<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
|X| Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 or
| | Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
---------------- ----------------
COMMISSION FILE NUMBER 0-16059
JASON INCORPORATED
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1756840
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
411 EAST WISCONSIN AVENUE, SUITE 2120, MILWAUKEE, WI 53202
(Address of principal executive offices)
(414) 277-9300
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
N/A N/A
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.10 PAR VALUE
----------------------------
Title of Class
Indicate by mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |X|
The aggregate market value of the Common Stock of the Registrant held by
non-affiliates as of February 15, 2000: $127,992,820
Number of shares of Common Stock outstanding as of February 15, 2000: 20,445,353
DOCUMENTS INCORPORATED BY REFERENCE: None
<PAGE> 2
PART I
ITEM I. BUSINESS
Jason Incorporated ("Jason" or the "Company") is a diversified
industrial manufacturing company with leading positions in niche markets
throughout the world. Jason operates in two business segments: Motor Vehicle
Products and Industrial Products. The Company manufactures a wide range of
products for numerous industries, and has operations in the U.S. and 11 foreign
countries.
On January 31, 2000, the Company announced that it had signed a
definitive merger agreement providing for the acquisition of the Company by a
group consisting of Jason's senior management and Saw Mill Capital Fund II, LP,
an affiliate of Saw Mill Capital LLC, a New York based private equity firm ("Saw
Mill"). The management members of the group are Vincent L. Martin, Chairman of
Jason and Mark Train, President and Chief Executive Officer of Jason. The
transaction is to be structured as a merger of an indirect subsidiary of Saw
Mill ("Merger Sub") with and into the Company with the Company as the surviving
corporation. The merger agreement provides that shareholders of the Company
(other than the Company, Merger Sub or shareholders who perfect their
dissenters' rights) will receive $11.25 in cash for each share of Jason common
stock. It is expected that the transaction will be submitted to shareholders for
a vote and, if approved by the shareholders, will close in the second quarter of
2000. The transaction is also subject to a number of other conditions and,
accordingly, no assurance can be given that the transaction will be completed.
Information relating to the Company's two business segments is
contained in "Management's Discussion and Analysis of Results of Operations and
Financial Condition" and "Note 13 - Segment Information" which are included in
Items 7 and 8 of Part II of this report.
OVERVIEW
The Company's Motor Vehicle Products segment includes the following
three separate businesses serving different areas relating to motor vehicles:
Automotive Acoustical Fiber Insulation. Automotive acoustical fiber
insulation products are used primarily as an undercarpet floor insulator
designed for lightweight, high performance noise reduction. Janesville Products,
established in 1881, is the largest manufacturer of acoustical fiber insulation
for the automotive industry in North America. The Company's German subsidiary,
Suroflex, is a manufacturer of acoustical fiber insulation for the European
automotive industry. Janesville U.K. produces acoustical fiber insulation for
the U.K. automotive industry.
Specialty Nonwovens. The Company's specialty nonwovens business unit,
Sackner Products, established in 1916, designs and manufacturers polyester based
products, used predominantly for acoustical insulation in the automotive and
office furniture industries, and as air filters in a variety of applications.
Sackner's automotive products, which represent approximately half of its sales,
are used as door panel inserts and for interior acoustical trim applications.
Seating. Milsco Manufacturing, established in 1924, designs and
manufactures seating products for Harley-Davidson(R) motorcycles, construction
equipment and turf care vehicles. Milsco has been the sole supplier of
Harley-Davidson(R) motorcycle seats for over 60 years.
<PAGE> 3
The Company's Motor Vehicle Products segment has capitalized on the
trend in the automotive industry toward larger vans and sport utility vehicles
as well as the new requirements for acoustical materials that have higher
acoustical performance and lower weight, that are cost effective and
environmentally friendly. As a result, Jason's automotive acoustical fiber
insulation business has increased its content per vehicle produced in North
America by 42% over the last five years. This segment has also benefitted from
the growth of Harley-Davidson and the turf care industry.
The Company's Industrial Products segment is composed of the following
two businesses serving various industries:
Industrial Consumables consists of two separate business units:
- Industrial Brushes. The Company's industrial brush business unit
designs and manufactures a variety of industrial power, maintenance, strip and
mill brushes, used in numerous manufacturing applications. This unit is composed
of Osborn International and Sealeze and has been operating for over 100 years.
- Industrial Buffs and Compounds. JacksonLea, established in 1931,
designs and manufacturers industrial buffing wheels and compounds used in a
variety of industrial finishing applications.
Industrial Components. The Jason Components Group, established in 1919,
produces custom ordered stampings, assemblies, wire forms and expanded metal
products. This unit has capitalized on the trend of manufacturing companies to
outsource their component assembly operations. This unit uses its design and
engineering expertise and manufacturing capabilities to reduce its customers'
product cost and increase their manufacturing flexibility.
PRODUCTS
MOTOR VEHICLE PRODUCTS
Automotive Acoustical Fiber Insulation
Janesville's products are used as an undercarpet floor insulator or as
insulation behind various interior trim parts of automobiles, light trucks and
vans. In addition to its traditional products, Janesville has also been a leader
in the development of special moldable insulation products which can be used for
contoured shapes for both interior and trunk applications.
Janesville manufactures a broad range of products under various
trademarks, including Maratex(R) and Marabond(R). Maratex(R) is a needled
nonwoven material manufactured from reclaimed textile fibers. Maratex(R)
material currently represents the majority of Janesville's sales, generating
approximately 58% of total sales in 1999. Marabond(R), introduced in 1994, is a
thermoplastic nonwoven manufactured from reclaimed fibers which can be molded to
conform to interior trim component shapes with variable thickness. Marabond(R)
generated 42% of Janesville's 1999 sales and continues to benefit from the trend
in the industry toward the increased use of moldable products because of their
superior fit and finish characteristics. Therefore, the percentage of
Janesville's sales comprised of Marabond(R) is expected to continue to increase.
Janesville recently developed Marabond DL(R), a dual density lightweight
acoustical product which has been extremely well received by potential
customers.
<PAGE> 4
Suroflex offers a broader product line than Janesville Products. The
majority of Suroflex's products are used in smaller non-floor interior trim
applications. Suroflex manufactures products that include both phenolic and
non-phenolic resins using two different nonwoven production technologies.
Suroflex has recently developed and produced several non-phenolic materials
which are gaining increasing attention from European OEMs. SURODUR is
predominantly a phenolic product manufactured using an airlayed production
process. SUROTHERM is also produced using airlayed technology but using
non-phenolic binding materials, while SUROBOND is also a non-phenolic product
but is produced using a carding process.
Janesville U.K. produces phenolic materials, but will be converting
certain of its production capacity to enable it to produce non-phenolic
products. Historically, Janesville U.K.'s products have been used in various
smaller interior trim applications primarily for Land Rover and Jaguar.
Specialty Nonwovens
Sackner manufactures polyester based products that are fabricated into
components used in many automotive and non-automotive applications. Sackner's
automotive products include dielectric padding, thermoformed door panel inserts
with nonwoven substrate, and various interior trim insulation materials.
Sackner's non-automotive products include acoustical and seating materials for
office furniture, upholstery materials for residential furniture and air
filtration products.
Sackner manufactures PolyTex(TM), a thermobonded nonwoven pad comprised
of 100% polyester fibers, which has been engineered with a variety of fiber
types to achieve premium acoustical properties. In addition, Sackner fabricates
PolyLite(TM), a light weight, cost effective polyester pad.
Seating
Milsco specializes in the design and manufacture of complete seating
products for motorcycles and for vehicles used in agricultural, construction,
industrial, and turf care applications. Milsco has been the sole supplier of
original equipment seats to Harley-Davidson, Jason's second largest customer,
for over 60 years. Milsco also manufactures original equipment saddle bags and
other accessories for Harley-Davidson, plus a wide variety of seats, saddle bags
and other products sold to Harley-Davidson for the aftermarket. In addition,
Milsco designs and manufactures seats that are used on tractor backhoes,
forklift trucks, turf care equipment, front end loaders, agricultural tractors
and a variety of other vehicles for a variety of customers.
During 1997, 1998 and 1999 sales of the Motor Vehicle Products segment
accounted for approximately 59%, 54% and 55%, respectively, of the Company's
total sales.
<PAGE> 5
INDUSTRIAL PRODUCTS
Industrial Consumables
(i) Industrial Brushes
Jason Brush Group, the largest producer of industrial brushes in the
world, manufactures industrial power, maintenance and mill brushes used in a
variety of manufacturing applications, and strip brushes used in a variety of
original equipment applications.
Jason Brush Group manufactures and supplies thousands of different
brushes which range from tiny micro abrasive brushes to wide-face brushes, which
can be up to 16 inches in diameter, 18 feet in length and cost over $10,000.
These wide-face or mill brushes are used primarily in steel and aluminum mills.
Power brushes are used as attachments to power tools or machines. Power brushes
can be used for applications ranging from small industrial deburring required by
the electronics industry to the removal of slag from steel mill rolling
equipment. Maintenance brushes are used for cleaning, maintenance and repair.
Jason Brush Group's Sealeze unit manufactures an extensive range of strip
brushes, which are used for a variety of OEM applications to provide a durable
and pliable seal to protect moving parts such as shafts, bearings and bushings
from exposure to dirt and other contaminants. Sealeze also manufactures a
complete line of brush weather seals for residential and commercial doors. The
Jason Brush Group offers a complete line of branded utility brushes, paint
brushes, aerosols, abrasives and absorbents.
Osborn International also manufactures and markets a line of idler
rollers, the Load Runners(R) product line, for use by manufacturers of material
handling and other equipment. Load Runners(R) are low friction heavy-duty metal
rollers designed to carry radial and thrust loads in numerous industrial
conditions.
Jason Brush Group sells brushes primarily under the Osborn
International(R) and Sealeze(TM) brand names. The Company believes that these
are valuable brand names in distinguishing its products from those of its
competitors.
(ii) Industrial Buffs and Compounds
JacksonLea buffing wheels and compounds are used primarily to finish
metal parts requiring a high degree of luster. JacksonLea manufactures buffing
wheels ranging from 3 to 30 inches in diameter including both airway
(ventilated) buffing wheels and conventional buffing wheels. JacksonLea has
developed and uses a proprietary process to make its ventilated buffs. Plumbing
fixtures, door hardware, cookware, silverware, motorcycle parts and automotive
components are some of the many metal items which are commonly buffed. The
buffing operation is used either to give the product its final finished
appearance, particularly true for stainless steel or aluminum auto trim, or to
prepare the product for a final plating process, a technique commonly used to
finish plumbing fixtures. Although buffing wheels are primarily used on metal
surfaces, they can also be used with other materials. For example, a
manufacturer might buff a plastic product to remove seams that result from the
bonding of two pieces of plastic.
JacksonLea works closely with its customers to match the
characteristics of a buffing wheel and its associated compounds to their needs.
For example, buffing wheels can be made in different sizes and use different
types and combinations of cloth which can be treated with different chemicals to
harden the buff to the desired degree, improve its life and increase its ability
to hold buffing compound. In conjunction with the design of a buff for a
particular purpose, JacksonLea formulates a buffing compound for use with that
buff. Therefore, its ability to supply a buff and
<PAGE> 6
buffing compound appropriate for use by its customers is an important element of
JacksonLea's success. Compounds are sold in flow bins, drums or bar form
depending on customer requirements.
JacksonLea sells its buff products primarily under the JACKSON(R),
LEA(R), BUCKEYE(R), HANSON & WELLS(R) and JACKSONLEA(R) brand names. These brand
names are valuable in distinguishing its buff and compound products from
competitive products.
Industrial Components
The Company's components manufacturing business, Jason Components
Group, produces metal and wire components for the outdoor equipment, housewares
and hardware, electrical power equipment and automotive aftermarket industries.
Jason Components Group consists of four companies, operating in North America
and Asia.
- Advance Wire Products offers a wide range of capabilities in
custom wire forming and metal stamping as well as multiple types of finish and
secondary value-added operations. These products are used in the lawn and
garden, electrical, automobile, household and concrete industries.
- Assembled Products provides a broad range of engineering
services for various assembly processes including resistance welding, joining,
forming, stamping and gauging of metal components. These products are used in
the outdoor power and electrical industries.
- Jason Precision Components of Shanghai, China produces high
volume, low cost assemblies for the power equipment industry.
- Metalex provides OEM and end user customers with innovative
solutions to expanded metal forming applications. Expanded metal is used in a
variety of applications including patio furniture, truck and automotive air
filters and building construction products.
During 1997, 1998 and 1999 sales of the Industrial Products segment
accounted for approximately 41%, 46% and 45%, respectively, of the Company's
total sales.
