (2) the aggregate Net Cash Proceeds received by the Company
after the Closing Date from the issuance and sale permitted by this Indenture of
its Capital Stock (other than Disqualified Stock) to a Person who is not a
Subsidiary of the Company, including an issuance or sale permitted by this
Indenture of Indebtedness of the Company for cash subsequent to the Closing Date
upon the conversion of such Indebtedness into Capital Stock (other than
Disqualified Stock) of the Company, or from the issuance to a Person who is not
a Subsidiary of the Company of any options, warrants or other rights to acquire
Capital Stock of the Company (in each case, exclusive of any Disqualified Stock
or any options, warrants or other rights that are redeemable at the option of
the holder, or are required to be redeemed, prior to the Stated Maturity of the
Notes) plus (3) an amount equal to the net reduction in Investments (other than
reductions in Permitted Investments or Investments made pursuant to the
following paragraph) in any Person resulting from payments of interest on
Indebtedness, dividends, repayments of loans or advances, or other transfers of
assets, in each case to the Company or any Restricted Subsidiary or from the Net
Cash Proceeds from the sale of any such Investment (except, in each case, to the
extent
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any such payment or proceeds are included in the calculation of Adjusted
Consolidated Net Income), or from redesignations of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued in each case as provided in the definition of
"Investments"), not to exceed, in each case, the amount of Investments
previously made by the Company or any Restricted Subsidiary in such Person or
Unrestricted Subsidiary plus (4) $5 million.
The foregoing provision shall not be violated by reason of: (i) the payment
of any dividend or distribution within 60 days after the date of declaration
thereof if, at said date of declaration, such payment would comply with the
foregoing paragraph; (ii) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Indebtedness that is subordinated in
right of payment to the Notes including premium, if any, and accrued and unpaid
interest, with the proceeds of, or in exchange for, Indebtedness Incurred under
clause (iii) of the second paragraph of part (a) of Section 4.03(a); (iii) the
repurchase, redemption or other acquisition of Capital Stock of the Company or
an Unrestricted Subsidiary (or options, warrants or other rights to acquire such
Capital Stock) in exchange for, or out of the proceeds of a substantially
concurrent offering of, shares of Capital Stock (other than Disqualified Stock)
of the Company (or options, warrants or other rights to acquire such Capital
Stock); (iv) the making of any principal payment or the repurchase, redemption,
retirement, defeasance or other acquisition for value of Indebtedness of the
Company which is subordinated in right of payment to the Notes in exchange for,
or out of the proceeds of, a substantially concurrent offering of, shares of the
Capital Stock (other than Disqualified Stock) of the Company (or options,
warrants or other rights to acquire such Capital Stock); (v) payments or
distributions, to dissenting stockholders pursuant to applicable law, pursuant
to or in connection with a consolidation, merger or transfer of assets that
complies with the provisions of Article Five; (vi) Restricted Payments not to
exceed $30 million (provided that to the extent such Restricted Payment is an
Investment, Investments not to exceed $30 million at any one time outstanding);
or (vii) Investments acquired in exchange for Capital Stock (other than
Disqualified Stock) of the Company (or options, warrants or other rights to
acquire such Capital Stock) or financed or refinanced out of the proceeds of a
substantially concurrent offering of shares of Capital Stock of the Company (or
options, warrants or other rights to acquire such Capital Stock); provided that,
except in the case of clauses (i) and (iii), no Default or Event of Default
shall have occurred and be continuing or occur as a consequence of the actions
or payments set forth therein.
Each Restricted Payment permitted pursuant to the preceding paragraph
(other than the Restricted Payment referred to in clause (ii) thereof, an
exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iii) or (iv) thereof and an Investment referred to in clause (vi)
thereof), and the Net Cash Proceeds from any issuance of Capital Stock referred
to in clauses (iii) and (iv), shall be included in calculating whether the
conditions of clause (C) of the first paragraph of this Section 4.05 have been
met with respect to any subsequent Restricted Payments. In the event the
proceeds of an issuance of Capital Stock of the
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Company are used for the redemption, repurchase or other acquisition of the
Notes, or Indebtedness that is pari passu with the Notes, then the Net Cash
Proceeds of such issuance shall be included in clause (C) of the first paragraph
of this Section 4.05 only to the extent such proceeds are not used for such
redemption, repurchase or other acquisition of Indebtedness.
The amount of any Investment "outstanding" at any time shall be deemed to
be equal to the amount of such Investment on the date made, less the return on
capital to the Company and its Restricted Subsidiaries with respect to such
Investment by distribution, sale or otherwise (up to the amount of such
Investment on the date made).
SECTION 4.06. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES.
The Company will not, and will not permit any Restricted Subsidiary to,
create or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions permitted by
applicable law on any Capital Stock of such Restricted Subsidiary owned by the
Company or any other Restricted Subsidiary, (ii) pay any Indebtedness owed to
the Company or any other Restricted Subsidiary, (iii) make loans or advances to
the Company or any other Restricted Subsidiary or (iv) transfer any of its
property or assets to the Company or any other Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions: (i) existing on the Closing Date in the Credit Facility, this
Indenture or any other agreements in effect on the Closing Date, and any
amendments, modifications, supplements, extensions, refinancings, renewals or
replacements of such agreements; provided that the encumbrances and restrictions
in any such amendments, modifications, supplements, extensions, refinancings,
renewals or replacements are no less favorable in any material respect to the
Holders than those encumbrances or restrictions that are then in effect and that
are being amended, modified, supplemented, extended, refinanced, renewed or
replaced; (ii) existing under or by reason of applicable law; (iii) under any
instrument governing Acquired Indebtedness incurred in accordance with this
Indenture; provided that such encumbrances or restrictions are not adopted in
contemplation of the related acquisition; (iv) in the case of clause (iv) of the
first paragraph of this Section 4.06, (A) that restrict in a customary manner
the subletting, assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset, (B) existing by
virtue of any transfer of, agreement to transfer, option or right with respect
to, or Lien on, any property or assets of the Company or any Restricted
Subsidiary not otherwise prohibited by this Indenture or (C) arising or agreed
to in the ordinary course of business, not relating to any Indebtedness, and
that do not, individually or in the aggregate, detract from the value of
property or assets of the Company or any Restricted Subsidiary in any manner
material to the Company or any
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Restricted Subsidiary; (v) with respect to a Restricted Subsidiary and imposed
pursuant to an agreement that has been entered into for the sale or disposition
of all or substantially all of the Capital Stock of, or property and assets of,
such Restricted Subsidiary; and (vi) with respect to any Foreign Subsidiary;
provided that (A) the Investments of the Company and its Subsidiaries in such
Foreign Subsidiary are, as determined by the Board of Directors, not made for
the purpose of removing assets from the Company and the Guarantors which
removal, in the judgment of the Board of Directors, would be likely to have a
material adverse impact on the Company's ability to make payments on the Notes
and (B) such encumbrances or restrictions are not, in the judgment of the Board
of Directors, likely to have a material adverse impact on the Company's ability
to make payments on the Notes. Nothing contained in this Section 4.06 shall
prevent the Company or any Restricted Subsidiary from (1) creating, incurring,
assuming or suffering to exist any Liens otherwise permitted by Section 4.10 or
(2) restricting the sale or other disposition of property or assets of the
Company or any of its Restricted Subsidiaries that secure Indebtedness of the
Company or any of its Restricted Subsidiaries.
SECTION 4.07. LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES.
The Company will not sell, and will not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell, any shares of Capital Stock of a
Restricted Subsidiary (including options, warrants or other rights to purchase
shares of such Capital Stock) except (i) to the Company or a Wholly Owned
Restricted Subsidiary; (ii) issuances of director's qualifying shares or sales
to foreign nationals of shares of Capital Stock of foreign Restricted
Subsidiaries, to the extent required by applicable law; (iii) if, immediately
after giving effect to such issuance or sale, such Restricted Subsidiary would
no longer constitute a Restricted Subsidiary and any Investment in such Person
remaining after giving effect to such issuance or sale would have been permitted
to be made under Section 4.05 if made on the date of such issuance or sale; or
(iv) issuances or sales of Common Stock of a Restricted Subsidiary, provided
that the Company or such Restricted Subsidiary applies the Net Cash Proceeds, if
any, of any such sale in accordance with clause (A) or (B) of Section 4.11.
SECTION 4.08. LIMITATION ON ISSUANCES OF GUARANTEES BY RESTRICTED
SUBSIDIARIES.
The Company will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of the Company which is pari passu
with or subordinate in right of payment to the Notes ("Guaranteed
Indebtedness"), unless (i) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to this Indenture providing for a
Guarantee (a "Subsidiary Guarantee") of payment of the Notes by such Restricted
Subsidiary and (ii) such Restricted Subsidiary waives and will not in any manner
whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Restricted Subsidiary as a result of any payment by such Restricted
Subsidiary under its Subsidiary Guarantee; provided that this paragraph shall
not be
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applicable to any Guarantee of any Restricted Subsidiary that existed at the
time such Person became a Restricted Subsidiary and was not Incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary. If the Guaranteed Indebtedness is (A) pari passu with the Notes,
then the Guarantee of such Guaranteed Indebtedness shall be pari passu with, or
subordinated to, the Subsidiary Guarantee or (B) subordinated to the Notes, then
the Guarantee of such Guaranteed Indebtedness shall be subordinated to the
Subsidiary Guarantee at least to the extent that the Guaranteed Indebtedness is
subordinated to the Notes.
Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary may provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer,
to any Person not an Affiliate of the Company, of all of the Company's and each
Restricted Subsidiary's Capital Stock in, or all or substantially all the assets
of, such Restricted Subsidiary (which sale, exchange or transfer is not
prohibited by this Indenture) or (ii) the release or discharge of the Guarantee
which resulted in the creation of such Subsidiary Guarantee, except a discharge
or release by or as a result of payment under such Guarantee.
SECTION 4.09. LIMITATIONS ON TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into, renew or extend any transaction
(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any holder (or any
Affiliate of such holder) of 10% or more of any class of Capital Stock of the
Company (calculated on a fully diluted basis) or with any Affiliate of the
Company or any Restricted Subsidiary, except upon fair and reasonable terms no
less favorable to the Company or such Restricted Subsidiary than could be
obtained, at the time of such transaction or, if such transaction is pursuant
to a written agreement, at the time of the execution of the agreement providing
therefor, in a comparable arm's-length transaction with a Person that is not
such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply to (i)
transactions (A) approved by a majority of the disinterested members of the
Board of Directors or (B) for which the Company or a Restricted Subsidiary
delivers to the Trustee a written opinion of a nationally recognized investment
banking firm stating that the transaction is fair to the Company or such
Restricted Subsidiary from a financial point of view; (ii) any transaction
solely between the Company and any of its Wholly Owned Restricted Subsidiaries
or solely between Wholly Owned Restricted Subsidiaries; (iii) the payment in
cash or securities of reasonable and customary regular fees to directors of the
Company who are not employees of the Company; (iv) any payments or other
transactions pursuant to any tax-sharing agreement between the Company and any
other Person with which the Company files a consolidated tax return or with
which the Company is part of a consolidated group for tax purposes; or (v) any
Restricted Payments not prohibited by Section 4.05. Notwithstanding the
foregoing, any
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transaction or series of related transactions covered by the first paragraph of
this Section 4.09 and not covered by clauses (ii) through (v) of this paragraph,
the aggregate amount of which exceeds $2 million in value, must be approved or
determined to be fair in the manner provided for in clause (i)(A) or (B) above.
SECTION 4.10. LIMITATION ON LIENS.
The Company and the Guarantors shall not Incur any Indebtedness secured by
a Lien ("Secured Indebtedness") which is not Senior Indebtedness unless
contemporaneously therewith effective provision is made to secure the Notes or
the Note Guarantee of such Guarantor, as the case may be, equally and ratably
with (or, if the Secured Indebtedness is subordinated in right of payment to the
Notes, prior to) such Secured Indebtedness for so long as such Secured
Indebtedness is secured by such Lien.
The foregoing shall not apply to Liens (including extensions and renewals
thereof) upon real or personal property acquired after the Closing Date,
provided that (a) such Lien is created solely for the purpose of securing
Indebtedness Incurred, in accordance with Section 4.03, to finance the cost
(including the cost of design, development, acquisition, construction,
installation, improvement, transportation or integration) of the item of
property or assets subject thereto and such Lien is created prior to, at the
time of or within six months after the later of the acquisition, the completion
of construction or the commencement of full operation of such property, (b) the
principal amount of the Indebtedness secured by such Lien does not exceed 100%
of such cost and (c) any such Lien shall not extend to or cover any property or
assets other than such item of property or assets and any improvements on such
item.
SECTION 4.11. LIMITATION ON ASSET SALES.
The Company will not, and will not permit any Restricted Subsidiary to,
consummate any Asset Sale, unless (i) the consideration received by the Company
or such Restricted Subsidiary is at least equal to the fair market value of the
assets sold or disposed of and (ii) at least 75% of the consideration received
consists of cash or Temporary Cash Investments; provided, however, that the
amount of any note or other securities received by the Company or any such
Restricted Subsidiary which are converted into cash within 180 days of such
Asset Sale shall be deemed to be cash for purposes of this provision. In the
event and to the extent that the Net Cash Proceeds received by the Company or
any of its Restricted Subsidiaries from one or more Asset Sales occurring on or
after the Closing Date in any period of 12 consecutive months exceed 10% of
Adjusted Consolidated Net Tangible Assets (determined as of the date closest to
the commencement of such 12-month period for which a consolidated balance sheet
of the Company and its Subsidiaries has been filed with the Commission pursuant
to Section 4.18), then the Company shall or shall cause the relevant Restricted
Subsidiary to (i) within twelve months after the date Net Cash Proceeds so
received exceed 10% of Adjusted Consolidated Net Tangible Assets (A) apply an
amount equal to such excess Net Cash Proceeds to permanently repay Senior
Indebtedness of the Company, or any Restricted
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Subsidiary providing a Subsidiary Guarantee pursuant to Section 4.08 or
Indebtedness of any other Restricted Subsidiary, in each case owing to a Person
other than the Company or any of its Restricted Subsidiaries or (B) invest an
equal amount, or the amount not so applied pursuant to clause (A) (or enter into
a definitive agreement committing to so invest within 12 months after the date
of such agreement), in property or assets (other than current assets) of a
nature or type or that are used in a business (or in a company having property
and assets of a nature or type, or engaged in a business) similar or related to
the nature or type of the property and assets of, or the business of, the
Company and its Restricted Subsidiaries existing on the date of such investment
and (ii) apply (no later than the end of the 12-month period referred to in
clause (i)) such excess Net Cash Proceeds (to the extent not applied pursuant to
clause (i)) as provided in the following paragraph of this Section 4.11. The
amount of such excess Net Cash Proceeds required to be applied (or to be
committed to be applied) during such 12-month period as set forth in clause (i)
of the preceding sentence and not applied as so required by the end of such
period shall constitute "Excess Proceeds".
If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
Section 4.11 totals at least $10 million, the Company must commence, not later
than the fifteenth Business Day of such month, and consummate an Offer to
Purchase from the Holders on a pro rata basis an aggregate principal amount of
Notes equal to the Excess Proceeds on such date, at a purchase price equal to
100% of the principal amount of the Notes, plus, in each case, accrued interest
(if any) to the Payment Date.
Upon the consummation of any Offer to Purchase pursuant to this Section
4.11, the amount of Excess Proceeds shall be reset to zero.
Any transaction permitted under Article Five shall not be deemed an Asset
Sale for purposes of this Section 4.11.
A Guarantor shall be discharged and released automatically from all of its
obligations under its Note Guarantee if all or substantially all of its assets
are sold or all of its Capital Stock is sold, in each case in a transaction in
compliance with this Section 4.11.
SECTION 4.12. REPURCHASE OF NOTES UPON A CHANGE OF CONTROL.
The Company shall commence, within 30 days of the occurrence of a Change of
Control, and consummate an Offer to Purchase for all Notes then outstanding, at
a purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the Payment Date (subject to the right of Holders of
record on the relevant Regular Record Date that is prior to the Change of
Control to receive interest due on an Interest Payment Date).
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SECTION 4.13. EXISTENCE.
Subject to Articles Four and Five of this Indenture, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence and the existence of each of its Restricted Subsidiaries in
accordance with the respective organizational documents of the Company and each
Restricted Subsidiary and the rights (whether pursuant to charter, partnership
certificate, agreement, statute or otherwise), licenses and franchises of the
Company and each Restricted Subsidiary; provided that the Company shall not be
required to preserve any such right, license or franchise, or the existence of
any Restricted Subsidiary, if the maintenance or preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Restricted Subsidiaries taken as a whole.
SECTION 4.14. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge and shall cause each of its Subsidiaries
to pay or discharge, or cause to be paid or discharged, before the same shall
become delinquent (i) all material taxes, assessments and governmental charges
levied or imposed upon (a) the Company or any such Subsidiary, (b) the income or
profits of any such Subsidiary which is a corporation or (c) the property of the
Company or any such Subsidiary and (ii) all material lawful claims for labor,
materials and supplies that, if unpaid, might by law become a lien upon the
property of the Company or any such Subsidiary; provided that the Company shall
not be required to pay or discharge, or cause to be paid or discharged, any such
tax, assessment, charge or claim the amount, applicability or validity of which
is being contested in good faith by appropriate proceedings and for which
adequate reserves have been established.
SECTION 4.15. MAINTENANCE OF PROPERTIES AND INSURANCE.
The Company will cause all properties used or useful in the conduct of its
business or the business of any of its Restricted Subsidiaries to be maintained
and kept in good condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided
that nothing in this Section 4.15 shall prevent the Company or any Restricted
Subsidiary from discontinuing the use, operation or maintenance of any of such
properties or disposing of any of them, if such discontinuance or disposal is,
in the judgment of the Company, desirable in the conduct of the business of the
Company or such Restricted Subsidiary.
The Company will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, including, but not limited to,
products liability insurance and public liability insurance, with reputable
insurers or with the government of the United States of America, or
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an agency or instrumentality thereof, in such amounts, with such deductibles and
by such methods as shall be customary for corporations similarly situated in the
industry in which the Company or any such Restricted Subsidiary, as the case may
be, is then conducting business.
SECTION 4.16. NOTICE OF DEFAULTS.
In the event that any Officer becomes aware of any Default or Event of
Default, the Company shall promptly deliver to the Trustee an Officers'
Certificate specifying such Default or Event of Default.
SECTION 4.17. COMPLIANCE CERTIFICATES
(a) The Company shall deliver to the Trustee, within 60 days after the end
of each fiscal quarter (120 days after the end of the last fiscal quarter of
each year), an Officers' Certificate stating whether or not the signers know of
any Default or Event of Default that occurred during such fiscal quarter. In the
case of the Officers' Certificate delivered within 120 days after the end of the
Company's fiscal year, such certificate shall contain a certification from the
principal executive officer, principal financial officer or principal accounting
officer of the Company that a review has been conducted of the activities of the
Company and its Restricted Subsidiaries and the Company's and its Restricted
Subsidiaries' performance under this Indenture and that the Company has complied
with all conditions and covenants under this Indenture. For purposes of this
Section 4.17, such compliance shall be determined without regard to any period
of grace or requirement of notice provided under this Indenture. If any of the
officers of the Company signing such certificate has knowledge of such a Default
or Event of Default, the certificate shall specify each such Default or Event of
Default and the nature and status thereof. The first certificate to be delivered
pursuant to this Section 4.17(a) shall be for the first fiscal quarter beginning
after the execution of this Indenture.
(b) The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year, beginning with the fiscal year in which this Indenture was
executed, a certificate signed by the Company's independent certified public
accountants stating (i) that their audit examination has included a review of
the terms of this Indenture and the Notes as they relate to accounting matters,
(ii) that they have read the most recent Officers' Certificate delivered to the
Trustee pursuant to paragraph (a) of this Section 4.17 and (iii) whether, in
connection with their audit examination, anything came to their attention that
caused them to believe that the Company was not in compliance with any of the
terms, covenants, provisions or conditions of Article Four and Section 5.01 as
they pertain to accounting matters and, if any Default or Event of Default has
come to their attention, specifying the nature and period of existence thereof;
provided that such independent certified public accountants shall not be liable
in respect of such statement by reason of any failure to obtain knowledge of any
such Default or Event of Default that would not be disclosed in the course of an
audit examination conducted in accordance with generally accepted auditing
standards in effect at the date of such examination.
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SECTION 4.18 COMMISSION REPORTS AND REPORTS TO HOLDERS.
Whether or not the Company is then required to file reports with the
Commission, the Company shall file with the Commission (if permitted) all such
reports and other information as it would be required to file with the
Commission by Sections 13(a) or 15(d) under the Exchange Act if it were subject
thereto. The Company shall supply the Trustee and each Holder or shall supply to
the Trustee for forwarding to each such Holder, without cost to such Holder,
copies of such reports and other information (whether or not so filed) within 15
days after the date it would have been required to file such reports or other
information with the Commission had it been subject to such Sections. The
Company also shall comply with the other provisions of TIA Section 314 (a).
SECTION 4.19. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of, premium, if any, or interest on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
that may affect the covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) the Company hereby expressly waives all
benefit or advantage of any such law and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. WHEN THE COMPANY MAY MERGE, ETC.
The Company will not consolidate with, merge with or into, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all of its property
and assets (as an entirety or substantially an entirety in one transaction or a
series of related transactions) to, any Person or permit any Person to merge
with or into the Company unless: (i) the Company shall be the continuing Person,
or the Person (if other than the Company) formed by such consolidation or into
which the Company is merged or that acquired or leased such property and assets
of the Company shall be a corporation organized and validly existing under the
laws of the United States of America or any jurisdiction thereof and shall
expressly assume, by a supplemental indenture, executed and delivered to the
Trustee, all of the obligations of the Company on all of the Notes and under
this Indenture; (ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; (iii)
immediately after giving effect to such transaction on a pro forma basis the
Company, or any Person becoming the successor obligor of the Notes, as the case
may be, could Incur at least $1.00 of Indebtedness under the first paragraph of
Section 4.03; provided that this clause
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(iii) shall not apply to a consolidation, merger or sale of assets of the
Company if all Liens and Indebtedness of the Company or any Person becoming the
successor obligor on the Notes, as the case may be, and its Restricted
Subsidiaries outstanding immediately after such transaction would, if Incurred
at such time, have been permitted to be Incurred (and all such Liens and
Indebtedness, other than Liens and Indebtedness of the Company and its
Restricted Subsidiaries outstanding immediately prior to the transaction, shall
be deemed to have been Incurred) for all purposes of this Indenture; and (iv)
the Company delivers to the Trustee an Officers' Certificate (attaching the
arithmetic computations to demonstrate compliance with clause (iii)) and an
Opinion of Counsel, in each case stating that such consolidation, merger or
transfer and such supplemental indenture complies with this provision and that
all conditions precedent provided for herein relating to such transaction have
been complied with; provided, however, that clauses (iii) and (iv) above do not
apply if, in the good faith determination of the Board of Directors of the
Company, whose determination shall be evidenced by a Board Resolution, the
principal purpose of such transaction is to change the state of incorporation of
the Company; and provided further that any such transaction shall not have as
one of its purposes the evasion of the foregoing limitations.
Notwithstanding the foregoing, (i) any Restricted Subsidiary of the Company
may consolidate with, merge into or transfer all or part of its properties and
assets to the Company and (ii) the Company may merge with an Affiliate
incorporated solely for the purpose of reincorporating the Company in another
jurisdiction to realize tax or other similar benefits.
Each Guarantor will not consolidate with, merge with or into, or sell,
convey, transfer, lease or otherwise dispose of all or substantially all of its
property and assets (as an entirety or substantially an entirety in one
transaction or a series of related transactions) to, any Person (other than the
Company or another Guarantor) or permit any Person to merge with or into it
unless: (i) such Guarantor shall be the continuing Person, or (ii) the Person
(if other than such Guarantor) formed by such consolidation or into which such
Guarantor is merged or that acquired or leased such property and assets of such
Guarantor shall be a corporation organized and validly existing under the laws
of the United States of America or any jurisdiction thereof and shall expressly
assume, by a supplemental indenture, executed and delivered to the Trustee, all
of the obligations of such Guarantor's Note Guarantee. Notwithstanding the
foregoing sentence, a Guarantor shall be discharged and released from all of its
obligations under its Note Guarantee if all or substantially all of its assets
are sold, or all of its Capital Stock is sold, in each case in a transaction in
compliance with Section 4.11.
SECTION 5.02. SUCCESSOR SUBSTITUTED.
Upon any consolidation or merger, or any sale, conveyance, transfer, lease
or other disposition of all or substantially all of the property and assets of
the Company in accordance with Section 5.01, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale,
conveyance, transfer, lease or other disposition is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Company under
this
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Indenture with the same effect as if such successor Person had been named as the
Company herein; provided that the Company shall not be released from its
obligation to pay the principal of, premium, if any, or interest on the Notes in
the case of a lease of all or substantially all of its property and assets.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Any of the following events shall constitute an "EVENT OF DEFAULT"
hereunder:
(a) default in the payment of principal of (or premium, if any, on) any
Note when the same becomes due and payable at Stated Maturity, upon
acceleration, redemption or otherwise;
(b) default in the payment of interest on any Note when the same becomes
due and payable, and such default continues for a period of 30 days whether or
not such payment is prohibited by Article Ten;
(c) default in the performance or breach of Article Five or the failure to
comply for 30 days after notice of its obligation to make an Offer to Purchase
in accordance with Section 4.11 or Section 4.12;
(d) the Company defaults in the performance of or breaches any other
covenant or agreement of the Company in this Indenture or under the Notes (other
than a default specified in clause (a), (b) or (c) above) and such default or
breach continues for a period of 60 consecutive days after written notice by the
Trustee or the Holders of 25% or more in aggregate principal amount of the
Notes;
(e) there occurs with respect to any issue or issues of Indebtedness of the
Company or any Significant Subsidiary having an outstanding principal amount of
$10 million or more in the aggregate for all such issues of all such Persons,
whether such Indebtedness now exists or shall hereafter be created, (i) an event
of default that has caused the holder thereof to declare such Indebtedness to be
due and payable prior to its Stated Maturity and such Indebtedness has not been
discharged in full or such acceleration has not been rescinded or annulled
within 60 days of such acceleration and/or (ii) the failure to make a principal
payment at the final (but not any interim) fixed maturity and such defaulted
payment shall not have been made, waived or extended within the applicable grace
period related to any such payment default;
(f) any final judgment or order (not covered by insurance) for the payment
of
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money in excess of $10 million in the aggregate for all such final judgments or
orders against all such Persons (treating any deductibles, self-insurance or
retention as not so covered) shall be rendered against the Company or any
Significant Subsidiary and shall not be paid or discharged, and there shall be
any period of 60 consecutive days following entry of the final judgment or order
that causes the aggregate amount for all such final judgments or orders
outstanding and not paid or discharged against all such Persons to exceed $10
million during which a stay of enforcement of such final judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect;
(g) a court having jurisdiction in the premises enters a decree or order
for (A) relief in respect of the Company or any Guarantor that would be a
Significant Subsidiary if the references to 10% in the definition of Significant
Subsidiary were 20% instead of 10% (a "Significant Guarantor") or any
Significant Subsidiary in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, (B) appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Company or any Significant Guarantor or any Significant
Subsidiary or for all or substantially all of the property and assets of the
Company or any Significant Guarantor or any Significant Subsidiary or (C) the
winding up or liquidation of the affairs of the Company or any Significant
Guarantor or any Significant Subsidiary and, in each case, such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days;
(h) the Company or any Significant Guarantor or any Significant Subsidiary
(A) commences a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or consents to the entry of an
order for relief in an involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any
Significant Guarantor or any Significant Subsidiary or for all or substantially
all of the property and assets of the Company or any Significant Guarantor or
any Significant Subsidiary or (C) effects any general assignment for the benefit
of creditors; or
(i) the Company or any Guarantor disclaims any Note Guarantee or asserts
that any Note Guarantee is not binding on any Guarantor.
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in clause
(g) or (h) of Section 6.01 that occurs with respect to the Company or any
Significant Guarantor or any Significant Subsidiary) occurs and is continuing
under this Indenture, the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes, then outstanding, by written notice to the
Company (and to the Trustee if such notice is given by the Holders), may, and
the Trustee at the request of such Holders shall, declare the principal of,
premium, if any, and accrued interest on the Notes to be immediately due and
payable. Upon a declaration of acceleration, such principal, premium, if any,
and accrued interest shall be immediately due and payable; provided, however,
that so long as the Credit Facility is in effect, such declaration shall not
become
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effective until the earlier of (A) five Business Days after delivery of such
notice to the representative of the Credit Facility and (B) the acceleration of
any Indebtedness under the Credit Facility. In the event of a declaration of
acceleration because an Event of Default set forth in clause (e) of Section 6.01
has occurred and is continuing, such declaration of acceleration shall be
automatically rescinded and annulled if the event of default triggering such
Event of Default pursuant to clause (e) shall be remedied or cured by the
Company or the relevant Significant Guarantor or the relevant Significant
Subsidiary or waived by the holders of the relevant Indebtedness within 60 days
after the declaration of acceleration with respect thereto. If an Event of
Default specified in clause (g) or (h) of Section 6.01 occurs with respect to
the Company or any Significant Guarantor or Significant Subsidiary, the
principal of, premium, if any, and accrued interest on the Notes then
outstanding shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Holder.
At any time after such declaration of acceleration, but before a judgment
or decree for the payment of the money due has been obtained by the Trustee, the
Holders of at least a majority in principal amount of the outstanding Notes by
written notice to the Company and to the Trustee, may waive all past Defaults
and rescind and annul a declaration of acceleration and its consequences if (a)
the Company has paid or deposited with the Trustee a sum sufficient to pay (i)
all sums paid or advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, (ii) all overdue interest on all Notes, (iii) the principal of and
premium, if any, on the Notes that have become due otherwise than by such
declaration or occurrence of acceleration and interest thereon at the rate
prescribed therefor by such Notes, and (iv) to the extent that the payment of
such interest is lawful, interest upon overdue interest, if any, at the rate
prescribed therefor, by such Notes, (b) existing Events of Default, other than
the non-payment of the principal of, premium, if any, and accrued interest on
the Notes that have become due solely by such declaration of acceleration, have
been cured or waived and (c) the rescission would not conflict with any judgment
or decree of a court of competent jurisdiction.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may, and at
the direction of the Holders of at least a majority in principal amount of the
outstanding Notes shall, pursue any available remedy by proceeding at law or in
equity to collect the payment of principal of, premium, if any, or 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.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Subject to Sections 6.02, 6.07 and 9.02, the Holders of at least a majority
in principal amount of the outstanding Notes, by notice to the Trustee, may
waive an existing Default or Event of
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Default and its consequences, except a Default in the payment of principal of,
premium, if any, or interest on any Note as specified in clause (a) or (b) of
Section 6.01 or in respect of a covenant or provision of this Indenture which
cannot be modified or amended without the consent of the Holder of each
outstanding Note affected. 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 Event of Default or impair any right
consequent thereto.
SECTION 6.05. CONTROL BY MAJORITY.
The Holders of at least a majority in aggregate principal amount of the
outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee; provided that, the Trustee may refuse to follow
any direction that conflicts with law or this Indenture, that may involve the
Trustee in personal liability, or that the Trustee determines in good faith may
be unduly prejudicial to the rights of Holders of Notes not joining in the
giving of such direction; and provided further that the Trustee may take any
other action it deems proper that is not inconsistent with any such direction
received from Holders of Notes.