MARKETS AND MARKETING
MOTOR VEHICLE PRODUCTS
Automotive Acoustical Fiber Insulation
The Company markets its automotive acoustical fiber insulation products
through independent sales representatives and in-house salespersons. While
Jason's customers are primarily Tier-1 automotive carpeting suppliers and trim
fabricators, the type of insulation used by a supplier is generally specified by
the automotive manufacturer. Therefore, the Company's sales representatives and
in-house sales and engineering staffs spend considerable time working directly
with the automobile companies during the design phase for a new automobile to
specify a type of insulation which the Company can provide.
<PAGE> 7
The Company's major customers are Tier-1 manufacturers such as Lear and
Collins & Aikman and OEMs such as General Motors. The Company's automotive
acoustical fiber insulation products are used by Ford, General Motors,
DaimlerChrysler, Honda, Nissan, Toyota, Mitsubishi, Mazda, Isuzu and BMW at
their North American assembly facilities and by BMW, DaimlerChrysler, Opel,
Audi, Land Rover and Jaguar at their European assembly facilities.
Specialty Nonwovens
The Company's dielectric and other automotive padding products are
generally sold as Tier-2 or Tier-3 components to interior trim fabricators. Door
insert subassemblies, comprised of either a fabric cover over a substrate and
dielectric or foam pad, or a fabric over a thermoformable nonwoven material,
provide a decorative and soft contrast to the molded hard plastic door panels in
certain models and are sold as a Tier-2 component to door system assemblers.
Door insert products are marketed by company sales people directly to Tier-1 or
Tier-2 automotive suppliers. The Company also sells a number of related products
outside the automotive industry for furniture, air filtration, industrial and
appliance applications and markets these products directly to OEMs.
The Company's major customers include Johnson Controls, Venture, Magna,
Lear, Steelcase, Airguard and PrecisionAire.
Seating
Jason has been the sole supplier of original equipment seats to
Harley-Davidson for over 60 years. The Company's Milsco Manufacturing unit is
integrally involved in the motorcycle seat design function of Harley-Davidson's
development program and maintains an engineer who is resident at Harley-Davidson
to participate in these efforts. Milsco is presently Harley-Davidson's largest
supplier.
The Company's other major seating customers include John Deere, Case,
Caterpillar, Toro and Jacobson. The Company sells direct to these OEMs with its
internal sales personnel working closely with its engineering staff to provide
new and value-added seat designs.
In 1999 approximately 53% of the Company's motor vehicle products sales
were made to four customers.
INDUSTRIAL PRODUCTS
Industrial Consumables
(i) Industrial Brushes
The Company markets its power and maintenance brushes in North America
through a network of industrial distributors as well as through catalogues. The
Company markets its power and maintenance brushes internationally through
Company-owned sales and distribution outlets in France and Portugal as well as
industrial and retail distributors in various countries and also directly to end
users. Mill brushes are marketed direct to companies involved in the production
of steel and aluminum. The Company maintains a force of technically trained
field representatives who train distributors in the proper use of the Company's
brushes and assist the end users in meeting their product finishing needs. Load
Runners(R) are sold through independent distributors which maintain
approximately 1,000 outlets in the United States and Canada. Sealeze strip
brushes are sold direct to OEMs utilizing a unique telemarketing approach
performed by a specially trained internal sales force.
<PAGE> 8
(ii) Industrial Buffs and Compounds
The Company markets its buffing wheels and buffing compounds
nationally, primarily through a direct sales force. The Company has formed joint
ventures in Taiwan and China to produce and sell products locally for customers
in the Far East. The Company's primary customers are manufacturers of plumbing
fixtures, door hardware, cookware, silverware, motorcycle and automotive
components.
Industrial Components
The majority of Jason Components Group's products are manufactured to
customer order and specifications. These products include job shop stampings,
wire forms, mechanical and electrical assemblies and made-to-order components
fabricated from expanded metal. These product lines are brought to the
marketplace through a network of technically proficient manufacturers'
representatives and in-house direct sales people who have a strong knowledge of
fabrication processes. Jason Components Group's engineering staff will sometimes
provide complete design for a given application or work with the customer's
engineering group on value enhancing modifications.
The customer base for the industrial products segment is diverse;
however, one customer accounts for 7% of total segment sales.
COMPETITION
MOTOR VEHICLE PRODUCTS
Automotive Acoustical Fiber Insulation
The Company believes that it is the largest manufacturer of automotive
acoustical fiber insulation products in North America. The Company competes with
other suppliers of automotive acoustical fiber insulation products as well as
suppliers of other competing technologies such as foam or resinated fiber
products. The Company's products are recyclable and the Company believes that
its products are generally superior to alternatives in cost and in thermal and
acoustical insulation characteristics. The Company believes that its molded
fiber products provide a fit and finish comparable to foam and, as a result,
believes that its products continue to gain market share over competing
technologies.
The Company's principal North American competitors are Bauer
Industries, Rieter Magee, and Clark, Cutler, McDermott. The Company has not
experienced significant import competition in its acoustical insulation product
market and does not expect increased import competition in the U.S. market
because shipping costs place foreign competitors at a price disadvantage.
The European competitive landscape is much more fragmented and diverse
as the Tier-1 and Tier-2 supply structure is not as well defined as in North
America. Therefore, depending upon the application and end user, Suroflex and
Janesville U.K. may function as either a Tier-1 or Tier-2 supplier. The
Company's principal European competitors are Borgers, Catensa and Pelzer.
<PAGE> 9
Specialty Nonwovens
The Company competes with numerous other producers of nonwoven products
and producers of fiberglass insulation primarily on the basis of price, quality,
and its ability to engineer solutions for automotive, furniture and air
filtration applications. The Company believes that none of its competitors has a
higher quality rating with any of the Company's primary customers.
Seating
Milsco has maintained its position as the sole supplier of seating
products to Harley-Davidson by providing style and design capabilities,
competitive prices and on-time delivery. Milsco does not manufacture seats for
any other motorcycle manufacturer and therefore does not compete with any other
manufacturers of motorcycle seating products.
Milsco also designs and manufactures seats for tractor backhoes,
skid-steer loaders, forklift trucks, turf care equipment, front end loaders, and
a variety of other vehicles. Competition for this portion of Milsco's market is
principally based on quality, engineering, design, price and delivery.
Milsco's principal competitor in lower end seating products is Michigan
Seating while Milsco's principal competitor in the higher end seating category
is Sears Manufacturing. Additionally, Grammer, based in Germany, has recently
entered the North American market with the establishment of a manufacturing
facility in Mexico.
INDUSTRIAL PRODUCTS
Industrial Consumables
(i) Industrial Brushes
The Company believes that it is the world's largest manufacturer in the
highly fragmented global industrial brush industry. The Company competes with
other brush manufacturers primarily on the basis of quality, service and price.
The Company believes that its comprehensive network of distributors, supported
by its technically trained field representatives, provides it with a significant
competitive advantage for all of its product lines. The Company's field
representatives enable it to provide the end users of its brushes continuing
support and assistance in meeting their product finishing needs. The Osborn
brand name is recognized worldwide.
The Company's principal competitors in the U.S. include Anderson and
Weiler, and in Europe, Kullen & Metz.
(ii) Industrial Buffs and Compounds
The Company believes that it is the world's largest manufacturer in the
highly fragmented global buffs and buffing compounds industry. The Company
competes with many different suppliers of buffs and buffing compounds on the
basis of price, quality and service. The Company believes that its ability to
solve its customers' buffing problems through the proper design and application
of buffing wheels and compounds and its willingness to provide ongoing in-plant
service for its customers make its products highly competitive.
The Company's principal U.S. competitors in buffing wheel products
include Barker and Devine while its principal U.S. competitors for compound
products include Schaffner and Van.
<PAGE> 10
Industrial Components
Competition for products manufactured by Jason Components Group varies
significantly. The degree of competition depends on geographic, technological
and specific product characteristics.
The Company believes that its Metalex operation is the largest producer
of expanded metal products in the U.S. with fewer than six significant
competitors. The stamping, wire form, and assembly businesses operate in
extremely fragmented markets. Thousands of U.S. competitors exist, but the
quality of the Company's customer base limits competition to approximately 100
world class job shop competitors.
MANUFACTURING PROCESS
MOTOR VEHICLE PRODUCTS
Automotive Acoustical Fiber Insulation
In the manufacture of automotive acoustical fiber insulation products,
the Company uses reclaimed fiber purchased primarily from the textile industry.
This material is then passed through opening and blending operations to ensure
that the fibers are properly aligned for layering to the desired thickness or
weight. The layering process is then performed using either garnet, airlay or
card technology with the fibers bonded by either needling or heating. For
certain applications, products will also be die cut or molded or customers may
specify that adhesives be applied in order to facilitate the installation of the
product to the interior of the automobile. The thickness and weight of the
Company's products as well as the materials utilized all influence the
acoustical properties of the end product.
Specialty Nonwovens
Specialty nonwovens are manufactured using the same processes as used
in the manufacture of automotive acoustical fiber insulation products discussed
above. However, the Company's specialty nonwovens operation uses more light
weight polyester materials.
Seating
Milsco is a vertically integrated seat manufacturer, utilizing a
technologically advanced foam cushion production process. Milsco utilizes
in-house capabilities to thermoform the seat backs used in motorcycle seats, but
purchases certain components from outside vendors, principally plastic blow
molded seat backs. The foam cushion is bonded to a vinyl, leather or cloth seat
cover using a proprietary foam-in-place technology. The cushion is assembled to
the seat base using specialty adhesives or through upholstering operations. In
the manufacture of motorcycle seats Milsco uses specially trained employees who
are expert in the custom cutting, tailoring and sewing of vinyl and leather.
Milsco has designed and patented numerous pneumatic, hydraulic and mechanical
seat suspensions to accommodate the various vibration environments produced by
different vehicles. Suspension components are fabricated, assembled and finished
in-house utilizing a wide range of metalworking equipment and high capacity
presses, skilled arc and spot welders, robotic welding systems and a fully
automated cleaning and painting line.
<PAGE> 11
INDUSTRIAL PRODUCTS
Industrial Consumables
(i) Industrial Brushes
The Company manufactures its brushes using a variety of proprietary
processes that it has developed from its long experience in the industry. The
size and shape of the brush, the type, length and density of its bristles (or
filler), and the construction and treatment of the filler, all influence its
finishing characteristics. For example, the Company uses a steel wire drawn to
proprietary specifications for those brushes where long life is important,
stainless steel wire for brushes designed to work on unusual metals, brass wire
for brushes for special applications and a variety of nonmetallic fillers for
light finishing work. For some heavy-duty applications, power brushes are
treated with hardening solutions that give the contact surface of the brush a
consistency similar to that of a grinding wheel. The Company uses a variety of
natural and synthetic fibers for its maintenance and strip brushes.
(ii) Industrial Buffs and Compounds
The Company manufactures its buff products using special grades of
cotton and synthetic cloth, as well as sisal. These materials are cut to size
and then formed and trimmed in a variety of configurations and densities, using
custom equipment, to provide the appropriate buffing face to meet varying
polishing requirements. Utilizing specially designed tanks, proprietary solvents
or water based dip treatments are applied to a large percentage of the buffs
that are produced. JacksonLea also produces a full line of liquid and bar
compounds. Compound production involves a basic mixing process of compound
formulations in large vats. Finished liquid compounds can be either piped into
drums or large flow bins according to customer preferences.
Industrial Components
Manufacturing processes utilized by the Jason Components Group include
the following:
- Advance Wire Products - formed wire products are manufactured in
varying shapes, lengths and diameters on a full range of over 125 wire form and
secondary operation machines. Advance Wire Products also maintains complete tool
and die making facilities.
- Assembled Products - an in-house engineering staff redesigns
customer assemblies and designs and manufactures focused factory assembly
systems which enable customers to outsource key assembly operations to Assembled
Products at reduced cost. Assembled Products also manufactures close tolerance,
high volume, small to medium size progressive stampings using 10 to 300 ton
presses and performs tapping, welding, riveting and other secondary operations.
Assembled Products maintains complete tool and die making facilities.
- Jason Precision Components (China) - Also specializes in low cost
high volume stamping and assembly operations relying on technical support from
Assembled Products in the U.S.
- Metalex - expanded metal products are manufactured using a wide
range of metals including carbon and stainless steel, aluminum, titanium and
copper in a range of precise sizes. Computer controlled sheet or continuous coil
processes are used to feed specialized expanded metal production machines that
simultaneously slit and stretch the raw metal product. The metal is then
sheared, punched or blanked to customer specifications.
<PAGE> 12
PRODUCT DEVELOPMENT AND TECHNOLOGY
MOTOR VEHICLE PRODUCTS
Automotive Acoustical Fiber Insulation
Janesville is committed to supplying innovative acoustical products to
the global automotive market. The Company believes that Janesville is the
industry leader in developing new products which become performance benchmarks
for fiber-based acoustical applications in the North American and European
automotive manufacturing markets.
In recent years, customers have put increasing reliance on suppliers
like Janesville to develop new products and reduce costs. In response to this
trend, over the last few years, Janesville has increased its product development
emphasis. Janesville's personnel work directly with its customers' engineering
departments to establish the design and specifications for new applications. For
example, the requirements for lower weight led to the development of Marabond
DL(R).
Janesville has established an applications engineering group to design
new products, explore the use of different fibers and combinations of fibers to
improve the characteristics of existing products. Several new products,
including moldable products and more recently Marabond DL(R) have resulted from
this product development effort. These products have contributed, and the
Company expects that they will contribute, to the increase in sales per vehicle
produced in North America.
Specialty Nonwovens
Similar to Janesville Products, Sackner utilizes an applications
engineering focus to develop new products. Automotive development efforts are
directed towards interior trim and acoustical applications utilizing polyester
based products. Efforts in this area have resulted in the development of
thermoformed door inserts and lighter weight acoustical insulation products.
Sackner has realized significant sales increases in recent years through the
development of new office system and air filtration products. New products have
included polyester office panel cores and seat pads and Rigi Pad(R) polyester
air filtration products. Sackner has reinforced its commitment to these markets
by installing two new nonwoven production lines in 1999: a new filter production
line at its Southeast facility and a new card line in its Grand Rapids facility.
Seating
Milsco's research in mechanical and chemical engineering has resulted
in unique solutions and numerous patents for a wide variety of seating
applications. For example, Milsco developed a foam capable of retaining its
resiliency and ability to perform even in low temperatures when many other
competing foams become brittle and lose their cushion and comfort. Milsco has
also developed unique seat suspensions which accommodate the various vibration
environments produced by different vehicles and continues to develop integrated
seats and suspensions and lower cost back mounted suspensions. In the motorcycle
seating area Milsco has utilized its extensive research in the area of
ergonomics to develop several new products including seats with adjustable rider
backrests and deep bucket seats that provide the rider with a higher level of
comfort. Milsco plans to leverage its expertise in seating design and innovation
to extend its product offering to other markets including the development of
seats for the recreational vehicle market.
<PAGE> 13
INDUSTRIAL PRODUCTS
Industrial Consumables
(i) Industrial Brushes
The Company believes that its Jason Brush Group is a recognized leader
in innovation with 50 active patents. These patents include the development of
advanced technology brushes (ATB (TM) ) which utilize special nylon filaments
providing a unique blend of toughness and flexibility and specialty brushes for
use in tire retreading. The Jason Brush Group's technological leadership also
extends to the development of production equipment. During early 2000, Osborn
International completed the development and manufacture of seven new machines
that will be used in the manufacture of twist knot industrial wire brushes.
These machines are expected to reduce production time, improve product quality
and significantly reduce labor cost.
(ii) Industrial Buffs and Compounds
The Company believes that JacksonLea's technical development staff is
the industry leader. This group plays an integral role in working with its
customers to develop unique and tailored solutions to meet their finishing needs
in a cost effective manner. JacksonLea has pioneered much of the technology and
products commonly used in today's finishing industry and continues to develop
new buff and compound applications including water based dip treatment processes
and buffs using new nonwoven materials.
Industrial Components
The Assembled Products operation has been able to engineer solutions
for customers that simplify product design thereby reducing overall production
and assembly costs. The Company's activities in this area have allowed it to
capitalize on the trend to outsource product assemblies. The Company's
capabilities in this market were also significantly enhanced during 1999 by the
successful start-up of a low cost assembly operation in Shanghai. At the
Advanced Wire and Metalex operations a number of new products and secondary
value-added operations, such as welding, knurling, threading, riveting and
finishing have been applied to create new products or enhance existing products.
SOURCES OF SUPPLY
Generally, the Company has multiple sources of supply for the important
materials it uses, both in its foreign and domestic operations. The Company has
not experienced any long-term supply problems in its operations.
<PAGE> 14
RECENT ACQUISITIONS
On February 28, 2000, the Company completed the acquisitions of
California Buff Company, Inc., Global Product Systems, Inc. and the buffing and
buffing compound operations of M-C Finishing Supplies for approximately $2.7
million. These companies are involved in the manufacture of buffs and buffing
compounds, primarily in the Western U.S. These businesses will be integrated
into the Company's JacksonLea operations.
On December 1, 1999, the Company completed the acquisition of Sinjet
System AB for approximately $4.4 million, including cash and acquisition costs,
plus the assumption of approximately $4.6 million of debt. Sinjet is a leading
manufacturer of industrial brushes in Sweden and of road sweeping brushes in
Denmark and has been integrated into the Company's industrial brush business,
Osborn International.
On February 9, 1999, the Company completed the acquisition of Sealeze
Corporation for approximately $18.4 million, including acquisition costs.
Sealeze is a major producer of strip brushes for industrial and consumer
applications and has been integrated into the Company's Industrial Products
segment.
On February 3, 1999, the Company completed the acquisition of the
acoustical insulation manufacturing and molding operations of Lear Corporation
based in Colne, England for approximately $1.4 million. This acquisition further
expands Jason's European automotive acoustical insulation capabilities and has
been integrated into the Company's automotive acoustical fiber insulation
business.
In October 1998, the Company acquired the remaining minority interest
in Suroflex GmbH, a German manufacturer of acoustical insulation products for
the automotive industry for approximately $2.5 million. In October 1996, the
Company made its initial majority investment in Suroflex. This acquisition
allows Jason and Suroflex to serve their U.S. and European customers on a
worldwide basis.
On March 13, 1998, the Company completed the acquisition of Power
Brushes Ltd. for approximately $16.9 million, including cash and acquisition
costs, plus the assumption of approximately $10.3 million of debt. Brushes
International Ltd., a wholly-owned subsidiary of Power Brushes Ltd., is one of
the largest producers of industrial power brushes in Europe. This business was
combined with the Company's industrial brush business, Osborn Manufacturing, to
form Osborn International, the largest producer of industrial power brushes in
the world.
Additional information relating to the above acquisitions is contained
in "Note 2 - Acquisitions" which is included in Item 8 of Part II of this
report.
<PAGE> 15
EMPLOYEES
The Company has approximately 2,700 hourly and 900 salaried employees.
The Company's work forces at its Conover, NC; Santa Fe Springs, CA; Burns Flat,
OK; Old Fort, NC; Statesville, NC; Verona, MS; Cincinnati, OH; Richmond, VA;
Addison, IL; Libertyville, IL and Wheeling, IL locations are nonunion. Its work
forces at its four Norwalk, OH plants and two Grand Rapids, MI plants are
represented by the Amalgamated Clothing and Textile Workers of America. Its work
forces at its Milsco Milwaukee, WI and Redgranite, WI plants are represented by
the United Paperworkers International. Its work forces at its Cleveland, OH and
Jason Components Milwaukee, WI plants are represented by the United Auto
Workers. Its work force at its Waterbury, CT and Janesville, WI locations are
represented by the Teamsters. The Company believes its relationship with its
employees to be good which has had a positive impact on its productivity.
ENVIRONMENTAL REGULATION
Like all U.S. manufacturers, the Company is subject to environmental
regulation with respect to its operations. The Company believes that it is
operating in compliance with environmental requirements. The Company's costs to
comply with environmental regulations have not been material.
BACKLOG
As of December 31, 1999 and December 25, 1998, the Company's backlogs
were approximately $65 million and $51 million, respectively. The Company
expects to fill substantially all of its December 31, 1999 backlog by the end of
2000.
SEASONALITY
U.S. auto makers traditionally shut down for the annual model
changeover in the third quarter. In addition, adjustments to production
schedules are made throughout the year based on retail auto sales and the level
of dealer inventories. These seasonal patterns affect the Company's Motor
Vehicle Products segment operations most significantly but also have somewhat of
an impact on the Industrial Products segment due to the effect on automotive
suppliers which use the Company's industrial products.
ITEM 2. PROPERTIES
The following table sets forth information with respect to the
Company's principal facilities. These facilities have approximately 3.1 million
square feet of floor space and, unless otherwise indicated, the Company owns
these facilities. On February 4, 2000, the Company announced plans to construct
a new 93,000 square foot automotive acoustical fiber insulation manufacturing
facility to be located in Newcomerstown, Ohio; the facility is to be completed
and production is scheduled to begin in this facility during the third quarter
of 2000. The Company believes that its current and planned facilities are
suitable and adequate to meet its current and anticipated future needs.
Substantially all of the Company's facilities are operating at normal levels
based on capacity.
<PAGE> 16
CORPORATE HEADQUARTERS:
Milwaukee, Wisconsin (1)
MOTOR VEHICLE PRODUCTS:
JANESVILLE PRODUCTS
Norwalk, Ohio (3)
Old Fort, North Carolina (1)
Burns Flat, Oklahoma (1)
Janesville, Wisconsin (1)
Colne, Great Britain (1)
SUROFLEX GMBH
Sulzbach-Rosenberg, Germany
MILSCO MANUFACTURING COMPANY
Milwaukee, Wisconsin
Redgranite, Wisconsin
Coventry, Great Britain (1)
SACKNER PRODUCTS
Grand Rapids, Michigan (2)
Statesville, North Carolina (2)
Verona, Mississippi (1)
Los Angeles, California (1)
INDUSTRIAL PRODUCTS:
JACKSONLEA
Conover, North Carolina
Santa Fe Springs, California (1)
Waterbury, Connecticut (1)
Cincinnati, Ohio (1)
Cambridge, Ontario, Canada (1)
Mississauga, Ontario, Canada (1)
Mexico City, Mexico (1)
Shanghai, Peoples Republic of China (1)
JASON COMPONENTS GROUP
Milwaukee, Wisconsin (1)
Wheeling, Illinois (1)
Addison, Illinois (1)
Libertyville, Illinois (1)
Shanghai, Peoples Republic of China (1)
Shenzhen, Peoples Republic of China (1)
OSBORN INTERNATIONAL
Cleveland, Ohio
Nogales, Sonora, Mexico (1)
Burgwald, Germany
Chepstow, Great Britain
Sexdraga, Sweden
Huskvarna, Sweden (1)
Nassjo, Sweden (1)
Kolding, Denmark
Gura Humoruli, Romania
Sao Paulo, Brazil (1)
Ningbo, Peoples Republic of China (1)
Beco das Lages, Portugal (1)
Gonesse, France (1)
SEALEZE
Richmond, Virginia
(1) Leased
(2) 2 Plants -- Both leased
(3) 4 Plants , 1 office -- 4 leased
<PAGE> 17
ITEM 3. LEGAL PROCEEDINGS
As of December 31, 1999, the Company was not subject to any legal
proceedings which management believes would have a material effect on the
Company's business or financial condition.
However, shortly after the Company announced the signing of a
definitive merger agreement providing for the acquisition of the Company (refer
to Item 1 of Part I of this report), three purported class action lawsuits
(collectively, the "Complaints") were filed in the Circuit Court of the State of
Wisconsin for Milwaukee County under the captions Harbor Finance Partners v.
Vincent L. Martin, et al, (Case No. 00CV000907, filed on February 1, 2000),
Bruce Robbin v. Jason Incorporated, et al, (Case No. 00CV000953, filed on
February 2, 2000) and George Swogger v. Jason Incorporated, et al (Case No.
00CV001322, filed on February 15, 2000). Each Complaint was filed by an alleged
shareholder of the Company against the Company, Vincent L. Martin, Chairman of
Jason, Mark Train, Chief Executive Officer and President of Jason (together the
"Management Shareholders"), and each member of the Special Committee of the
Board of Directors. The Complaints, which are substantially similar to each
other, allege, among other things, that the price to public shareholders of
$11.25 per share in the acquisition is inadequate. The Complaints seek, among
other things, an order which certifies that the lawsuits may be maintained as
class actions, prevents the merger from being completed, rescinds the merger in
the event the merger is consummated, awards unspecified compensatory damages to
the members of the purported class, and awards the named plaintiffs their costs,
including counsel and expert fees.
The Special Committee of the Board of Directors, the Company and the
Management Shareholders all believe the Complaints are without merit and intend
to defend the lawsuits vigorously.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the Company's security holders
during the fourth quarter of the year ended December 31, 1999.
<PAGE> 18
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1998
First Quarter $10 3/4 $7 5/8
Second Quarter 10 3/4 8 1/4
Third Quarter 8 3/4 6 1/2
Fourth Quarter 8 5/8 7
1999
First Quarter 9 1/4 7 1/4
Second Quarter 9 1/4 6 3/4
Third Quarter 8 1/2 5 13/16
Fourth Quarter 7 7/8 5 7/8
</TABLE>
The Company's stock is traded on The NASDAQ National Market under the
symbol JASN. As of February 15, 2000, there were 211 shareholders of record and
approximately 1,000 beneficial shareholders.