SECTION 6.06. LIMITATION ON SUITS.
A Holder may not institute any proceeding, judicial or otherwise, with
respect to this Indenture or the Notes, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless:
(i) the Holder gives the Trustee written notice of a continuing Event
of Default;
(ii) the Holders of at least 25% in aggregate principal amount of
outstanding Notes shall have made a written request to the Trustee to
pursue such remedy;
(iii) such Holder or Holders offer the Trustee indemnity reasonably
satisfactory to the Trustee against any costs, liability or expense;
(iv) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(v) during such 60-day period, the Holders of a majority in aggregate
principal amount of the outstanding Notes do not give the Trustee a
direction that is inconsistent with the request.
For purposes of Section 6.05 and this Section 6.06, the Trustee shall
comply with TIA Section 316(a) in making any determination of whether the
Holders of the required aggregate principal amount of outstanding Notes have
concurred in any request or direction of the
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Trustee to pursue any remedy available to the Trustee or the Holders with
respect to this Indenture or the Notes or otherwise under the law.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of the principal of, premium, if any, or
interest on, such Note or to bring suit for the enforcement of any such payment,
on or after the due date expressed in the Notes, shall not be impaired or
affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default in payment of principal, premium or interest
specified in clause (a), (b) or (c) of Section 6.01 occurs and is continuing,
the Trustee may recover judgment in its own name and as trustee of an express
trust against the Company or any other obligor of the Notes for the whole amount
of principal, premium, if any, and accrued interest remaining unpaid, together
with interest on overdue principal, premium, if any, and, to the extent that
payment of such interest is lawful, interest on overdue installments of
interest, in each case at the rate specified in the Notes, 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 may 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 any other amounts due
the Trustee under Section 7.07) and the Holders allowed in any judicial
proceedings relative to the Company (or any other obligor of the Notes), its
creditors or its property and shall be entitled and empowered to collect and
receive any monies, securities or other property payable or deliverable upon
conversion or exchange of the Notes or upon any such claims and to distribute
the same, and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official 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. Nothing
herein contained shall be deemed to empower 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 thereof, or to authorize the Trustee to vote in respect of the claim of
any Holder in
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any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article Six, it shall
pay out the money in the following order:
First: to the Trustee for all amounts due under Section 7.07, subject
only to the written disapproval of any representative of the holders of the
Senior Indebtedness as to amounts reasonably determined by them or it to be
excessive and unreasonable;
Second: to the holders of Senior Indebtedness, as and to the extent
required by Article Ten;
Third: to the Trustee as to all remaining amounts due it under Section
7.07 and not paid pursuant to priority First, above;
Fourth: to Holders for amounts then due and unpaid for principal of,
premium, if any, and interest on the Notes in respect of which or for the
benefit of which such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and payable on such
Notes for principal, premium, if any, and interest, respectively; and
Fifth: to the Company or any other obligors of the Notes, as their
interests may appear, or as a court of competent jurisdiction may direct.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Holders 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
Trustee, a court may require any party litigant in such suit to file an
undertaking to pay the costs of the suit, and the court 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 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by Holders of
more than 10% in principal amount of the outstanding Notes.
SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then, and in every such case, subject to any determination in
such proceeding, the Company,
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the Trustee and the Holders shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Company, Trustee and the Holders shall continue as though no such proceeding had
been instituted.
SECTION 6.13. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or wrongfully taken Notes in Section 2.09, no right
or remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 6.14. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder to exercise any right
or remedy accruing upon any Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article Six or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee or by the Holders, as the case may be.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. GENERAL.
The duties and responsibilities of the Trustee shall be as provided by the
TIA and as set forth herein. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not herein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Article Seven.
SECTION 7.02. CERTAIN RIGHTS OF TRUSTEE.
Subject to TIA Sections 315(a) through (d):
(i) the Trustee may rely, and shall be protected in acting or
refraining from acting, upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of
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indebtedness or other paper or document believed by it to be genuine and to
have been signed or presented by the proper person;
(ii) before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel, which shall conform to
Section 10.04. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such certificate or opinion;
(iii) the Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any attorney or
agent appointed with due care by it hereunder;
(iv) the Trustee shall be under no obligation to exercise any of the
rights or powers 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;
(v) 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 its
rights or powers, provided that the Trustee's conduct does not constitute
negligence or bad faith;
(vi) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate; and
(vii) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company
personally or by agent or attorney.
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 its Affiliates
with the same rights it would have if it were not the Trustee. Any Agent may do
the same with like rights. However, the Trustee is subject to TIA Sections
310(b) and 311.
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SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee (i) makes no representation as to the validity or adequacy of
this Indenture or the Notes, (ii) shall not be accountable for the Company's use
or application of the proceeds from the Notes and (iii) shall not be responsible
for any statement in the Notes other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULT.
If any Default or any Event of Default occurs and is continuing and if such
Default or Event of Default is known to the Trustee, the Trustee shall mail to
each Holder in the manner and to the extent provided in TIA Section 313(c)
notice of the Default or Event of Default within 45 days after it occurs, unless
such Default or Event of Default has been cured; provided, however, that, except
in the case of a default in the payment of the principal of, premium, if any, or
interest on any Note, the Trustee shall be protected in withholding such notice
if and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interest of the Holders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15, beginning with May 15, 1999, the Trustee
shall mail to each Holder as provided in TIA Section 313(c) a brief report dated
as of such May 15, if required by TIA Section 313(a).
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 Commission and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange or of any delisting thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee such compensation as shall be agreed
upon in writing for its services hereunder. The compensation of the Trustee
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by the Trustee without
negligence or bad faith on its part. Such expenses shall include the reasonable
compensation and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee for, and hold it harmless against,
any loss or liability or expense incurred by it without negligence or bad faith
on its part in connection with the acceptance or administration of this
Indenture and its duties under this Indenture and the Notes, including the costs
and expenses of defending itself against any claim or liability and of complying
with any process served upon it or any of its officers in connection with the
exercise or performance of any of its powers or duties under this Indenture and
the Notes. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity.
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Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder, unless the Company is materially prejudiced thereby.
The Company shall defend the claim and the Trustee shall cooperate in the
defense. Unless otherwise set forth herein, 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.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all money or property held or
collected by the Trustee, in its capacity as Trustee, except money or property
held in trust to pay principal of, premium, if any, and interest on particular
Notes.
If the Trustee incurs expenses or renders services after the occurrence of
an Event of Default specified in clause (g) or (h) of Section 6.01, the expenses
and the compensation for the services will be intended to constitute expenses of
administration under Title 11 of the United States Bankruptcy Code or any
applicable federal or state law for the relief of debtors.
The provisions of this Section 7.07 shall survive the termination of this
Indenture.
The Trustee shall comply with the provisions of TIA Section 313(b)(2) to
the extent applicable.
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 7.08.
The Trustee may resign at any time by so notifying the Company in writing
at least 30 days prior to the date of the proposed resignation. The Holders of a
majority in principal amount of the outstanding Notes may remove the Trustee by
so notifying the Trustee in writing and may appoint a successor Trustee with the
consent of the Company. The Company may remove the Trustee if: (i) the Trustee
is no longer eligible under Section 7.10; (ii) the Trustee is adjudged a
bankrupt or an insolvent; (iii) a receiver or other public officer takes charge
of the Trustee or its property; or (iv) 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 outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company. If
the successor Trustee does not deliver its written acceptance required by the
next succeeding paragraph of this Section 7.08 within 30 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company or the Holders
of a majority in
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principal amount of the outstanding Notes may, at the expense of the Company,
petition any court of competent jurisdiction for 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. Immediately after the delivery of
such written acceptance, subject to the lien provided in Section 7.07, (i) the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, (ii) the resignation or removal of the retiring Trustee shall
become effective and (iii) the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. A successor Trustee shall
mail notice of its succession to each Holder. No successor Trustee shall accept
its appointment unless at the time of such acceptance such successor Trustee
shall be qualified and eligible under this Article.
If the Trustee is no longer eligible under Section 7.10 or shall fail to
comply with TIA Section 310(b), any Holder who satisfies the requirements of TIA
Section 310(b) may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 7.08, the Trustee shall resign immediately in the manner and with the
effect provided in this Section.
The Company shall give notice of any resignation and any removal of the
Trustee and each appointment of a successor Trustee to all Holders. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Company's obligation under Section 7.07 shall continue for the benefit of
the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation or
national banking association, the resulting, surviving or transferee corporation
or national banking association without any further act shall be the successor
Trustee with the same effect as if the successor Trustee had been named as the
Trustee herein, provided such corporation shall be otherwise qualified and
eligible under this Article.
SECTION 7.10. ELIGIBILITY.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA Section 310(a)(1). The Trustee shall have a combined capital and surplus
of at least $25 million as set forth in its most recent published annual report
of condition that is subject to the requirements of applicable Federal or state
supervising or examining authority. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in this Article.
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SECTION 7.11. MONEY HELD IN TRUST.
The Trustee shall not be liable for interest on any money received by it
except as the Trustee may agree with the Company. Money held in trust by the
Trustee need not be segregated from other funds except to the extent required by
law and except for money held in trust under Article Eight of this Indenture.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. TERMINATION OF COMPANY'S OBLIGATIONS.
Except as otherwise provided in this Section 8.01, the Company may
terminate its obligations under the Notes and this Indenture if:
(i) all Notes previously authenticated and delivered (other than
destroyed, lost or stolen Notes that have been replaced or Notes that are
paid pursuant to Section 4.01 or Notes for whose payment money or
securities have theretofore been held in trust and thereafter repaid to the
Company, as provided in Section 8.05) have been delivered to the Trustee
for cancellation and the Company has paid all sums payable by it hereunder;
or
(ii) (A) the Notes mature within one year or all of them are to be
called for redemption within one year under arrangements satisfactory to
the Trustee for giving the notice of redemption, (B) the Company
irrevocably deposits in trust with the Trustee during such one-year period,
under the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds solely for the benefit of the
Holders for that purpose, money or Government Securities sufficient (in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee),
without consideration of any reinvestment of any interest thereon, to pay
principal, premium, if, any, and interest on the Notes to maturity or
redemption, as the case may be, and to pay all other sums payable by it
hereunder, (C) no Default or Event of Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit, (D) such
deposit will not result in a breach or violation of, or constitute a
default under, this Indenture or any other agreement or instrument to which
the Company or any Guarantor is a party or by which it is bound and (E) the
Company has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, in each case stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this
Indenture have been complied with.
With respect to the foregoing clause (i), the Company's obligations under
Section 7.07
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shall survive. With respect to the foregoing clause (ii), the Company's
obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.14,
4.01, 4.02, 7.07, 7.08, 8.04, 8.05 and 8.06 shall survive until the Notes are no
longer outstanding. Thereafter, only the Company's obligations in Sections 7.07,
8.04, 8.05 and 8.06 and Article Ten (with respect to payments in respect of
Senior Subordinated Obligations other than with the assets held in trust as
described in clause (ii) above) shall survive. After any such irrevocable
deposit, the Trustee upon request shall acknowledge in writing the discharge of
the Company's obligations under the Notes and this Indenture except for those
surviving obligations specified above.
SECTION 8.02. DEFEASANCE AND DISCHARGE OF INDENTURE.
The Company will be deemed to have paid and will be discharged from any and
all obligations in respect of the Notes on the 123rd day after the date of the
deposit referred to in clause (A) of this Section 8.02, and the provisions of
this Indenture will no longer be in effect with respect to the Notes, and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same if:
(A) with reference to this Section 8.02, the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee (or
another trustee satisfying the requirements of Section 7.10) and conveyed
all right, title and interest to the Trustee for the benefit of the
Holders, under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee as trust funds in trust, specifically
pledged to the Trustee for the benefit of the Holders as security for
payment of the principal of, premium, if any, and interest, if any, on the
Notes, and dedicated solely to, the benefit of the Holders, in and to (1)
money in an amount, (2) Government Securities that, through the payment of
interest, premium, if any, and principal in respect thereof in accordance
with their terms, will provide, not later than one day before the due date
of any payment referred to in this clause (A), money in an amount or (3) a
combination thereof in an amount sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge,
without consideration of the reinvestment of such interest and after
payment of all federal, state and local taxes or other charges and
assessments in respect thereof payable by the Trustee, the principal of,
premium, if any, and interest on the outstanding Notes on the Stated
Maturity of such principal or interest; provided that the Trustee shall
have been irrevocably instructed to apply such money or the proceeds of
such U.S. Government Securities to the payment of such principal, premium,
if any, and interest with respect to the Notes;
(B) the Company has delivered to the Trustee (1) either (x) an Opinion
of Counsel to the effect that Holders will not recognize income, gain or
loss for federal income tax purposes as a result of the Company's exercise
of its option under this Section 8.02 and will be subject to federal income
tax on the same amount and in the
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same manner and at the same times as would have been the case if such
option had not been exercised, which Opinion of Counsel shall be based upon
(and accompanied by a copy of) a ruling of the Internal Revenue Service to
the same effect unless there has been a change in applicable federal income
tax law after the Closing Date such that a ruling is no longer required or
(y) a ruling directed to the Trustee received from the Internal Revenue
Service to the same effect as the aforementioned Opinion of Counsel and (2)
an Opinion of Counsel to the effect that the creation of the defeasance
trust does not violate the Investment Company Act of 1940 and that after
the passage of 123 days following the deposit (except, with respect to any
trust funds for the account of any Holder who may be deemed to be an
"insider" for purposes of the United States Bankruptcy Code, after one year
following the deposit), the trust funds will not be subject to the effect
of Section 547 of the United States Bankruptcy Code or Section 15 of the
New York Debtor and Creditor Law in a case commenced by or against the
Company under either such statute, and either (i) the trust funds will no
longer remain the property of the Company (and therefore will not be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally) or
(II) if a court were to rule under any such law in any case or proceeding
that the trust funds remained property of the Company, (a) assuming such
trust funds remained in the possession of the Trustee prior to such court
ruling to the extent not paid to the Holders, the Trustee will hold, for
the benefit of the Holders, a valid and perfected security interest in such
trust funds that is not avoidable in bankruptcy or otherwise except for the
effect of Section 552(b) of the United States Bankruptcy Code on interest
on the trust funds accruing after the commencement of a case under such
statute and (b) the Holders will be entitled to receive adequate protection
of their interests in such trust funds if such trust funds are used in such
case or proceeding;
(C) immediately after giving effect to such deposit, on a pro forma
basis, no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or during the period ending on the 123rd day
after such date of such deposit, and such deposit shall not result in a
breach or violation of, or constitute a Default under, this Indenture or
any other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound and is permitted by Article Ten;
(D) if the Notes are then listed on a national securities exchange,
the Company has delivered to the Trustee an Opinion of Counsel to the
effect that the Notes will not be delisted as a result of such deposit,
defeasance and discharge; and
(E) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the defeasance contemplated by
this Section 8.02 have been complied with.
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Notwithstanding the foregoing, prior to the end of the 123-day (or one
year) period referred to in clause (B)(2) of this Section 8.02, none of the
Company's obligations under this Indenture shall be discharged. Subsequent to
the end of such 123-day (or one year) period with respect to this Section 8.02,
the Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08,
2.09, 2.14, 4.01, 4.02, 8.04, 8.05, 8.06 and the rights, powers, trusts, duties
and immunities of the Trustee hereunder and Article Ten (with respect to
payments in respect of Senior Subordinated Obligations other than with the
assets held in trust as described in this Section 8.02) shall survive until the
Notes are no longer outstanding. Thereafter, only the Company's obligations in
Sections 7.07, 8.04, 8.05 and 8.06 shall survive. If and when a ruling from the
Internal Revenue Service or an Opinion of Counsel referred to in clause (B)(1)
of this Section 8.02 is able to be provided specifically without regard to, and
not in reliance upon, the continuance of the Company's obligations under Section
4.01, then the Company's obligations under such Section 4.01 shall cease upon
delivery to the Trustee of such ruling or Opinion of Counsel and compliance with
the other conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.02.
After any such irrevocable deposit, the Trustee upon request shall
acknowledge in writing the discharge of the Company's obligations under the
Notes and this Indenture except for those surviving obligations in the
immediately preceding paragraph.
SECTION 8.03. DEFEASANCE OF CERTAIN OBLIGATIONS.
The Company may omit to comply with any term, provision or condition set
forth in clauses (iii) and (iv) of Section 5.01 and Sections 4.03 through 4.11
and clause (c) of Section 6.01 with respect to clauses (iii) and (iv) of Section
5.01, clause (d) of Section 6.01 with respect to Sections 4.01, 4.02 and 4.12
through 4.19 and clauses (e) and (f) of Section 6.01 shall be deemed not to be
Events of Default and Article Ten shall not apply to the money and/or U.S.
Government Securities held by the trust referred to in clause (i) below, in each
case with respect to the outstanding Notes if:
(i) with reference to this Section 8.03, the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee (or
another trustee satisfying the requirements of Section 7.10) and conveyed
all right, title and interest to the Trustee for the benefit of the
Holders, under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee as trust funds in trust, specifically
pledged to the Trustee for the benefit of the Holders as security for
payment of the principal of, premium, if any, and interest, if any, on the
Notes, and dedicated solely to, the benefit of the Holders, in and to (A)
money in an amount, (B) Government Securities that, through the payment of
interest, premium, if any, and principal in respect thereof in accordance
with their terms, will provide, not later than
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one day before the due date of any payment referred to in this clause (i),
money in an amount or (C) a combination thereof in an amount sufficient, in
the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, without consideration of the reinvestment of
such interest and after payment of all federal, state and local taxes or
other charges and assessments in respect thereof payable by the Trustee,
the principal of, premium, if any, and interest on the outstanding Notes on
the Stated Maturity of such principal or interest; provided that the
Trustee shall have been irrevocably instructed to apply such money or the
proceeds of such U.S. Government Securities to the payment of such
principal, premium, if any, and interest with respect to the Notes;
(ii) the Company has delivered to the Trustee an Opinion of Counsel to
the effect that (A) the creation of the defeasance trust does not violate
the Investment Company Act of 1940, (B) after the passage of 123 days
following the deposit (except, with respect to any trust funds for the
account of any Holder who may be deemed to be an "insider" for purposes of
the United States Bankruptcy Code, after one year following the deposit),
the trust funds will not be subject to the effect of Section 547 of the
United States Bankruptcy Code or Section 15 of the New York Debtor and
Creditor Law in a case commenced by or against the Company under either
such statute, and either (1) the trust funds will no longer remain the
property of the Company (and therefore will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally) or (2) if a court were to rule under
any such law in any case or proceeding that the trust funds remained
property of the Company, (x) assuming such trust funds remained in the
possession of the Trustee prior to such court ruling to the extent not paid
to the Holders, the Trustee will hold, for the benefit of the Holders, a
valid and perfected security interest in such trust funds that is not
avoidable in bankruptcy or otherwise (except for the effect of Section
552(b) of the United States Bankruptcy Code on interest on the trust funds
accruing after the commencement of a case under such statute) and (y) the
Holders will be entitled to receive adequate protection of their interests
in such trust funds if such trust funds are used in such case or
proceeding, (C) the Holders will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and defeasance of
certain covenants and Events of Default and will be subject to federal
income tax on the same amount and in the same manner and at the same times
as would have been the case if such deposit and defeasance had not occurred
and (D) the Trustee, for the benefit of the Holders, has a valid
first-priority security interest in the trust funds;
(iii) immediately after giving effect to such deposit on a pro forma
basis, no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or during the period ending on the 123rd day
after such date of such deposit,
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and such deposit shall not result in a breach or violation of, or
constitute a default under, this Indenture or any other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound and is permitted by
Article Ten;
(iv) if the Notes are then listed on a national securities exchange,
the Company has delivered to the Trustee an Opinion of Counsel to the
effect that the Notes will not be delisted as a result of such deposit,
defeasance and discharge; and
(v) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, in each case stating that all conditions
precedent provided for herein relating to the defeasance contemplated by
this Section 8.03 have been complied with.
SECTION 8.04. APPLICATION OF TRUST MONEY.
Subject to Section 8.06, the Trustee or Paying Agent shall hold in trust
money or Government Securities deposited with it pursuant to Section 8.01, 8.02
or 8.03, as the case may be, and shall apply the deposited money and the money
from Government Securities in accordance with the Notes and this Indenture to
the payment of principal of, premium, if any, and interest on the Notes; but
such money need not be segregated from other funds except to the extent required
by law.
SECTION 8.05. REPAYMENT TO COMPANY.
Subject to Sections 7.07, 8.01, 8.02 and 8.03, the Trustee and the Paying
Agent shall promptly pay to the Company upon request set forth in an Officers'
Certificate any excess money held by them at any time and thereupon shall be
relieved from all liability with respect to such money. The Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal, premium, if any, or interest that remains unclaimed
for two years; provided that the Trustee or Paying Agent before being required
to make any payment may cause to be published at the expense of the Company once
in a newspaper of general circulation in The City of New York and, in the event
the Notes are listed on the Luxembourg Stock Exchange, in Luxembourg, or mail to
each Holder entitled to such money at such Holder's address (as set forth in the
Security Register) notice that such money remains unclaimed and that after a
date specified therein (which shall be at least 30 days from the date of such
publication or mailing) any unclaimed balance of such money then remaining will
be repaid to the Company. After payment to the Company, Holders entitled to such
money must look to the Company for payment as general creditors unless an
applicable law designates another Person, and all liability of the Trustee and
such Paying Agent with respect to such money shall cease.
SECTION 8.06. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with
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Section 8.01, 8.02 or 8.03, as the case may be, by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.01, 8.02 or
8.03, as the case may be, until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Securities in accordance
with Section 8.01, 8.02 or 8.03, as the case may be; provided that, if the
Company has made any payment of principal of, premium, if any, or interest on
any Notes because of 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 or U.S. Government Securities held by the Trustee or Paying
Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company, when authorized
by a resolution of its Board of Directors (as evidenced by a Board Resolution
delivered to the Trustee), and the Trustee may amend or supplement this
Indenture or the Notes without notice to or the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency in
this Indenture; provided that such amendments or supplements shall not,
in the good faith opinion of the Board of Directors as evidenced by a
Board Resolution, adversely affect the interests of the Holders in any
material respect;
(2) to comply with Article Five;
(3) to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the TIA; (4)
to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee;
(5) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(6) to add one or more subsidiary guarantees on the terms
required by this Indenture; or
(7) to make any change that, in the good faith opinion of
the Board of Directors as evidenced by a Board
Resolution, does not materially and adversely affect
the rights of any Holder.
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SECTION 9.02. WITH CONSENT OF HOLDERS. Subject to Sections 6.04 and
6.07 and without prior notice to the Holders, the Company and the Guarantors,
when authorized by their respective Boards of Directors (as evidenced by a Board
Resolution delivered to the Trustee), and the Trustee may amend this Indenture
and the Notes with the written consent of the Holders of a majority in aggregate
principal amount of the Notes then outstanding, and the Holders of a majority in
aggregate principal amount of the Notes then outstanding by written notice to
the Trustee may waive future compliance by the Company with any provision of
this Indenture or the Notes.
Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected, an amendment or waiver, including a waiver
pursuant to Section 6.04, may not:
(i) change the Stated Maturity of the principal of, or
any installment of interest on, any Note;
(ii) reduce the principal amount of, premium, if any, or
interest on any Note;
(iii) change the currency of payment of principal of,
premium, if any, or interest on, any Note;
(iv) impair the right to institute suit for the
enforcement of any payment on or after the Stated Maturity (or, in the
case of redemption, on or after the Redemption Date) on any Note;
(v) reduce the percentage or principal amount of
outstanding Notes the consent of whose Holders is necessary to modify
or amend this Indenture or to waive compliance with certain provisions
of or certain Defaults under this Indenture;
(vi) waive a default in the payment of principal of,
premium, if any, or interest on, any Note;
(vii) modify any of the provisions of this Section 9.02,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each outstanding Note affected thereby;
(viii) release the Note Guarantee of any Guarantor, except
pursuant to Section 4.11; or
(ix) modify any of the provisions of Article Ten in a
manner adverse to the Holders.
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It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The Company will
mail supplemental indentures to Holders upon request. 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 supplemental indenture or waiver.
SECTION 9.03. REVOCATION AND EFFECT OF CONSENT. Until an amendment or
waiver becomes effective, a consent to it by a Holder is a continuing consent by
the Holder and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the Note of the consenting Holder, even if notation
of the consent is not made on any Note. However, any such Holder or subsequent
Holder may revoke the consent as to its Note or portion of its Note. Such
revocation shall be effective only if the Trustee receives the notice of
revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver shall become effective on receipt
by the Trustee of written consents from the Holders of the requisite percentage
in principal amount of the outstanding Notes.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
two sentences of the immediately preceding paragraph, those persons who were
Holders at such record date (or their duly designated proxies) and only those
persons shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such persons continue to
be Holders after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder unless it is of the type described in the second paragraph of
Section 9.02. In case of an amendment or waiver of the type described in the
second paragraph of Section 9.02, the amendment or waiver shall bind each Holder
who has consented to it and every subsequent Holder of a Note that evidences the
same indebtedness as the Note of the consenting Holder.
SECTION 9.04. NOTATION ON OR EXCHANGE OF NOTES. If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder to deliver such Note to the Trustee. At the Company's expense, the
Trustee may place an appropriate notation on the Note about the changed terms
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and return it to the Holder and the Trustee may place an appropriate notation on
any Note thereafter authenticated. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. 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 9.05. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall be
entitled to receive, and shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article Nine is authorized or permitted by this
Indenture and that it will be valid and binding upon the Company. Subject to the
preceding sentence, the Trustee shall sign such amendment, supplement or waiver
if the same does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. The Trustee may, but shall not be obligated to,
execute any such amendment, supplement or waiver that affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.
SECTION 9.06. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article Nine shall conform to the
requirements of the TIA as then in effect.
ARTICLE TEN
SUBORDINATION OF NOTES AND NOTE GUARANTEES
SECTION 10.01. NOTES AND NOTE GUARANTEES SUBORDINATED TO SENIOR
INDEBTEDNESS. The Company and the Trustee each covenants and agrees, and each
Holder, by its acceptance of a Note, likewise covenants and agrees that all
Notes and Note Guarantees shall be issued subject to the provisions of this
Article Ten; and each Person holding any Note, whether upon original issue or
upon transfer, assignment or exchange thereof, accepts and agrees that Senior
Subordinated Obligations shall, to the extent and in the manner set forth in
this Article Ten, be subordinated in right of payment to the prior payment in
full, in cash or cash equivalents, of all existing and future Senior
Indebtedness, including, without limitation, the Company's obligations under the
Credit Facility, (including any interest accruing subsequent to an event
specified in Sections 6.01(g) and 6.01(h), whether or not such interest is an
allowed claim enforceable against the debtor under the United States Bankruptcy
Code).
SECTION 10.02. NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES. (a) No
direct or indirect payment (other than a payment or distribution in the form of
Permitted Junior Securities) by or on behalf of the Company or any Guarantor of
Senior Subordinated Obligations (other than with the money and/or Government
Securities held under any defeasance trust established in accordance with
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this Indenture on the Closing Date and not in violation of the terms of any
Senior Indebtedness), whether pursuant to the terms of the Notes or the Note
Guarantees or upon acceleration or otherwise shall be made if, at the time of
such payment, there exists a default in the payment of all or any portion of the
obligations on any Senior Indebtedness of the Company or such Guarantor and such
default shall not have been cured or waived or the benefits of this sentence
waived by or on behalf of the holders of such Senior Indebtedness.
(b) During the continuance of any other event of default with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof may
be accelerated, upon receipt by the Trustee of written notice from the trustee
or other representative for the holders of such Designated Senior Indebtedness
(or the holders of at least a majority in principal amount of such Designated
Senior Indebtedness then outstanding), no payment (other than a payment or
distribution in the form of Permitted Junior Securities) of Senior Subordinated
Obligations (other than with the money and/or Government Securities held under
any defeasance trust established in accordance with this Indenture on the
Closing Date and not in violation of the terms of any Senior Indebtedness) may
be made by or on behalf of the Company or such Guarantor upon or in respect of
the Notes or the Note Guarantees for a period (a "PAYMENT BLOCKAGE PERIOD")
commencing on the date of receipt of such notice and ending 179 days thereafter
(unless, in each case, such Payment Blockage Period shall be terminated by
written notice to the Trustee from such trustee of, or other representatives
for, such holders or by payment in full in cash or cash equivalents of such
Designated Senior Indebtedness or at such time as defaults cease to exist or
have been cured or waived). Not more than one Payment Blockage Period may be
commenced with respect to the Notes (with respect to the Company or any
particular Guarantor) during any period of 360 consecutive days. Notwithstanding
anything in this Indenture to the contrary (with respect to the Company and each
Guarantor), there must be 180 consecutive days in any 360-day period in which no
Payment Blockage Period is in effect. No event of default that existed or was
continuing (it being acknowledged that any subsequent action that would give
rise to an event of default pursuant to any provision under which an event of
default previously existed or was continuing shall constitute a new event of
default for this purpose) on the date of the commencement of any Payment
Blockage Period with respect to the Designated Senior Indebtedness initiating
such Payment Blockage Period shall be, or shall be made, the basis for the
commencement of a second Payment Blockage Period by the representative for, or
the holders of, such Designated Senior Indebtedness, whether or not within a
period of 360 consecutive days, unless such event of default shall have been
cured or waived for a period of not less than 60 consecutive days.
(c) In the event that, notwithstanding the foregoing, any payment shall
be received by the Trustee or any Holder when such payment is prohibited by
Section 10.02(a) or 10.02(b), the Trustee shall promptly notify the holders of
Senior Indebtedness of such prohibited payment and such payment shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness or their respective representatives, or
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to the trustee or trustees under any indenture pursuant to which any of such
Senior Indebtedness may have been issued, as their respective interests may
appear, but only to the extent that, upon notice from the Trustee to the holders
of Senior Indebtedness that such prohibited payment has been made, the holders
of the Senior Indebtedness (or their representative or representatives of a
trustee) within 30 days of receipt of such notice from the Trustee notify the
Trustee of the amounts then due and owing on the Senior Indebtedness, if any,
and only the amounts specified in such notice to the Trustee shall be paid to
the holders of Senior Indebtedness and any excess above such amounts due and
owing on Senior Indebtedness shall be paid to the Company.
SECTION 10.03. PAYMENT OVER PROCEEDS UPON DISSOLUTION, BANKRUPTCY, ETC.
(a) Upon any payment or distribution of assets or securities of the Company or
any Guarantor of any kind or character, whether in cash, property or securities
(other than with the money and/or Government Securities held under any
defeasance trust established in accordance with this Indenture and not in
violation of the terms of any Senior Indebtedness), in connection with any
dissolution or winding up or total or partial liquidation or reorganization of
the Company or any Guarantor, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other proceedings or other marshaling of
assets for the benefit of creditors, all amounts due or to become due upon all
Senior Indebtedness (including any interest accruing subsequent to an event
specified in Sections 6.01(g) and 6.01(h), whether or not such interest is an
allowed claim enforceable against the debtor under the United States Bankruptcy
Code) shall first be paid in full, in cash or cash equivalents, before the
Holders or the Trustee on their behalf shall be entitled to receive any payment
by (or on behalf of) the Company or such Guarantor on account of Senior
Subordinated Obligations, or any payment to acquire any of the Notes for cash,
property or securities, or any distribution with respect to the Notes of any
cash, property or securities (other than a payment or distribution in the form
of Permitted Junior Securities). Before any payment may be made by, or on behalf
of, the Company or such Guarantor on any Senior Subordinated Obligations (other
than with the money and/or Government Securities held under any defeasance trust
established in accordance with this Indenture and not in violation of the terms
of any Senior Indebtedness) in connection with any such dissolution, winding up,
liquidation or reorganization, any payment or distribution of assets or
securities of the Company or such Guarantor of any kind or character, whether in
cash, property or securities (other than a payment or distribution in the form
of Permitted Junior Securities), to which the Holders or the Trustee on their
behalf would be entitled, but for the provisions of this Article Ten, shall be
made by the Company, such Guarantor or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other similar Person making such payment or
distribution, or by the Holders or the Trustee if received by them or it,
directly to the holders of Senior Indebtedness (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders) or
their representatives or to any trustee or trustees under any other indenture
pursuant to which any such Senior Indebtedness may have been issued, as their
respective interests appear, to the extent necessary to pay all such Senior
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Indebtedness in full, in cash or cash equivalents after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
such Senior Indebtedness.
(b) To the extent any payment of Senior Indebtedness (whether by or on
behalf of the Company or any Guarantor, as proceeds of security or enforcement
of any right of setoff or otherwise) is declared to be fraudulent or
preferential, set aside or required to be paid to any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then
if such payment is recovered by, or paid over to, such receiver, trustee in
bankruptcy, liquidating trustee or other similar Person, the Senior Indebtedness
or part thereof originally intended to be satisfied shall be deemed to be
reinstated and outstanding as if such payment had not occurred. To the extent
the obligation to repay any Senior Indebtedness is declared to be fraudulent,
invalid, or otherwise set aside under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then the obligation so declared
fraudulent, invalid or otherwise set aside (and all other amounts that would
come due with respect thereto had such obligation not been so affected) shall be
deemed to be reinstated and outstanding as Senior Indebtedness for all purposes
hereof as if such declaration, invalidity or setting aside had not occurred.
(c) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of the Company of any kind or character, whether in cash, property
or securities, shall be received by the Trustee or any Holder at a time when
such payment or distribution is prohibited by Section 10.03(a) and before all
obligations in respect of Senior Indebtedness are paid in full, in cash or cash
equivalents, such payment or distribution shall be received and held in trust
for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness (pro rata to such holders on the basis of such respective
amount of Senior Indebtedness held by such holders) or their representatives, or
to the trustee or trustees under any indenture pursuant to which any such Senior
Indebtedness may have been issued, as their respective interests appear, for
application to the payment of Senior Indebtedness remaining unpaid until all
such Senior Indebtedness has been paid in full, in cash or cash equivalents,
after giving effect to any concurrent payment, distribution or provision
therefor to or for the holders of such Senior Indebtedness.
(d) For purposes of this Section 10.03, the words "cash, property or
securities" shall not be deemed to include, so long as the effect of this clause
is not to cause the Notes or the Note Guarantees to be treated in any case or
proceeding or similar event described in this Section 10.03 as part of the same
class of claims as the Senior Indebtedness or any class of claims pari passu
with, or senior to, the Senior Indebtedness for any payment or distribution,
Permitted Junior Securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment; provided that (1) if a new
corporation results from such reorganization or readjustment, such corporation
assumes the Senior Indebtedness and (2) the
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rights of the holders of the Senior Indebtedness are not, without the consent of
such holders, altered by such reorganization or readjustment. The consolidation
of the Company with, or the merger of the Company with or into, another
corporation or the liquidation or dissolution of the Company following the sale,
conveyance, transfer, lease or other disposition of all or substantially all of
its property and assets to another corporation upon the terms and conditions
provided in Article Five of this Indenture (including in connection with the
Acquisition) shall not be deemed a dissolution, winding up, liquidation or
reorganization for the purposes of this Section 10.03 if such other corporation
shall, as a part of such consolidation, merger, sale, conveyance, transfer,
lease or other disposition, comply (to the extent required) with the conditions
stated in Article Five of this Indenture.
(e) In the event of any bankruptcy, insolvency, receivership or other
proceeding or other marshalling of assets for the benefit of creditors or any
total or partial liquidation or reorganization of the Company or any of the
Guarantors, whether voluntary or involuntary, the Holders shall retain the right
to vote and otherwise act with respect to the Notes (including, without
limitation, the right to vote to accept or reject any plan of partial or
complete liquidation, reorganization, arrangement, composition or extension),
provided that the Holders shall not in any way take or omit any action so as to
contest (i) the validity of any Senior Indebtedness or any collateral therefor
or guaranties thereof, (ii) the relative rights and duties of any holders of any
Senior Indebtedness established in any instruments or agreements creating or
evidencing any of the Senior Indebtedness with respect to any of such collateral
or guaranties or (iii) the Holders' obligations and agreements set forth herein.
In the event that any Holder or the Trustee fails to file a proof of claim in
any such proceeding within five days of the deadline of such filing, the
representatives of the Senior Indebtedness shall be permitted to file such claim
on behalf of such Holder.
SECTION 10.04. SUBROGATION. (a) Upon the payment in full of all Senior
Indebtedness in cash or cash equivalents, the Holders shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company made on such Senior
Indebtedness until the principal of, premium, if any, and interest on the Notes
shall be paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of the Senior Indebtedness of any cash, property or
securities to which the Holders or the Trustee on their behalf would be entitled
except for the provisions of this Article Ten, and no payment pursuant to the
provisions of this Article Ten to the holders of Senior Indebtedness by Holders
or the Trustee on their behalf shall, as between the Company, its creditors
other than holders of Senior Indebtedness, and the Holders, be deemed to be a
payment by the Company to or on account of the Senior Indebtedness. It is
understood that the provisions of this Article Ten are intended solely for the
purpose of defining the relative rights of the Holders, on the one hand, and the
holders of the Senior Indebtedness, on the other hand.
(b) If any payment or distribution to which the Holders would otherwise
have been
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entitled but for the provisions of this Article Ten shall have been applied,
pursuant to the provisions of this Article Ten, to the payment of all amounts
payable under Senior Indebtedness, then, and in such case, the Holders shall be
entitled to receive from the holders of such Senior Indebtedness, unless
otherwise required by applicable law, any payments or distributions received by
such holders of Senior Indebtedness in excess of the amount required to make
payment in full, in cash or cash equivalents, of such Senior Indebtedness of
such holders.
SECTION 10.05. OBLIGATIONS OF COMPANY UNCONDITIONAL. (a) Nothing
contained in this Article Ten or elsewhere in this Indenture or in the Notes is
intended to or shall impair, as among the Company and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders the principal of, premium, if any, and interest on the Notes as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Company other than the holders of the Senior Indebtedness, nor shall
anything herein or therein prevent the Holders or the Trustee on their behalf
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article Ten of
the holders of the Senior Indebtedness.
(b) Without limiting the generality of the foregoing, nothing contained
in this Article Ten will restrict the right of the Trustee or the Holders to
take any action to declare the Notes to be due and payable prior to their Stated
Maturity pursuant to Section 6.01 or to pursue any rights or remedies hereunder;
provided, however, that all Senior Indebtedness then due and payable or
thereafter declared to be due and payable shall first be paid in full, in cash
or cash equivalents, before the Holders or the Trustee (to the extent provided
in Section 6.10) are entitled to receive any direct or indirect payment from the
Company of Senior Subordinated Obligations.
SECTION 10.06. NOTICE TO TRUSTEE. (a) The Company shall give prompt
written notice to the Trustee of any fact known to the Company that would
prohibit the making of any payment to or by the Trustee in respect of the Notes
pursuant to the provisions of this Article Ten. The Trustee shall not be charged
with the knowledge of the existence of any default or event of default with
respect to any Senior Indebtedness or of any other facts that would prohibit the
making of any payment to or by the Trustee unless and until the Trustee shall
have received notice in writing at its Corporate Trust Office to that effect
signed by an Officer of the Company, or by a holder of Senior Indebtedness or
trustee or agent thereof; and prior to the receipt of any such written notice,
the Trustee shall, subject to Article Seven, be entitled to assume that no such
facts exist; provided that, if the Trustee shall not have received the notice
provided for in this Section 10.06 at least one Business Day prior to the date
upon which, by the terms of this Indenture, any monies shall become payable for
any purpose (including, without limitation, the payment of the
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principal of, premium, if any, or interest on any Note), then, notwithstanding
anything herein to the contrary, the Trustee shall have full power and authority
to receive any monies from the Company and to apply the same to the purpose for
which they were received, and shall not be affected by any notice to the
contrary that may be received by it on or after such prior date except for an
acceleration of the Notes prior to such application. Nothing contained in this
Section 10.06 shall limit the right of the holders of Senior Indebtedness to
recover payments as contemplated by this Article Ten. The foregoing shall not
apply if the Paying Agent is the Company. The Trustee shall be entitled to rely
on the delivery to it of a written notice by a Person representing himself or
itself to be a holder of any Senior Indebtedness (or a trustee on behalf of, or
other representative of, such holder) to establish that such notice has been
given by a holder of such Senior Indebtedness or a trustee or representative on
behalf of any such holder.
(b) In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Ten, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article Ten and, if such evidence is not furnished to the
Trustee, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 10.07. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets or securities referred to in
this Article Ten, the Trustee and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which bankruptcy,
dissolution, winding up, liquidation or reorganization proceedings are pending,
or upon a certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person making such payment or distribution,
delivered to the Trustee or to the Holders for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Indebtedness 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 Ten.
SECTION 10.08. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS. (a) The
Trustee and any Paying Agent shall be entitled to all the rights set forth in
this Article Ten with respect to any Senior Indebtedness that may at any time be
held by it in its individual or any other capacity to the same extent as any
other holder of Senior Indebtedness and nothing in this Indenture shall deprive
the Trustee or any Paying Agent of any of its rights as such holder.
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(b) With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Ten and in Section 6.10, and no
implied covenants or obligations with respect to the holders of Senior
Indebtedness shall be read into this Indenture against the Trustee.
SECTION 10.09. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS
OF THE COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS. No right of any present or
future holders of any Senior Indebtedness to enforce subordination as provided
in this Article Ten will at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or any Guarantor or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Company or any Guarantor with the terms of this Indenture, regardless of any
knowledge thereof that any such holder may have or otherwise be charged with.
The provisions of this Article Ten are intended to be for the benefit of, and
shall be enforceable directly by, the holders of Senior Indebtedness.
SECTION 10.10. HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF
NOTES. Each Holder by its acceptance of any Notes authorizes and expressly
directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article Ten, and
appoints the Trustee its attorney-in-fact for such purposes, including, in the
event of any dissolution, winding up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the property and assets of the
Company, the filing of a claim for the unpaid balance of its Notes in the form
required in those proceedings. If the Trustee does not file a proper claim or
proof in indebtedness in the form required in such proceeding at least 30 days
before the expiration of the time to file such claim or claims, each holder of
Senior Indebtedness is hereby authorized to file an appropriate claim for and on
behalf of the Holders.
SECTION 10.11. NOT TO PREVENT EVENTS OF DEFAULT. The failure to make a
payment on account of principal of, premium, if any, or interest on the Notes by
reason of any provision of this Article Ten will not be construed as preventing
the occurrence of an Event of Default.
SECTION 10.12. TRUSTEE'S COMPENSATION NOT PREJUDICED. Subject to
Section 6.10, nothing in this Article Ten will apply to amounts due to the
Trustee pursuant to other sections of this Indenture, including Section 7.07.
SECTION 10.13. NO WAIVER OF SUBORDINATION PROVISIONS. Without in any
way limiting the generality of Section
<PAGE> 90
83
10.09, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders, without
incurring responsibility to the Holders and without impairing or releasing the
subordination provided in this Article Ten or the obligations hereunder of the
Holders to the holders of Senior Indebtedness, do any one or more of the
following: (a) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior Indebtedness is
outstanding or secured; (b) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Indebtedness; (c)
release any Person liable in any manner for the collection of Senior
Indebtedness; and (d) exercise or refrain from exercising any rights against the
Company and any other Person.
SECTION 10.14. PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION. Nothing
contained in this Article Ten or elsewhere in this Indenture shall prevent (i)
the Company except under the conditions described in Section 10.02 or 10.03,
from making payments of principal of, premium, if any, and interest on the
Notes, or from depositing with the Trustee any money for such payments, or (ii)
the application by the Trustee of any money deposited with it for the purpose of
making such payments of principal of, premium, if any, and interest on the Notes
to the holders entitled thereto unless, at least one Business Day prior to the
date upon which such payment becomes due and payable, the Trustee shall have
received the written notice provided for in Section 10.02(b) (or there shall
have been an acceleration of the Notes prior to such application) or in Section
10.06. The Company shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Company.
SECTION 10.15. CONSENT OF HOLDERS OF SENIOR INDEBTEDNESS UNDER THE
CREDIT FACILITY. The provisions of this Article Ten (including the definitions
contained in this Article and references to this Article contained in this
Indenture) shall not be amended in a manner that would adversely affect the
rights of the holders of Senior Indebtedness under the Credit Facility, and no
such amendment shall become effective unless the holders of Senior Indebtedness
under the Credit Facility shall have consented (in accordance with the
provisions of the Credit Facility) to such amendment. The Trustee shall be
entitled to receive and rely on an Officers' Certificate stating that such
consent has been given.
SECTION 10.16. TRUST MONEYS NOT SUBORDINATED. Notwithstanding anything
contained herein to the contrary, payments from money or the proceeds of
Government Securities held in trust under Article Eight by the Trustee for the
payment of principal of, premium, if any, and interest on the Notes shall not be
subordinated to the prior payment of any Senior Indebtedness (provided that, at
the time deposited, such deposit did not violate any then outstanding Senior
Indebtedness), and none of the Holders shall be obligated to pay over any such
amount to any holder of Senior
<PAGE> 91
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Indebtedness.
ARTICLE ELEVEN
GUARANTEE OF NOTES
SECTION 11.01. NOTE GUARANTEE. Subject to the provisions of this
Article Eleven, each of the Guarantors hereby, jointly and severally, fully,
unconditionally and irrevocably guarantees to each Holder and to the Trustee on
behalf of the Holders: (i) the due and punctual payment of the principal of,
premium, if any, on and interest on each Note, when and as the same shall become
due and payable, whether at maturity, by acceleration or otherwise, the due and
punctual payment of interest on the overdue principal of and interest, if any,
on the Notes, to the extent lawful, 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 such Note and this Indenture and (ii) in the 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, at Stated Maturity, by
acceleration or otherwise. Each of the Guarantors hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
merger or bankruptcy of the Company, any right to require a proceeding first
against the Company, the benefit of discussion, protest or notice with respect
to any such Note or the debt evidenced thereby and all demands whatsoever
(except as specified above), and covenants that this Note Guarantee will not be
discharged as to any such Note except by payment in full of the principal
thereof and interest thereon and as provided in Section 8.01 and Section 8.02,
or if all or substantially all of such Guarantor's assets are sold, or all of
its Capital Stock is sold, in each case in a transaction in compliance with
Section 4.11. The maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Six for the purposes of this Article Eleven.
In the event of any declaration of acceleration of such obligations as provided
in Article Six, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Article Eleven. In addition, without limiting the foregoing provisions, upon the
effectiveness of an acceleration under Article Six, the Trustee shall promptly
make a demand for payment on the Notes under the Note Guarantees provided for in
this Article Eleven.
If the Trustee or the Holder of any Note is required by any court or
otherwise to return to the Company or any Guarantor, or any custodian, receiver,
liquidator, trustee, sequestrator or other similar official acting in relating
to the Company or such Guarantor, any amount paid to the Trustee or such Holder
in respect of a Note, the Note Guarantees, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each of the Guarantors further
agrees, to the fullest extent that it may lawfully do so, that, as between it,
on the one hand, and the Holders and the Trustee, on the other hand, the
maturity of the obligations
<PAGE> 92
85
guaranteed hereby may be accelerated as provided in Article Six hereof for the
purposes of its Note Guarantee, notwithstanding any stay, injunction or other
prohibition extant under any applicable bankruptcy law preventing such
acceleration in respect of the obligations guaranteed hereby.
Each of the Guarantors hereby irrevocably waives any claim or other
right which it may now or hereafter acquire against the Company or any other
Guarantor that arise from the existence, payment, performance or enforcement of
its obligations under its Note Guarantee and this Indenture, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution,
indemnification, any right to participate in any claim or remedy of the Holders
against the Company or any Guarantor or any collateral which any such Holder or
the Trustee on behalf of such Holder hereafter acquires, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Company or a Guarantor, directly or indirectly, in cash or other property or by
setoff or in any other manner, payment or Note on account of such claim or other
rights, except to the extent that such claim or right would be necessary to
preserve the enforceability of a Note Guarantee as provided in Section 11.05. If
any amount shall be paid to a Guarantor in violation of the preceding sentence
and the principal of, premium, of any, and accrued interest on the Notes shall
not have been paid in full, such amount shall be deemed to have been paid to
such Guarantor for the benefit of, and held in trust for the benefit of, the
Holders, and shall forthwith be paid to the Trustee for the benefit of the
Holders to be credited and applied upon the principal of, premium, if any, and
accrued interest on the Notes. Each of the Guarantors acknowledges that it will
receive direct and indirect benefits from the issuance of the Notes pursuant to
this Indenture and that the waivers set forth in this Section 11.01 are
knowingly made in contemplation of such benefits.
The Note Guarantees set forth in this Section 11.01 shall not be valid
or become obligatory for any purpose with respect to a Note until the
certificate of authentication on such Note shall have been signed by or on
behalf of the Trustee.
SECTION 11.02. OBLIGATIONS UNCONDITIONAL. Subject to Section 11.05,
nothing contained in this Article Eleven or elsewhere in this Indenture or in
the Notes is intended to or shall impair, as among any Guarantor and the holders
of the Notes, the obligation of such Guarantor, which is absolute and
unconditional, upon failure by the Company, to pay to the holders of the Notes
the principal of, premium, if any, and interest on the Notes as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the holders of Notes and creditors of
such Guarantor, nor shall anything herein or therein prevent the holder of any
Note or the Trustee on their behalf from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture.
Without limiting the foregoing, nothing contained in this Article
Eleven will restrict the
<PAGE> 93
86
right of the Trustee or the holders of the Notes to take any action to declare
the Note Guarantee to be due and payable prior to the Stated Maturity of the
Notes pursuant to Section 6.02 or to pursue any rights or remedies hereunder.
SECTION 11.03. NOTICE TO TRUSTEE. Each Guarantor shall give prompt
written notice to the Trustee of any fact known to such Guarantor which would
prohibit the making of any payment to or by the Trustee in respect of the Note
Guarantee of such Guarantor pursuant to the provisions of this Article Eleven.
SECTION 11.04. THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT. The
failure to make a payment on account of principal of, premium, if any, or
interest on the Notes by reason of any provision of this Article will not be
construed as preventing the occurrence of an Event of Default.
SECTION 11.05. FRAUDULENT CONVEYANCE LIMITATION. Notwithstanding any
other provision of this Indenture or the Notes, no Note Guarantee shall be
enforceable against any Guarantor in an amount that would cause such Note
Guarantee to be a fraudulent conveyance under applicable law.
SECTION 11.06. ADDITIONAL GUARANTORS. The Company shall cause any
Person (other than a Foreign Subsidiary) that becomes a Restricted Subsidiary on
or after the Closing Date to execute a supplemental indenture as a Guarantor.
SECTION 11.07. SUBORDINATION. The obligations of the Guarantors under
this Article Eleven are obligations of the Guarantors subject in all respects to
the subordination provisions of Article Ten hereof.
ARTICLE TWELVE
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT OF 1939. Prior to the effectiveness
of the Registration Statement, this Indenture shall incorporate and be governed
by the provisions of the TIA that are required to be part of and to govern
indentures qualified under the TIA. After the effectiveness of the Registration
Statement, this Indenture shall be subject to the provisions of the TIA that are
required to be a part of this Indenture and shall, to the extent applicable, be
governed by such provisions.
SECTION 12.02. NOTICES. Any notice or communication shall be
sufficiently given if in writing and delivered in person, mailed by first-class
mail or sent by telecopier transmission addressed as follows:
<PAGE> 94
87
IF TO THE COMPANY OR ANY OF THE GUARANTORS, TO EACH OF THEM, CARE OF:
HADCO CORPORATION
12A Manor Parkway
Salem, New Hampshire
Telecopier No.: (603) 898-0025
Attention: Patricia Randall
IF TO THE TRUSTEE:
STATE STREET BANK AND TRUST COMPANY
Two International Place
Boston, MA 02110
Telecopier No.: (617) 664-5150
Attention: Corporate Trust Division
The Company, the Guarantors or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed to it at
its address as it appears in each case on the Security Register by first-class
mail and shall be sufficiently given to him if so mailed within the time
prescribed. 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. In addition,
so long as the Notes are listed on the Luxembourg Stock Exchange and it is
required by the rules of such stock exchange, such notices shall be published in
English in a leading newspaper having general circulation in Luxembourg (which
is expected to be the Luxembourger Wort) or if any such case is not applicable,
in one other leading English language daily newspaper with general circulation
in Europe, such newspaper being published on each Business Day in morning
editions, whether or not it shall be published on a Saturday, Sunday or a
holiday. COPIES of any such communication or notice to a Holder shall also be
mailed to the Trustee and each Agent at the same time.
Failure to mail a notice or communication to a Holder as provided
herein or any defect in any such notice or communication shall not affect its
sufficiency with respect to other Holders. Except for a notice to the Trustee,
which is deemed given only when received, and except as otherwise provided in
this Indenture, if a notice or communication is mailed in the manner provided in
this Section 12.02, it is duly given, whether or not the addressee receives it.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with
<PAGE> 95
88
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
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 Guarantor, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 12.03. 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:
(i) an Officers' Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of
such Counsel, all such conditions precedent have been complied with.
SECTION 12.04. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(i) a statement that each person signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion
contained in such certificate or opinion is based;
(iii) a statement that, in the opinion of each such person,
he 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 complied with; and
(iv) a statement as to whether or not, in the opinion of
each such person, such condition or covenant has been complied with;
provided, however, that, with respect to matters of fact, an Opinion of
Counsel may rely on an Officers' Certificate
<PAGE> 96
89
or certificates of public officials.
SECTION 12.05. RULES BY TRUSTEE, PAYING AGENT OR REGISTRAR. The Trustee
may make reasonable rules for action by or at a meeting of Holders. The Paying
Agent or Registrar may make reasonable rules for its functions.
SECTION 12.06. PAYMENT DATE OTHER THAN A BUSINESS DAY. If an Interest
Payment Date, Redemption Date, Payment Date, Stated Maturity or date of maturity
of any Note shall not be a Business Day, then payment of principal of, premium,
if any, or interest on such Note, as the case may be, need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Payment Date or Redemption
Date, or at the Stated Maturity or date of maturity of such Note; provided that
no interest shall accrue for the period from and after such Interest Payment
Date, Payment Date, Redemption Date, Stated Maturity or date of maturity, as the
case may be.
SECTION 12.07. GOVERNING LAW. This Indenture and the Notes shall be
governed by the laws of the State of New York. The Trustee, the Company, the
Guarantors and the Holders agree to submit to the jurisdiction of the courts of
the State of New York in any action or proceeding arising out of or relating to
this Indenture or the Notes.
SECTION 12.08. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any Subsidiary of the Company. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 12.09. NO RECOURSE AGAINST OTHERS. No recourse for the payment
of the principal of, premium, if any, or interest on any of the Notes, or for
any claim based thereon or otherwise in respect thereof, and no recourse under
or upon any obligation, covenant or agreement of the Company contained in this
Indenture or in any of the Notes, or because of the creation of any Indebtedness
represented thereby, shall be had against any incorporator or against any past,
present or future partner, stockholder, other equity holder, officer, director,
employee or controlling person, as such, of the Company or of any successor
Person, either directly or through the Company or any successor Person, whether
by virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that all
such liability is hereby expressly waived and released as a condition of, and as
a consideration for, the execution of this Indenture and the issue of the Notes.
SECTION 12.10. SUCCESSORS. All agreements of the Company in this
Indenture and the Notes shall bind its successors. All agreements of the
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90
Trustee in this Indenture shall bind its successor.
SECTION 12.11. DUPLICATE 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.
SECTION 12.12. SEPARABILITY. 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 12.13. 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 hereof and shall in no way modify or restrict any of the terms
and provisions hereof.
<PAGE> 98
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
HADCO CORPORATION
By: /s/ Timothy P. Losik
______________________________________
Name: Timothy P. Losik
Title: Senior Vice President, Chief
Financial Officer and Treasurer
HADCO SANTA CLARA, INC.
By: /s/ Timothy P. Losik
______________________________________
Name: Timothy P. Losik
Title: Senior Vice President, Chief
Financial Officer and Treasurer
HADCO PHOENIX, INC.
By: /s/ Timothy P. Losik
______________________________________
Name: Timothy P. Losik
Title: Senior Vice President
and Treasurer
CCIR OF CALIFORNIA CORP.
By: /s/ Timothy P. Losik
______________________________________
Name: Timothy P. Losik
Title: Chief Financial Officer
CCIR OF TEXAS CORP.
By: /s/ Timothy P. Losik
______________________________________
Name: Timothy P. Losik
Title: Chief Financial Officer
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ Carolina D. Altomare
______________________________________
Name: Carolina D. Altomare
Title: Assistant Vice President
<PAGE> 99
Title
EXHIBIT A
---------
[APPLICABLE LEGENDS]
[FACE OF NOTE]
HADCO CORPORATION
9 1/2% Senior Subordinated Note due 2008
[CUSIP] [CINS] [ISIN] [__________]
No. ____ $_________
HADCO CORPORATION, a corporation organized under the laws of the
Commonwealth of Massachusetts (the "Company", which term includes any successor
under the Indenture hereinafter referred to), for value received, promises to
pay to _____________, or its registered assigns, the principal sum of
____________ ($____) on June 15, 2008
Interest Payment Dates: June 15 and December 15, commencing
December 15, 1998.
Regular Record Dates: June 1 and December 1.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
<PAGE> 100
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Date: May , 1998 HADCO CORPORATION
By: ______________________________________
Name:
Title
By: ______________________________________
Name:
Title
Trustee's Certificate of Authentication
This is one of the 9 1/2% Senior Subordinated Notes due 2008 described in the
within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: ______________________________________
Authorized Signatory
<PAGE> 101
A-3
[REVERSE SIDE OF NOTE]
HADCO CORPORATION
9 1/2% Senior Subordinated Note due 2008
1. PRINCIPAL AND INTEREST.
The Company will pay the principal of this Note on June 15, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
Interest will be payable semiannually (to the holders of record of the
Notes at the close of business on the June 1 or December 1 immediately preceding
the Interest Payment Date) on each Interest Payment Date, commencing December
15, 1998.
If an exchange offer (the "Exchange Offer") registered under the
Securities Act is not consummated or a shelf registration statement (the "Shelf
Registration Statement") under the Securities Act with respect to resales of the
Notes is not declared effective by the Commission on or before November 18, 1998
in accordance with the terms of the Registration Rights Agreement dated as of
May 13, 1998 between the Company and Hadco Santa Clara, Inc. Hadco Phoenix,
Inc., CCIR of California Corp. and CCIR of Texas Corp., as guarantors
(collectively, the "Guarantors") and Morgan Stanley & Co. Incorporated, Merrill
Lynch, Pierce, Fenner and Smith Incorporated, BancAmerica Robertson Stephens and
BT Alex. Brown Incorporated (a "Registration Default"), the annual interest rate
borne by the Notes shall be increased by 0.5% from the rate shown above accruing
from the date of such Registration Default, payable in cash semiannually, in
arrears, on each Interest Payment Date, commencing with the first such date
occurring after any such Registration Default until the Exchange Offer is
consummated or the Shelf Registration Statement is declared effective. After the
date on which such Registration Default is cured, the interest rate on the Notes
will revert to the interest rate shown above. The Holder of this Note is
entitled to the benefits of such Registration Rights Agreement.
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 May 18, 1998;
provided that, if there is no existing default in the payment of interest and
this Note is authenticated between a Regular Record Date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue from
such Interest Payment Date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
<PAGE> 102
A-4
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 2% in excess of the rate otherwise payable.
2. METHOD OF PAYMENT.
The Company will pay interest (except defaulted interest) on the
principal amount of the Notes as provided above on each June 15 and December 15,
commencing December 15, 1998 to the persons who are Holders (as reflected in the
Security Register at the close of business on the June 1 or December 1
immediately preceding the Interest Payment Date), in each case, even if the Note
is canceled on registration of transfer or registration of exchange after such
record date; provided that, with respect to the payment of principal, the
Company will make payment to the Holder that surrenders this Note to a Paying
Agent on or after June 15, 2008.
The Company will pay principal, premium, if any, and as provided above,
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company may pay
principal, premium, if any, and interest by its check payable in such money. It
may mail an interest check to a Holder's registered address (as reflected in the
Security Register). If a payment date is a date other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding day
that is a Business Day and no interest shall accrue for the intervening period.
3. PAYING AGENT AND REGISTRAR.
Initially, the Trustee will act as authenticating agent, Paying Agent
and Registrar. The Company may change any authenticating agent, Paying Agent or
Registrar without notice. The Company, any Subsidiary or any Affiliate of any of
them may act as Paying Agent, Registrar or co-Registrar.
4. INDENTURE; LIMITATIONS.
The Company issued the Notes under an Indenture dated as of May 18,
1998 (the "Indenture"), between the Company, the Guarantors and State Street
Bank and Trust Company, trustee (the "Trustee"). Capitalized terms herein are
used as defined in the Indenture unless otherwise indicated. 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. The Notes are subject to all such
terms, and Holders are referred to the Indenture and the Trust Indenture Act for
a statement of all such terms. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note and the terms of the
Indenture, the terms of the Indenture shall control.
<PAGE> 103
A-5
The Notes are general unsecured Securities of the Company.
The Company may, subject to Article Four of the Indenture and
applicable law, issue additional Notes under the Indenture.
5. OPTIONAL REDEMPTION.
The Notes are redeemable, at the Company's option, in whole or in part,
at any time or from time to time, on or after June 15, 2003 and prior to
maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first class mail to each Holder's last address, as it appears in the Security
Register, at the following Redemption Prices (expressed in percentages of
principal amount), plus accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant Regular Record
Date that is prior to the Redemption Date to receive interest due on an Interest
Payment Date), if redeemed during the 12-month period commencing June 15 of the
years set forth below:
Redemption
Year Price
---- ----------
2003........................................ 104.750
2004........................................ 103.167
2005........................................ 101.583
2006 and thereafter......................... 100.000
In addition, at any time and from time to time, prior to June 15, 2001,
the Company may redeem up to 35% of the aggregate principal amount of the Notes
originally issued with the proceeds of one or more Equity Offerings, at a
Redemption Price of 109.50%, plus accrued and unpaid interest to the Redemption
Date (subject to the rights of Holders of record on the relevant Regular Record
Date that is prior to the Redemption Date to receive interest due on an Interest
Payment Date); provided that (i) Notes representing 65% of the principal amount
of Notes initially issued remain outstanding after each such redemption and (ii)
notice of such redemption is mailed within 60 days of the related Equity
Offering.
Prior to June 15, 2003, the Notes will be redeemable at the Company's
option, in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice mailed by first class mail to each
Holder's registered address, at a redemption price (expressed as a percentage of
principal amount) equal to the sum of the principal amount of such Notes plus
the Applicable Premium thereon on the Early Redemption Date (subject to the
right of holders of record on the Relevant Record Date to receive interest due
on the relevant interest payment date).