The Company has not paid any dividends in the previous two years. The
Company's current financing agreements contain restrictions on the payment of
dividends as more fully described in Note 7 of the Notes to Consolidated
Financial Statements (which appears under Item 8).
<PAGE> 19
ITEM 6. SELECTED FINANCIAL DATA
OPERATING RESULTS (1)
(in thousands except per share data)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, DECEMBER 25, DECEMBER 26, DECEMBER 27, DECEMBER 29,
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net sales $ 423,865 $ 390,853 $ 338,666 $ 291,676 $ 275,199
Cost of sales 323,841 303,568 264,766 226,070 214,657
----------------------------------------------------------------------------
Gross profit 100,024 87,285 73,900 65,606 60,542
Selling and administrative expense 65,315 58,984 50,401 43,748 40,433
----------------------------------------------------------------------------
Operating income 34,709 28,301 23,499 21,858 20,109
Interest expense (6,132) (6,661) (7,837) (7,375) (7,560)
Other income (expense) 660 1,272 1,410 211 (225)
----------------------------------------------------------------------------
Income from continuing operations before
income taxes 29,237 22,912 17,072 14,694 12,324
Provision for income taxes (11,475) (8,937) (6,658) (5,730) (5,063)
----------------------------------------------------------------------------
Income from continuing operations 17,762 13,975 10,414 8,964 7,261
Income (loss) from discontinued
operations, net of tax - 1,278 1,813 (98) 4,270
----------------------------------------------------------------------------
Net income $ 17,762 $ 15,253 $ 12,227 $ 8,866 $ 11,531
============================================================================
Earnings per share - basic
Income from continuing operations $ .87 $ .69 $ .52 $ .45 $ .36
Income (loss) from discontinued
operations - .06 .08 (.01) .21
----------------------------------------------------------------------------
Net income $ .87 $ .75 $ .60 $ .44 $ .57
============================================================================
Earnings per share - diluted
Income from continuing operations $ .86 $ .66 $ .51 $ .44 $ .36
Income (loss) from discontinued
operations - .06 .08 (.01) .19
----------------------------------------------------------------------------
Net income $ .86 $ .72 $ .59 $ .43 $ .55
============================================================================
</TABLE>
BALANCE SHEET DATA (1)
(in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 25, DECEMBER 26, DECEMBER 27, DECEMBER 29,
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total assets $ 311,897 $ 299,181 $ 263,285 $ 290,718 $ 254,986
Long-term debt 70,208 62,849 85,631 134,467 110,067
Working capital, excluding net assets of
discontinued operations 44,785 45,092 36,803 45,123 33,234
Shareholders' equity 140,369 123,943 107,264 95,264 86,218
</TABLE>
No cash dividends have been declared on the Company's common stock for the years
presented.
(1) Historical amounts have been restated to reflect the reclassification of the
power generation businesses as discontinued operations.
<PAGE> 20
JASON INCORPORATED
SELECTED FINANCIAL DATA
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
------------------------------------------------------
DECEMBER 31, DECEMBER 25, DECEMBER 26,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net Sales:
Motor vehicle products $ 233,037 $ 212,416 $ 198,562
Industrial products 190,828 178,437 140,104
---------- ---------- ---------
$ 423,865 $ 390,853 $ 338,666
========== ========== =========
Operating Income:
Motor vehicle products $ 26,851 $ 20,034 $ 17,065
Industrial products 10,744 10,845 8,740
---------- ---------- ---------
37,595 30,879 25,805
Corporate and other expenses (2,886) (2,578) (2,306)
---------- ---------- ---------
$ 34,709 $ 28,301 $ 23,499
========== ========== =========
Depreciation and Amortization:
Motor vehicle products $ 9,628 $ 8,740 $ 8,500
Industrial products 8,908 7,157 6,288
Corporate 573 561 650
---------- ---------- ---------
$ 19,109 $ 16,458 $ 15,438
========== ========== =========
Capital Expenditures:
Motor vehicle products $ 14,695 $ 11,409 $ 7,004
Industrial products 6,959 5,244 5,739
Corporate 328 38 42
---------- ---------- ---------
$ 21,982 $ 16,691 $ 12,785
========== ========== =========
<CAPTION>
DECEMBER 31, DECEMBER 25, DECEMBER 26,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Identifiable Assets:
Motor vehicle products $ 134,559 $ 122,358 $ 120,988
Industrial products 166,187 139,796 102,932
Corporate 11,151 37,027 8,114
Net assets of discontinued
operations - - 31,251
---------- ---------- ---------
$ 311,897 $ 299,181 $ 263,285
========== ========== =========
</TABLE>
<PAGE> 21
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
On June 5, 1998, the Company completed the sale of its power generation
businesses to a management led group backed by Saw Mill Capital LLC. As such,
the financial statements and related notes within Item 8 have been reclassified
to reflect the power generation businesses as discontinued operations. Net cash
proceeds from the sale approximated $30.1 million; there was no gain or loss on
the sale. Sales and operating profit of the power generation businesses for the
period ended June 5, 1998 were $61 million and $2.6 million, respectively. Sales
and operating profit of the power generation businesses for the year ended
December 26, 1997 were $142.7 million and $4.2 million, respectively.
RESULTS OF OPERATIONS
1999 COMPARED TO 1998
Net Sales. Net sales for 1999 increased by 8.4% from $390.9 million in
1998 to $423.9 million. Sales of the Motor Vehicle Products segment increased by
9.7% from $212.4 million to $233.1 million. Sales of the Industrial Products
segment increased by 6.9% from $178.5 million to $190.8 million.
The higher Motor Vehicle Products sales in 1999 were the result of
sales increases realized in both the automotive acoustical fiber insulation and
seating businesses. Automotive acoustical fiber insulation sales increased by
16.7%. The automotive industry in North America built 10% more vehicles in 1999
compared to 1998. Additionally, automotive acoustical fiber insulation sales
were favorably impacted by an increase in the Company's content per vehicle
resulting from improved sales of Marabond(R) moldable insulation products
compared to the prior year. The February 1999 acquisition of the Colne, England
acoustical insulation manufacturing and molding operation had the effect of
increasing automotive acoustical insulation products sales by $4.0 million or
3.8% for 1999. These increases were partially offset by a sales decline
resulting from the Company's German subsidiary, Suroflex, due primarily to
currency translation. Sales for the seating business increased 5.4% in 1999
primarily from strong sales to turf care customers partially offset by reduced
sales of parts and accessories products to Harley-Davidson which occurred in the
first half of 1999 from inventory adjustments made by this customer. Specialty
nonwovens sales in 1999 were at about the same level realized in 1998.
The Industrial Products sales increase in 1999 resulted from an 8.5%
increase in industrial consumable products sales and a 4.0% increase in
industrial components products sales. The industrial consumable products sales
increase was due entirely to the acquisitions of Power Brushes Ltd. in March
1998 and Sealeze Corporation in February 1999, as JacksonLea buff and compound
sales and sales by the North American brush operations of Osborn International
decreased from the prior year due to softness in certain market segments served
by these businesses. The sales increases attributable to the acquisitions of
Power Brushes Ltd. and Sealeze Corporation amounted to $4.6 million and $8.6
million, respectively. Sales for the components business were stronger for
assembled products and stampings but weaker for video springs, wire forms and
expanded metal.
Operating Income. Operating income increased in 1999 from $28.3 million
in 1998 to $34.7 million. Operating income for the Motor Vehicle Products
segment improved from $20.0 million in 1998 to $26.9 million. Operating income
for the Industrial Products segment decreased slightly from $10.9 million in
1998 to $10.7 million.
<PAGE> 22
The increase in Motor Vehicle Products operating income was due
primarily to higher volume and related margins in the North American automotive
operations, as discussed above, partially offset by losses at both the Company's
German and U.K. operations. Higher operating income was also generated by the
seating business as the profitability from higher sales levels and increased
operating efficiencies resulting from the conversion to cellular manufacturing,
more than offset reduced profitability caused by a higher mix of lower margin
products.
The decrease in Industrial Products operating income was due primarily
to lower sales experienced by JacksonLea and the North American operations of
Osborn International during 1999, as discussed above. These reductions to
operating income were almost entirely offset by improved profitability generated
by the Jason Components Group and by the profitability of Sealeze, which was
acquired in February 1999.
Corporate Expenses. Corporate expenses increased from $2.6 million in
1998 to $2.9 million. This increase is primarily due to personnel additions.
Other Income. Other income declined in 1999 due to lower royalty income
and higher than normal gains on the disposition of assets during 1998. Minority
interests in losses at subsidiaries decreased in 1999 as the Company purchased
the minority share of its German subsidiary, Suroflex, in October 1998.
Interest Expense. Interest expense decreased in 1999 from $6.7 million
in 1998 to $6.1 million due to lower average domestic debt levels which are a
result of cash flow from operations and the proceeds received from the sale of
the power generation businesses.
Income Taxes. The effective income tax rate for 1999 of 39.2% does not
differ significantly from the 1998 rate of 39.0%.
RESULTS OF OPERATIONS
1998 COMPARED TO 1997
Net Sales. Net sales for 1998 increased by 15.4% from $338.7 million in
1997 to $390.9 million. Sales of the Motor Vehicle Products segment increased by
7.0% from $198.6 million to $212.4 million. Sales of the Industrial Products
segment increased by 27.4% from $140.1 million to $178.5 million.
The higher Motor Vehicle Products sales in 1998 were the result of
sales increases achieved in all three businesses. Automotive acoustical fiber
insulation sales increased by 4.5%. This increase was due to an increase in
sales at the Company's German subsidiary, Suroflex, as well as an increase in
the Company's content per vehicle resulting from improved sales of Marabond(R)
moldable insulation product. These increases more than offset the effect of a
less than one percent decrease in North American automobile industry production
for 1998 compared to 1997. The strike at General Motors had only a minor
negative impact on 1998 sales and operating income. A 7.1% increase in sales in
the specialty nonwovens business resulted from increased demand for air
filtration products and higher volumes on certain model-specific automotive
applications as compared to the prior year. Sales in the seating business were
up 10.9% in 1998 compared to the prior year. This was primarily the result of an
increase in sales to Harley-Davidson.
<PAGE> 23
Industrial Products sales in 1998 were higher due to an increase in
sales of industrial consumables of 47.2%. Industrial components sales were
relatively consistent with the prior year. Osborn International showed the most
significant increase due primarily to the acquisition of Power Brushes Ltd. in
March 1998, which added sales of $31.4 million, but increases were also achieved
for JacksonLea. Sales for the industrial components business were stronger for
assembled products and wire forms but weaker for stampings, video springs and
expanded metal.
Operating Income. Operating income increased in 1998 from $23.5 million
in 1997 to $28.3 million. Operating income for the Motor Vehicle Products
segment improved from $17.1 million in 1997 to $20.0 million. Operating income
for the Industrial Products segment increased from $8.7 million in 1997 to $10.9
million.
The increase in Motor Vehicle Products operating income was due
primarily to higher volume and margins in the automotive acoustical fiber
insulation and specialty nonwovens businesses, as mentioned above, including
improved volume and operating results from the Company's German subsidiary,
Suroflex. These results more than offset reduced profitability in the seating
business due to one time costs incurred in the conversion to cellular
manufacturing. Management believes this conversion is necessary to enable the
Company to meet an expected increase in customer volume levels in the future.
The increase in Industrial Products operating income was primarily a
result of an increase in operating income in the industrial brushes unit due to
the acquisition of Power Brushes Ltd. in March 1998 as well as an increase in
operating income for JacksonLea. These increases were partially offset by lower
operating earnings for the Jason Components Group.
Corporate Expenses. Corporate expenses increased from $2.3 million in
1997 to $2.6 million. This increase is primarily due to personnel additions.
Other Income. The increase in other income in 1998 is due to an
increase in royalty income. Minority interests in subsidiaries decreased in 1998
due to improved operating results at the Company's German subsidiary, Suroflex.
Interest Expense. Interest expense decreased in 1998 from $7.8 million
in 1997 to $6.7 million which is a result of cash flow received from the sale of
the power generation businesses.
Income Taxes. The effective income tax rate for 1998 was 39.0% which is
the same as the rate for 1997.