Notes in original denominations larger than $1,000 may be redeemed in
part. On and after the Redemption Date, interest ceases to accrue on Notes or
portions of Notes called for
<PAGE> 104
A-6
redemption, unless the Company defaults in the payment of the Redemption Price.
6. REPURCHASE UPON CHANGE OF CONTROL.
The Company shall commence, within 30 days of the occurrence of any
Change of Control, and consummate an Offer to Purchase for all Notes then
outstanding, at a purchase price equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase (the "Payment
Date") (subject to the right of Holders of record on the relevant Regular Record
Date that is prior to the Change of Control to receive interest due on an
Interest Payment Date).
7. DENOMINATIONS; TRANSFER; EXCHANGE.
The Notes are in registered form without coupons in denominations of
$1,000 of principal amount and multiples of $1,000 in excess thereof. A Holder
may register the transfer or exchange of Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
or exchange of any Notes selected for redemption. Also, it need not register the
transfer or exchange of any Notes for a period of 15 days before the day of
mailing of a notice of redemption of Notes selected for redemption.
8. PERSONS DEEMED OWNERS.
A Holder shall be treated as the owner of a Note for all purposes.
9. UNCLAIMED MONEY.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
10. DISCHARGE PRIOR TO REDEMPTION OR MATURITY.
If the Company deposits with the Trustee money or Government Securities
sufficient to pay the then outstanding principal of, premium, if any, and
accrued interest on the Notes (a) to redemption or maturity, the Company will be
discharged from the Indenture and the Notes, except in certain circumstances for
certain provisions thereof, and (b) to the Stated Maturity, the Company will be
discharged from certain covenants set forth in the Indenture.
<PAGE> 105
A-7
11. AMENDMENT; SUPPLEMENT; 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 Notes then outstanding, and any existing default or
compliance with any provision may be waived with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding. Without
notice to or the consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency and make any change that does not materially
and adversely affect the rights of any Holder.
12. RESTRICTIVE COVENANTS.
The Indenture imposes certain limitations on the ability of the Company
and its Restricted Subsidiaries and, in certain circumstances, the Guarantors,
among other things, to Incur additional Indebtedness, incur Senior Subordinated
Indebtedness, make Restricted Payments, suffer to exist restrictions on the
ability of Restricted Subsidiaries to make certain payments to the Company,
issue Capital Stock of Restricted Subsidiaries, guarantee Indebtedness of the
Company, engage in transactions with Affiliates, suffer to exist or incur Liens,
use the proceeds from Asset Sales, or merge, consolidate or transfer
substantially all of its assets. Within 60 days after the end of each fiscal
quarter (120 days after the end of the last fiscal quarter of each year), the
Company shall deliver to the Trustee an Officers' Certificate stating whether or
not the signers thereof know of any Default or Event of Default under such
restrictive covenants.
13. SUCCESSOR PERSONS.
When a successor person or other entity assumes all the obligations of
its predecessor under the Notes and the Indenture, the predecessor person will
be released from those obligations.
14. DEFAULTS AND REMEDIES.
Any of the following events shall constitute an "Event of Default"
under the Indenture:
(a) default in the payment of principal of (or premium, if any, on) any
Note when the same becomes due and payable at Stated Maturity, upon
acceleration, redemption or otherwise;
(b) default in the payment of interest on any Note when the same
becomes due and payable, and such default continues for a period of 30 days
whether or not such payment is prohibited by Article Ten of the Indenture;
<PAGE> 106
A-8
(c) default in the performance or breach of Article Five of the
Indenture or the failure to comply for 30 days after notice of its obligation to
make an Offer to Purchase in accordance with Section 4.11 or Section 4.12 of the
Indenture;
(d) the Company defaults in the performance of or breaches any other
covenant or agreement of the Company in the Indenture or this Note (other than a
default specified in clause (a), (b) or (c) above) and such default or breach
continues for a period of 60 consecutive days after written notice by the
Trustee or the Holders of 25% or more in aggregate principal amount of the
Notes;
(e) there occurs with respect to any issue or issues of Indebtedness of
the Company or any Significant Subsidiary having an outstanding principal amount
of $10 million or more in the aggregate for all such issues of all such Persons,
whether such Indebtedness now exists or shall hereafter be created, (i) an event
of default that has caused the holder thereof to declare such Indebtedness to be
due and payable prior to its Stated Maturity and such Indebtedness has not been
discharged in full or such acceleration has not been rescinded or annulled
within 60 days of such acceleration and/or (ii) the failure to make a principal
payment at the final (but not any interim) fixed maturity and such defaulted
payment shall not have been made, waived or extended within the applicable grace
period related to any such payment default;
(f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $10 million in the aggregate for all such final
judgments or orders against all such Persons (treating any deductibles,
self-insurance or retention as not so covered) shall be rendered against the
Company or any Significant Subsidiary and shall not be paid or discharged, and
there shall be any period of 60 consecutive days following entry of the final
judgment or order that causes the aggregate amount for all such final judgments
or orders outstanding and not paid or discharged against all such Persons to
exceed $10 million during which a stay of enforcement of such final judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
(g) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of the Company or any Significant Guarantor or
any Significant Subsidiary in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, (B)
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any Significant Guarantor or
any Significant Subsidiary or for all or substantially all of the property and
assets of the Company or any Significant Guarantor or any Significant Subsidiary
or (C) the winding up or liquidation of the affairs of the Company or any
Significant Guarantor or any Significant Subsidiary and, in each case, such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days;
<PAGE> 107
A-9
(h) the Company or any Significant Guarantor or any Significant
Subsidiary (A) commences a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consents to the
entry of an order for relief in an involuntary case under any such law, (B)
consents to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Company or
any Significant Guarantor or any Significant Subsidiary or for all or
substantially all of the property and assets of the Company or any Significant
Guarantor or any Significant Subsidiary or (C) effects any general assignment
for the benefit of creditors; or
(i) the Company or any Guarantor disclaims any Note Guarantee or
asserts that any Note Guarantee is not binding on any Guarantor.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee may, and at the direction of the Holders of at least 25%
in aggregate principal amount of the Notes then outstanding shall, declare all
the Notes to be due and payable. If a bankruptcy or insolvency default with
respect to the Company or any Guarantor occurs and is continuing, the Notes
automatically become due and payable. Holders may not enforce the Indenture or
the Notes except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of at least a majority in principal amount of the
Notes then outstanding may direct the Trustee in its exercise of any trust or
power.
15. SUBORDINATION.
The payment of the Notes and the obligations of the Guarantors under
the Note Guarantees will, to the extent set forth in the Indenture, be
subordinated in right of payment to the prior payment in full, in cash or cash
equivalents, of all Senior Indebtedness.
16. NOTE GUARANTEE
The Company's obligations under the Notes are fully, unconditionally
and irrevocably guaranteed on a joint and several basis, by the Guarantors, and
the obligations of the Guarantors under such Note Guarantees are subordinated to
the prior payment in full, in cash or cash equivalents, of all Senior
Indebtedness of the Guarantors to the same extent as the Notes are subordinated
to the Senior Indebtedness of the Company.
17. TRUSTEE DEALINGS WITH THE COMPANY.
The Trustee under the Indenture, 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.
<PAGE> 108
A-10
18. NO RECOURSE AGAINST OTHERS.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person, as such,
of the Company or of any successor Person shall have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or their creation.
Each 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.
19. AUTHENTICATION.
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
20. 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).
The Company will furnish a copy of the Indenture to any Holder upon
written request and without charge. Requests may be made to Hadco Corporation,
12A Manor Parkway, Salem, New Hampshire 03079; Attention: Patricia Randall.
<PAGE> 109
A-11
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
INSERT TAXPAYER IDENTIFICATION NO.
_______________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
_______________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ____________________________________ attorney to transfer said Note
on the books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED OFFSHORE GLOBAL NOTES AND
UNLEGENDED OFFSHORE PHYSICAL NOTES]
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date the Shelf Registration Statement is
declared effective or (ii) the end of the period referred to in Rule 144(k)
under the Securities Act, the undersigned confirms that without utilizing any
general solicitation or general advertising that:
[CHECK ONE]
[ ] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933 provided by Rule 144A
thereunder.
OR
[ ] (b) this Note is being transferred other than in accordance with (a) above
and documents are being furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
<PAGE> 110
A-12
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
Date: ______________ ______________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the within-mentioned instrument in
every particular, without alteration or any
change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933 and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: _____________ ______
NOTICE: To be executed by an executive officer
<PAGE> 111
A-13
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or 4.12 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or 4.12 of the Indenture, state the amount:
$___________________.
Date: _____________
Your Signature:_________________________________________________________________
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee: ______________________________
<PAGE> 112
EXHIBIT B
---------
FORM OF CERTIFICATE
___________, ____
State Street Bank and Trust Company
Two International Place - 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Division
Re: Hadco Corporation (the "Company")
9 1/2% Senior Subordinated Notes due 2008 (the "Notes")
-------------------------------------------------------
Dear Sirs:
This letter relates to U.S. $__________ principal amount of Notes
represented by a Note (the "Legended Note") which bears a legend outlining
restrictions upon transfer of such Legended Note. Pursuant to Section 2.02 of
the Indenture dated as of May 18, 1998 (the "Indenture") relating to the Notes,
we hereby certify that we are (or we will hold such securities on behalf of) a
person outside the United States to whom the Notes could be transferred in
accordance with Rule 904 of Regulation promulgated under the U.S. Securities Act
of 1933. Accordingly, you are hereby requested to exchange the legended
certificate for an unlegended certificate representing an identical principal
amount of Notes, all in the manner provided for in the Indenture.
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. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By: ____________________________________
Authorized Signature
<PAGE> 113
EXHIBIT C
---------
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-Qib Accredited Investors
-----------------------------------------
___________, ____
State Street Bank and Trust Company
Two International Place - 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Division
Re: Hadco Corporation (the "Company")
9 1/2% Senior Subordinated Notes due 2008 (the "Notes")
-------------------------------------------------------
Dear Sirs:
In connection with our proposed purchase of $_______________ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is subject
to certain restrictions and conditions set forth in the Indenture dated as of
May 18, 1998 (the "Indenture") relating to the Notes and the undersigned agrees
to be bound by, and not to resell, pledge or otherwise transfer the Notes except
in compliance with such restrictions and conditions and the Securities Act of
1933, 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 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 any Notes within the time period referred to in Rule
144(k) of the Securities Act, 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, if such
transfer is in respect of an aggregate principal amount of less than $100,000,
an opinion of counsel acceptable to the Company 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
exemption from registration provided by Rule 144 under the Securities Act (if
available) or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing any of
the
<PAGE> 114
Notes from us a notice advising such purchaser that resales of the Notes are
restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, 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.
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 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.
Very truly yours,
[Name of Transferee]
By: ______________________
Authorized Signature
<PAGE> 115
EXHIBIT D
---------
Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to Regulation S
--------------------------------------------------
___________, ____
State Street Bank and Trust Company
Two International Place - 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Department
Re: Hadco Corporation (the "Company")
9 1/2% Senior Subordinated Notes due 2008 (the "Notes")
-------------------------------------------------------
Dear Sirs:
In connection with our proposed sale of U.S. $______________ aggregate
principal of the Notes, we confirm that such sale has been effected pursuant to
and in accordance with Regulation S under the Securities Act of 1933 and,
accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the U.S. Securities Act of 1933.
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. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
<PAGE> 116
By: _______________________
Authorized Signature
<PAGE> 1
Exhibit 4.2
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated May 13, 1998
among
HADCO CORPORATION
and
HADCO SANTA CLARA, INC.
HADCO PHOENIX, INC.
CCIR OF CALIFORNIA CORP.
CCIR OF TEXAS CORP.
and
MORGAN STANLEY & CO. INCORPORATED
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
BANCAMERICA ROBERTSON STEPHENS
and
BT ALEX. BROWN INCORPORATED
- --------------------------------------------------------------------------------
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into May 13, 1998, among HADCO CORPORATION, a corporation organized
under the laws of the Commonwealth of Massachusetts (the "Company"), and HADCO
SANTA CLARA, INC., a Delaware corporation, HADCO PHOENIX, INC., a Delaware
corporation, CCIR OF CALIFORNIA CORP., a California corporation, and CCIR OF
TEXAS CORP., a Texas corporation (collectively, the "Guarantors"), and MORGAN
STANLEY & CO. INCORPORATED, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
BANCAMERICA ROBERTSON STEPHENS and BT ALEX. BROWN INCORPORATED (the "Placement
Agents").
This Agreement is made pursuant to the Placement Agreement
dated May 13, 1998, among the Company, the Guarantors and the Placement Agents
(the "Placement Agreement"), which provides for the sale by the Company to the
Placement Agents of an aggregate of $200,000,000 principal amount of the
Company's 9 1/2% Senior Subordinated Notes Due 2008 (the "Securities"), to be
fully and unconditionally guaranteed on a senior subordinated basis, jointly and
severally, by the Guarantors (the "Note Guarantees"). In order to induce the
Placement Agents to enter into the Placement Agreement, the Company and the
Guarantors have agreed to provide to the Placement Agents and their direct and
indirect transferees the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Placement
Agreement. This Agreement shall become effective upon the issuance of the Notes
under the Indenture as of the Closing Date.
In consideration of the foregoing, the parties hereto agree as
follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized defined
terms shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended
from time to time.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"CLOSING DATE" shall mean the Closing Date as defined in the
Placement Agreement.
<PAGE> 3
2
"COMPANY" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"EXCHANGE OFFER" shall mean the exchange offer by the Company
of Exchange Securities for Registrable Securities pursuant to Section
2(a) hereof.
"EXCHANGE OFFER REGISTRATION" shall mean a registration under
the 1933 Act effected pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange
offer registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such
registration statement, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by
reference therein.
"EXCHANGE SECURITIES" shall mean securities issued by the
Company and guaranteed by the Guarantors under the Indenture containing
terms identical to the Securities, including the Note Guarantees
(except that the Exchange Securities will not contain restrictions on
transfer) and to be offered to Holders of Securities in exchange for
Securities pursuant to the Exchange Offer.
"GUARANTORS" shall have the meaning set forth on the preamble
and shall also include the successors of the Guarantors.
"HOLDER" shall mean the Placement Agents, for so long as they
own any Registrable Securities, and each of their successors, assigns
and direct and indirect transferees who become registered owners of
Registrable Securities under the Indenture; PROVIDED that for purposes
of Sections 4 and 5 of this Agreement, the term "Holder" shall include
Participating Broker-Dealers (as defined in Section 4(a)).
"INDENTURE" shall mean the Indenture relating to the
Securities dated as of May 18, 1998 among the Company, the Guarantors
and State Street Bank and Trust Company, as trustee, and as the same
may be amended from time to time in accordance with the terms thereof.
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Securities;
PROVIDED that whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or any of its affiliates (as
such term is defined in Rule 405 under the 1933 Act) (other than the
Placement Agents or subsequent Holders of Registrable Securities if
such subsequent holders are
<PAGE> 4
3
deemed to be such affiliates solely by reason of their holding of such
Registrable Securities) shall not be counted in determining whether
such consent or approval was given by the Holders of such required
percentage or amount.
"PERSON" shall mean an individual, partnership, limited
liability company, corporation, trust or unincorporated organization,
or a government or agency or political subdivision thereof.
"PLACEMENT AGENTS" shall have the meaning set forth in the
preamble.
"PLACEMENT AGREEMENT" shall have the meaning set forth in the
preamble.
"PROSPECTUS" shall mean the prospectus included in a
Registration Statement, including any preliminary prospectus, and any
such prospectus as amended or supplemented by any prospectus
supplement, including a prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by
a Shelf Registration Statement, and by all other amendments and
supplements to such prospectus, and in each case including all material
incorporated by reference therein.
"REGISTRABLE SECURITIES" shall mean the Securities (including
as part of such Securities the Note Guarantees); PROVIDED, HOWEVER,
that the Securities shall cease to be Registrable Securities (i) when a
Registration Statement with respect to such Securities and the Note
Guarantees shall have been declared effective under the 1933 Act and
such Securities shall have been disposed of or exchanged pursuant to
the Exchange Offer pursuant to such Registration Statement, (ii) when
such Securities have been sold to the public pursuant to Rule 144 (or
any similar provision then in force, but not Rule 144A) under the 1933
Act or are salable pursuant to Rule 144(k) (or any similar provision
then in force, but not Rule 144A) under the 1933 Act or (iii) when such
Securities shall have ceased to be outstanding.
"REGISTRATION EXPENSES" shall mean any and all expenses
incident to performance of or compliance by the Company and the
Guarantors with this Agreement, including without limitation: (i) all
SEC, stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all fees and expenses incurred in
connection with compliance with state securities or blue sky laws
(including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of
any of the Exchange Securities or Registrable Securities), (iii) all
expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any underwriting
agreements,
<PAGE> 5
4
securities sales agreements and other documents relating to the
performance of and compliance with this Agreement, (iv) all rating
agency fees, (v) all fees and disbursements relating to the
qualification of the Indenture under applicable securities laws, (vi)
the fees and disbursements of the Trustee and its counsel, (vii) the
fees and disbursements of counsel for the Company and the Guarantors
and, in the case of a Shelf Registration Statement, the reasonable fees
and disbursements of one counsel for the Holders (which counsel shall
be selected by the Majority Holders and which counsel may also be
counsel for the Placement Agents) and (viii) the fees and disbursements
of the independent public accountants of the Company and the
Guarantors, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, but excluding fees and expenses of counsel to the
underwriters (other than fees and expenses set forth in clause (ii)
above) or the Holders and underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by a Holder.
"REGISTRATION STATEMENT" shall mean any registration statement
of the Company and the Guarantors that covers any of the Exchange
Securities or Registrable Securities pursuant to the provisions of this
Agreement and all amendments and supplements to any such Registration
Statement, including post-effective amendments, in each case including
the Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"SHELF REGISTRATION" shall mean a registration effected
pursuant to Section 2(b) hereof.
"SHELF REGISTRATION STATEMENT" shall mean a "shelf"
registration statement of the Company and the Guarantors pursuant to
the provisions of Section 2(b) of this Agreement which covers all of
the Registrable Securities (but no other securities unless approved by
the Holders whose Registrable Securities are covered by such Shelf
Registration Statement) on an appropriate form under Rule 415 under the
1933 Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated
by reference therein.
"TRUSTEE" shall mean the trustee with respect to the
Securities under the Indenture.
"UNDERWRITER" shall have the meaning set forth in Section 3
hereof.
<PAGE> 6
5
"UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" shall
mean a registration in which Registrable Securities are sold to an
Underwriter for reoffering to the public.
2. REGISTRATION UNDER THE 1933 ACT.
(a) To the extent not prohibited by any applicable law or
applicable interpretation of the Staff of the SEC, each of the Company and the
Guarantors shall use its best efforts to cause to be filed an Exchange Offer
Registration Statement covering the offer by the Company and the Guarantors to
the Holders to exchange all of the Registrable Securities for Exchange
Securities and to have such Registration Statement remain effective until the
closing of the Exchange Offer. The Company and the Guarantors shall commence the
Exchange Offer promptly after the Exchange Offer Registration Statement has been
declared effective by the SEC and use their best efforts to have the Exchange
Offer consummated not later than 60 days after such effective date. The Company
and the Guarantors shall commence the Exchange Offer by mailing the related
exchange offer Prospectus and accompanying documents to each Holder stating, in
addition to such other disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to
this Registration Rights Agreement and that all Registrable Securities
validly tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be
a period of at least 20 business days from the date such notice is
mailed) (the "Exchange Dates");
(iii) that any Registrable Security not tendered will
remain outstanding and continue to accrue interest, but will not retain
any rights under this Registration Rights Agreement;
(iv) that Holders electing to have a Registrable Security
exchanged pursuant to the Exchange Offer will be required to surrender
such Registrable Security, together with the enclosed letters of
transmittal, to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice
prior to the close of business on the last Exchange Date; and
(v) that Holders will be entitled to withdraw their
election, not later than the close of business on the last Exchange
Date, by sending to the institution and at the address (located in the
Borough of Manhattan, The City of New York) specified in the notice a
telegram, telex, facsimile transmission or letter setting forth the
name of such Holder, the principal amount of Registrable Securities
delivered for exchange and a
<PAGE> 7
6
statement that such Holder is withdrawing his election to have such
Securities exchanged.
As soon as practicable after the last Exchange Date, the
Company and the Guarantors shall:
(i) accept for exchange Registrable Securities or
portions thereof tendered and not validly withdrawn pursuant to the
Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted
for exchange by the Company and the Guarantors and issue, and cause the
Trustee to promptly authenticate and mail to each Holder, an Exchange
Security equal in principal amount to the principal amount of the
Registrable Securities surrendered by such Holder.
Each of the Company and the Guarantors shall use its best efforts to complete
the Exchange Offer as provided above and shall comply with the applicable
requirements of the 1933 Act, the 1934 Act and other applicable laws and
regulations in connection with the Exchange Offer. The Exchange Offer shall not
be subject to any conditions, other than that the Exchange Offer does not
violate applicable law or any applicable interpretation of the Staff of the SEC.
The Company and the Guarantors shall inform the Placement Agents of the names
and addresses of the Holders to whom the Exchange Offer is made, and the
Placement Agents shall have the right, subject to applicable law, to contact
such Holders and otherwise facilitate the tender of Registrable Securities in
the Exchange Offer. Each Holder who participates in the Exchange Offer will be
required to represent that any Exchange Securities received by it will be
acquired in the ordinary course of its business, that at the time of the
consummation of the Exchange Offer such Holder will have no arrangement or
understanding with any person to participate in the distribution of the Exchange
Securities, and that such Holder is not an affiliate of the Company within the
meaning of Rule 405 promulgated under the 1933 Act or if it is such an
affiliate, that it will comply with the registration and prospectus delivery
requirements of the 1933 Act, to the extent applicable.
(b) In the event that (i) the Company and the Guarantors
determine that the Exchange Offer Registration provided for in Section 2(a)
above is not available or may not be consummated as soon as practicable after
the last Exchange Date because it would violate applicable law or the applicable
interpretations of the Staff of the SEC, (ii) the Exchange Offer is not for any
other reason consummated by November 18, 1998 or (iii) the Exchange Offer has
been completed and in the opinion of counsel for the Placement Agents a
Registration Statement must be filed and a Prospectus must be delivered by the
Placement Agents in connection with any offering or sale of Registrable
Securities, each of the Company and the Guarantors shall use its best efforts to
cause to be filed as soon as practicable after such
<PAGE> 8
7
determination, date or notice of such opinion of counsel is given to the Company
and the Guarantors, as the case may be, a Shelf Registration Statement providing
for the sale by the Holders of all of the Registrable Securities and to have
such Shelf Registration Statement declared effective by the SEC. In the event
the Company and the Guarantors are required to file a Shelf Registration
Statement solely as a result of the matters referred to in clause (iii) of the
preceding sentence, each of the Company and the Guarantors shall use its best
efforts to file and have declared effective by the SEC both an Exchange Offer
Registration Statement pursuant to Section 2(a) with respect to all Registrable
Securities and a Shelf Registration Statement (which may be a combined
Registration Statement with the Exchange Offer Registration Statement) with
respect to offers and sales of Registrable Securities held by the Placement
Agents after completion of the Exchange Offer. Each of the Company and the
Guarantors agrees to use its best efforts to keep the Shelf Registration
Statement continuously effective until the expiration of the period referred to
in Rule 144(k) (or any similar provision then in force, but not Rule 144A) with
respect to the Registrable Securities or such shorter period that will terminate
when all of the Registrable Securities covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement. The
Company and the Guarantors further agree to supplement or amend the Shelf
Registration Statement if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the 1933 Act or by any other rules and regulations
thereunder for shelf registration or if reasonably requested by a Holder with
respect to information relating to such Holder, and to use its best efforts to
cause any such amendment to become effective and such Shelf Registration
Statement to become usable as soon as thereafter practicable. The Company and
the Guarantors agree to furnish to the Holders of Registrable Securities copies
of any such supplement or amendment promptly after its being used or filed with
the SEC.
(c) The Company and the Guarantors shall pay all
Registration Expenses in connection with the registration pursuant to Section
2(a) or Section 2(b). Each Holder shall pay all underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
such Holder's Registrable Securities pursuant to the Shelf Registration
Statement.
(d) (i) An Exchange Offer Registration Statement pursuant
to Section 2(a) hereof or a Shelf Registration Statement pursuant to Section
2(b) hereof will not be deemed to have become effective unless it has been
declared effective by the SEC; PROVIDED, HOWEVER, that, if, after it has been
declared effective, the offering of Registrable Securities pursuant to a Shelf
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Securities
pursuant to such Registration Statement may legally resume. As provided for in
the Indenture, in the event the Exchange Offer is not
<PAGE> 9
8
consummated and the Shelf Registration Statement is not declared effective on or
prior to November 18, 1998, the annual interest rate on the Securities will be
increased by .5% per annum (the "ADDITIONAL INTEREST") effective until the
Exchange Offer is consummated or the Shelf Registration Statement is declared
effective by the SEC after which the interest rate on the Securities will revert
to the interest rate originally borne by the Securities. In addition to the
foregoing sentence, in the event a Shelf Registration Statement is required by
Section 2(b) and the effectiveness of such Shelf Registration Statement is
interfered with on or after November 18, 1998, as described in the first
sentence of this Section 2(d), the annual interest rate on the Securities will
be increased by the Additional Interest effective until the offering of the
Registrable Securities pursuant to such Registration Statement may legally
resume, after which the interest rate on the Securities will revert to the
interest rate initially borne on the Securities. The Additional Interest shall
be payable to Holders of the Securities on the Interest Payment Dates (as
defined in the Indenture) commencing with the first Interest Payment Date after
any such Additional Interest commences to accrue.
(e) Without limiting the remedies available to the
Placement Agents and the Holders, each of the Company and the Guarantors
acknowledge that any failure by the Company or any of the Guarantors to comply
with their obligations under Section 2(a) and Section 2(b) hereof may result in
material irreparable injury to the Placement Agents 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 Placement Agents or any Holder may obtain such relief as may be required to
specifically enforce the Company's and the Guarantor's obligations under Section
2(a) and Section 2(b) hereof.
3. REGISTRATION PROCEDURES.
In connection with the obligations of the Company and the
Guarantors with respect to the Registration Statements pursuant to Section 2(a)
and Section 2(b) hereof, the Company and the Guarantors shall as expeditiously
as possible:
(a) prepare and file with the SEC a Registration
Statement on the appropriate form under the 1933 Act, which form (x)
shall be selected by the Company and the Guarantors, (y) shall, in the
case of a Shelf Registration, be available for the sale of the
Registrable Securities by the selling Holders thereof and (z) shall
comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the
SEC to be filed therewith, and use its best efforts to cause such
Registration Statement to become effective and remain effective in
accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such
<PAGE> 10
9
Registration Statement effective for the applicable period and cause
each Prospectus to be supplemented by any required prospectus
supplement and, as so supplemented, to be filed pursuant to Rule 424
under the 1933 Act; to keep each Prospectus current during the period
described under Section 4(3) and Rule 174 under the 1933 Act that is
applicable to transactions by brokers or dealers with respect to the
Registrable Securities or Exchange Securities;
(c) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities, to counsel for the Placement Agents,
to counsel for the Holders and to each Underwriter of an Underwritten
Offering of Registrable Securities, if any, without charge, as many
copies of each Prospectus, including each preliminary Prospectus, and
any amendment or supplement thereto and such other documents as such
Holder or Underwriter may reasonably request, in order to facilitate
the public sale or other disposition of the Registrable Securities; and
each of the Company and the Guarantors consents to the use of such
Prospectus and any amendment or supplement thereto in accordance with
applicable law by each of the selling Holders of Registrable Securities
and any such Underwriters in connection with the offering and sale of
the Registrable Securities covered by and in the manner described in
such Prospectus or any amendment or supplement thereto in accordance
with applicable law;
(d) use its best efforts to register or qualify the
Registrable Securities under all applicable state securities or "blue
sky" laws of such jurisdictions as any Holder of Registrable Securities
covered by a Registration Statement shall reasonably request in writing
by the time the applicable Registration Statement is declared effective
by the SEC, to cooperate with such Holders in connection with any
filings required to be made with the National Association of Securities
Dealers, Inc. and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate
the disposition in each such jurisdiction of such Registrable
Securities owned by such Holder; PROVIDED, HOWEVER, that neither the
Company nor the Guarantors shall be required to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction
where it would not otherwise be required to qualify but for this
Section 3(d), (ii) file any general consent to service of process or
(iii) subject itself to taxation in any such jurisdiction if it is not
so subject;
(e) in the case of a Shelf Registration, notify each
Holder of Registrable Securities, counsel for the Holders and counsel
for the Placement Agents promptly and, if requested by any such Holder
or counsel, confirm such advice in writing (i) when a Registration
Statement has become effective and when any post-effective amendment
thereto has been filed and becomes effective, (ii) of any request by
the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
<PAGE> 11
10
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if, between the effective date of a Registration
Statement and the closing of any sale of Registrable Securities covered
thereby, the representations and warranties of the Company and the
Guarantors contained in any underwriting agreement, securities sales
agreement or other similar agreement, if any, relating to the offering
cease to be true and correct in all material respects or if the Company
or any of the Guarantors receives any notification with respect to the
suspension of the qualification of the Registrable Securities for sale
in any jurisdiction or the initiation of any proceeding for such
purpose, (v) of the happening of any event during the period a Shelf
Registration Statement is effective which makes any statement made in
such Registration Statement or the related Prospectus untrue in any
material respect or which requires the making of any changes in such
Registration Statement or Prospectus in order to make the statements
therein not misleading and (vi) of any determination by the Company or
any of the Guarantors that a post-effective amendment to a Registration
Statement would be appropriate;
(f) use its best efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement as soon
as is reasonably practicable and provide immediate notice to each
Holder of the withdrawal of any such order; and such Holder agrees that
upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(e)(iii), such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to
such Registration Statement until the receipt of notice of withdrawal
of any such order, and, if so directed by the Company or any of the
Guarantors, such Holder will deliver to the Company (at its expense)
all copies in its possession, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice;
(g) in the case of a Shelf Registration, furnish to each
Holder of Registrable Securities, without charge, at least one
conformed copy of each Registration Statement and any post-effective
amendment thereto (without documents incorporated therein by reference
or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with
the selling Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends and
enable such Registrable Securities to be in such denominations
(consistent with the provisions of the Indenture) and registered in
such names as the selling Holders may reasonably request at least one
business day prior to the closing of any sale of Registrable
Securities;
<PAGE> 12
11
(i) in the case of a Shelf Registration, upon the
occurrence of any event contemplated by Section 3(e)(v) hereof, use its
best efforts to prepare and file with the SEC a supplement or
post-effective amendment to a Registration Statement or the related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company
and the Guarantors agree to notify the Holders to suspend use of the
Prospectus as promptly as practicable after the occurrence of such an
event, and the Holders hereby agree to suspend use of the Prospectus
until the Company and the Guarantors have amended or supplemented the
Prospectus to correct such misstatement or omission;
(j) a reasonable time prior to the filing of any
Registration Statement, any Prospectus, any amendment to a Registration
Statement or amendment or supplement to a Prospectus or any document
which is to be incorporated by reference into a Registration Statement
or a Prospectus after initial filing of a Registration Statement,
provide copies of such document to the Placement Agents and their
counsel (and, in the case of a Shelf Registration Statement, the
Holders and their counsel) and make such of the representatives of the
Company and the Guarantors as shall be reasonably requested by the
Placement Agents or their counsel (and, in the case of a Shelf
Registration Statement, the Holders or their counsel) available for
discussion of such document, and shall not at any time file or make any
amendment to the Registration Statement, any Prospectus or any
amendment of or supplement to a Registration Statement or a Prospectus
or any document which is to be incorporated by reference into a
Registration Statement or a Prospectus, of which the Placement Agents
and their counsel (and, in the case of a Shelf Registration Statement,
the Holders and their counsel) shall not have previously been advised
and furnished a copy or to which the Placement Agents or their counsel
(and, in the case of a Shelf Registration Statement, the Holders or
their counsel) shall object;
(k) obtain a CUSIP number for all Exchange Securities or
Registrable Securities, as the case may be, not later than the
effective date of a Registration Statement;
(l) cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Securities or Registrable Securities, as
the case may be, cooperate with the Trustee and the Holders to effect
such changes to the Indenture as may be required for the 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
as may be required to effect such
<PAGE> 13
12
changes and all other forms and documents required to be filed with the
SEC to enable the Indenture to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, make available
for inspection by a representative of the Holders of the Registrable
Securities, any Underwriter participating in any disposition pursuant
to such Shelf Registration Statement, and one (1) counsel and one (1)
accounting firm designated by the Holders (collectively, the
"Inspectors"), at reasonable times and in a reasonable manner, all
financial and other records, pertinent documents and properties of the
Company and the Guarantors (collectively, the "Records"), and cause the
respective officers, directors and employees of the Company and the
Guarantors to supply all Records reasonably requested by any such
Inspector in connection with a Shelf Registration Statement; PROVIDED
that, notwithstanding the foregoing, in the event that Holders have
actual or potential differing interests thereby making representation
of all Holders by one counsel inappropriate, they shall be permitted to
appoint separate counsel; and, PROVIDED FURTHER that, Records which the
Company and the Guarantors determine in good faith, to be confidential
and any Records which it notifies the Inspectors are confidential shall
not be disclosed by the Inspectors unless (i) counsel to the Holders or
Underwriters or the Company reasonably advise the Inspectors that the
disclosure of such Records is necessary to avoid or correct a material
misstatement or material omission in such Registration Statement or is
otherwise necessary to comply with the 1933 Act or 1934 Act, (ii) the
release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction or (iii) the information
in such Records has been made generally available to the public other
than through the Inspectors' breach of any confidentiality agreement.