FUTURE ACCOUNTING CHANGES
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement requires all derivative
instruments to be recorded in the Consolidated Balance Sheets at their fair
value. Changes in fair value of derivatives are required to be recorded each
period in current earnings or other comprehensive income, depending on whether
the derivative is designated as part of a hedge transaction and if it is, the
type of hedge transaction. In June 1999, the statement's effective date was
delayed by one year and will be effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. The effect of adoption of this statement on
the Company's earnings and financial condition is expected to be minimal.
<PAGE> 24
LIQUIDITY AND CAPITAL RESOURCES
During 1999, the Company satisfied the capital requirements of its
operations with internally generated funds. The net proceeds of $30.1 million
received from the June 1998 sale of the power generation businesses enabled the
Company to pay off its revolving loans with its banks and resulted in $30.7
million of cash being held on its balance sheet at the end of 1998. During 1999,
the Company used this cash to finance new acquisitions and to pay down
additional debt. For the foreseeable future, the Company believes it will
generate funds from operations to meet the capital requirements of its existing
operations. In March 1999, the Company completed a new $50 million bank loan
agreement which reflects the requirements of both its domestic and international
operations. As of December 31, 1999, the Company had available unused borrowing
capacity under this facility of $29.5 million. Borrowings and outstanding
letters of credit under this facility were approximately $18.6 million and $1.9
million, respectively, as of December 31, 1999. During 1998, the Company also
satisfied the capital requirements of its operations with internally generated
funds.
During 1999, net working capital decreased slightly from $45.1 million
at December 25, 1998 to $44.8 million. The decline in working capital was due to
a decrease in cash and cash equivalents used to partially fund the 1999
acquisitions of the Colne, England acoustical insulation manufacturing and
molding operations and Sealeze Corporation. The reduction in working capital
caused by the decrease in cash and cash equivalents described above, was offset
by the working capital requirements of the businesses acquired during 1999. The
Company also used available cash to repay the $17.1 million balance outstanding
on the convertible notes which became due on January 3, 1999; however, this
repayment had no net impact on working capital as the notes had been included in
current liabilities as of December 25, 1998. During 1999, the Company generated
$34.2 million in cash from continuing operations compared to $26.4 million in
1998.
During 1999 and 1998, the Company made capital expenditures of $22.0
million and $16.7 million, respectively. The major 1999 expenditures were in the
Motor Vehicle Products segment for equipment at Janesville Products and Sackner
to support new programs and to improve efficiency and in the Industrial Products
segment for equipment at Osborn International to support new programs. The major
1998 expenditures were in the Motor Vehicle Products segment for equipment at
Milsco to support the conversion to cellular manufacturing, at Janesville
Products to support new programs and to improve efficiency, and in the
Industrial Products segment for equipment at JacksonLea, Osborn International
and Jason Components Group to support new programs at those operations. During
1999, the Company committed to undertake major facilities expansions for its
German brush operations, its U.K. seating operations and its domestic automotive
acoustical fiber insulation operations. These major projects, as well as the
ongoing capital requirements of new programs and plant modernization activities,
are expected to result in capital expenditures in 2000 exceeding the amount
incurred in 1999.
SEASONALITY
U.S. auto makers traditionally shut down for the annual model
changeover in the third quarter. In addition, adjustments to production
schedules are made throughout the year based on retail auto sales and the level
of dealer inventories. These seasonal patterns affect the Company's Motor
Vehicle Products operations most significantly but also have somewhat of an
impact on Industrial Products due to the effect on automotive suppliers which
use the Company's industrial components and industrial consumable products.
<PAGE> 25
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk stemming from changes in foreign
exchange rates, interest rates and commodity prices. Changes in these factors
could cause fluctuations in earnings and cash flows. In the normal course of
business, exposure to interest rates is managed by fixing interest rates on the
majority of the Company's long-term debt. Fluctuation in commodity prices, for
example steel and cotton cloth, are managed by strategic purchasing which
generally provides the time necessary to allow for price increases to customers,
where appropriate. In rare situations where commitments are made for extended
periods (more than 60 days), outside of functional currencies, for example, a
commitment to purchase European equipment for use in a U.S. plant which will
take six months to deliver, exposure is managed by entering into hedging
transactions authorized under Company policies that place controls on these
activities. Hedging transactions involve the use of derivative financial
instruments and are used only where there is an underlying exposure, not for
trading or speculative purposes. At December 31, 1999, there were no outstanding
hedging transactions.
<PAGE> 26
The Company has significant foreign operations, for which the
functional currencies are denominated primarily in German Marks, Swedish Kronor
and British Pounds and to a lesser extent, Canadian Dollars, Danish Krone,
French Francs, Mexican Pesos, Brazilian Reals, Chinese Renminbi, and Portuguese
Escudos. As the value of the currencies of the foreign countries in which the
Company has operations increases or decreases relative to the U.S. Dollar, the
sales, expenses, profits, assets and liabilities of the Company's foreign
operations, as reported in the Company's Consolidated Financial Statements,
increase or decrease, accordingly. The Company's primary method of reducing this
exposure is to approximately balance current assets and liabilities within each
functional currency. The Company does not use derivative financial instruments
to hedge this exposure. Because the Company has significant operations across
member countries of the European Monetary Union, the introduction of the Euro on
January 1, 1999 is expected to simplify the management of foreign exchange
exposure by aggregating the assets and liabilities of several currencies that
now have to be managed individually.
EURO CONVERSION
On January 1, 1999, member countries of the European Monetary Union
(EMU) began a three-year transition from their national currencies to a new
common currency, the "Euro". In the first phase, the permanent rates of exchange
between the members' national currency and the Euro has been established and
monetary, capital, foreign exchange, and interbank markets will be converted to
the Euro. National currencies will continue to exist as legal tender and may
continue to be used in commercial transactions. By January 2002, Euro currency
will be issued and by July 2002, the respective national currencies will be
withdrawn. The Company has operations in member countries of the EMU and,
accordingly, has established action plans that are continuing to be implemented
to address the Euro's impact on information systems, currency exchange rate
risk, taxation, contracts, competition and pricing. Based on its current
assessment, management believes that the costs of the Euro conversion will not
have a material impact on the operations, cash flows or financial condition of
the Company.
FORWARD-LOOKING STATEMENTS
When used in this report, the words "estimate," "project," "intend,"
"expect" and similar expressions are intended to identify forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this report.
Actual results may differ materially from those contemplated in such
forward-looking statements. Important assumptions and factors that could cause
actual results to differ materially from those contemplated, projected,
forecasted, estimated or budgeted in, or expressed or implied by, such
forward-looking statements include industry trends, currency fluctuations,
government fiscal and monetary policy, the success of new product introductions,
general economic and business conditions in the markets the Company serves and
actions of competitors which may affect the Company's ability to obtain orders
and the ability of the Company to implement its plans. Other factors and
assumptions not identified above were also involved in the derivation of these
forward-looking statements, and the failure of such other assumptions to be
realized, as well as other factors, may also cause actual results to differ
materially from those projected. The Company assumes no obligation to update
such forward-looking statements to reflect actual results, changes in
assumptions or changes in other factors affecting such forward-looking
statements.
<PAGE> 27
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
JASON INCORPORATED
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND
DECEMBER 25, 1998
<PAGE> 28
JASON INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
------
DECEMBER 31, DECEMBER 25,
1999 1998
---- ----
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 5,304 $ 30,676
Accounts receivable - net 53,099 46,558
Inventories 48,801 46,368
Income tax receivable 1,993 -
Deferred income taxes 6,763 5,663
Other current assets 4,637 4,732
--------- --------
Total current assets 120,597 133,997
--------- --------
PROPERTY, PLANT AND EQUIPMENT
Cost 195,522 172,965
Less: accumulated depreciation (92,941) (80,268)
--------- --------
Net property, plant and equipment 102,581 92,697
--------- --------
INTANGIBLE ASSETS - NET 86,648 70,421
--------- --------
OTHER ASSETS 2,071 2,066
--------- --------
$ 311,897 $299,181
========= ========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
DECEMBER 31, DECEMBER 25,
1999 1998
---- ----
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt $ 10,936 $ 29,947
Accounts payable 31,810 26,557
Accrued compensation and employee benefits 17,081 15,942
Accrued interest 782 1,059
Accrued income taxes - 1,551
Other current liabilities 15,203 13,849
--------- --------
Total current liabilities 75,812 88,905
REVOLVING LOAN 18,625 -
LONG-TERM DEBT 51,583 62,849
POSTRETIREMENT HEALTH AND OTHER
BENEFITS 6,317 6,337
DEFERRED INCOME TAXES 16,903 15,345
LONG-TERM LIABILITIES 2,288 1,802
--------- --------
Total liabilities 171,528 175,238
--------- --------
COMMITMENTS AND CONTINGENCIES (Note 8)
SHAREHOLDERS' EQUITY
Common stock and additional contributed
capital 35,968 35,556
Retained earnings 105,865 88,103
Accumulated other comprehensive (loss) income (1,464) 284
--------- --------
140,369 123,943
--------- --------
$ 311,897 $299,181
========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 29
JASON INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
------------------
December 31, December 25, December 26,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net sales $ 423,865 $ 390,853 $ 338,666
Cost of sales 323,841 303,568 264,766
---------- ----------- -----------
Gross profit 100,024 87,285 73,900
Selling and administrative expenses 65,315 58,984 50,401
---------- ----------- -----------
Operating income 34,709 28,301 23,499
Interest expense (6,132) (6,661) (7,837)
Other income 638 832 614
Minority interests in subsidiaries 22 440 796
---------- ----------- -----------
Income before income taxes 29,237 22,912 17,072
Provision for income taxes (11,475) (8,937) (6,658)
---------- ----------- -----------
Income from continuing operations 17,762 13,975 10,414
Income from discontinued operations,
net of applicable income taxes - 1,278 1,813
---------- ----------- -----------
Net income $ 17,762 $ 15,253 $ 12,227
========== =========== ===========
Earnings per share - basic
Income from continuing operations $ .87 $ .69 $ .52
Income from discontinued operations - .06 .08
---------- ----------- -----------
Net income per share $ .87 $ .75 $ .60
========== =========== ===========
Earnings per share - diluted
Income from continuing operations $ .86 $ .66 $ .51
Income from discontinued operations - .06 .08
---------- ----------- -----------
Net income per share $ .86 $ .72 $ .59
========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 30
JASON INCORPORATED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
COMMON CONTRIBUTED RETAINED COMPREHENSIVE
STOCK CAPITAL EARNINGS (LOSS) INCOME TOTAL
----- ------- -------- ------------- -----
<S> <C> <C> <C> <C> <C>
Balance at December 27, 1996 $ 2,016 $ 32,671 $ 60,623 $ (46) $ 95,264
Comprehensive income:
Net income - - 12,227 - 12,227
Translation adjustments - - - (554) (554)
---------
Total comprehensive income 11,673
Exercise of options 7 320 - - 327
------- -------- -------- --------- ---------
Balance at December 26, 1997 2,023 32,991 72,850 (600) 107,264
Comprehensive income:
Net income - - 15,253 - 15,253
Translation adjustments - - - 884 884
---------
Total comprehensive income 16,137
Exercise of options 12 530 - - 542
------- -------- -------- --------- ---------
Balance at December 25, 1998 2,035 33,521 88,103 284 123,943
Comprehensive income:
Net income - - 17,762 - 17,762
Translation adjustments - - - (1,748) (1,748)
---------
Total comprehensive income 16,014
Exercise of options 8 404 - - 412
------- -------- -------- --------- ---------
Balance at December 31, 1999 $ 2,043 $ 33,925 $105,865 $(1,464) $ 140,369
======= ======== ======== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 31
JASON INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
------------------
DECEMBER 31, DECEMBER 25, DECEMBER 26,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from continuing operations $ 17,762 $ 13,975 $ 10,414
------------ -------------- ---------------
Adjustments to reconcile income from continuing
operations to net cash provided by operating
activities of continuing operations:
Depreciation 15,385 13,191 12,206
Amortization 3,724 3,267 3,232
Equity in net income of affiliates (210) (163) (146)
Deferred income taxes 958 (74) (940)
Loss (gain) on sale of property, plant and
equipment 462 (282) 65
Increase (decrease) in cash, excluding
effects of acquisitions, due to changes in:
Accounts receivable (4,891) 2,993 (3,482)
Inventories (422) (3,586) (1,305)
Income tax receivable (1,993) - 2,250
Other current assets 150 (568) 1,179
Accounts payable 4,957 (1,096) 2,839
Accrued compensation and employee benefits 990 936 1,922
Accrued interest (265) (130) (372)
Accrued income taxes (2,325) (1,140) 518
Other, net (101) (919) 1,574
------------ -------------- ---------------
Total adjustments 16,419 12,429 19,540
------------ -------------- ---------------
Net cash provided by operating activities of
continuing operations 34,181 26,404 29,954
------------ -------------- ---------------
Net cash provided by operating activities
of discontinued operations - 14,772 24,858
------------ -------------- ---------------
Net cash provided by operating activities 34,181 41,176 54,812
------------ -------------- ---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 32
JASON INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
------------------
DECEMBER 31, DECEMBER 25, DECEMBER 26,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of property,
plant and equipment $ 209 $ 1,842 $ 3,302
Acquisition of property, plant and equipment (21,982) (16,691) (12,785)
Investment in joint ventures - - (18)
Net proceeds from sale of discontinued operations - 30,094 -
Investing activities of discontinued operations - (308) (758)
Other, net (172) 783 (782)
------------- -------------- --------------
Net cash (used in) provided by investing activities,
excluding acquisitions (21,945) 15,720 (11,041)
------------- -------------- --------------
Net cash provided before financing
activities, excluding acquisitions 12,236 56,896 43,771
Acquisition of net assets, net of cash acquired (23,857) (18,995) -
------------- -------------- --------------
Net cash (used) provided before financing activities (11,621) 37,901 43,771
------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving loans 86,525 59,762 67,215
Repayments on revolving loans (67,900) (62,082) (107,085)
Repayments of senior notes (9,370) (6,513) (2,667)
Repayments of convertible notes (17,057) - -
Repayments of senior subordinated notes (1,250) (1,250) (1,250)
(Repayments) proceeds of other long-term debt, net (5,111) (2,137) 1,164
Proceeds from issuance of common stock 412 542 327
------------- -------------- --------------
Net cash used in financing activities (13,751) (11,678) (42,296)
------------- -------------- --------------
Net (decrease) increase in cash and cash equivalents (25,372) 26,223 1,475
Cash and cash equivalents, beginning of year 30,676 4,453 2,978
------------- -------------- --------------
Cash and cash equivalents, end of year $ 5,304 $ 30,676 $ 4,453
============= ============== ==============
Cash paid during the year for:
Interest $ 6,409 $ 6,785 $ 9,789
Income taxes $ 12,292 $ 9,164 $ 6,136
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 33
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The consolidated financial statements and related notes have been
reclassified to reflect the Company's divestiture in 1998 of the power
generation products segment, accounted for as discontinued operations (see
Note 3). The consolidated financial statements include the accounts of all
wholly-owned and majority-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated. The term "Company" as used
in these consolidated financial statements refers to Jason Incorporated and
its subsidiaries.