Each selling Holder of such Registrable Securities and each such
Participating Broker-Dealer or Underwriter will be required to agree
that information obtained by it as a result of such inspections shall
be deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Company unless and until
such is made generally available to the public (any information in a
Registration Statement shall be deemed to have been made generally
available to the public). Each selling Holder of such Registrable
Securities and each such Participating Broker-Dealer will be required
to further agree that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice to
the Company in a reasonably timely manner prior to disclosure of such
Records.
(n) in the case of a Shelf Registration, use its best
efforts to cause all Registrable Securities to be listed on any
securities exchange or any automated quotation system on which similar
securities issued by the Company and the Guarantors are then listed if
requested by the Majority Holders, to the extent such Registrable
Securities satisfy applicable listing requirements;
<PAGE> 14
13
(o) use its best efforts to cause the Exchange Securities
or Registrable Securities, as the case may be, to be rated by two
nationally recognized statistical rating organizations (as such term is
defined in Rule 436(g)(2) under the 1933 Act);
(p) if reasonably requested by any Holder of Registrable
Securities covered by a Registration Statement, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment such
information with respect to such Holder as such Holder reasonably
requests to be included therein and (ii) make all required filings of
such Prospectus supplement or such post-effective amendment as soon as
the Company or any of the Guarantors has received notification of the
matters to be incorporated in such filing; and
(q) in the case of a Shelf Registration, enter into such
customary agreements and take all such other actions in connection
therewith (including those requested by the Holders of a majority of
the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities including,
but not limited to, an Underwritten Offering and in such connection,
(i) to the extent possible, make such representations and warranties to
the Holders and any Underwriters of such Registrable Securities with
respect to the business of the Company and its subsidiaries, the
Registration Statement, Prospectus and documents incorporated by
reference or deemed incorporated by reference, if any, in each case, in
form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested, (ii) obtain opinions of counsel to the Company and the
Guarantors (which counsel and opinions, in form, scope and substance,
shall be reasonably satisfactory to the Holders and such Underwriters
and their respective counsel) addressed to each selling Holder and
Underwriter of Registrable Securities, covering the matters customarily
covered in opinions requested in underwritten offerings, (iii) obtain
"cold comfort" letters from the independent certified public
accountants of the Company (and, if necessary, any other certified
public accountant of any subsidiary of the Company, or of any business
acquired by the Company or any of the Guarantors for which financial
statements and financial data are or are required to be included in the
Registration Statement) addressed to each selling Holder and
Underwriter of Registrable Securities, such letters to be in customary
form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings, and (iv)
deliver such documents and certificates as may be reasonably requested
by the Holders of a majority in principal amount of the Registrable
Securities being sold or the Underwriters, and which are customarily
delivered in underwritten offerings, to evidence the continued validity
of the representations and warranties of the Company and the Guarantors
made pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in an underwriting agreement.
<PAGE> 15
14
In the case of a Shelf Registration Statement, the Company and
the Guarantors may require each Holder of Registrable Securities to furnish to
the Company and the Guarantors such information regarding the Holder and the
proposed distribution by such Holder of such Registrable Securities as the
Company and the Guarantors may from time to time reasonably request in writing.
The Company and the Guarantors may exclude from such registration the
Registrable Securities of any Holder or Participating Broker-Dealer who fails to
furnish such information within a reasonable time after receiving such request.
In the case of a Shelf Registration Statement, each Holder
agrees that, upon receipt of any notice from the Company or the Guarantors of
the happening of any event of the kind described in Section 3(e)(v) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to a Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if
so directed by the Company or any of the Guarantors, such Holder will deliver to
the Company (at its expense) all copies in its possession, other than permanent
file copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. If the
Company or the Guarantors shall give any such notice to suspend the disposition
of Registrable Securities pursuant to a Registration Statement, the Company and
the Guarantors shall extend the period during which the Registration Statement
shall be maintained effective pursuant to this Agreement by the number of days
during the period from and including the date of the giving of such notice to
and including the date when the Holders shall have received copies of the
supplemented or amended Prospectus necessary to resume such dispositions or such
earlier time when none of the Securities constitute Registrable Securities. The
Company and the Guarantors may give any such notice only twice during any 365
day period and any such suspensions may not exceed 30 days for each suspension
and there may not be more than two suspensions in effect during any 365 day
period, unless in the good faith judgment of the Company's Board of Directors,
upon advice of counsel, the sale of the Securities under the Shelf Registration
Statement would be reasonably likely to cause a violation of the 1933 Act or the
1934 Act and result in potential liability to the Company or any of the
Guarantors; PROVIDED that the Company and the Guarantors shall pay to each
Holder of Registrable Securities that are covered under the Shelf Registration
Statement and have not sold pursuant thereto additional interest on such
Securities of .5% per annum (calculated for the actual number of days of
suspension in excess of 60 days in any 365 day period). In no event shall such
suspensions by the Company and the Guarantors exceed 180 days in any 365 day
period.
The Holders of Registrable Securities covered by a Shelf
Registration Statement who desire to do so may sell such Registrable Securities
in an Underwritten Offering. In any such Underwritten Offering, the investment
banker or investment bankers and manager or managers (the "Underwriters") that
will administer the offering will be selected by the
<PAGE> 16
15
Majority Holders of the Registrable Securities included in such offering
provided that such selection is reasonably acceptable to the Company and the
Guarantors.
No Holder of Registrable Securities may participate in an
underwritten registration hereunder unless such Holder agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements and completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents; provided that such
arrangements and documents are customary for underwritten offerings and are
reasonably acceptable to the Holders.
4. PARTICIPATION OF BROKER-DEALERS IN EXCHANGE OFFER.
(a) The Staff of the SEC has taken the position that any
broker-dealer that receives Exchange Securities for its own account in the
Exchange Offer in exchange for Securities that were acquired by such
broker-dealer as a result of market-making or other trading activities (a
"Participating Broker-Dealer"), may be deemed to be an "underwriter" within the
meaning of the 1933 Act and must deliver a prospectus meeting the requirements
of the 1933 Act in connection with any resale of such Exchange Securities.
The Company and the Guarantors understand that it is the
Staff's position that if the Prospectus contained in the Exchange Offer
Registration Statement includes a plan of distribution containing a statement to
the above effect and the means by which Participating Broker-Dealers may resell
the Exchange Securities, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Securities owned by them, such Prospectus may
be delivered by Participating Broker-Dealers to satisfy their prospectus
delivery obligation under the 1933 Act in connection with resales of Exchange
Securities for their own accounts, so long as the Prospectus otherwise meets the
requirements of the 1933 Act.
(b) In light of the above, notwithstanding the other
provisions of this Agreement, the Company and the Guarantors agree that the
provisions of this Agreement as they relate to a Shelf Registration shall also
apply to an Exchange Offer Registration to the extent, and with such reasonable
modifications thereto as may be, reasonably requested by the Placement Agents or
by one or more Participating Broker-Dealers, in each case as provided in clause
(ii) below, in order to expedite or facilitate the disposition of any Exchange
Securities by Participating Broker-Dealers consistent with the positions of the
Staff recited in Section 4(a) above; PROVIDED that:
(i) neither the Company nor the Guarantors shall be
required to amend or supplement the Prospectus contained in the
Exchange Offer Registration Statement, as would otherwise be
contemplated by Section 3(i), for a period exceeding the lesser of (i)
180 days after the last Exchange Date (as such period may be extended
pursuant to
<PAGE> 17
16
the penultimate paragraph of Section 3 of this Agreement) and (ii) the
date on which all persons subject to the prospectus delivery
requirements of the 1933 Act (as described above) have sold all
Exchange Securities held by them hereunder; and Participating
Broker-Dealers shall not be authorized by the Company or any of the
Guarantors to deliver and shall not deliver such Prospectus after such
period in connection with the resales contemplated by this Section 4;
and
(ii) the application of the Shelf Registration procedures
set forth in Section 3 of this Agreement to an Exchange Offer
Registration, to the extent not required by the positions of the Staff
of the SEC or the 1933 Act and the rules and regulations thereunder,
will be in conformity with the reasonable request to the Company and
the Guarantors by the Placement Agents or with the reasonable request
in writing to the Company and the Guarantors by one or more
broker-dealers who certify to the Placement Agents and the Company and
the Guarantors in writing that they anticipate that they will be
Participating Broker-Dealers; and PROVIDED FURTHER that, in connection
with such application of the Shelf Registration procedures set forth in
Section 3 to an Exchange Offer Registration, the Company shall be
obligated (x) to deal only with one entity representing the
Participating Broker-Dealers, which shall be Morgan Stanley & Co.
Incorporated unless it elects not to act as such representative, (y) to
pay the reasonable fees and expenses of only one counsel representing
the Participating Broker-Dealers, which shall be counsel to the
Placement Agents unless such counsel elects not to so act and (z) to
cause to be delivered only one, if any, "cold comfort" letter with
respect to the Prospectus in the form existing on the last Exchange
Date and with respect to each subsequent amendment or supplement, if
any, effected during the period specified in clause (i) above.
(c) The Placement Agents shall have no liability to the
Company, any of the Guarantors or any Holder with respect to any request that it
may make pursuant to Section 4(b) above.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) Each of the Company and the Guarantors, jointly and
severally, agrees to indemnify and hold harmless the Placement Agents, each
Holder and each Person, if any, who controls any Placement Agent or any Holder
within the meaning of either Section 15 of the 1933 Act or Section 20 of the
1934 Act, or is under common control with, or is controlled by, any Placement
Agent or any Holder, from and against all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by the Placement Agent, any Holder or any such controlling
or affiliated Person in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement (or any amendment
<PAGE> 18
17
thereto) pursuant to which Exchange Securities or Registrable Securities were
registered under the 1933 Act, including all documents incorporated therein by
reference, 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, or caused by any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus (as amended or
supplemented if the Company and the Guarantors shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make the statements
therein in light of the circumstances under which they were made not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to the Placement Agents or any Holder furnished to the
Company in writing through Morgan Stanley & Co. Incorporated or any selling
Holder expressly for use therein; PROVIDED, HOWEVER, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Placement Agent or Holder from whom the person asserting
any such losses, claims, damages or liabilities purchased Securities, or any
person controlling such Placement Agent or Holder, if a copy of the final
Prospectus (as then amended or supplemented if the Company and the Guarantors
shall have furnished any amendments or supplements thereto) was not sent or
given by or on behalf of such Placement Agent or Holder to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Securities to such person, and if the final
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such losses, claims, damages or liabilities, unless such failure is the
result of the failure of the Company to furnish copies of the final Prospectus,
any documents incorporated by reference therein or any supplements or amendments
thereto pursuant to Section 3(c) or Section 4(b). In connection with any
Underwritten Offering permitted by Section 3, each of the Company and the
Guarantors will also, jointly and severally, indemnify the Underwriters, if any,
selling brokers, dealers and similar securities industry professionals
participating in the distribution, their officers and directors and each Person
who controls such Persons (within the meaning of the 1933 Act and the 1934 Act)
to the same extent as provided above with respect to the indemnification of the
Holders, if requested in connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Guarantors, the Placement Agents
and the other selling Holders, and each of their respective directors, officers
who sign the Registration Statement and each Person, if any, who controls the
Company, the Guarantors, any Placement Agent and any other selling Holder within
the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act
to the same extent as the foregoing indemnity from the Company and the
Guarantors to the Placement Agents and the Holders, but only with reference to
information relating to such Holder furnished to the Company in writing by such
Holder expressly for use in any Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto).
<PAGE> 19
18
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above,
such Person (the "indemnified party") shall promptly notify the Person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (a) the fees and expenses of
more than one separate firm (in addition to any local counsel) for the Placement
Agents and all Persons, if any, who control any Placement Agent within the
meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b)
the fees and expenses of more than one separate firm (in addition to any local
counsel) for the Company, the Guarantors, their directors, their officers who
sign the Registration Statement and each Person, if any, who controls the
Company and the Guarantors within the meaning of either such Section and (c) the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Holders and all Persons, if any, who control any Holders within
the meaning of either such Section, and that all such fees and expenses shall be
reimbursed as they are incurred. In such case involving the Placement Agents and
Persons who control the Placement Agents, such firm shall be designated in
writing by Morgan Stanley & Co. Incorporated. In such case involving the Holders
and such Persons who control Holders, such firm shall be designated in writing
by the Majority Holders. In all other cases, such firm shall be designated by
the Company. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent but, if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party for such fees and expenses of counsel in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified
<PAGE> 20
19
party, effect any settlement of any pending or threatened proceeding in respect
of which such indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph (a)
or paragraph (b) of this Section 5 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company, the Guarantors and the Holders 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, the Guarantors or by the Holders and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Holders' respective
obligations to contribute pursuant to this Section 5(d) are several in
proportion to the respective principal amount of Registrable Securities of such
Holder that were registered pursuant to a Registration Statement.
(e) The Company, the Guarantors and each Holder agree
that it would not be just or equitable if contribution pursuant to this Section
5 were determined by PRO RATA allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in paragraph
(d) above 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 such action or claim.
Notwithstanding the provisions of this Section 5, no Holder shall be required to
indemnify or contribute any amount in excess of the amount by which the total
price at which Registrable Securities were sold by such Holder exceeds the
amount of any damages that 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 1933 Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 5 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.
<PAGE> 21
20
The indemnity and contribution provisions contained in this
Section 5 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of the Placement Agents, any Holder or any Person controlling any Placement
Agent or any Holder, or by or on behalf of the Company, the Guarantors, their
officers or directors or any Person controlling the Company or the Guarantors,
(iii) acceptance of any of the Exchange Securities and (iv) any sale of
Registrable Securities pursuant to a Shelf Registration Statement.
6. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. Neither the Company nor
any of the Guarantors has not entered into, and on or after the date of this
Agreement will not enter into, any agreement which is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's or the Guarantors' other
issued and outstanding securities under any such agreements.
(b) AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company and the Guarantors has
obtained the written consent of Holders of at least a majority in aggregate
principal amount of the outstanding Registrable Securities affected by such
amendment, modification, supplement, waiver or consent; PROVIDED, HOWEVER, that
no amendment, modification, supplement, waiver or consent to any departure from
the provisions of Section 5 hereof shall be effective as against any Holder of
Registrable Securities unless consented to in writing by such Holder.
(c) NOTICES. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, telex, telecopier, or any courier guaranteeing
overnight delivery (i) if to a Holder, at the most current address given by such
Holder to the Company and the Guarantors by means of a notice given in
accordance with the provisions of this Section 6(c), which address initially is,
with respect to the Placement Agents, the address set forth in the Placement
Agreement; and (ii) if to the Company and the Guarantors, initially at the
Company's address set forth in the Placement Agreement and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 6(c).
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is
<PAGE> 22
21
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.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the successors, assigns and transferees 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 Registrable
Securities in violation of the terms of the Placement Agreement. If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable 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 and such Person shall be entitled to receive the benefits hereof. The
Placement Agents (in their capacity as Placement Agents) shall have no liability
or obligation to the Company or any of the Guarantors with respect to any
failure by a Holder to comply with, or any breach by any Holder of, any of the
obligations of such Holder under this Agreement.
(e) PURCHASES AND SALES OF SECURITIES. The Company and
the Guarantors shall not, and shall use their best efforts to cause their
affiliates (as defined in Rule 405 under the 1933 Act) not to, purchase and then
resell or otherwise transfer any Securities.
(f) 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 Placement Agents, on the other hand, and
shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(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.
<PAGE> 23
22
(i) GOVERNING LAW. This Agreement shall be governed by
the laws of the State of New York, excluding (to the greatest extent a New York
court would permit) any rule of law that would cover application of the law of
any jurisdiction other than the State of New York.
(j) SEVERABILITY. In the event that any one or more of
the provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
HADCO CORPORATION
By: /s/ Timothy P. Losik
-------------------------------
Name: Timothy P. Losik
Title: Senior Vice President,
Chief Financial Officer
and Treasurer
HADCO SANTA CLARA, INC.
By: /s/ Timothy P. Losik
-------------------------------
Name: Timothy P. Losik
Title: Senior Vice President,
Chief Financial Officer
and Treasurer
HADCO PHOENIX, INC.
By: /s/ Timothy P. Losik
-------------------------------
Name: Timothy P. Losik
Title: Senior Vice President
and Treasurer
CCIR OF CALIFORNIA CORP.
By: /s/ Timothy P. Losik
-------------------------------
Name: Timothy P. Losik
Title: Chief Financial Officer
CCIR OF TEXAS CORP.
By: /s/ Timothy P. Losik
-------------------------------
Name: Timothy P. Losik
Title: Chief Financial Officer
<PAGE> 25
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
BANCAMERICA ROBERTSON STEPHENS
BT ALEX. BROWN INCORPORATED
By: MORGAN STANLEY & CO. INCORPORATED
By /s/ William H. Wright II
-----------------------------------
Name: William H. Wright II
Title: Managing Director
<PAGE> 1
EXHIBIT 5.1
June 23, 1998
Hadco Corporation
12A Manor Parkway
Salem, NH 03079
Dear Ladies and Gentlemen:
We are acting as counsel to Hadco Corporation, a Massachusetts
corporation (the "Company") in connection with the registration on a
Registration Statement on Form S-4 (the "Registration Statement") and the
prospectus forming a part thereof (the "Prospectus") under the Securities Act of
1933, as amended, of $200,000,000 aggregate principal amount of the Company's
9-1/2% Senior Subordinated Notes due 2008 (the "Exchange Notes") and the related
guarantees (the "Guarantees") of certain of the Company's subsidiaries named in
the Registration Statement (the "Guarantors"). The Exchange Notes and the
Guarantees are proposed to be issued under an indenture dated as of May 18, 1998
(the "Indenture") among the Company, the Guarantors and State Street Bank and
Trust Company, as trustee, and the related Registration Rights Agreement (the
"Registration Rights Agreement"), dated May 13, 1998, among the Company, the
Guarantors and the Initial Purchasers (as defined in the Registration Rights
Agreement) in exchange for the Company's 9-1/2% Senior Subordinated Notes due
2008 (the "Original Notes") and related guarantees.
We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion. We have assumed that the Exchange
Notes and the Guarantees will be executed and delivered as set forth in the
Registration Statement, the Prospectus and the Letter of Transmittal set forth
as an exhibit to the Registration Statement. We have assumed the genuineness of
all signatures and the conformity to original documents of all copies of
documents submitted to us as copies, whether certified or not. We have assumed
the conformity of the certificates for the Exchange Notes and the Guarantees to
the specimens of the certificates, which are included as an exhibit to the
Registration Statement. We have assumed that the Exchange Notes, the Guarantees
and the Indenture have been duly authorized, executed and authenticated in
accordance with the terms of the Indenture by each of the parties thereto. Our
opinions expressed herein with respect to the validly and binding effect the
Exchange Notes and the Guarantees are qualified to the extent that the validity
and binding effect thereof may be limited by (i) applicable bankruptcy,
reorganization, arrangements, insolvency, fraud on creditors, preference,
moratorium or similar laws affecting the enforcement of creditors' rights
generally as at the time in effect and (ii) general principles of equity
(whether considered in a proceeding of law or in equity).
<PAGE> 2
Hadco Corporation
June 23, 1998
Page 2
We are members only of the bar of the Commonwealth of Massachusetts and
therefore do not hold ourselves out as experts in, and express no opinion as to,
the laws of any other state or jurisdiction other than the Laws of the
Commonwealth of Massachusetts and the federal laws of the United States of
America. The Indenture and the Exchange Notes provide that each is governed by
the laws of the State of New York, without giving effect to the conflict of laws
provisions thereof. We have assumed that the substantive laws of the State of
New York are the same as the substantive laws of the Commonwealth of
Massachusetts. We have also assumed that the choice of law provisions of the
Indenture and the Exchange Notes would be given effect.
Based upon and subject to the foregoing, we are of the opinion that the
Exchange Notes and the Guarantees, when duly executed and authenticated in
accordance with the terms of the Indenture and delivered in exchange for the
Original Notes as contemplated in the Prospectus, will be valid and binding
obligations of the Company and the Guarantors, respectively.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the Registration Statement.
Very truly yours,
/s/ Testa, Hurwitz & Thibeault, LLP
TESTA, HURWITZ & THIBEAULT, LLP
<PAGE> 1
Exhibit 10.1
$200,000,000
HADCO CORPORATION
9 1/2% SENIOR SUBORDINATED NOTES DUE 2008
PLACEMENT AGREEMENT
May 13, 1998
<PAGE> 2
May 13, 1998
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith Incorporated
BancAmerica Robertson Stephens
BT Alex. Brown Incorporated
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
HADCO CORPORATION, a corporation organized under the laws of
the Commonwealth of Massachusetts (the "Company"), proposes to issue and sell to
the several purchasers named in Schedule I hereto (the "Placement Agents")
$200,000,000 principal amount of its 9 1/2% Senior Subordinated Notes due 2008
(the "Securities") to be issued pursuant to the provisions of an Indenture dated
as of May 18, 1998 (the "Indenture") among the Company, the Guarantors (as
defined) and State Street Bank and Trust Company, as Trustee (the "Trustee").
The Securities will be guaranteed (the "Note Guarantees") on a senior
subordinated basis, jointly and severally by HADCO SANTA CLARA, INC., a Delaware
corporation, HADCO PHOENIX, INC., a Delaware corporation, CCIR OF CALIFORNIA
CORP., a California corporation, and CCIR OF TEXAS CORP., a Texas corporation
(collectively, the "Guarantors").
The Securities will be offered without being registered under
the Securities Act of 1933, as amended (the "Securities Act"), to qualified
institutional buyers in compliance with the exemption from registration provided
by Rule 144A under the Securities Act, in offshore transactions in reliance on
Regulation S under the Securities Act ("Regulation S") and to a limited number
of institutional accredited investors (as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act) that deliver a letter in the form annexed to the
Final Memorandum (as defined below).
The Placement Agents and their direct and indirect transferees
will be entitled to the benefits of a Registration Rights Agreement dated the
date hereof between the Company, the Guarantors and the Placement Agents (the
"Registration Rights Agreement").
In connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum (the "Preliminary Memorandum") and
will prepare a final offering memorandum (the "Final Memorandum" and, with the
Preliminary Memorandum, each a "Memorandum") including or incorporating by
reference a description of the terms of the Securities, the terms of the
offering and a description of the Company. As used herein, the term "Memorandum"
shall include in each case the documents incorporated by reference
<PAGE> 3
2
therein. The terms "supplement", "amendment" and "amend" as used herein with
respect to a Memorandum shall include all documents deemed to be incorporated by
reference in the Preliminary Memorandum or Final Memorandum that are filed
subsequent to the date of such Memorandum with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
1. Representations and Warranties. Each of the Company
and the Guarantors, jointly and severally, represents and warrants to, and
agrees with, you that:
(a) (i) Each document, if any, filed or to be filed
pursuant to the Exchange Act and incorporated by reference in either
Memorandum complied or will comply when so filed in all material
respects with the Exchange Act and the applicable rules and regulations
of the Commission thereunder and (ii) the Preliminary Memorandum does
not contain and the Final Memorandum, in the form used by the Placement
Agents to confirm sales and on the Closing Date (as defined in Section
4), will not contain any untrue statement of a material fact or omit to
state a material fact 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 set forth in this
paragraph do not apply to statements or omissions in either Memorandum
based upon information relating to any Placement Agent furnished to the
Company in writing by such Placement Agent through you expressly for
use therein.
(b) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in each Memorandum and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing in the jurisdiction of its incorporation or such foreign
jurisdiction would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole; no proceeding has been
instituted in any such jurisdiction, revoking, limiting or curtailing,
or seeking to revoke, limit or curtail, such power and authority or
qualification.
(c) Each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in each Memorandum and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing in the jurisdiction of its
<PAGE> 4
3
incorporation or such foreign jurisdiction would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
all of the issued shares of capital stock of each subsidiary of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and, except as otherwise described in the Final
Memorandum, are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims other than those
which would not have a material adverse effect on the Company and its
subsidiaries taken as a whole.
(d) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors.
(e) The Securities 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 Placement Agents in
accordance with the terms of this Agreement, will be valid and binding
obligations of the Company, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity, and will
be entitled to the benefits of the Indenture and the Registration
Rights Agreement.
(f) The Note Guarantees have been duly authorized by each
of the Guarantors and, when the Securities are executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Placement Agents in accordance with
the terms of this Agreement, will be valid and binding obligations of
each of the Guarantors, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity, and will
be entitled to the benefits of the Indenture and the Registration
Rights Agreement.
(g) The Indenture has been duly authorized and, when
executed and delivered by the Company and each of the Guarantors, and
assuming due authorization, execution and delivery by the Trustee, will
be a valid and binding agreement of the Company and each of the
Guarantors, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency or similar laws affecting creditors'
rights generally and general principles of equity.
(h) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and each of the
Guarantors, and is a valid and binding agreement of the Company and
each of the Guarantors, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity and except
as rights to
<PAGE> 5
4
indemnification and contribution under the Registration Rights
Agreement may be limited under applicable law.
(i) The execution and delivery by the Company and each of
the Guarantors of, and the performance by the Company and each of the
Guarantors of their respective obligations under, this Agreement, the
Indenture, the Registration Rights Agreement and, in the case of the
Company, the Securities, and in the case of the Guarantors, the Note
Guarantees will not contravene any provision of applicable law or the
certificate of incorporation or by-laws of the Company or of the
Guarantors or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and
its subsidiaries, taken as a whole, or any judgment, order or decree
presently in effect or in effect on the Closing Date of any
governmental body, agency or court having jurisdiction over the Company
or any subsidiary that is material to the Company and its subsidiaries,
taken as a whole, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required for
the performance by the Company or the Guarantors of their respective
obligations under this Agreement, the Indenture, the Registration
Rights Agreement or, in the case of the Company, the Securities or, in
the case of the Guarantors, the Note Guarantees, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities and by Federal and
state securities laws with respect to the Company's and the Guarantors'
obligations under the Registration Rights Agreement.
(j) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws or in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any material bond, debenture, note
or other evidence of indebtedness, or in any material lease, contract,
indenture, deed of trust, loan agreement, joint venture or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or by which it or any of its subsidiaries or their
respective properties may be bound; and neither the Company nor any of
its subsidiaries is in material violation of any law, order, rule,
regulation, writ, injunction, judgment or decree of any court,
government or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or over their
respective properties of which it has knowledge.
(k) There has not occurred any material adverse change,
in the condition, financial or otherwise, or in the earnings, business
or operations or business prospects of the Company and its
subsidiaries, taken as a whole, from that set forth in the Final
Memorandum.
<PAGE> 6
5
(l) There are no legal or governmental proceedings
pending or, to the best of the Company's knowledge, threatened to which
the Company or any of its subsidiaries is a party or to which any of
the properties of the Company or any of its subsidiaries is subject
other than proceedings accurately described in all material respects in
each Memorandum and proceedings that would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole, or on the
power or ability of the Company or the Guarantors to perform their
respective obligations under this Agreement, the Indenture, the
Registration Rights Agreement or, in the case of the Company, the
Securities or, in the case of the Guarantors, the Note Guarantees, or
to consummate the transactions contemplated by the Final Memorandum.
(m) Except as set forth in the Final Memorandum, the
Company and its subsidiaries (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) to the best of their knowledge after
reasonable inquiry, have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in compliance with
all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(n) Except as set forth in the Final Memorandum, to the
best of the Company's knowledge after reasonable inquiry, 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 permit, license or approval, 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
on the Company and its subsidiaries, taken as a whole.
(o) None of the Company nor any of the Guarantors is, and
after giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in the Final
Memorandum, will be an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
(p) Neither the Company, the Guarantors nor any affiliate
(as defined in Rule 501(b) of Regulation D under the Securities Act, an
"Affiliate") of the Company or the Guarantors has directly, or through
any agent (other than the Placement Agents),
<PAGE> 7
6
(i) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (other than the Securities to be
offered hereunder) (as defined in the Securities Act) which is or will
be integrated with the sale of the Securities in a manner that would
require the registration under the Securities Act of the Securities or
(ii) engaged in any form of general solicitation or general advertising
in connection with the offering of the Securities, (as those terms are
used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act, provided that with respect to the Placement Agents,
this representation is based solely on the representations of the
Placement Agents in Section 7 hereof.
(q) None of the Company, the Guarantors, 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 Securities and the Company, the Guarantors and
their Affiliates and any person acting on its or their behalf have
complied and will comply with the offering restrictions requirement of
Regulation S, except no representation, warranty or agreement is made
by the Company or the Guarantors in this paragraph with respect to the
Placement Agents.
(r) Assuming the accuracy of each of the Placement
Agents' representations and warranties set forth in Section 7 hereof
and the due performance by each Placement Agent of the covenants and
agreements set forth herein, it is not necessary in connection with the
offer, sale and delivery of the Securities to the Placement Agents in
the manner contemplated by this Agreement to register the Securities or
the Note Guarantees under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended.
(s) The Securities and the Note Guarantees satisfy the
requirements set forth in Rule 144A(d)(3) under the Securities Act.
(t) The Securities and the Note Guarantees conform in all
material respects to the descriptions thereof contained in the Final
Memorandum under the heading "Description of the Notes."