CASH AND CASH EQUIVALENTS
For purposes of the Consolidated Statements of Cash Flows, the Company
considers all investments with a maturity of three months or less at the
time of purchase to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts in the Consolidated Balance Sheets for cash and cash
equivalents, accounts receivable and accounts payable approximate fair
value due to the short-term maturity of these instruments. The fair value
of long-term debt closely approximates its carrying value.
INVENTORIES
Inventories are stated at the lower of cost or market. The first-in,
first-out (FIFO) method is used to determine cost for all of the Company's
inventories.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and depreciated over their
estimated useful lives using the straight-line method for financial
reporting purposes and accelerated methods for income tax purposes.
Leasehold improvements are amortized over the term of the respective leases
using the straight-line method. Expenditures which substantially increase
value or extend useful lives are capitalized. Expenditures for maintenance
and repairs are charged to operations as incurred.
REVENUE RECOGNITION
Revenue is recognized from product sales at the time of shipment.
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. A valuation allowance is provided for deferred tax assets where
it is considered more likely than not that the Company will not realize the
benefit of such assets.
<PAGE> 34
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
INTANGIBLE ASSETS
Intangible assets are comprised of the following (in thousands):
<TABLE>
<CAPTION>
December 31, December 25,
1999 1998
-------- -------
<S> <C> <C>
Goodwill $ 96,508 $79,779
Other intangible assets 12,125 8,959
-------- -------
108,633 88,738
Less: accumulated amortization (21,985) (18,317)
-------- -------
$ 86,648 $70,421
======== =======
</TABLE>
Other intangible assets include patents, computer software, trademarks,
intellectual property and covenants not-to-compete. Intangible assets are
being amortized over their respective estimated useful lives ranging from
5-30 years.
LONG-LIVED ASSETS
The Company reviews the carrying value of long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. Measurement of any impairment would include
a comparison of estimated future operating cash flows anticipated to be
generated during the remaining life of the long-lived assets to the net
carrying value of the long-lived assets.
DEFERRED FINANCING COSTS
Expenses associated with the issuance of debt instruments are capitalized
and amortized over the respective terms of the debt instruments. Net
deferred financing costs included in other assets at December 31, 1999 and
December 25, 1998 approximated $210,000 and $433,000, respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities 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.
EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income available to
common shareholders by the weighted-average number of common shares
outstanding during the period. Diluted earnings per share is computed by
giving effect to all dilutive potential common shares.
FUTURE ACCOUNTING CHANGES
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement requires all derivative
instruments to be recorded in the Consolidated Balance Sheets at their fair
value. Changes in fair value of derivatives are required to be recorded
each period in current earnings or other comprehensive income, depending on
whether the derivative is designated as part of a hedge transaction and if
it is, the type of hedge transaction. In June 1999, the statement's
effective date was delayed by one year and will be effective for all
<PAGE> 35
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
fiscal quarters of fiscal years beginning after June 15, 2000. The effect
of adoption of this statement on the Company's earnings and financial
condition is expected to be minimal.
2. ACQUISITIONS
Effective December 1, 1999, the Company completed the acquisition of Sinjet
System AB ("Sinjet") for approximately $4.4 million, including cash and
acquisition costs, plus the assumption of approximately $4.6 million of
debt. Sinjet is a leading manufacturer of industrial brushes in Sweden and
of road sweeping brushes in Denmark. This business has been integrated into
the Company's industrial products segment.
Effective February 9, 1999, the Company completed the acquisition of
Sealeze Corporation ("Sealeze") for approximately $18.4 million, including
acquisition costs. Sealeze is a major producer of strip brushes for
industrial and consumer applications. This business has been integrated
into the Company's industrial products segment.
Effective February 3, 1999, the Company completed the acquisition of the
acoustical insulation manufacturing and molding operations of Lear
Corporation based in Colne, England for approximately $1.4 million. This
operation further expands the Company's European automotive capabilities.
This business has been integrated into the Company's motor vehicle products
segment.
Effective March 13, 1998, the Company completed the acquisition of Power
Brushes Ltd. for approximately $16.9 million, including cash and
acquisition costs, plus the assumption of approximately $10.3 million of
debt. Brushes International Ltd., a wholly-owned subsidiary of Power
Brushes Ltd., is one of the largest producers of industrial power brushes
in Europe. This business has been integrated within the Company's
industrial products segment.
Effective October 31, 1996, the Company acquired 51% of the stock of
Suroflex GmbH ("Suroflex") for approximately $2.9 million, including cash
of $2.7 million and acquisition costs. Suroflex is a German manufacturer of
nonwoven insulation products for the automotive industry. In connection
with this acquisition, the Company was provided a ten year option to
purchase the remaining 49% interest in Suroflex for 4 million Deutsche
Marks. Effective October 25, 1998, the Company exercised its option to
purchase the remaining 49% interest for approximately $2.5 million.
The aforementioned acquisitions have been accounted for using the purchase
method and, accordingly, operating results are included in the consolidated
financial statements since the respective acquisition dates. The respective
purchase prices were allocated to the assets acquired and liabilities
assumed based upon their estimated fair values. The excess of purchase
price over the estimated fair values of the net assets acquired has been
recorded as identifiable intangible assets and goodwill.
<PAGE> 36
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. DISCONTINUED OPERATIONS
Effective June 5, 1998, the Company completed the sale of its power
generation businesses. Net cash proceeds from the sale approximated $30.1
million; there was no gain or loss on the sale. The provision for income
taxes on discontinued operations was approximately $817,000 and $1,159,000
for 1998 and 1997, respectively.
Sales and operating profit of the power generation businesses were $61.0
million and $2.6 million, respectively, for the period ended June 5, 1998.
Sales and operating profit of the power generation businesses were $142.7
million and $4.2 million, respectively, for the year ended December 26,
1997.
4. ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following (in thousands):
<TABLE>
<CAPTION>
December 31, December 25,
1999 1998
---- ----
<S> <C> <C>
Accounts receivable $55,204 $48,404
Allowance for doubtful accounts (2,105) (1,846)
------- -------
$53,099 $46,558
======= =======
</TABLE>
5. INVENTORIES
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
December 31, December 25,
1999 1998
---- ----
<S> <C> <C>
Raw material $20,732 $19,881
Work-in-process 5,191 5,817
Finished goods 22,878 20,670
------- -------
$48,801 $46,368
======= =======
</TABLE>
<PAGE> 37
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following (in thousands):
<TABLE>
<CAPTION>
December 31, December 25,
1999 1998
----------- ------------
<S> <C> <C>
Land and improvements $ 4,262 $ 2,373
Buildings and improvements 33,262 32,361
Machinery and equipment 153,608 134,173
Construction-in-progress 4,390 4,058
-------- --------
195,522 172,965
Less: accumulated depreciation (92,941) (80,268)
-------- --------
$102,581 $ 92,697
======== ========
</TABLE>
7. REVOLVING LOAN AGREEMENT AND LONG-TERM DEBT
The revolving loan and long-term debt consisted of the following (in
thousands):
<TABLE>
<CAPTION>
December 31, December 25,
1999 1998
------------ ------------
<S> <C> <C>
Revolving loan $ 18,625 $ -
======== ========
Convertible notes $ - $ 17,057
Senior note - 1995 17,143 20,000
Senior note - 1994 17,308 21,154
Senior notes - 1992 8,000 10,666
Senior subordinated notes 1,250 2,500
Suroflex notes 12,720 13,732
Other 6,098 7,687
-------- --------
62,519 92,796
Less: current maturities (10,936) (29,947)
-------- --------
$ 51,583 $ 62,849
======== ========
</TABLE>
Effective March 3, 1999, the Company amended and restated its existing
revolving loan facility. Such facility provides for borrowings of up to $50
million, including letters of credit totaling $10 million. Letters of
credit outstanding ($1.9 million at December 31, 1999) on the Company's
behalf reduce availability under the facility. The revolving loan agreement
matures on March 3, 2004; borrowings bear interest payable monthly, at the
Company's option, at floating rates based upon either the bank's prime rate
(8.50% at December 31, 1999) or a Eurodollar rate (7.25% at December 31,
1999). A per annum commitment fee on the unused portion of the revolving
loan facility is payable on a monthly basis (.25% at December 31, 1999).
Interest rate margins applied to the prime rate and Eurodollar rate vary
based upon the Company's interest coverage ratio.
<PAGE> 38
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
During 1995, in conjunction with the Company's acquisition of Milsco
Manufacturing Company ("Milsco"), the Company issued $17,057,000 of
convertible notes to the former Milsco shareholders. Interest was payable
quarterly on these notes at a rate of 7%. At any time after January 31,
1996, and prior to the payment in full of the principal amount of the
notes, the holders had the ability to convert all or any portion of the
outstanding notes into shares of the Company's $.10 par value common stock.
The number of common shares to be received by the holder was obtained by
dividing the outstanding principal balance of the notes on the date of
conversion by the conversion price of $11.25 per common share. In January
1999, the Company repaid the entire principal portion of the Milsco notes.
During 1995, the Company entered into a $20,000,000 senior note agreement
with an insurance company. The senior note bears interest at 7.34% payable
quarterly. The principal portion of the note is payable in seven equal
annual installments of $2,857,143 which commenced May 31, 1999. During
1994, the Company entered into a $25,000,000 senior note agreement with an
insurance company. The senior note bears interest at 7.72% payable
quarterly. The principal portion of the note is payable in thirteen equal
semi-annual installments of $1,923,077 which commenced April 27, 1998.
During 1992, the Company entered into a $16,000,000 senior note agreement
with two insurance companies. These senior notes bear interest at 7.65%
payable semiannually. The notes are payable in six equal annual
installments of $2,667,000 which commenced December 1, 1997.
As of December 31, 1999, the interest rate on the 1989 senior subordinated
notes was 10.775%. The senior subordinated notes are payable in equal
installments of $1,250,000 in October of each year with interest payable
semiannually. Under the terms of these agreements, the interest rate
decreases as the Company's leverage ratio decreases.
Long-term debt generated from the Company's acquisition of Suroflex (see
Note 2) and held principally by German banks of $12.7 million at December
31, 1999 is not guaranteed by the Company and there is no requirement for
the Company to repay these obligations in the event Suroflex would be
unable to do so. In connection with the acquisition, the repayment terms
were modified to eliminate principal repayments through 1999. Thereafter,
annual payments are required in an amount equal to the excess of 49% of the
pretax income of Suroflex over interest paid on the aforementioned
obligations. Amounts outstanding under the debt agreements bear interest at
a weighted average interest rate of 5.85% and are collateralized by
substantially all of the assets of Suroflex.