(u) Each of the Company and its subsidiaries has all
necessary consents, authorizations, approvals, orders, certificates and
permits of and from, and has made all declarations and filings with,
all federal, state, local, foreign and other governmental authorities,
all self-regulatory organizations and all courts and other tribunals to
own, lease, license and use its properties and assets and to conduct
its business in the manner described in the Final Memorandum except as
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole; and
<PAGE> 8
7
neither the Company nor any of its subsidiaries has received any notice
of proceedings relating to the revocation or modification of any such
consent, authorization, approval, order, certificate or permit which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the Company
and its subsidiaries, taken as a whole, except as described in the
Final Memorandum.
(v) The Company and its subsidiaries have timely filed
all necessary federal, state and foreign income and franchise tax
returns required to be filed prior to the Closing Date and have paid
all taxes shown thereon as due other than those taxes being contested
in good faith and for which adequate reserves have been made, which
amount of taxes being contested, if the subject to an unfavorable
decision, would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole, and except for where failure to
file such returns or to pay such taxes would not, in the aggregate,
have a material adverse effect on the Company and its subsidiaries
taken as a whole, and there is no tax deficiency that has been or, to
the best of the Company's knowledge, might be asserted against the
Company or any of its subsidiaries that might have a material adverse
effect on the Company and its subsidiaries, taken as a whole; and all
tax liabilities are adequately provided for on the books of the Company
and its subsidiaries.
(w) Arthur Andersen LLP, which has examined the
consolidated financial statements of the Company, together with the
related schedules and notes, as of October 25, 1997 and for each of the
three years ended October 25, 1997 and Ernst & Young LLP, which has
examined the consolidated financial statements of Continental Circuits
Corp. ("Continental") together with the related schedules and notes, as
of July 31, 1997, and for each of the three years ended July 31, 1997,
which are included or incorporated by reference in the Final Memorandum
are independent accountants within the meaning of the Act and the rules
and regulations of the Act; the audited consolidated financial
statements of the Company and Continental, together with the related
schedules and notes, and the unaudited consolidated financial
information, forming part of the Final Memorandum, fairly present in
all material respects the financial position and the results of
operations of the Company and its subsidiaries and Continental and its
subsidiaries at the respective dates and for the respective periods to
which they apply; and all audited consolidated financial statements of
the Company and Continental, together with the related schedules and
notes, and the unaudited consolidated financial information included or
incorporated by reference in the Final Memorandum, have been
consistently applied throughout the periods involved except as may be
otherwise stated therein. The selected and summary financial and
statistical data included or incorporated by reference in the Final
Memorandum present fairly in all material respects the information
shown therein and have been compiled on a basis
<PAGE> 9
8
consistent with the audited financial statements presented therein. No
other financial statements or schedules are required to be included or
incorporated by reference in the Final Memorandum.
(x) Subsequent to the respective dates as of which
information is given in the Final Memorandum, (i) the Company and its
subsidiaries have not incurred any material liability or obligation,
including any material contingent liability or obligation which would
be required to be disclosed on the Company's consolidated balance sheet
in accordance with GAAP, nor entered into any material transaction not
in the ordinary course of business; (ii) the Company has not purchased
any of its outstanding capital stock, nor declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock,
other than ordinary and customary dividends; and (iii) there has not
been any material change in the capital stock, short-term debt or
long-term debt of the Company and its subsidiaries, except in each case
as described in the Final Memorandum.
(y) The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is
material to the business of the Company and its subsidiaries, in each
case free and clear of all liens, encumbrances and defects except such
as are described in the Final Memorandum or such as do not materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its subsidiaries, in
each case except as described in the Final Memorandum.
(z) The Company and its subsidiaries own, license or
possess, or can acquire on reasonable terms, all patents, patent
rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks and trade names currently employed by them in connection with the
business now operated by them and material to the business of the
Company and its subsidiaries, taken as a whole, and, except as
described in the Final Memorandum, neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
<PAGE> 10
9
(aa) No material labor dispute with the employees of the
Company or any of its subsidiaries exists, except as described in the
Final Memorandum, or, to the knowledge of the Company, is imminent; and
the Company is not aware of any existing, threatened or imminent labor
disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that is reasonably expected to have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(bb) The Company and its subsidiaries are insured by
insurers of recognized financial responsibility (or self-insured)
against such losses and risks and in such amounts as customary in the
businesses in which they are engaged; neither the Company nor any of
its subsidiaries has been refused any insurance coverage sought or
applied for, except where such refusal would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
and neither the Company nor any of its subsidiaries has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole, except as described in
the Final Memorandum.
(cc) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(dd) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company to or for the
benefit of any of the executive officers or directors of the Company or
any of the members of the families of any of them, except as disclosed
in the Final Memorandum and any incorporated document.
(ee) The Unrestricted Subsidiaries designated in the
Indenture are not "significant subsidiaries" as such term is defined in
Regulation S-X.
2. Agreements to Sell and Purchase. The Company hereby
agrees to sell to the several Placement Agents, and each Placement Agent, upon
the basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agrees,
<PAGE> 11
10
severally and not jointly, to purchase from the Company the respective principal
amount of Securities set forth in Schedule I hereto opposite its name at a
purchase price of 96.91% of the principal amount thereof (the "Purchase Price")
plus accrued interest, if any, to the Closing Date.
The Company and the Guarantors hereby agree that, without the
prior written consent of Morgan Stanley & Co. Incorporated on behalf of the
Placement Agents, they will not, during the period beginning on the date hereof
and continuing to and including the Closing Date, offer, sell, contract to sell
or otherwise dispose of any debt of the Company or the Guarantors or warrants to
purchase debt of the Company or the Guarantors substantially similar to the
Securities (other than the sale of the Securities under this Agreement.)
3. Terms of Offering. You have advised the Company and
the Guarantors that the Placement Agents will make an offering of the Securities
purchased by the Placement Agents hereunder on the terms to be set forth in the
Final Memorandum, as soon as practicable after this Agreement is entered into as
in your judgment is advisable.
4. Payment and Delivery. Payment for the Securities
shall be made to the Company in Federal or other funds immediately available in
New York City against delivery of such Securities for the respective accounts of
the several Placement Agents at 10:00 a.m., New York City time, on May 18, 1998,
or at such other time on the same or such other date, not later than June 2,
1998, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the "Closing Date."
Certificates for the Securities shall be in definitive form or
global form, as specified by you, and registered in such names and in such
denominations as you shall request in writing not later than one full business
day prior to the Closing Date. The certificates evidencing the Securities shall
be delivered to you on the Closing Date for the respective accounts of the
several Placement Agents, with any transfer taxes payable in connection with the
initial transfer of the Securities to the Placement Agents duly paid, against
payment of the Purchase Price therefor plus accrued interest, if any, to the
date of payment and delivery.
5. Conditions to the Placement Agents' Obligations. The
several obligations of the Placement Agents to purchase and pay for the
Securities on the Closing Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
(i) there shall not have occurred any
downgrading, nor shall any notice have been given of any
intended or potential downgrading or of any
<PAGE> 12
11
review for a possible change that does not indicate the
direction of the possible change, in the Company's or any of
the Guarantors' securities by any "nationally recognized
statistical rating organization," as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or
any development involving a prospective change, in the
condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries,
taken as a whole, from that set forth in the Final Memorandum
(exclusive of any amendments or supplements thereto subsequent
to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Securities on the terms and in the
manner contemplated in the Final Memorandum.
(b) The Placement Agents shall have received on the
Closing Date a certificate, dated the Closing Date and signed by an
executive officer of each of the Company and the Guarantors, to the
effect set forth in Section 5(a)(i) and to the effect that the
representations and warranties of the Company and the Guarantors
contained in this Agreement are true and correct as of the Closing Date
and the Company and the Guarantors have complied in all material
respects with all of the agreements and satisfied all of the conditions
on their part to be performed or satisfied hereunder on or before the
Closing Date or that such conditions have been waived by the Placement
Agents.
Any officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
(c) The Placement Agents shall have received on the
Closing Date an opinion of Testa, Hurwitz & Thibeault, LLP, special
counsel for the Company, dated the Closing Date, to the effect set
forth in Exhibit A. Such opinion shall be rendered to the Placement
Agents at the request of the Company and the Guarantors and shall so
state therein.
(d) The Placement Agents shall have received on the
Closing Date an opinion of Hamilton & Dahmen, LLP general counsel for
the Company, dated the Closing Date, to the effect set forth in Exhibit
B. Such opinion shall be rendered to the Placement Agents at the
request of the Company and the Guarantors and shall so state therein.
<PAGE> 13
12
(e) The Placement Agents shall have received on the
Closing Date an opinion of Shearman & Sterling, counsel for the
Placement Agents, dated the Closing Date, in form and substance
satisfactory to you.
(f) The Placement Agents shall have received on each of
the date hereof and the Closing Date a letter, dated the date hereof or
the Closing Date, as the case may be, in form and substance
satisfactory to the Placement Agents, from Arthur Andersen LLP,
independent public accountants, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information of the Company contained in or incorporated by
reference into the Final Memorandum; provided that the letter delivered
on the Closing Date shall use a "cut-off date" not earlier than the
date hereof.
(g) The Placement Agents shall have received on the date
hereof a letter, dated the date hereof, in form and substance
satisfactory to the Placement Agents, from Ernst & Young L.L.P.,
independent public accountants, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain
financial information of Continental contained in or incorporated by
reference into the Final Memorandum.
(h) The Placement Agents shall have received such other
documents and certificates as are reasonably requested by you or your
counsel.
(i) On or prior to the Closing Date, the Company,
BankBoston, N.A. and the other lenders party thereto, shall have
executed a second amendment and modification to the Amended and
Restated Revolving Credit Agreement dated as of December 8, 1997, which
shall be in full force and effect as of the Closing Date and shall be
reasonably satisfactory to the Placement Agents.
6. Covenants of the Company. In further consideration of
the agreements of the Placement Agents contained in this Agreement, each of the
Company and the Guarantors covenants with each Placement Agent as follows:
(a) To furnish to you in New York City, without charge,
prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned
in Section 6(c), as many copies of the Final Memorandum, any documents
incorporated by reference therein and any supplements and amendments
thereto as you may reasonably request.
(b) Prior to the expiration of the period referred to in
Section 6(c), before amending or supplementing either Memorandum, to
furnish to you a copy of each such
<PAGE> 14
13
proposed amendment or supplement and not to use any such proposed
amendment or supplement to which you reasonably object.
(c) If, during such period after the date hereof and
prior to the date on which all of the Securities shall have been sold
by the Placement Agents, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Final
Memorandum in order to make the statements therein, in the light of the
circumstances when the Final Memorandum is delivered to a purchaser,
not misleading, or if, in the opinion of counsel for the Placement
Agents, it is necessary to amend or supplement the Final Memorandum to
comply with applicable law, forthwith to prepare and furnish, at its
own expense, to the Placement Agents, either amendments or supplements
to the Final Memorandum so that the statements in the Final Memorandum
as so amended or supplemented will not, in the light of the
circumstances when the Final Memorandum is delivered to a purchaser, be
misleading or so that the Final Memorandum, as amended or supplemented,
will comply with applicable law.
(d) To endeavor to qualify the Securities and the Note
Guarantees for offer and sale under the securities or Blue Sky laws of
such jurisdictions as you shall reasonably request for so long as is
reasonably necessary to complete the resale of the Securities and the
Note Guarantees; provided the Company shall not be required to qualify
as a foreign corporation or consent to service of process in any
jurisdiction, incur any tax or amend its charter or by-laws.
(e) 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 its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the issuance and sale of the Securities
and all other fees or expenses in connection with the preparation of
each Memorandum and all amendments and supplements thereto, including
all printing costs associated therewith, and the delivering of copies
thereof to the Placement Agents, in the quantities herein above
specified, (ii) all costs and expenses related to the transfer and
delivery of the Securities to the Placement Agents, including any
transfer or other taxes payable thereon, (iii) the cost of printing or
producing any Blue Sky or legal investment memorandum in connection
with the offer and sale of the Securities under state securities laws
and all expenses in connection with the qualification of the Securities
and the Note Guarantees for offer and sale under state securities laws
as provided in Section 6(d) hereof, including filing fees and the
reasonable fees and disbursements of one counsel for the Placement
Agents in connection with such qualification and in connection with the
Blue Sky or legal investment memorandum, (iv) any fees charged
<PAGE> 15
14
by rating agencies for the rating of the Securities, (v) the fees and
expenses, if any, incurred in connection with the admission of the
Securities for trading in PORTAL or any appropriate market system and
on the Luxembourg Stock Exchange, (vi) the costs and charges of the
Trustee and any transfer agent, registrar or depositary, (viii) the
cost of the preparation, issuance and delivery of the Securities,
(viii) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the
marketing of the offering of the Securities, including, without
limitation, expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of
the Company, travel and lodging expenses of the representatives and
officers of the Company and any such consultants, and the cost of any
aircraft chartered in connection with the road show, and (ix) all other
costs and expenses incident to the performance of the obligations of
the Company hereunder for which provision is not otherwise made in this
Section. It is understood, however, that except as provided in this
Section, Section 8, and the last paragraph of Section 10, the Placement
Agents will pay all of their costs and expenses, including fees and
disbursements of their counsel, their travel and lodging expenses,
transfer taxes payable on resale of any of the Securities by them and
any advertising expenses connected with any offers they may make.
(f) Neither the Company, the Guarantors, nor any
Affiliate will sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the
Securities Act) which could be integrated with the sale of the
Securities in a manner which would require the registration under the
Securities Act of the Securities.
(g) Not to solicit any offer to buy or offer or sell the
Securities by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.
(h) While any of the Securities remain "restricted
securities" within the meaning of the Securities Act and not salable in
full under Rule 144 (or any successor thereto), to make available, upon
request, to any seller of the Securities the information specified in
Rule 144A(d)(4) under the Securities Act, unless the Company is then
subject to Section 13 or 15(d) of the Exchange Act.
(i) If requested by you, to use its best efforts to
permit the Securities to be designated PORTAL securities in accordance
with the rules and regulations adopted by the National Association of
Securities Dealers, Inc. relating to trading in the PORTAL Market.
<PAGE> 16
15
(j) None of the Company, the Guarantors, their Affiliates
or any person acting on its or their behalf (other than the Placement
Agents) will engage in any directed selling efforts (as that term is
defined in Regulation S) with respect to the Securities, and the
Company, the Guarantors and their Affiliates and each person acting on
its or their behalf (other than the Placement Agents) will comply with
the offering restrictions requirement of Regulation S.
(k) During the period of two years after the Closing
Date, the Company and the Guarantors will not, and will not permit any
of their affiliates (as defined in Rule 144 under the Securities Act)
to resell any of the Securities which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them.
(l) As soon as reasonably practicable to qualify the
Securities for listing on the Luxembourg Stock Exchange.
7. Offering of Securities; Restrictions on Transfer. (a)
Each Placement Agent, severally and not jointly, represents and warrants that
such Placement Agent is a qualified institutional buyer as defined in Rule 144A
under the Securities Act (a "QIB"). Each Placement Agent, severally and not
jointly, agrees with the Company and the Guarantors that (i) it has not and will
not directly or indirectly solicit offers for, or offer or sell, such Securities
by any form of general solicitation or general advertising (as those terms are
used in Regulation D under the Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act and
(ii) it has and will solicit offers for such Securities only from, and will
offer, sell and deliver such Securities only to, persons that it reasonably
believes to be (A) in the case of offers inside the United States, (1) QIBs or
(2) a limited number of other institutional accredited investors (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act ("institutional
accredited investors") that, prior to their purchase of the Securities, deliver
to such Placement Agent a letter containing the representations and agreements
set forth in Appendix A to the Memorandum and (B) in the case of offers outside
the United States, to persons other than U.S. persons ("foreign purchasers,"
which term shall include dealers or other professional fiduciaries in the United
States acting on a discretionary basis for foreign beneficial owners (other than
an estate or trust)) in reliance upon Regulation S under the Securities Act
that, in each case, in purchasing such Securities are deemed to have represented
and agreed as provided in the Final Memorandum under the caption "Transfer
Restrictions."
(b) Each Placement Agent, severally and not jointly, represents,
warrants, and agrees with respect to offers and sales outside the United States
that:
(i) such Placement Agent understands that no action has
been or will be taken in any jurisdiction by the Company that would
permit a public offering of the
<PAGE> 17
16
Securities, or possession or distribution of either Memorandum or any
other offering or publicity material relating to the Securities, in any
country or jurisdiction where action for that purpose is required;
(ii) such Placement Agent will comply with all applicable
laws and regulations in each jurisdiction in which it acquires, offers,
sells or delivers Securities or has in its possession or distributes
either Memorandum or any such other material, in all cases at its own
expense;
(iii) the Securities have not been registered under the
Securities Act and may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons except in
accordance with Rule 144A or Regulation S under the Securities Act or
pursuant to another exemption from the registration requirements of the
Securities Act;
(iv) such Placement Agent has offered the Securities and
will offer and sell the Securities (A) as part of their distribution at
any time and (B) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date, only in accordance
with Rule 903 of Regulation S or as otherwise permitted in Section
7(a); accordingly, neither such Placement Agent, its Affiliates nor any
persons acting on its or their behalf have engaged or will engage,
directly or indirectly, in any directed selling efforts (within the
meaning of Regulation S) with respect to the Securities, and any such
Placement Agent, its Affiliates and any such persons have complied and
will comply with the offering restrictions requirement of Regulation S;
(v) such Placement Agent has (A) not offered or sold and,
prior to the date six months after the Closing Date, will not offer or
sell any Securities to persons in the United Kingdom 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 businesses 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;
(B) 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 Securities in, from or otherwise involving the United
Kingdom, and (C) 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 issue of the Securities to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on;
<PAGE> 18
17
(vi) such Placement Agent understands that the Securities
have not been and will not be registered under the Securities and
Exchange Law of Japan, and represents that it has not offered or sold,
and agrees not to offer or sell, directly or indirectly, any Securities
in Japan or for the account of any resident thereof except pursuant to
any exemption from the registration requirements of the Securities and
Exchange Law of Japan and otherwise in compliance with applicable
provisions of Japanese law; and
(vii) such Placement Agent agrees that, at or prior to
confirmation of sales of the Securities, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Securities from it during the
restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been
registered under the U.S. Securities Act of 1933 (the
"Securities Act") and may not be offered and sold within the
United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of
the offering and the closing date, except in either case in
accordance with Regulation S (or Rule 144A if available) under
the Securities Act. Terms used above have the meaning given to
them by Regulation S."
Terms used in this Section 7(b) have the meanings given to
them by Regulation S.
8. Indemnity and Contribution. (a) Each of the Company
and the Guarantors, jointly and severally, agrees to indemnify and hold harmless
each Placement Agent and each person, if any, who controls any Placement Agent
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in either Memorandum (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact necessary
to make the statements therein in the light of the circumstances under which
they were made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Placement
Agent furnished to the Company in writing by such Placement Agent through you
expressly for use therein; PROVIDED, HOWEVER, that the foregoing indemnity
agreement with respect to any Preliminary Memorandum shall not inure to the
benefit of any Placement Agent from whom the person asserting any such losses,
claims, damages or liabilities purchased Securities, or any person controlling
such Placement Agent, if a copy of the Final Memorandum (as then
<PAGE> 19
18
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Placement
Agent to such person, if required by law so to have been delivered, at or prior
to the written confirmation of the sale of the Securities to such person, and if
the Final Memorandum (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such failure
is the result of noncompliance by the Company with Section 6(a) hereof.
(b) Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless the Company and the Guarantors, their directors,
their officers and each person, if any, who controls the Company and the
Guarantors within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company and the Guarantors to such Placement Agent, but only with
reference to information relating to such Placement Agent furnished to the
Company in writing by such Placement Agent through you expressly for use in
either Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such
reasonable fees and expenses shall be reimbursed as they are incurred. Such firm
shall be designated in writing by Morgan Stanley & Co. Incorporated, in the case
of 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
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of
<PAGE> 20
19
such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a)
or 8(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (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
Placement Agents on the other hand from the offering of the Securities 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 of the Placement
Agents on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Guarantors on the one hand and the Placement Agents on the other hand in
connection with the offering of the Securities shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Securities
(before deducting expenses, but after deducting all discounts, commissions and
fees received by the Placement Agents) received by the Company and the
Guarantors and the total discounts and commissions received by the Placement
Agents in respect thereof, bear to the aggregate offering price of the
Securities. The relative fault of the Company and the Guarantors on the one hand
and of the Placement Agents 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, the Guarantors or by the
Placement Agents and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Placement Agents' respective obligations to contribute pursuant to this
Section 8 are several in proportion to the respective principal amount of
Securities they have purchased hereunder, and not joint.
(e) The Company, the Guarantors and the Placement Agents agree
that it would not be just or equitable if contribution pursuant to this Section
8 were determined by pro rata allocation (even if the Placement Agents were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in
Section 8(d). The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities referred to in Section 8(d) shall be
deemed to include, subject
<PAGE> 21
20
to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this Section 8, no
Placement Agent shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities resold by it in the
initial placement of such Securities were offered to investors exceeds the
amount of any damages that such Placement Agent 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 Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. 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.
(f) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company and the Guarantors contained in this Agreement shall remain operative
and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Placement Agent or
any person controlling any Placement Agent or by or on behalf of the Company,
its officers or directors or any person controlling the Company and (iii)
acceptance of and payment for any of the Securities.
9. Termination. This Agreement shall be subject to
termination by notice given by you to the Company, if (a) after the execution
and delivery of this Agreement and prior to the Closing Date (i) trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange, the
National Association of Securities Dealers, Inc., the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii)
trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
national or international calamity or crisis that, in your judgment, is material
and adverse and (b) in the case of any of the events specified in clauses
9(a)(i) through 9(a)(iv), such event, singly or together with any other such
event, makes it, in your judgment, impracticable to market the Securities on the
terms and in the manner contemplated in the Final Memorandum.
10. Effectiveness; Defaulting Placement Agents. This
Agreement shall become effective upon the execution and delivery hereof by the
parties hereto.
<PAGE> 22
21
If, on the Closing Date, any one or more of the Placement
Agents shall fail or refuse to purchase Securities that it or they have agreed
to purchase hereunder on such date, and the aggregate principal amount of
Securities which such defaulting Placement Agent or Placement Agents agreed but
failed or refused to purchase is not more than one-tenth of the aggregate
principal amount of the Securities to be purchased on such date, the other
Placement Agents shall be obligated severally in the proportions that the
principal amount of Securities set forth opposite their respective names in
Schedule I bears to the aggregate principal amount of Securities set forth
opposite the names of all such non-defaulting Placement Agents, or in such other
proportions as you may specify, to purchase the Securities which such defaulting
Placement Agent or Placement Agents agreed but failed or refused to purchase on
such date; PROVIDED that in no event shall the principal amount of Securities
that any Placement Agent has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 10 by an amount in excess of one-ninth of
such principal amount of Securities without the written consent of such
Placement Agent. If, on the Closing Date, any Placement Agent or Placement
Agents shall fail or refuse to purchase Securities which it or they have agreed
to purchase hereunder on such date and the aggregate principal amount of
Securities with respect to which such default occurs is more than one-tenth of
the aggregate principal amount of Securities to be purchased on such date, and
arrangements satisfactory to you and the Company for the purchase of such
Securities are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Placement Agent or
the Company. In any such case 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 Final Memorandum or in any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Placement Agent from liability in respect of
any default of such Placement Agent under this Agreement.
If this Agreement shall be terminated by the Placement Agents,
or any of them, because of any failure or refusal on the part of the Company or
any of the Guarantors to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Company or any of the
Guarantors shall be unable to perform its obligations under this Agreement, the
Company or the Guarantors will reimburse the Placement Agents or such Placement
Agents as have so terminated this Agreement with respect to themselves,
severally, for all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) reasonably incurred by such Placement Agents in
connection with this Agreement or the offering contemplated hereunder.
11. Notices. All notices and other communications under
this Agreement shall be in writing and mailed, delivered or sent by facsimile
transmission to: if sent to the Placement Agents, Morgan Stanley & Co.
Incorporated, 1585 Broadway, New York, New York 10036, attention: High Yield New
Issues Group, facsimile number (212) 761-0587 and if sent to the Company or any
of the Guarantors c/o the Company, to 12A Manor Parkway,
<PAGE> 23
22
Salem, New Hampshire 03079, attention: Patricia Randall, Vice President and
General Counsel, facsimile number (603)898-6756.
12. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
14. Headings. The headings of the sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed a part of this Agreement.
<PAGE> 24
Very truly yours,
HADCO CORPORATION
By:
-------------------------------
Name:
Title:
HADCO SANTA CLARA, INC.
By:
-------------------------------
Name:
Title:
HADCO PHOENIX, INC.
By:
-------------------------------
Name:
Title:
CCIR OF CALIFORNIA CORP.
By:
-------------------------------
Name:
Title:
CCIR OF TEXAS CORP.
By:
-------------------------------
Name:
Title:
<PAGE> 25
Accepted as of the date hereof
MORGAN STANLEY & CO. INCORPORATED
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
BANCAMERICA ROBERTSON STEPHENS
BT ALEX. BROWN INCORPORATED
By: Morgan Stanley & Co. Incorporated
By:
----------------------------------
Name:
Title:
<PAGE> 26
SCHEDULE I
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT OF
PLACEMENT AGENT SECURITIES TO BE PURCHASED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Morgan Stanley & Co. Incorporated $110,000,000
- --------------------------------------------------------------------------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 40,000,000
- --------------------------------------------------------------------------------
BancAmerica Robertson Stephens 30,000,000
- --------------------------------------------------------------------------------
BT Alex. Brown Incorporated 20,000,000
- --------------------------------------------------------------------------------
Total:.............................................. $200,000,000
- --------------------------------------------------------------------------------
<PAGE> 27
EXHIBIT A
OPINION OF COUNSEL FOR THE COMPANY
Attach draft opinion of the counsel for the Company to be
delivered pursuant to Section 5(c) of the Placement Agreement to the effect
that:
A. The Placement Agreement has been duly authorized, executed and
delivered by the Company.
B. The Securities have been duly authorized by the Company and,
when executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Placement Agents in accordance
with the terms of the Placement Agreement, will be valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity, and will be
entitled to the benefits of the Indenture and the Registration Rights Agreement.
C. Each of the Indenture and the Registration Rights Agreement
has been duly authorized, executed and delivered by the Company, and assuming
due authorization, execution and delivery by the Trustee in the case of the
Indenture and the Placement Agents in the case of the Registration Rights
Agreement, is a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and general
principles of equity and except as rights to indemnification and contribution
under the Registration Rights Agreement may be limited under applicable law.
D. After due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject other than proceedings set forth in the Final
Memorandum and proceedings which such counsel believes are not likely to have a
material adverse effect on the Company and its subsidiaries, taken as a whole,
or on the power or ability of the Company to perform its obligations under the
Placement Agreement, the Indenture, the Registration Rights Agreement or the
Securities, or to consummate the transactions contemplated by the Final
Memorandum.
E. None of the Company nor any of the Guarantors is, and after
giving effect to the offering and sale of the Securities and the application of
the proceeds thereof as described in the Final Memorandum, will be an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended.
<PAGE> 28
A-2
F. The statements in the Final Memorandum under the captions
"Business Environmental Matters", " - Legal Proceedings and Claims" (except for
statements relating to environmental matters and statements relating to the
Riley lawsuit), "Description of the Notes", "Private Placement", "Description of
Certain Indebtedness" and "Transfer Restrictions", insofar as such statements
constitute summaries of the legal matters, documents or proceedings referred to
therein, fairly summarize the matters referred to therein in all material
respects.
G. The statements in the Final Memorandum under the caption
"Certain United States Federal Income Tax Considerations," insofar as such
statements constitute a summary of the United States federal tax laws referred
to therein, are accurate and fairly summarize in all material respects the
United States federal tax laws referred to therein.
H. Based upon the representations, warranties and agreements of
the Company in the Placement Agreement and of the Placement Agents in the
Placement Agreement, it is not necessary in connection with the offer, sale and
delivery of the Securities to the Placement Agents under the Placement Agreement
or in connection with the initial resale of such Securities by the Placement
Agents in accordance with the Placement Agreement to register the Securities or
the Note Guarantees under the Securities Act of 1933 or to qualify the Indenture
under the Trust Indenture Act of 1939, it being understood that no opinion is
expressed as to any subsequent resale of any Security.
I. Such counsel is of the opinion that each document incorporated
by reference in the Final Memorandum (except for financial statements and
schedules and the notes thereto and the other financial and statistical data
included in the Final Memorandum) complied as to form when filed with the
Commission in all material respects with the Exchange Act and the rules and
regulations of the Commission thereunder.
We have participated in conferences with officers and other
representatives of the Company and the Guarantors, the Placement Agents, counsel
for the Placement Agents and representatives of the independent public
accountants of the Company, at which the contents of the Final Memorandum and
related matters were discussed and, although we are not passing upon and do not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Final Memorandum, no facts have come to our
attention which lead us to believe that (i) the Final Memorandum contained as of
its date or contains as of the Closing Date an untrue statement of a material
fact or omitted or omits to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (it being understood that we have not
been requested to and do not make any comment with respect to the financial
statements and the notes thereto and the other financial and statistical data
included in the Final Memorandum).
<PAGE> 29
A-3
With respect to the paragraph above, counsel may state that his or her
opinion and belief are based upon his or her participation in the preparation of
the Final Memorandum (and any amendments or supplements thereto) and review and
discussion of the contents thereof and review of the documents incorporated by
reference therein, but are without independent check or verification except with
respect to paragraphs F and G.
<PAGE> 30
EXHIBIT B
OPINION OF COUNSEL FOR THE COMPANY AND THE GUARANTORS
Attach draft opinion of the counsel for the Company and the
Guarantors to be delivered pursuant to Section 5(d) of the Placement Agreement
to the effect that:
A. The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Final Memorandum and is duly qualified
to transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
B. Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the Final Memorandum
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole; all of the issued shares
of capital stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable, and are owned directly
by the Company, free and clear of all liens, encumbrances, equities or claims.
C. The Placement Agreement has been duly authorized, executed and
delivered by each of the Guarantors.
D. Each of the Indenture and the Registration Rights Agreement
has been duly authorized, executed and delivered by each of the Guarantors, and
assuming due authorization, execution and delivery by the Trustee in the case of
the Indenture and the Placement Agents in the case of the Registration Rights
Agreement, is a valid and binding agreement of, each of the Guarantors,
enforceable against each of the Guarantors in accordance with its terms, subject
to applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity and except as rights to
indemnification and contribution under the Registration Rights Agreement may be
limited under applicable law.
E. After due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject other than proceedings set forth in the Final
Memorandum and proceedings which such counsel
<PAGE> 31
B-1
believes are not likely to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of the Guarantors to
perform their respective obligations under the Placement Agreement, the
Indenture, the Registration Rights Agreement or the Note Guarantees, or to
consummate the transactions contemplated by the Final Memorandum.
F. The execution and delivery by the Company and each of the
Guarantors of, and the performance by the Company and each of the Guarantors of
their respective obligations under, this Agreement, the Indenture, the
Registration Rights Agreement and in the case of the Company, the Securities
will not contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or of the Guarantors or, to the best of
such counsel's knowledge, any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree presently in
effect or in effect on the Closing Date of any governmental body, agency or
court having jurisdiction over the Company or any subsidiary that is material to
the Company and its subsidiaries, taken as a whole, and no consent, approval,
authorization or order of, or qualification with, any governmental body or
agency is required for the performance by the Company or of the Guarantors of
their respective obligations under this Agreement, the Indenture, the
Registration Rights Agreement or, in the case of the Company, the Securities or,
in the case of the Guarantors, the Note Guarantees, except such as may be
required by the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Securities and by Federal and state securities
laws with respect to the Company's and the Guarantors' obligations under the
Registration Rights Agreement.