Future annual maturities of long-term debt are as follows (in thousands):
<TABLE>
<S> <C>
2000 $10,936
2001 9,687
2002 9,687
2003 7,020
2004 5,094
Thereafter 20,095
-------
$62,519
=======
</TABLE>
<PAGE> 39
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
All of the Company's lending agreements contain restrictions, including
limitations on dividends, capital expenditures, new indebtedness and
disposition of assets. The agreements also contain various leverage,
interest coverage, fixed charge coverage, working capital and net worth
requirements, among others. The Company's revolving loan and long-term debt
is collateralized by substantially all Company assets.
8. LEASE OBLIGATIONS
The Company leases machinery, transportation equipment and office,
warehouse and manufacturing facilities which are accounted for as operating
leases.
Future minimum lease payments required under long-term operating leases in
effect at December 31, 1999 are as follows (in thousands):
<TABLE>
<S> <C>
2000 $ 6,807
2001 5,046
2002 3,868
2003 2,894
2004 1,885
Thereafter 5,319
-------
Total minimum lease payments $25,819
=======
</TABLE>
Total rental expense under operating leases was as follows (in thousands):
<TABLE>
<S> <C>
For the year ended:
December 31, 1999 $7,202
December 25, 1998 6,376
December 26, 1997 5,768
</TABLE>
<PAGE> 40
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
9. EARNINGS PER SHARE
A reconciliation of the income (numerator) and shares (denominator) used in
the computations of basic and diluted earnings per common share from
continuing operations, respectively, are as follows (in thousands except
per share data):
<TABLE>
<CAPTION>
For the Year Ended
December 31, 1999
--------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ------
<S> <C> <C> <C>
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $17,762 20,396 $ .87
======
EFFECT OF DILUTIVE SECURITIES
Options - 295
------- ------
DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations $17,762 20,691 $ .86
======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended
December 25, 1998
------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ------
<S> <C> <C> <C>
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $ 13,975 20,295 $ .69
=====
EFFECT OF DILUTIVE SECURITIES
Options - 435
Convertible notes 737 1,516
-------- ------
DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations
plus assumed conversions $ 14,712 22,246 $ .66
======== ====== =====
</TABLE>
<PAGE> 41
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended
December 26, 1997
-----------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ------
<S> <C> <C> <C>
BASIC EARNINGS PER COMMON SHARE
Income from continuing operations $10,414 20,188 $ .52
=====
EFFECT OF DILUTIVE SECURITIES
Options - 395
Convertible notes 368 758
------- -------
DILUTED EARNINGS PER COMMON SHARE
Income from continuing operations
plus assumed conversions $10,782 21,341 $ .51
======= ======= =====
</TABLE>
The impact, prior to their January 1999 repayment, of the assumed
conversion of the $17,057,000 convertible notes, was included within the
earnings per share calculations for those periods in which such conversion
had a dilutive effect.
10. SHAREHOLDERS' EQUITY
COMMON STOCK - The Company has authorized 30,000,000 shares of $.10 par
value common stock of which 20,435,353 and 20,354,633 shares were issued
and outstanding at December 31, 1999 and December 25, 1998, respectively.
STOCK OPTION PLAN - On April 16, 1987, the Company adopted a nonqualified
stock option plan. The plan provides for the issuance of up to 2,687,500
shares of common stock to executives and other key employees. The option
price generally equals the fair market value of the common shares on the
day of the grant and an option's maximum term is ten years.
<PAGE> 42
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Substantially all options granted vest ratably over a three-year period.
Transactions and options outstanding under this plan were as follows:
<TABLE>
<CAPTION>
Options Price Per Share
------- ---------------
<S> <C> <C>
Outstanding at December 27, 1996 1,557,214 $ 1.30 - $10.20
Granted 146,250 $ 6.25 - $ 7.69
Exercised (78,132) $ 1.30 - $ 6.40
Canceled (60,000) $ 6.50 - $10.20
---------
Outstanding at December 26, 1997 1,565,332 $ 1.30 - $10.20
Granted 125,000 $ 8.00 - $ 9.75
Exercised (116,928) $ 1.30 - $ 8.32
Canceled (145,500) $ 6.50 - $ 7.69
---------
Outstanding at December 25, 1998 1,427,904 $ 1.30 - $10.20
Granted 27,000 $ 7.38 - $ 8.19
Exercised (80,720) $ 1.30 - $ 7.69
Canceled (51,000) $ 6.50 - $10.20
---------
Outstanding at December 31, 1999 1,323,184 $ 1.30 - $10.20
=========
Exercisable at December 26, 1997 1,101,332 $ 1.30 - $10.20
Exercisable at December 25, 1998 1,137,904 $ 1.30 - $10.20
Exercisable at December 31, 1999 1,108,184 $ 1.30 - $10.20
</TABLE>
The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." No compensation expense has been
recognized for options granted under the stock option plan in accordance
with the applicable accounting principles adopted by the Company as the
option exercise price was equal to the fair value of the Company's common
stock on the date of grant. Had compensation expense been determined based
on the fair value at the grant date for awards in 1997, 1998 and 1999
consistent with the provisions of SFAS No. 123, the Company's pro forma net
income and earnings per share would have been as presented below (in
thousands except per share data):
<PAGE> 43
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended
---------------------------------------
December 31, December 25, December 26,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Net income - as reported $17,762 $15,253 $12,227
Net income - pro forma 17,555 15,013 12,022
Basic earnings per common share,
as reported .87 .75 .60
Diluted earnings per common share,
as reported .86 .72 .59
Basic earnings per common share,
pro forma .86 .74 .59
Diluted earnings per common share,
pro forma .85 .71 .58
</TABLE>
The fair value of each option granted is estimated on the date of grant
using the Black-Scholes option-pricing model with the following grant
assumptions used:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Expected stock price volatility 31.96% 30.42% 29.88%
Risk-free interest rate 6.09% 4.83% 5.83%
Expected life of options 7 years 7 years 7 years
</TABLE>
The weighted average exercise prices per share for options outstanding at
December 31, 1999, December 25, 1998 and December 26, 1997 are $6.30, $6.19
and $5.86, respectively. The weighted average exercise prices per share for
options exercisable at December 31, 1999, December 25, 1998 and December
26, 1997 are $5.97, $5.85 and $5.34, respectively. The weighted average
remaining contractual life of options outstanding at December 31, 1999 is
7.81 years. The weighted average fair value of options granted during 1999,
1998 and 1997 is $3.63, $3.58 and $3.48 per share, respectively.
11. INCOME TAXES
The components of income (loss) before income taxes for the Company's
continuing domestic and foreign operations were as follows (in thousands):
<TABLE>
<CAPTION>
For the Year Ended
--------------------------------------
December 31, December 25, December 26,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Domestic $28,475 $19,878 $18,005
Foreign 762 3,034 (933)
------- ------- -------
$29,237 $22,912 $17,072
======= ======= =======
</TABLE>
<PAGE> 44
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The consolidated provision for income taxes related to continuing
operations included in the Consolidated Statements of Income consisted of
the following (in thousands):
<TABLE>
<CAPTION>
For the Year Ended
----------------------------------------
December 31, December 25, December 26,
1999 1998 1997
------------ ------------ -------------
<S> <C> <C> <C>
Current:
Federal $ 8,453 $6,328 $6,212
State 1,947 1,500 1,330
Foreign 117 1,183 56
------- ------ ------
10,517 9,011 7,598
------- ------ ------
Deferred:
Federal 818 (64) (740)
State 140 (10) (200)
------- ------ ------
958 (74) (940)
------- ------ ------
$11,475 $8,937 $6,658
======= ====== ======
</TABLE>
The reconciliation between the Federal statutory tax rate expressed as a
percent of pre-tax income and the effective tax rate is as follows:
<TABLE>
<CAPTION>
For the Year Ended
-------------------------------------------
December 31, December 25, December 26,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate 35.0% 35.0% 35.0%
State income taxes, net of
federal benefit 4.4 3.6 4.3
Nondeductible amortization of
intangible assets 1.1 1.4 1.8
Foreign sales corporation benefit (0.4) (0.3) (1.0)
Other (0.9) (0.7) (1.1)
---- ---- ----
39.2% 39.0% 39.0%
==== ==== ====
</TABLE>
<PAGE> 45
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Deferred income taxes are provided for the temporary differences between
the financial reporting and tax bases of the Company's assets and
liabilities. The Company's temporary differences which give rise to
deferred tax assets and liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
December 31, December 25,
1999 1998
---- ----
<S> <C> <C>
Deferred tax assets:
Accrued expenses and reserves $ 3,534 $ 2,894
Postretirement and postemployment
benefits 2,476 2,406
Employee benefits 2,135 1,483
Foreign operating loss carryforwards 11,500 13,400
Valuation allowance (11,500) (13,400)
-------- ---------
8,145 6,783
-------- ---------
Deferred tax liabilities:
Property, plant and equipment (7,894) (7,570)
Intangible assets (2,950) (1,802)
Other (7,441) (7,093)
-------- ---------
(18,285) (16,465)
-------- ---------
Net deferred tax liability $(10,140) $ (9,682)
======== =========
</TABLE>
The deferred tax asset valuation allowance is related entirely to certain
of the Company's foreign operations, including German net operating loss
carryforwards acquired in connection with the Suroflex transaction totaling
approximately $22,897,000 (at December 31, 1999 exchange rates) and for
which a valuation allowance was provided at the time of the acquisition. At
December 31, 1999, the Company's foreign subsidiaries had approximately
$25,855,000 in net operating losses available for carryforward;
approximately $2,100,000 of such carryforwards expire at various times
through 2001 while the remainder of these carryforwards are available for
an unlimited period.
12. EMPLOYEE BENEFIT PLANS
The Company maintains defined benefit pension plans covering union
employees at certain of its divisions and foreign operations. Additionally,
the Company maintains savings and profit sharing plans for the majority of
employees not covered by union defined benefit plans.
<PAGE> 46
Jason Incorporated
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Net periodic costs for the defined benefit plans include the following
components (in thousands):
<TABLE>
<CAPTION>
For the Year Ended
-----------------------------------------
December 31, December 25, December 26,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Service cost $ 252 $ 197 $ 24
Interest cost 588 520 287
Return on plan assets (285) (105) (754)
Amortization and deferrals (212) (404) 432
----- ----- -----
Net periodic benefit cost (income) $ 343 $ 208 $ (11)
===== ===== =====
</TABLE>
The following provides a reconciliation of benefit obligations, plan assets
and funded status of the plans (in thousands):
<TABLE>
<CAPTION>
December 31, December 25,
1999 1998
---- ----
<S> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $ 9,671 $ 3,934
Acquisition - 5,358
Service cost 252 197
Interest cost 588 520
Actuarial gain (219) (20)
Plan participants' contributions 47 36
Benefits paid (441) (377)
Currency translation (480) 230
Plan termination - (207)
-------- -------
Benefit obligation at end of year 9,418 9,671
-------- -------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year 6,820 4,399
Acquisition - 2,342
Actual return on plan assets 717 436
Employer contribution 190 165
Plan participants' contributions 47 36
Benefits paid (441) (377)
Currency translation (110) 26
Plan termination - (207)
-------- -------
Fair value of plan assets at end of year 7,223 6,820
-------- -------
Funded status (2,195) (2,851)
Unrecognized actuarial gain (653) (659)
Unrecognized transition liability 492 394
Additional minimum liability - -
-------- -------
Accrued benefit cost $ (2,356) $(3,116)
======== =======
</TABLE>
<PAGE> 47
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The projected benefit obligation was determined using weighted averaged
assumed discount rates ranging from 6.0% to 7.25% at December 31, 1999 and
at December 25, 1998, and weighted averaged assumed long-term rate of
return on plan assets ranging from 7.4% to 9.0% at December 31, 1999 and
from 5.5% to 9.0% at December 25, 1998. The weighted average expected rate
of compensation increase was 3.9% at December 31, 1999 and December 25,
1998. Plan assets consist principally of common stocks and government
obligations.
The projected benefit obligation for non-U.S. defined benefit pension plans
totaled $5,734,000 and $5,863,000 as of December 31, 1999 and December 25,
1998, respectively. Assets maintained by these plans totaled $3,504,000 and
$2,910,000 as of December 31, 1999 and December 25, 1998, respectively.
The Company also provides postretirement health care benefits and life
insurance coverage to certain eligible employees at one of its divisions.
The costs of retiree health care benefits and life insurance coverage are
accrued over the employee service periods.