G. The Note Guarantees have been duly authorized by each of the
Guarantors and, when the Securities are executed and authenticated in accordance
with the provisions of the Indenture and delivered to and paid for by the
Placement Agents in accordance with the terms of this Agreement, will be valid
and binding obligations of each of the Guarantors, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of equity, and will
be entitled to the benefits of the Indenture and the Registration Rights
Agreement.
H. The statements in the Final Memorandum under the caption
"Business - Legal Proceedings and Claims" (except with respect to the Lemelson
claim), insofar as such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly summarize the matters
referred to therein in all material respects.
<PAGE> 32
Very truly yours,
HADCO CORPORATION
By: /s/ Timothy P. Losik
-------------------------------
Name: Timothy P. Losik
Title: Senior Vice President,
Chief Financial Officer
and Treasurer
HADCO SANTA CLARA, INC.
By: /s/ Timothy P. Losik
-------------------------------
Name: Timothy P. Losik
Title: Senior Vice President,
Chief Financial Officer
and Treasurer
HADCO PHOENIX, INC.
By: /s/ Timothy P. Losik
-------------------------------
Name: Timothy P. Losik
Title: Senior Vice President
and Treasurer
CCIR OF CALIFORNIA CORP.
By: /s/ Timothy P. Losik
-------------------------------
Name: Timothy P. Losik
Title: Chief Financial Officer
CCIR OF TEXAS CORP.
By: /s/ Timothy P. Losik
-------------------------------
Name: Timothy P. Losik
Title: Chief Financial Officer
<PAGE> 33
Accepted as of the date hereof
MORGAN STANLEY & CO. INCORPORATED
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
BANCAMERICA ROBERTSON STEPHENS
BT ALEX. BROWN INCORPORATED
By: Morgan Stanley & Co. Incorporated
By: /s/ William H. Wright II
----------------------------------
Name: William H. Wright II
Title: Managing Director
<PAGE> 1
EXHIBIT 11.1
HADCO CORPORATION
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS ENDED
----------------------------------- ------------------------
October 28, October 26, October 25, April 26, May 2,
1995 1996 1997 1997 1998
---------- ---------- ---------- -------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Net income (loss)..................... $21,374 $32,014 $(36,493) $(59,212) $(47,612)
======= ======= ======= ======= =======
Basic weighted average shares
outstanding........................ 9,805 10,245 11,458 10,435 13,130
Weighted average common equivalent
shares............................. 1,001 839 -- -- --
------- ------- ------- ------- -------
Diluted weighted average shares
outstanding........................ 10,806 11,084 11,458 10,435 13,130
======= ======= ======= ======= =======
Basic net income (loss) per share..... $ 2.18 $ 3.12 $ (3.18) $ (5.67) $ (3.63)
======= ======= ======= ======= =======
Diluted net income (loss) per share... $ 1.98 $ 2.89 $ (3.18) $ (5.67) $ (3.63)
======= ======= ======= ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 12.1
HADCO CORPORATION
COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
The following table sets forth the ratio of earnings to fixed charges of Hadco
Corporation for the period October 30, 1993 to May 2, 1998, including pro
forma financial data. The ratio of earnings to fixed charges is computed by
dividing net fixed charges (interest expense on all debt plus the interest
portion of rent expense) into earnings before income taxes and fixed charges.
<CAPTION>
Fiscal Year Ended, Six Months Ended,
--------------------------------------------------------------------- ------------------------------------
Oct. 30, Oct. 29, Oct. 28, Oct. 26, Oct.25, Oct. 25, Apr.26, May 2, May 2,
1993 1994 1995 1996 1997 1997 1997 1998 1998
-------- -------- -------- -------- -------- ------------- -------- -------- --------------
(Pro Forma) (Pro Forma)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings before
income taxes 12,941 $16,434 $35,038 $52,481 $(8,821) $61,113 $(46,424) $(37,426) $14,739
Interest expense,
including interest
portion of rental
expense 1,402 891 537 338 10,923 27,544 5,251 6,294 12,083
Amortization of Debt
Issuance Costs -- -- -- -- 5 -- 5 -- --
------ ------- ------- ------- ------- ------- ------- -------- -------
Earnings before fixed
charges 14,343 17,325 35,575 52,819 2,107 88,657 (41,168) (31,132) 26,822
------ ------- ------- ------- ------- ------- ------- -------- -------
Fixed Charges:
Interest expense,
including interest
portion of rental
expense 1,402 891 537 338 10,923 27,544 5,251 6,294 12,083
Amortization of Debt
Issuance Costs -- -- -- -- 5 -- 5 -- --
------ ------- ------- ------- ------- ------- ------- -------- -------
Fixed charges 1,402 891 537 338 10,928 27,544 5,256 6,294 12,083
------ ------- ------- ------- ------- ------- ------- -------- -------
Ratio of earnings to
fixed charges 10.2x 19.4x 66.2x 156.3x 0.2x 3.2x -- -- 2.2x
</TABLE>
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
June 22, 1998
<PAGE> 1
Exhibit 23.3
Consent of Ernst & Young LLP
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated August 22, 1997, with respect to the consolidated
financial statements of Continental Circuits Corp. included in the Registration
Statement (Form S-4) and related Prospectus of Hadco Corporation for the
registration of $200,000,000 of Senior Subordinated Notes due 2008.
/s/ ERNST & YOUNG LLP
Phoenix, Arizona
June 19, 1998
<PAGE> 1
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2)
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
HADCO CORPORATION
(Exact name of obligor as specified in its charter)
MASSACHUSETTS 04-2393279
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12A MANOR PARKWAY
SALEM, NEW HAMPSHIRE 03079
(Address of principal executive offices) (Zip Code)
SENIOR SUBORDINATED NOTES
(Title of indenture securities)
<PAGE> 2
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System,
Washington, D.C., Federal Deposit Insurance Corporation,
Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its
parent, State Street Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF
ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange
Commission as Exhibit 1 to Amendment No. 1 to the Statement
of Eligibility and Qualification of Trustee (Form T-1) filed
with the Registration Statement of Morse Shoe, Inc. (File
No. 22-17940) and is incorporated herein by reference
thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the
trustee to commence business was necessary or issued is on
file with the Securities and Exchange Commission as Exhibit
2 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS
SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and
Exchange Commission as Exhibit 3 to Amendment No. 1 to the
Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by
reference thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is
on file with the Securities and Exchange Commission as
Exhibit 4 to the Statement of Eligibility and Qualification
of Trustee (Form T-1) filed with the Registration Statement
of Eastern Edison Company (File No. 33-37823) and is
incorporated herein by reference thereto.
1
<PAGE> 3
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS
IN DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(b) OF THE ACT.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority is annexed hereto as
Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the JUNE 9, 1998.
STATE STREET BANK AND TRUST COMPANY
By: /s/ E. Decker Adams
----------------------------------
NAME E. DECKER ADAMS
TITLE VICE PRESIDENT
2
<PAGE> 4
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by HADCO
CORPORATION. of its SENIOR SUBORDINATED NOTES, we hereby consent that reports of
examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ E. Decker Adams
----------------------------------
NAME E. DECKER ADAMS
TITLE VICE PRESIDENT
DATED: JUNE 9, 1998
3
<PAGE> 5
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business March 31, 1998,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act and in accordance
with a call made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin .................... 1,144,309
Interest-bearing balances ............................................. 9,914,704
Securities ..................................................................... 10,062,052
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary ................................... 8,073,970
Loans and lease financing receivables:
Loans and leases, net of unearned income .............................. 6,433,627
Allowance for loan and lease losses ................................... 88,820
Allocated transfer risk reserve ....................................... 0
Loans and leases, net of unearned income and allowances ............... 6,344,807
Assets held in trading accounts ................................................ 1,117,547
Premises and fixed assets ...................................................... 453,576
Other real estate owned ........................................................ 100
Investments in unconsolidated subsidiaries ..................................... 44,985
Customers' liability to this bank on acceptances outstanding ................... 66,149
Intangible assets .............................................................. 263,249
Other assets ................................................................... 1,066,572
----------
Total assets ................................................................... 38,552,020
==========
LIABILITIES
Deposits:
In domestic offices ................................................... 9,266,492
Noninterest-bearing .......................................... 6,824,432
Interest-bearing ............................................. 2,442,060
In foreign offices and Edge subsidiary ................................ 14,385,048
Noninterest-bearing .......................................... 75,909
Interest-bearing ............................................. 14,309,139
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary ................................... 9,949,994
Demand notes issued to the U.S. Treasury and Trading Liabilities ............... 171,783
Trading liabilities ............................................................ 1,078,189
Other borrowed money ........................................................... 406,583
Subordinated notes and debentures .............................................. 0
Bank's liability on acceptances executed and outstanding ....................... 66,149
Other liabilities .............................................................. 878,947
Total liabilities .............................................................. 36,203,185
----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus .................................. 0
Common stock ................................................................... 29,931
Surplus ........................................................................ 450,003
Undivided profits and capital reserves/Net unrealized holding gains (losses) ... 1,857,021
Net unrealized holding gains (losses) on available-for-sale securities ......... 18,136
Cumulative foreign currency translation adjustments ............................ (6,256)
Total equity capital ........................................................... 2,348,835
-----------
Total liabilities and equity capital ........................................... 38,552,020
----------
</TABLE>
4
<PAGE> 6
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Truman S. Casner
5
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000729533
<NAME> HADCO CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-25-1997
<PERIOD-START> OCT-27-1996
<PERIOD-END> OCT-25-1997
<EXCHANGE-RATE> 1
<CASH> 12,171
<SECURITIES> 1,562
<RECEIVABLES> 93,922
<ALLOWANCES> 1,700
<INVENTORY> 46,000
<CURRENT-ASSETS> 166,683
<PP&E> 444,718
<DEPRECIATION> 213,228
<TOTAL-ASSETS> 502,517
<CURRENT-LIABILITIES> 112,990
<BONDS> 0
0
0
<COMMON> 655
<OTHER-SE> 239,257
<TOTAL-LIABILITY-AND-EQUITY> 502,517
<SALES> 648,705
<TOTAL-REVENUES> 648,705
<CGS> 507,313
<TOTAL-COSTS> 571,899
<OTHER-EXPENSES> 78,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (7,627)
<INCOME-PRETAX> (8,821)
<INCOME-TAX> 27,672
<INCOME-CONTINUING> (36,493)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (36,493)
<EPS-PRIMARY> (3.18)
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
Exhibit 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
9-1/2% SENIOR SUBORDINATED NOTES DUE 2008
OF
HADCO CORPORATION
PURSUANT TO
PROSPECTUS DATED , 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME ON , 1998, UNLESS EXTENDED. TENDERS OF 9-1/2% SENIOR SUBORDINATED
NOTES DUE 2008 MAY ONLY BE WITHDRAWN UNDER THE CIRCUMSTANCES DESCRIBED IN THE
PROSPECTUS AND HEREIN.
The Exchange Agent for the Exchange Offer is:
STATE STREET BANK AND TRUST COMPANY
Facsimile Transmission:
(Eligible Institutions Only)
617-664-5290
Confirm by Telephone:
617-664-5587
<TABLE>
<S> <C>
By Mail: By Hand/Overnight Delivery:
State Street Bank and Trust Company State Street Bank and Trust Company
Two International Place-- 61 Broadway--
4th Floor 15th Floor
Boston, MA 02110 New York, NY 10006
Attention: Corporate Trust Division/Kellie Attention: Corporate Trust Division/Kellie Mullen
Mullen
Tel.: (617) 664-5587
</TABLE>
For Information Call
(617) 664-5587
<TABLE>
<CAPTION>
DESCRIPTION OF ORIGINAL NOTES TENDERED
- ------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) Original Notes Tendered
(Please fill in, if blank, exactly as name(s) (Attach additional schedule, if necessary)
appear(s) on Original Notes)
- ------------------------------------------------------ -----------------------------------------------------
<S> <C> <C>
(1) (2) (3)
-------------------------- --------------------------
Certificate Number(s) Total Principal Amount
(if applicable) of Original Notes
Tendered
-------------------------- --------------------------
-------------------------- --------------------------
-------------------------- --------------------------
-------------------------- --------------------------
-------------------------- --------------------------
Total
- ------------------------------------------------------ -------------------------- --------------------------
</TABLE>
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE PROSPECTUS, DATED ,
1998 (THE "PROSPECTUS"), OF HADCO CORPORATION, A MASSACHUSETTS CORPORATION (THE
"COMPANY"), RELATING TO THE OFFER (THE "EXCHANGE OFFER") OF THE COMPANY, UPON
THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THE PROSPECTUS AND HEREIN
AND THE INSTRUCTIONS HERETO, TO EXCHANGE $1,000 PRINCIPAL AMOUNT OF ITS 9-1/2%
SENIOR SUBORDINATED NOTES DUE 2008, WHICH HAVE BEEN
<PAGE> 2
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "EXCHANGE NOTES")
FOR EACH $1,000 PRINCIPAL AMOUNT OF THE OUTSTANDING 9-1/2% SENIOR SUBORDINATED
NOTES DUE 2008, (THE "ORIGINAL NOTES"), OF WHICH $200 MILLION AGGREGATE
PRINCIPAL AMOUNT IS OUTSTANDING. THE MINIMUM PERMITTED TENDER IS $1,000
PRINCIPAL AMOUNT OF ORIGINAL NOTES, AND ALL OTHER TENDERS MUST BE IN INTEGRAL
MULTIPLES OF $1,000.
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION
BY FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE
READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
The Exchange Offer will expire at 5:00 p.m., New York City time, on
, 1998 (the "Expiration Date"), unless extended.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE NOTES PURSUANT TO
THE EXCHANGE OFFER MUST VALIDLY TENDER THEIR ORIGINAL NOTES TO THE EXCHANGE
AGENT ON OR PRIOR TO THE EXPIRATION DATE.
This Letter of Transmittal should be used only to exchange the Original
Notes, pursuant to the Exchange Offer as set forth in the Prospectus.
This Letter of Transmittal is to be used (a) if Original Notes are to
be physically delivered to the Exchange Agent or (b) if delivery of Original
Notes is to be made by book-entry transfer to the account maintained by the
Exchange Agent at The Depository Trust Company ("DTC" or the "Book-Entry
Transfer Facility") pursuant to the procedures set forth in the Prospectus under
the caption "The Exchange Offer-Procedures for Tendering." Delivery of documents
to the Book-Entry Transfer Facility does not constitute delivery to the Exchange
Agent.
Holders whose Original Notes are not immediately available or who
cannot deliver their Original Notes and all other documents required hereby to
the Exchange Agent on or prior to the Expiration Date nevertheless may tender
their Original Notes in accordance with the guaranteed delivery procedures set
forth in the Prospectus under the caption "The Exchange Offer-Guaranteed
Delivery Procedures." See Instruction 1.
THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL THE SURRENDER OF
ORIGINAL NOTES FOR EXCHANGE BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS IN ANY
JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE OF THE EXCHANGE OFFER WOULD NOT
BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION.
All capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Prospectus.
HOLDERS WHO WISH TO EXCHANGE THEIR ORIGINAL NOTES MUST COMPLETE THE BOX
BELOW ENTITLED "METHOD OF DELIVERY," COMPLETE COLUMNS (1) THROUGH (3) IN THE BOX
ON THE COVER ENTITLED "DESCRIPTION OF ORIGINAL NOTES TENDERED" AND SIGN IN THE
APPROPRIATE BOX(ES) BELOW.
2
<PAGE> 3
METHOD OF DELIVERY
[ ] CHECK HERE IF CERTIFICATES FOR TENDERED ORIGINAL NOTES ARE ENCLOSED
HEREWITH.
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY SPECIFIED ABOVE AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
------------------------------------------
Name of Book-Entry Transfer Facility:
[ ] The Depository Trust Company
Account Number: Transaction Code Number:
------------------- -------
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING (SEE INSTRUCTIONS 1 AND 4):
Name(s) of Registered Holder(s):
----------------------------------------
Window Ticket Number (if any):
----------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
---------------------
Name of Eligible Institution which Guaranteed Delivery:
-----------------
IF DELIVERED BY THE BOOK-ENTRY TRANSFER FACILITY, CHECK BOX OF BOOK-ENTRY
TRANSFER FACILITY:
[ ] The Depository Trust Company
Account Number: Transaction Code Number:
--------------------- ---------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE TEN ADDITIONAL
COPIES OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
------------------------------------------------------------------
Address:
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
3
<PAGE> 4
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Original Notes
indicated in the box on the cover entitled "Description of Original Notes
Tendered." Subject to, and effective upon, the acceptance for exchange of the
Original Notes tendered hereby, the undersigned hereby irrevocably sells,
assigns and transfers to or upon the order of the Company all right, title and
interest in and to such Original Notes, and hereby irrevocably constitutes and
appoints the Exchange Agent the true and lawful agent and attorney-in-fact of
the undersigned (with full knowledge that said Exchange Agent also acts as the
agent of the Company and as Trustee under the indenture governing the Original
Notes and the Exchange Notes) with respect to such Original Notes, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest) to (a) deliver certificates representing such
Original Notes, and to deliver all accompanying evidences of transfer and
authenticity to or upon the order of the Company upon receipt by the Exchange
Agent, as the undersigned's agent, of the Exchange Notes to which the
undersigned is entitled upon the acceptance by the Company of such Original
Notes for exchange pursuant to the Exchange Offer, (b) receive all benefits and
otherwise to exercise all rights of beneficial ownership of such Original Notes,
all in accordance with the terms of the Exchange Offer, and (c) present such
Original Notes for transfer on the register for such Original Notes.
The undersigned acknowledges that prior to this Exchange Offer, there
has been no public market for the Original Notes or the Exchange Notes. If a
market for the Exchange Notes should develop, the Exchange Notes could trade at
a discount from their principal amount. The undersigned is aware that the
Company does not intend to list the Exchange Notes on a national securities
exchange and that there can be no assurance that an active market for the
Exchange Notes will develop.
The undersigned also acknowledges that this Exchange Offer is being
made in reliance on an interpretation by the staff of the Securities and
Exchange Commission (the "Commission") that the Exchange Notes issued pursuant
to the Exchange Offer in exchange for the Original Notes may be offered for
resale, resold and otherwise transferred by any person receiving such Exchange
Notes whether or not such person is the holder thereof, (other than any such
holder or other person which is (i) a broker-dealer that receives Exchange Notes
for its own account in exchange for Original Notes, where such Original Notes
were acquired by such broker-dealer as a result of market-making or other
trading activities, or (ii) an "affiliate" of the Company or any Guarantor
within the meaning of Rule 405 under the Securities Act of 1933, as amended (the
"Securities Act")) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such Exchange Notes are
acquired in the ordinary course of business of such holder or other person, such
holder or other person is not engaged in or intending to engage in a
distribution of the Exchange Notes, and such holder or other person has no
arrangement with any person to participate in the distribution of such Exchange
Notes. See Morgan Stanley & Co. Incorporated, SEC No-Action Letter (available
June 5, 1991) and Exxon Capital Holdings Corporation, SEC No-Action Letter
(available May 13, 1988).
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange
Notes, it represents that the Original Notes to be exchanged for Exchange Notes
were acquired as a result of market-making or other trading activities and it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Notes; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED
FROM OR ON BEHALF OF, HOLDERS OF THE ORIGINAL NOTES IN ANY JURISDICTION IN WHICH
THE MAKING OF THE EXCHANGE OFFER OR
4
<PAGE> 5
ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION
OR WOULD OTHERWISE NOT BE IN COMPLIANCE WITH ANY PROVISION OF ANY APPLICABLE
SECURITY LAW.
The undersigned represents that (a) the Exchange Notes acquired
pursuant to the Exchange Offer are being obtained in the ordinary course of
business of the undersigned or other person receiving such Exchange Notes, (b)
neither the undersigned nor any such other person is engaged in or intends to
engage in a distribution of such Exchange Notes, (c) neither the undersigned nor
any such other person has any arrangement or understanding with any person to
participate in a distribution of the Exchange Notes and (d) neither the
undersigned nor any such other person is an "affiliate" as defined under Rule
405 of the Securities Act, of the Company or any Guarantor, or if such holder is
such an affiliate, that such holder will comply with the registration and the
prospectus delivery requirements of the Securities Act in connection with the
disposition of any Exchange Notes to the extent applicable.
The undersigned understands and acknowledges that the Company reserves
the right in its sole discretion to purchase or make offers for any Original
Notes that remain outstanding subsequent to the Expiration Date or, as set forth
in the Prospectus under the caption "The Exchange Offer -- Conditions," to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Original Notes in the open market, in privately negotiated transactions
or otherwise. The terms of any such purchases or offers will differ from the
terms of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned
accepts the terms and conditions of the Exchange Offer, has full power and
authority to tender, exchange, assign and transfer the Original Notes tendered
hereby, and that when the same are accepted for exchange by the Company, the
Company will acquire good and unencumbered title thereto, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim or right. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Exchange Agent or the Company to be necessary
or desirable to complete the sale, assignment and transfer of the Original Notes
tendered hereby.
The undersigned agrees that all authority conferred or agreed to be
conferred by this Letter of Transmittal and every obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrators, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. The undersigned also agrees that, except as
stated in the Prospectus, the Original Notes tendered hereby cannot be
withdrawn.
The undersigned understands that tenders of the Original Notes pursuant
to any one of the procedures described in the Prospectus under the caption "The
Exchange Offer-Procedures for Tendering" and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company in
accordance with the terms and subject to the conditions of the Exchange Offer.
The undersigned understands that by tendering Original Notes pursuant
to one of the procedures described in the Prospectus and the instructions
thereto, the tendering holder will be deemed to have waived the right to receive
any payment in respect of interest on the Original Notes accrued up to the date
of issuance of the Exchange Notes.
The undersigned recognizes that, under certain circumstances set forth
in the Prospectus, the Company may not be required to accept for exchange any of
the Original Notes tendered. Original Notes not accepted for exchange or
withdrawn will be returned to the undersigned at the address set forth below
unless otherwise indicated under "Special Delivery Instructions" below.
Unless otherwise indicated herein under the box entitled "Special
Issuance Instructions" below, Exchange Notes, and Original Notes not validly
tendered or accepted for exchange, will be issued in the name of the undersigned
or, in the case of a book-entry transfer of Original Notes, credited to the
account indicated above at DTC. Similarly, unless otherwise indicated under the
box entitled "Special Delivery Instructions" below, Exchange Notes, and Original
Notes not validly tendered or accepted for exchange, will be delivered to the
undersigned at the address shown below the signature of the undersigned or, in
the case of a book-entry transfer of Original Notes, credited to the account
indicated above at DTC. The
5
<PAGE> 6
undersigned recognizes that the Company has no obligation pursuant to the
"Special Issuance Instructions" to transfer any Original Notes from the name of
the registered holder thereof if the Company does not accept for exchange any of
the principal amount of such Original Notes so tendered.
All questions as to the validity, form, eligibility (including time of
receipt), and withdrawal of the tendered Original Notes will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Original
Notes not properly tendered or any Original Notes the Company's acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the right to waive any irregularities or conditions of tender as
to particular Original Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in this Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Original Notes must be
cured within such time as the Company shall determine. None of the Company, the
Exchange Agent or any other person shall be under any duty to give notification
of defects or irregularities with respect to tenders of Original Notes, nor
shall any of them incur any liability for failure to give such notification.
Tenders of Original Notes will not be deemed to have been made until such
irregularities have been cured or waived. Any Original Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned (or, in the case
of Original Notes tendered by book-entry transfer, credited to an account at
DTC) without cost to such holder by the Exchange Agent to the tendering holders
of Original Notes, unless otherwise provided in this Letter of Transmittal, as
soon as practicable following the Expiration Date.
THE COMPANY HAS AGREED THAT, SUBJECT TO THE PROVISIONS OF A
REGISTRATION RIGHTS AGREEMENT DATED MAY 13, 1998 BETWEEN THE COMPANY, THE
GUARANTORS AND THE PLACEMENT AGENTS NAME THEREIN, THE PROSPECTUS, AS IT MAY BE
AMENDED OR SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A EXCHANGING
BROKER-DEALER (AS DEFINED BELOW) IN CONNECTION WITH RESALES OF EXCHANGE NOTES
RECEIVED IN EXCHANGE FOR ORIGINAL NOTES, WHERE SUCH ORIGINAL NOTES WERE ACQUIRED
BY SUCH EXCHANGING BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF
MARKET-MAKING OR OTHER TRADING ACTIVITIES, FOR A PERIOD ENDING 180 DAYS AFTER
THE EXPIRATION DATE OR, IF EARLIER, WHEN ALL SUCH EXCHANGE NOTES HAVE BEEN
DISPOSED OF BY SUCH EXCHANGING BROKER-DEALER. IN THAT REGARD, EACH BROKER-DEALER
WHO ACQUIRED ORIGINAL NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR
OTHER TRADING ACTIVITIES (AN "EXCHANGING BROKER-DEALER"), BY TENDERING SUCH
ORIGINAL NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, AGREES THAT, UPON
RECEIPT OF NOTICE FROM THE COMPANY OF THE OCCURRENCE OF ANY EVENT OR THE
DISCOVERY OF ANY FACT WHICH MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY
REFERENCE IN THE PROSPECTUS UNTRUE IN ANY MATERIAL RESPECT OR WHICH CAUSES THE
PROSPECTUS TO OMIT TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE
STATEMENTS CONTAINED THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY
WERE MADE, NOT MISLEADING OR OF THE OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED
IN THE REGISTRATION RIGHTS AGREEMENT, SUCH EXCHANGING BROKER-DEALER WILL SUSPEND
THE SALE OF EXCHANGE NOTES PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY HAS
AMENDED OR SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR
OMISSION AND HAS FURNISHED COPIES OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO
THE EXCHANGING BROKER-DEALER OR THE COMPANY HAS GIVEN NOTICE THAT THE SALE OF
THE EXCHANGE NOTES MAY BE RESUMED, AS THE CASE MAY BE.
6
<PAGE> 7
THE UNDERSIGNED, BY COMPLETING THE BOX ON THE COVER ENTITLED
"DESCRIPTION OF ORIGINAL NOTES TENDERED" AND SIGNING THIS LETTER OF TRANSMITTAL,
WILL BE DEEMED TO HAVE TENDERED THE ORIGINAL NOTES AND MADE CERTAIN
REPRESENTATIONS (INCLUDING AS TO FINANCIAL STATUS) DESCRIBED IN THE PROSPECTUS
AND HEREIN.
SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
X
-----------------------------------------------------------------------------
X
-----------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S) OR AUTHORIZED SIGNATORY)
Must be signed by the registered holder(s) of Original Notes exactly as
their name(s) appear(s) on certificate(s) for the Original Notes or by person(s)
authorized to become registered holder(s) by endorsements and documents
transmitted with this Letter of Transmittal. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation,
agent or other person is acting in a fiduciary or representative capacity,
please provide the following information. See Instruction 3.
Name(s):
----------------------------------------------------------------------
-----------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
--------------------------------------------------------
Address:
---------------------------------------------------------------------
-----------------------------------------------------------------------------
(INCLUDING ZIP CODE)
Area Code and Telephone No.:
--------------------------------------------------
Tax Identification or Social Security Number(s):
-----------------------------
SIGNATURE GUARANTEE
(SEE INSTRUCTION 3)
-----------------------------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURE(S))
-----------------------------------------------------------------------------
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NO., INCLUDING AREA CODE, OF FIRM)
-----------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
-----------------------------------------------------------------------------
(PRINTED NAME)
-----------------------------------------------------------------------------
(TITLE)
Date: , 1998
-------------------
7
<PAGE> 8
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3, 4 AND 6)
To be completed ONLY if certificates for Original Notes in a principal
amount not exchanged and/or certificates for Exchange Notes are to be issued in
the name of someone other than the undersigned, of if Original Notes are to be
returned by credit to an account maintained by the Book-Entry Transfer Facility.
Issue (check appropriate box)
[ ] Exchange Notes to:
[ ] Original Notes to:
Name:
-----------------------------
(Please Print)
Address:
------------------------------
------------------------------
(Zip Code)
------------------------------
Taxpayer Identification Number
(YOU MUST ALSO COMPLETE
SUBSTITUTE FORM W-9 BELOW.)
Credit unaccepted or withdrawn Original Notes
tendered by book-entry transfer to:
[ ] The Depository Trust Company
account set forth below
- --------------------------------------
(DTC ACCOUNT NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3, 4 AND 6)
To be completed ONLY if certificates for Original Notes in a principal
amount not exchanged and/or certificates for Exchange Notes are to be sent to
someone other than the undersigned at an address other than that shown above.
Deliver (check appropriate box)
[ ] Exchange Notes to:
[ ] Original Notes to:
Name:
-------------------------------
(Please Print)
Address:
------------------------------
------------------------------
(Zip Code)
------------------------------
Taxpayer Identification Number
(YOU MUST ALSO COMPLETE
SUBSTITUTE FORM W-9 BELOW.)
8
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE
EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. To be effectively tendered pursuant to the Exchange Offer,
the Original Notes (or timely confirmation of a book-entry transfer of such
Original Notes into the Exchange Agent's account at DTC), together with a
properly completed Letter of Transmittal (or facsimile thereof), duly executed
by the registered holder thereof, and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent at one of its
addresses set forth on the front page of this Letter of Transmittal. If the
beneficial owner of any Original Notes is not the registered holder, then such
person may validly tender his or her Original Notes only by obtaining and
submitting to the Exchange Agent a properly completed Letter of Transmittal from
the registered holder. ORIGINAL NOTES SHOULD BE DELIVERED ONLY TO THE EXCHANGE
AGENT AND NOT TO THE COMPANY OR TO ANY OTHER PERSON.
THE METHOD OF DELIVERY OF ORIGINAL NOTES AND THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND
RISK OF THE HOLDER, BUT IF SUCH DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE
HOLDER USE PROPERLY INSURED, REGISTERED OR CERTIFIED MAIL WITH RETURN RECEIPT
REQUESTED. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT ORIGINAL NOTES
USE AN OVERNIGHT OR HAND DELIVERY SERVICE.
IF CERTIFICATES FOR ORIGINAL NOTES ARE SENT BY MAIL, IT IS SUGGESTED
THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO
PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON
THE EXPIRATION DATE.
If a holder desires to tender Original Notes and such holder's Original
Notes are not immediately available or time will not permit such holder's Letter
or Transmittal, Original Notes, or other required documents to reach the
Exchange Agent on or before the Expiration Date or such holder cannot complete
the procedures for book-entry transfer on a timely basis, such holder's tender
may be effected if:
(a) such tender is made by or through an Eligible Institution (as
defined);
(b) prior to the Expiration Date, the Exchange Agent has received a
properly completed and duly executed Notice of Guaranteed Delivery (by facsimile
transmission, mail or hand delivery) from such Eligible Institution setting
forth the name and address of the holder of such Original Notes, the certificate
number or numbers of such Original Notes and the principal amount of Original
Notes tendered and stating that the tender is being made thereby and
guaranteeing that, within three business days after the Expiration Date, a duly
executed Letter of Transmittal, or facsimile thereof, together with the Original
Notes to be tendered in proper form for transfer (or a confirmation of a
book-entry transfer into the Exchange Agent's account at the Depository of
Original Notes delivered electronically) and any other documents required by
this Letter of Transmittal and the instructions hereto, will be deposited by
such Eligible Institution with the Exchange Agent; and
(c) this Letter of Transmittal (or facsimile thereof), a Notice of
Guaranteed Delivery and Original Notes, in proper form for transfer (or a
confirmation of a book-entry transfer into the Exchange Agent's account at the
Depository of Original Notes delivered electronically), and all other required
documents are received by the Exchange Agent within three business days after
the date of such telegram, facsimile transmission or letter.
9
<PAGE> 10
2. WITHDRAWAL OF TENDERS. Tendered Original Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date, unless
previously accepted for exchange.
To be effective, a written or facsimile transmission notice of
withdrawal must (a) be received by the Exchange Agent at one of its addresses
set forth on the first page of this Letter of Transmittal prior to 5:00 p.m.,
New York City time, on the Expiration Date, unless previously accepted for
exchange, (b) specify the name of the person who tendered the Original Notes,
(c) contain the description of the Original Notes to be withdrawn, the
certificate numbers shown on the particular certificates evidencing such
Original Notes and the aggregate principal amount represented by such Original
Notes and (d) be signed by the holder of such Original Notes in the same manner
as the original signature appears on this Letter of Transmittal (including any
required signature guarantees) or be accompanied by evidence sufficient to have
the Trustee with respect to the Original Notes register the transfer of such
Original Notes into the name of the holder withdrawing the tender. The notice
must also specify the name in which any such Original Notes are to be
registered, if different from that of the depositor of such Original Notes. If
Original Notes have been tendered pursuant to the procedures for book-entry
transfer, the notice of withdrawal must specify the name and number of the
account at DTC to be credited with the withdrawal of the Original Notes. The
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution unless such Original Notes have been tendered (a) by a registered
holder of Original Notes who has not completed either the box entitled "Special
Issuance Instructions" or the box entitled "Special Delivery Instructions" on
this Letter of Transmittal or (b) for the account of an Eligible Institution.
All questions as to the validly, form and eligibility (including time of
receipt) of such withdrawal notices shall be determined by the Company, whose
determination shall be final and binding on all parties. If the Original Notes
to be withdrawn have been delivered or otherwise identified to the Exchange
Agent, a signed notice of withdrawal is effective immediately upon receipt by
the Exchange Agent of a written or facsimile transmission notice of withdrawal
even if physical release is not yet effected. Withdrawals may not be rescinded,
and any Original Notes withdrawn will thereafter be deemed not validly tendered
for purposes of the Exchange Offer. However, properly withdrawn Original Notes
may be retendered by following one of the procedures described under "The
Exchange Offer -- Procedures for Tendering" in the Prospectus at any time on or
prior to the applicable Expiration Date.
Any Original Notes which have been tendered but which are not accepted
for exchange will be returned to the holder thereof without cost to such holder
as soon as practicable after withdrawal, rejection of tender or termination of
the Exchange Offer.
Where Original Notes were tendered by book-entry transfer and such
Original Notes are to be returned to the holder thereof for any reason, such
Original Notes will be credited to the account of such holder maintained at DTC,
and such procedure shall satisfy the Company's obligation to return Original
Notes in the event such return is required by the terms described herein and in
the Prospectus.
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL, BOND POWERS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered holder(s) of the Original Notes tendered hereby, the signature
must correspond exactly with the name(s) as written on the face of the
certificates without any change whatsoever.
If any Original Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any Original Notes tendered hereby are registered in different names
on several certificates, it will be necessary to complete, sign and submit as
many separate copies of this Letter of Transmittal as there are different
registrations of certificates.
10
<PAGE> 11
When this Letter of Transmittal is signed by the registered holder or
holders specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required unless Exchange Notes are to be issued, or
certificates for any untendered principal amount of Original Notes are to be
reissued, to a person other than the registered holder.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any certificate(s) specified herein such certificate(s)
must be endorsed or accompanied by appropriate bond powers, in either case
signed exactly as the name(s) of the registered holder(s) appear(s) on the
certificate(s).
If this Letter of Transmittal or a Notice of Guaranteed Delivery or any
certificates or bond powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so indicate when
signing, and unless waived by the Company, proper evidence satisfactory to the
Company of their authority so to act must be submitted.
Except as described below, signatures on this Letter of Transmittal or
a notice of withdrawal, as the case may be, must be guaranteed by an Eligible
Institution. Signatures on this Letter of Transmittal or a notice of withdrawal,
as the case may be, need not be guaranteed if the Original Notes tendered
pursuant hereto are tendered (a) by a registered holder of Original Notes who
has not completed either the box entitled "Special Issuance Instructions" or the
box entitled "Special Delivery Instructions" on this Letter of Transmittal or
(b) for the account of an Eligible Institution. In the event that signatures on
this Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a firm which is a member of
a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (each as "Eligible
Institutions").
Endorsements on certificates for Original Notes or signatures on bond
powers required by this Instruction 3 must be guaranteed by an Eligible
Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders should
indicate in the applicable box the name and address to which certificates for
Exchange Notes and/or substitute certificates evidencing Original Notes for the
principal amounts not exchanged are to be issued or sent, if different from the
name and address of the person signing this Letter of Transmittal. In the case
of issuance in a different name, the employer identification or social security
number of the person named must also be indicated. If no such instructions are
given, any Original Notes not exchanged will be returned to the name and address
of the person signing this Letter of Transmittal.
5. TAX IDENTIFICATION NUMBER AND BACKUP WITHHOLDING. Federal income tax
law of the United States requires that a holder of Original Notes whose Original
Notes are accepted for exchange provide the Company with his correct taxpayer
identification number, which, in the case of a holder who is an individual, is
his or her social security number, or otherwise establish an exemption from
backup withholding. If the Company is not provided with the correct taxpayer
identification number, the exchanging holder of Original Notes may be subject to
a $50 penalty imposed by the Internal Revenue Service (the "IRS"). In addition,
interest on the Exchange Notes acquired pursuant to the Exchange Offer may be
subject to backup withholding in an amount equal to 31% of any interest payment.
If withholding occurs and results in an overpayment of taxes, a refund may be
obtained.
To prevent backup withholding, each exchanging holder of Original Notes
subject to backup withholding must provide his correct taxpayer identification
number by completing the Substitute Form W-9 provided in this Letter of
Transmittal, certifying that the taxpayer identification
11
<PAGE> 12
number provided is correct (or that the exchanging holder of Original Notes is
awaiting a taxpayer identification number) and that either (a) the exchanging
holder has not yet notified by the IRS that such holder is subject to backup
withholding as a result of failure to report all interest or dividends or (b)
the IRS has notified the exchanging holder that such holder is no longer subject
to backup withholding.
Certain exchanging holders of Original Notes (including, among others,
all corporations and certain foreign individuals) are not subject to these
backup withholding requirements. A foreign individual and other exempt holders
(i.e. corporations) should certify, in accordance with the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9," to
such exempt status on the Substitute Form W-9 provided in this Letter of
Transmittal.
6. TRANSFER TAXES. Holders tendering pursuant to the Exchange Offer
will not be obligated to pay brokerage commissions or fees or to pay transfer
taxes with respect to their exchange under the Exchange Offer unless the box
entitled "Special Issuance Instructions" in this Letter of Transmittal has been
completed, or unless the Exchange Notes are to be issued to any person other
than the holder of the Original Notes tendered for exchange. The Company will
pay all other charges or expenses in connection with the Exchange Offer. If
holders tender Original Notes for exchange and the Exchange Offer is not
consummated, certificates representing the Original Notes will be returned to
the holders at the Company's expense.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificate(s) specified in this Letter
of Transmittal.
7. INADEQUATE SPACE. If the space provided herein is inadequate, the
aggregate principal amount of the Original Notes being tendered and the
certificate numbers (if available) should be listed on a separate schedule
attached hereto and separately signed by all parties required to sign this
Letter of Transmittal.
8. PARTIAL TENDERS. Tenders of Original Notes will be accepted only in
integral multiples of $1,000. If tenders are to be made with respect to less
than the entire principal amount of any Original Notes, fill in the principal
amount of Original Notes which are tendered in column (3) in the box on the
cover entitled "Description of Original Notes Tendered." In the case of partial
tenders, new certificates representing the Original Notes in fully registered
form for the remainder of the principal amount of the Original Notes will be
sent to the person(s) signing this Letter of Transmittal, unless otherwise
indicated in the appropriate place on this Letter of Transmittal, as promptly as
practicable after the expiration or termination of the Exchange Offer.
9. MUTILATED, LOST, STOLEN OR DESTROYED ORIGINAL NOTES. Any holder
whose Original Notes have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address indicated above for further
instructions.
10. REQUEST FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for
assistance or additional copies of the Prospectus or this Letter of Transmittal
may be obtained from the Exchange Agent at its telephone number set forth on the
cover.
12
<PAGE> 13
PAYER'S NAME: STATE STREET BANK AND TRUST COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUBSTITUTE Part I - PLEASE PROVIDE
FORM W-9 YOUR TIN IN THE BOX AT
Department of the Treasury RIGHT AND CERTIFY BY ------------------------------
Internal Revenue Service SIGNING AND DATING Social Security Number
BELOW.
Payer's Request for Taxpayer's
Identification Number (TIN) OR
--------------------------
Employer Identification Number
</TABLE>
- --------------------------------------------------------------------------------
CERTIFICATION - UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding either because: (a) I am exempt
from backup withholding, or (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding.
---------------------------------------- -------------------------------
PART II -- AWAITING TIN [ ] PART III -- EXEMPT [ ]
---------------------------------------- -------------------------------
CERTIFICATION INSTRUCTIONS - You must cross out item (2) above if you
have been notified by the IRS that you are currently subject to backup
withholding because of under-reporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were
subject to backup withholding you received another notification from the
IRS that you are no longer subject to backup withholding, do not cross
out item (2). If you are exempt from backup withholding, check the box
in Part III.
Signature Date
-------------------------------- --------------------
PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN)
Please fill out your name and address below:
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address (Number and street)
- --------------------------------------------------------------------------------
City, State and Zip Code
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER
AND THE SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM
W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART II OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number to the payor by the time of
payment, 31% of all reportable payments made to me will be withheld until I
provide a number and that, if I do not provide my taxpayer identification number
within 60 days, such retained amounts shall be remitted to the IRS as backup
withholding.
- ---------------------------------- -------------------------------
Signature Date
13
<PAGE> 1
Exibit 99.2
NOTICE OF GUARANTEED DELIVERY
TO TENDER FOR EXCHANGE
9 1/2% SENIOR SUBORDINATED NOTES DUE 2008
OF
HADCO CORPORATION
PURSUANT TO
PROSPECTUS DATED _______ __, 1998
This Notice of Guaranteed Delivery or a form substantially equivalent
hereto must be used to accept the offer (the "Exchange Offer") of Hadco
Corporation, a Massachusetts corporation (the "Company"), to exchange $1,000
principal amount of its 9 1/2% Senior Subordinated Notes due 2008, which have
been registered under the Securities Act of 1933, as amended, for each $1,000
principal amount of the outstanding 9 1/2% Senior Subordinated Notes due 2008
(the "Original Notes") if (a) certificates representing the Original Notes are
not immediately available or (b) time will not permit the Original Notes and all
other required documents to reach the Exchange Agent on or prior to the
Expiration Date or (c) the procedures for book-entry transfer cannot be
completed on a timely basis. This form may be delivered by an Eligible
Institution (as defined) by mail or hand delivery or transmitted, via facsimile,
telegram or telex to the Exchange Agent as set forth below. All capitalized
terms used herein but not defined herein shall have the meanings ascribed to
them in the Prospectus dated __________ __, 1998 (the "Prospectus").
THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL THE SURRENDER OF
ORIGINAL NOTES BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF ORIGINAL NOTES IN
ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE OF THE EXCHANGE OFFER WOULD
NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON _________ __,
1998, UNLESS EXTENDED. TENDERS OF 9 1/2% SENIOR SUBORDINATED NOTES DUE 2008 MAY
ONLY BE WITHDRAWN UNDER THE CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS AND THE
LETTER OF TRANSMITTAL.
The Exchange Agent for the Exchange Offer:
STATE STREET BANK AND TRUST COMPANY
Facsimile Transmission:
(Eligible Institutions Only)
617-664-5290
Confirm by Telephone:
617-664-5587
<TABLE>
<CAPTION>
By Mail: By Hand/Overnight Delivery:
<S> <C>
State Street Bank and Trust Company State Street Bank and Trust Company
Two International Place 61 Broadway
4th Floor 15th Floor
Boston, MA 02110 New York, NY 10006
Attention: Corporate Trust Division/Kellie Mullen Attention: Corporate Trust Division/Kellie Mullen
Tel: (617) 664-5587
</TABLE>
For Information Call:
(617) 664-5587
<PAGE> 2
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION VIA FACSIMILE, TELEGRAM OR TELEX, OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on
the Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
2
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and
subject to the conditions set forth in the Prospectus, receipt of which is
hereby acknowledged, the principal amount of Original Notes set forth below,
pursuant to the guaranteed delivery procedures set forth in the Prospectus under
the caption "The Exchange Offer-Guaranteed Delivery Procedures."
Subject to and effective upon acceptance for exchange of the Original
Notes tendered herewith, the undersigned hereby sells, assigns and transfers to
or upon the order of the Company all right, title and interest in and to, and
any and all claims in respect of or arising or having arisen as a result of the
undersigned's status as a holder of, all Original Notes tendered hereby. In the
event of a termination of the Exchange Offer, the Original Notes tendered
pursuant thereto will be returned to the tendering Original Note holder
promptly.
The undersigned hereby represents and warrants that the undersigned
accepts the terms and conditions of the Prospectus and the Letter of
Transmittal, has full power and authority to tender, sell, assign and transfer
the Original Notes tendered hereby and that the Company will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim. The undersigned will,
upon request, execute and deliver any additional documents deemed by the
Exchange Agent or the Company to be necessary or desirable to complete the sale,
assignment and transfer of the Original Notes tendered.
All authority herein conferred or agreed to be conferred by this Notice
of Guaranteed Delivery shall survive the death or incapacity of the undersigned
and every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
PLEASE SIGN AND COMPLETE
<TABLE>
<S> <C>
Signature(s) of Registered Holder(s) Address(es):
or Authorized Signatory:
--------------------
- --------------------------------- --------------------
- --------------------------------- --------------------
--------------------
Name(s) of Registered Holder(s): Area Code and Telephone No.:
- -------------------------------- --------------------
- --------------------------------
Principal Amount of Original Notes Tendered:
- ------------------------------ If Original Notes
will be delivered by
a book-entry
transfer, check
trust company:
Certificate No(s). of Original Notes (if available):
[ ] The Depository Trust Company
- -------------------------
Transaction Code No.:
- ------------------------- ---------------------
Depository Account No.:
- ------------------------- ---------------------
</TABLE>
<PAGE> 4
This Notice of Guaranteed Delivery must be signed by the registered
holder(s) of Original Notes exactly as their name(s) appear(s) on the Original
Notes or by person(s) authorized to become registered holder(s) by endorsements
and documents transmitted with this Notice of Guaranteed Delivery. If signature
is by a trustee, guardian, attorney-in-fact, officer of a corporation, executor,
administrator, agent or other representative, such person must provide the
following information:
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Capacity:
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Address(es):
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the United
States (each, an "Eligible Institution") hereby guarantees that, within three
business days from the date of this Notice of Guaranteed Delivery, a properly
completed and validly executed Letter of Transmittal (or a facsimile thereof),
together with Original Notes tendered hereby in proper form for transfer (or
confirmation of the book-entry transfer of such Original Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility (as defined in the Letter of
Transmittal)) and all other required documents will be deposited by the
undersigned with the Exchange Agent at one of its addresses set forth above.
<TABLE>
<S> <C>
Name of Firm: ------------------------------------
-------------------------------- Authorized Signature
Address: Name:
--------------------------------- -------------------------------
Title:
--------------------------------- -------------------------------
Area Code and Telephone No.: Date:
--------------------------------- -------------------------------
</TABLE>
DO NOT SEND ORIGINAL NOTES WITH THIS FORM. ACTUAL SURRENDER OF ORIGINAL NOTES
MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND
VALIDLY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
4
<PAGE> 1
Exhibit 99.3
EXCHANGE AGENCY AGREEMENT
June __, 1998
State Street Bank and Trust Company
Corporate Trust Department
Two International Place - 4th Floor
Boston, Massachusetts 02110
Ladies and Gentlemen:
Hadco Corporation, a corporation organized under the laws of the
Commonwealth of Massachusetts (the "Company") is offering to exchange (the
"Exchange Offer"), upon the terms and subject to the conditions set forth in the
Company's Form S-4 Registration Statement filed with the SEC on __________, 1998
(the "Prospectus"), and the accompanying Letter of Transmittal and instructions
thereto (the "Letter of Transmittal"), its 9-1/2% Senior Subordinated Notes Due
2008 (the "New Notes") for all of its outstanding 9-1/2% Senior Subordinated
Notes Due 2008 (the "Old Notes") of the Company of which $ 200,000.00 principal
amount is outstanding. The New Notes and the Old Notes are together referred to
herein as the "Notes". Capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed to them in the Prospectus or Letter of
Transmittal.
You are hereby appointed and authorized to act as agent (the "Exchange
Agent") to effectuate the exchange of Old Notes for New Notes, on the terms and
subject to the conditions of this agreement (the "Agreement"). In that
connection, the following documents have been delivered to you:
(i) Prospectus;
(ii) the Letter of Transmittal accompanying the Prospectus, to be
used by the holders of Old Notes ("Old Noteholders") in
tendering their Old Notes; and
(iii) the Notice of Guaranteed Delivery to be used by Old
Noteholders whose Old Notes are not immediately available or
who cannot deliver their Old Notes, the
<PAGE> 2
State Street Bank and Trust Company
June __, 1998
Page 2
Letter of Transmittal or any other required documents to you
prior to the expiration of the Exchange Offer.
The Exchange Offer will expire at the time and on the date specified in
the Prospectus (the "Expiration Date") unless the Exchange Offer is extended by
the Company, in which case the term "Expiration Date" shall mean the latest date
to which the Exchange Offer is extended.
You are hereby requested, and you hereby agree, to act as follows:
1. You are to accept Old Notes which are accompanied by the appropriate
Letter of Transmittal or facsimile thereof, properly completed and duly executed
in accordance with the instructions thereon and any requisite collateral
documents or, in the case of Old Notes tendered by book-entry transfer, an
Agent's Message in lieu of the Letter of Transmittal, and all other instruments
and communications submitted to you in connection with the Exchange Offer and to
hold the same upon the terms and conditions set forth in this Agreement.
2. You are to examine the Letters of Transmittal, or Agent's Message in
lieu thereof, Old Notes and other documents delivered or mailed to you by or for
Old Noteholders to ascertain whether (i) the Letters of Transmittal are properly
completed and duly executed in accordance with the instructions set forth
therein, (ii) the other documents are properly completed and duly executed, and
(iii) the Old Notes have otherwise been properly tendered. You need not pass on
the legal sufficiency of any signature or verify any signature guarantee.
The Exchange Agent's obligations with respect to receipt and
inspection of the Letter of Transmittal in connection with this Exchange Offer
shall be satisfied for all purposes hereof by inspection of the electronic
message transmitted to the Exchange Agent by Depository Trust Company ("DTC")
participants in accordance with the Automated Tender Offer Program ("ATOP") of
the DTC and by otherwise observing and complying with all procedures established
by DTC in connection with ATOP.
3. In the event any Letter of Transmittal or other document has been
improperly executed or completed or any of the certificates are not in proper
form or have been improperly tendered or any book-entry delivery of Old Notes
has been improperly made, or if some other irregularity in connection with the
delivery of Old Notes by a holder thereof exists, you are authorized, upon
consultation with the Company or its counsel, to endeavor to take such action as
may be necessary to cause such irregularity to be corrected. You are authorized,
upon consultation with the Company or one of its representatives, to request
from any person tendering Old Notes such additional documents or undertakings as
you may deem appropriate. All questions as to the form of all documents and the
validity, eligibility
<PAGE> 3
State Street Bank and Trust Company
June __, 1998
Page 3
(including time of receipt) and acceptance of tendered Old Notes will be
determined by the Company, in its sole discretion, whose determination will be
final and binding. The Company reserves the absolute right to reject any or all
tenders of any particular Old Notes, which would, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any of the conditions of the Exchange Offer or any defect or irregularity
in the tender of any Old Notes, and the Company's interpretation of the terms
and conditions of the Exchange Offer (including the Letter of Transmittal and
the instructions set forth therein) will be final. No tender of Old Notes will
be deemed to have been properly made until all defects and irregularities have
been cured or waived.
4. Tenders of Old Notes may be made only as set forth in the Prospectus
and Letter of Transmittal, and Old Notes shall be considered properly tendered
to you only when:
a. a properly completed and duly executed Letter of
Transmittal, with any required signature guarantees and any other
required documents as set forth in the Letter of Transmittal, is
received by you at your address set forth in the Prospectus and Letter
of Transmittal, and Old Notes are received by you at such addresses or
a timely confirmation of a book-entry transfer of such Old Notes, along
with an Agent's Message is received by you at or prior to the
Expiration Date at your address set forth in the Prospectus and Letter
of Transmittal; or a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Company,
with an appropriate guarantee of signature and delivery from an
Eligible Institution, is received by you at or prior to the Expiration
Date and Old Notes (in respect of which there have been delivered to
you prior to the Expiration Date a properly completed and duly executed
Notice of Guaranteed Delivery) in proper form for transfer together
with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) or Agent's Message, and any other required documents
as set forth in the Letter of Transmittal, are received by you within
three New York Stock Exchange trading days; and
b. the adequacy of the items relating to Old Notes, the Letter
of Transmittal therefor and any Notice of Guaranteed Delivery has been
favorably passed upon as above provided.
Notwithstanding the provisions of the preceding paragraph, Old Notes
which the Company shall approve as having been properly tendered shall be
considered to be properly tendered.
5. Holders of Old Notes may make book-entry delivery of their
securities. You will establish in your name or the name of your nominee an
account with respect to the Old
<PAGE> 4
State Street Bank and Trust Company
June __, 1998
Page 4
Notes at Depository Trust Company ("DTC") for purpose of the Exchange Offer to
permit book-entry transfers of Old Notes. Except as otherwise provided below,
Old Notes, or any book-entry transfer into your account at DTC of Old Notes
tendered electronically, as well as a properly completed and duly executed copy
of the Letter of Transmittal or Agent's Message, and any other documents
required by the Letter of Transmittal, must be received by you or, in the case
of tenders of book-entry transfer, confirmed to you by transfer to your account
on or prior to the Expiration Date.
6. a. A tendering Old Noteholder may withdraw tendered Old Notes in
accordance with the procedures set forth in the Prospectus and Letter of
Transmittal, in which event, except as may be otherwise specified in the Old
Noteholder's notice of withdrawal, all items in your possession which shall have
been received from the Old Noteholder with respect to those Old Notes shall be
promptly returned to or upon the order of the Old Noteholder and the Old Notes
covered by those items shall no longer be considered to be properly tendered.
b. A withdrawal may not be rescinded. Withdrawn Old Notes may,
however, be tendered at anytime on or prior to the Expiration Date.
7. You are to record and to hold all tenders received by you and to
promptly notify by telephone after the close of business on each business day,
the following person as to the total number of Old Notes tendered on such day
and the cumulative numbers with respect to the Old Notes received through the
time of such call:
_____________________________________________________
Each daily report should identify: the number and principal amount of Old Notes
represented by (i) certificates, and (ii) Notices of Guaranteed Delivery
actually received by you through the time of the report. The foregoing
information should also be sent to Mr. in a daily letter. In addition, you will
also provide, and cooperate in making available to Mr. ________________________
____________________, such other information as he or the Company's counsel may
reasonably request upon oral request made from time to time. Your cooperation
shall include, without limitation, the granting by you to the Company, and such
other persons as it may reasonably request, of access to those persons on your
staff who are responsible for receiving tenders of Old Notes in order to insure
that immediately prior to the Expiration Date, the Company shall have received
information in sufficient detail to enable it to decide whether to extend the
Exchange Offer.
8. Letters of Transmittal, Notices of Guaranteed Delivery and
telegrams, facsimile transmissions and letters submitted in lieu thereof
pursuant to the Exchange Offer
<PAGE> 5
State Street Bank and Trust Company
June __, 1998
Page 5
shall be stamped by you as to the date and time of receipt and shall be retained
in your possession until the Expiration Date. As promptly as practicable after
the Expiration Date, you will deliver those items, together with all properly
tendered Old Notes to the Company.
9. You are to follow up and to act upon any amendments, modifications
or supplements to these instructions mutually satisfactory to you and the
Company, and upon any further information in connection with the terms of the
Exchange Offer, any of which may be given to you by the Company, including
instructions with respect to (i) any extension or other modification of the
Exchange Offer, (ii) the amount or manner of payment for any Old Notes
exchanged, and (iii) the cancellation of the Exchange Offer.
10. If under the conditions set forth in the Prospectus and Letter of
Transmittal, the Company becomes obligated to accept Old Notes tendered, it
will, as promptly as practicable thereafter, deposit with you certificates
representing New Notes in the amount determined according to the ratio
prescribed in the Prospectus and Letter of Transmittal. Unless otherwise
indicated under any Special Issuance Instructions or any Special Delivery
Instructions set forth in any Letter of Transmittal, you shall mail the
certificates representing the New Notes and the certificates for any Old Notes
submitted but not tendered for exchange to the registered owner of the
securities at the address shown in the Letter of Transmittal. In the event that
either or both the Special Issuance Instructions and the Special Delivery
Instructions are completed, you shall mail all certificates representing New
Notes (or Old Notes to be returned, if any) to the person or persons so
indicated in the Letter of Transmittal. Certificates shall be post-marked by you
within a reasonable period of time after certificates have been provided to you.
11. No exchange shall be made as to any Old Notes unless and until such
Old Notes have been properly tendered as provided in Section 4 of this
Agreement.
12. For performing your services hereunder, you shall be entitled to
receive from the Company a fee of $_______. You shall also be reimbursed by the
Company for all reasonable expenses, including counsel fees, if any, and mailing
costs you may incur in connection with the performance of your duties.
13. As Exchange Agent hereunder you:
(a) shall not have duties or obligations other than those
specifically set forth or as may subsequently be agreed to by you and
the Company;
<PAGE> 6
State Street Bank and Trust Company
June __, 1998
Page 6
(b) shall not be obligated to take any legal action hereunder
which might in your judgment involve any expense or liability unless
you have been furnished with reasonable indemnification;
(c) may rely on and shall be protected in acting upon any
certificate, instrument, opinion, notice, letter, telegram or other
document or security delivered to you and believed by you to be genuine
and to have been signed by the proper party or parties;
(d) may rely on and shall be protected in acting or refraining
from acting upon the written instructions of the Company; and
(e) may consult counsel satisfactory to you (including counsel
to the Company), and the opinion of such counsel shall be full and
complete authorization and protection with respect to any action taken,
suffered, or omitted by you hereunder in good faith and in accordance
with the opinion of such counsel.
(f) you shall not be deemed to have notice of any fact, claim
or demand with respect hereto unless actually known by an officer
charged with responsibility for administering this Agreement or unless
in writing received by you and making specific reference to this
Agreement.
14. You undertake the duties and obligations imposed herein upon
the following additional terms and conditions:
(a) you shall perform your duties and obligations hereunder
with due care;
(b) you shall not be under any responsibility in respect of
the validity or sufficiency (not only as to genuineness, but also as to
its due execution, the genuineness of signatures appearing thereon and
as to the truth and accuracy of any information therein contained) of
any Letter of Transmittal, certificate representing Old Notes,
book-entry transfer of Old Notes or Notice of Guaranteed Delivery; and
(c) neither you nor any of your directors, officers or
employees shall be liable to anyone for any error of judgment, or for
any act done or step taken or omitted to be taken by you or any of your
directors, officers or employees, or for any mistake of fact or law, or
for anything which you or any of your directors, officers or employees,
may do or refrain from doing in connection with or in the
administration of this Agreement, unless and except to the extent the
same constitutes gross negligence or willful misconduct on your part.
<PAGE> 7
State Street Bank and Trust Company
June __, 1998
Page 7
15. You are not authorized to make any recommendation on behalf of the
Company as to whether a holder of Old Notes should or should not tender his, her
or its Old Notes.
16. All certificates representing New Notes shall be forwarded by (i)
first-class mail under a blanket surety bond protecting you and the Company from
loss or liability arising out of the non-receipt or non-deliver of such
certificates or (ii) registered mail, insured separately for the replacement
value of such certificates.
17. You are authorized to cooperate with and furnish information to any
organization (and its representatives) designated from time to time by the
Company, in any manner reasonably requested by any of them and acceptable to you
in connection with the Exchange Offer.
18. The Company covenants and agrees to reimburse, indemnify and hold
you harmless against any costs, expenses (including reasonable expenses of your
legal counsel), losses or damages which, without negligence, misconduct or bad
faith on your part may be paid, incurred or suffered by you or to which you may
become subject by reason of or as a result of the administration of your duties
hereunder or by reason of or as a result of your compliance with the
instructions set forth herein or with any written or oral instructions delivered
to you pursuant hereto, or liability resulting from your actions as Exchange
Agent pursuant hereto, including any claims against you by any Old Noteholder.
19. You hereby acknowledge receipt of each of the documents listed in
items (i) through (iii) of the introduction to this Agreement and further
acknowledge that you have examined the same. The Company shall supply you with a
sufficient number of copies of such documents to enable you to perform your
services hereunder. Any inconsistency between this Agreement on the one hand and
the documents listed in items (i) through (iii) of the introduction of this
Agreement, as they may from time to time be amended, on the other, shall be
resolved in favor of the latter, except with respect to the duties, liabilities
and indemnification of you as Exchange Agent.
20. All notices, statements and other communications hereunder shall be
in writing, signed by a duly authorized officer of the party sending such
notices, and shall be deemed given when delivered by hand or by certified mail,
postage prepaid, addressed as follows:
To the Company: Hadco Corporation
12A Manor Parkway
Salem, New Hampshire 03079
<PAGE> 8
State Street Bank and Trust Company
June __, 1998
Page 8
Attention: ________________________________
Facsimile: ________________________________
Telephone: (603) 898-8000
to you:
State Street Bank and Trust Company
Corporate Trust Division
Two International Place
Boston, MA 02110-0778
Attention: Hadco Corporation
Facsimile: (617) 664-5607
Telephone: (617) 664-5371
or to such other address as either party may furnish hereunder by notice;
provided that notice of change of address shall be deemed given only when
received.
21. This agreement shall be construed and enforced in accordance with
the law of the State of New York applicable to agreements made and to be
performed in the State of New York and shall inure to the benefit of, and the
obligations created hereby shall be binding upon, the successors and assigns of
the parties hereto.
22. These instructions may be reasonably modified or supplemented by
the Company or by any officer thereof authorized to give notice, approval or
waiver on its behalf.
23. As used herein, "business day" shall mean any day other than a
Saturday or Sunday, or any other day on which you are authorized or required to
be closed for business.
<PAGE> 9
State Street Bank and Trust Company
June __, 1998
Page 9
Please acknowledge receipt of this letter and confirm the arrangements
herein provided by signing and returning the enclosed copy.
Very truly yours,
HADCO CORPORATION
By:_________________________________
Name:
Title:
ACCEPTED AS OF June __, 1998
STATE STREET BANK AND TRUST COMPANY
As Exchange Agent
By:_________________________________________
Name:
Title:
PABOS2:LKF:148771_1