The net postretirement benefit costs include the following components (in
thousands):
<TABLE>
<CAPTION>
For the Year Ended
--------------------------------------
December 31, December 25, December 26,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Service cost $ 59 $ 61 $ 62
Interest cost 360 377 377
Amortization and deferrals (47) (28) (16)
----- ---- ------
Net periodic benefit cost $ 372 $410 $ 423
===== ==== ======
</TABLE>
<PAGE> 48
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Presently, the Company's postretirement benefit plans are not funded. The
following provides a reconciliation of benefit obligations, plan assets and
the funded status of the plans (in thousands):
<TABLE>
<CAPTION>
December 31, December 25,
1999 1998
----------- ------------
<S> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $ 5,028 $ 5,084
Service cost 59 61
Interest cost 360 377
Actuarial gain (293) (192)
Benefits paid (329) (302)
------- --------
Benefit obligation at end of year 4,825 5,028
------- --------
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year - -
Employer contribution 329 302
Benefits paid (329) (302)
------- --------
Fair value of plan assets at end of year - -
------- --------
Funded status (4,825) (5,028)
Unrecognized actuarial gain (1,198) (942)
------- --------
Accrued benefit cost $(6,023) $ (5,970)
======= ========
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation was 7.50% at December 31, 1999 and December 25, 1998.
The assumed health care cost trend rates used in measuring the accumulated
postretirement benefit obligation were 6.0% and 5.0% for the hourly and
salaried plans, respectively, at December 31, 1999 and December 25, 1998.
It was assumed that these rates will decline to 1% over periods of 30 years
and 25 years for the hourly and salaried plans, respectively.
The health care cost trend rate assumption has a significant effect on the
amounts reported. To illustrate, a one percentage-point increase in the
assumed health care cost trend rate would increase the accumulated
postretirement benefit obligation as of December 31, 1999 by approximately
$327,000 and would increase the net postretirement benefit expense for 1999
by approximately $32,000. A one percentage-point decrease in the assumed
health care cost trend rate would decrease the accumulated postretirement
benefit obligation as of December 31, 1999 by approximately $318,000 and
would decrease the net postretirement benefit expense for 1999 by
approximately $32,000.
The Company maintains an incentive compensation plan which provides for
incentive payments to certain employees upon the achievement of defined
operating results. Incentive compensation expense approximated $2,730,000,
$2,571,000 and $3,055,000 in 1999, 1998 and 1997, respectively. These
amounts are included in accrued compensation and employee benefits within
the accompanying Consolidated Balance Sheets.
<PAGE> 49
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
13. SEGMENT INFORMATION
Reference is made to pages 20 through 24 for segment financial data and an
unaudited description and discussion of the Company's business segments.
The Company's seven business units have separate management teams and
infrastructures that offer different products and services. The business
units have been aggregated into two reportable segments (motor vehicle
products and industrial products) since the long term financial performance
of the business units within these segments is affected by similar economic
conditions. The Company evaluates performance based on operating earnings
of the respective business units.
Motor vehicle products include businesses which are manufacturers of
nonwoven fiber padding for the automotive industry and seating products for
motorcycles and a broad array of other mobile equipment. The four largest
customers of this segment comprised approximately 29%, 27% and 26% of
consolidated sales in 1999, 1998 and 1997, respectively. Receivables
outstanding with these customers represented approximately 29% and 26% of
accounts receivable balances at December 31, 1999 and December 25, 1998,
respectively.
Industrial products include businesses which are manufacturers of finishing
products for industrial applications and of precision components for
original equipment manufacturers throughout the world.
Information regarding the Company's geographic areas is summarized below
(in thousands). Revenues are attributed to countries based on origination
of sale. Amounts presented in the eliminations column represent sales
between geographic areas primarily comprised of sales made by the Company's
operations in the United States. Net assets of discontinued operations have
been excluded from long-lived assets.
<TABLE>
<CAPTION>
United States Germany All Other Eliminations Total
------------- ------- --------- ------------ -----
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1999
Sales to unaffiliated customers $377,104 $36,805 $30,538 $(20,582) $ 423,865
Long-lived assets 155,000 24,836 11,464 - 191,300
Year Ended December 25, 1998
Sales to unaffiliated customers $349,311 $34,872 $24,080 $(17,410) $ 390,853
Long-lived assets 134,011 25,296 5,877 - 165,184
Year Ended December 26, 1997
Sales to unaffiliated customers $328,043 $12,036 $12,970 $(14,383) $ 338,666
Long-lived assets 125,641 14,133 1,949 - 141,723
</TABLE>
<PAGE> 50
JASON INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
14. INTERIM FINANCIAL INFORMATION (UNAUDITED)
Summarized quarterly financial data for 1999 and 1998 are presented below
(in thousands except per share data):
<TABLE>
<CAPTION>
Quarter
-----------------------------------------------------------------
1999 First Second Third Fourth Total
---- ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C>
Net sales $ 102,200 $ 108,376 $101,775 $ 111,514 $423,865
Gross profit 23,215 26,458 23,138 27,213 100,024
Net income 3,561 4,964 3,686 5,551 17,762
Basic earnings per common share 0.18 0.24 0.18 0.27 0.87
Diluted earnings per common share 0.17 0.24 0.18 0.27 0.86
</TABLE>
<TABLE>
<CAPTION>
Quarter
-----------------------------------------------------------
1998 First Second Third Fourth Total
---- ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C>
Net sales $90,665 $99,402 $98,141 $102,645 $390,853
Gross profit 19,051 23,383 21,251 23,600 87,285
Income from continuing operations 2,859 3,805 2,475 4,836 13,975
Income from discontinued operations, net
of tax 747 531 - - 1,278
------- ------- ------- -------- --------
Net income $ 3,606 $ 4,336 $ 2,475 $ 4,836 $ 15,253
======= ======= ======= ======== ========
Earnings per share - basic
Income from continuing operations $ .14 $ .19 $ 0.12 $ 0.24 $ .69
Income from discontinued operations .04 .02 - - .06
------- ------- ------- -------- --------
Net income $ .18 $ .21 $ 0.12 $ 0.24 $ .75
======= ======= ======= ======== ========
Earnings per share - diluted
Income from continuing operations $ .13 $ .18 $ .12 $ .23 $ .66
Income from discontinued operations .04 .02 - - .06
------- ------- ------- -------- --------
Net income $ .17 $ .20 $ .12 $ .23 $ .72
======= ======= ======= ======== ========
</TABLE>
15. SUBSEQUENT EVENT
On January 31, 2000, the Company announced the signing of a definitive
merger agreement providing for the acquisition of the Company by a group
consisting of the Company's senior management and an affiliate of a New
York based private equity firm. Such transaction is expected to be
submitted to shareholders for a vote and, if approved by the shareholders,
will close in the second quarter of 2000. The transaction is also subject
to a number of other conditions and, accordingly, no assurance can be given
that the transaction will be completed. In connection with such
announcement, three purported class action lawsuits have been filed against
the Company and its directors seeking damages and other relief. The Company
believes such lawsuits are without merit and intends to defend the lawsuits
vigorously.
<PAGE> 51
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of Jason Incorporated
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 59 present fairly, in all material
respects, the financial position of Jason Incorporated and its subsidiaries at
December 31, 1999 and December 25, 1998, and the results of their operations and
their cash flows for each of the three years in the period ended December 31,
1999 in conformity with accounting principles generally accepted in the United
States. In addition, in our opinion, the financial statement schedule listed in
the index appearing under Item 14(a)(2) on page 60 presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States, which 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, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
February 1, 2000, except as to Note 15
which is as of February 15, 2000
<PAGE> 52
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT
DIRECTORS
VINCENT L. MARTIN
Age: 60; Elected Director: 1985; Present Term Ends: 2000 Annual Meeting;
Shares Beneficially Owned: 4,430,129
Mr. Martin has been Chairman since June, 1999. Mr. Martin was Chief
Executive Officer of the Company from November, 1985 to June, 1999 and has been
a director since it was formed in November, 1985. Mr. Martin is a director of
Modine Manufacturing Company.
MARK TRAIN
Age: 58; Elected Director: 1985; Present Term Ends: 2000 Annual Meeting;
Shares Beneficially Owned: 3,257,683
Mr. Train has been Chief Executive Officer and President since June, 1999.
Mr. Train was Executive Vice President, Secretary and Treasurer of the Company
and has been a director since it was formed in November, 1985. Mr. Train is a
member of the American Institute of Certified Public Accountants.
WAYNE OLDENBURG
Age: 53; Elected Director: 1987; Present Term Ends: 2000 Annual Meeting;
Shares Beneficially Owned: 147,078
Since 1981 Mr. Oldenburg has served as Chief Executive Officer of Oldenburg
Group, Inc., a privately-held industrial manufacturing company.
FRANK JONES
Age: 60; Elected Director: 1987; Present Term Ends: 2000 Annual Meeting;
Shares Beneficially Owned: 65,086
For the past twelve years Mr. Jones has been an independent consultant in
Tucson, Arizona. Mr. Jones is a director of Modine Manufacturing Company,
Ingersoll International Incorporated, Star Cutter Co., Gardner Publications,
Inc. and General Tool Co.
<PAGE> 53
DAVID DRURY
Age: 51; Elected Director: 1989; Present Term Ends: 2000 Annual Meeting;
Shares Beneficially Owned: 67,863
Since July, 1999 Mr. Drury has been President of Poblocki & Sons, LLC, a
privately-held manufacturer of commercial signs and displays. From November,
1997 through June, 1999 and from January 1, 1994 through September, 1994, Mr.
Drury was an independent consultant in Milwaukee, Wisconsin. Mr. Drury served as
President of Stolper-Fabralloy Co. LLC, a fabricator of gas turbine engine
components, from October, 1994 through October, 1997. Mr. Drury is a director of
Plexus Corp. and St. Francis Capital Corporation.
WAYNE FETHKE
Age: 55; Elected Director: 1987; Present Term Ends: 2000 Annual Meeting;
Shares Beneficially Owned: 36,010
Mr. Fethke has served as Chief Executive Officer of Fiskars Consumer
Products Group whose parent is Fiskars OY AB of Helsinki, Finland, since 1978.
Fiskars is a manufacturer of consumer cutlery and power electronics.
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Title Age
- ---- ----- ---
<S> <C> <C>
Vincent Martin Chairman of the Board 60
Mark Train Chief Executive Officer and President 58
Michael Gubesch Vice President 59
John Hengel Vice President-Finance and Secretary 41
Timothy Hitesman Vice President 55
Robert Sandberg Vice President 50
William Talbert Vice President 56
Howard Wolter Controller and Assistant Secretary 68
</TABLE>
The terms of office and past business experiences of Messrs. Martin and
Train are described above.
MICHAEL GUBESCH, Vice President
Mr. Gubesch was appointed a Vice President of the Company in May, 1993 and
is in charge of the Company's Janesville Products unit. Mr. Gubesch has been
with Janesville Products since 1983 and was Vice President of Operations when
Janesville Products was acquired by the Company in January, 1986.
<PAGE> 54
JOHN HENGEL, Vice President-Finance and Secretary
Mr. Hengel was appointed Vice President-Finance and Secretary in June, 1999
and serves as the Company's Chief Financial Officer. Prior to joining the
Company in June, 1999, Mr. Hengel held various positions at
PricewaterhouseCoopers LLP, most recently as a Director of Audit and Business
Advisory Services. Mr. Hengel is a Certified Public Accountant.
TIMOTHY HITESMAN, Vice President
Mr. Hitesman was appointed a Vice President of the Company in April, 1998
and is in charge of the Company's Jason Brush Group (formerly known as Osborn
International). Mr. Hitesman has been with Osborn International since 1991 and
was Vice President of Operations until appointment as President of Osborn
International in April, 1997.
ROBERT SANDBERG, Vice President
Mr. Sandberg was appointed a Vice President of the Company in December,
1994. He has been in charge of the Company's Sackner Products unit since June,
1993 and of its Jason Components unit since September, 1998. Mr. Sandberg has
been with Sackner Products since 1977 and was Vice President of Operations when
it was acquired by the Company in June, 1991.
WILLIAM TALBERT, Vice President
Mr. Talbert has been with the Company since 1987 and was appointed a Vice
President of the Company in February, 1988. He is in charge of the Company's
JacksonLea unit.
HOWARD WOLTER, Controller and Assistant Secretary
Mr. Wolter has been the Controller and Assistant Secretary of the Company
since April, 1989. Mr. Wolter has been with the Company since its formation.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Commission. Officers, directors and greater than 10%
shareholders are required by the Exchange Act to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that during fiscal 1999 all Section 16(a) filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with.
<PAGE> 55
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth summary information with respect to all
compensation, including stock options granted and all cash bonuses and accrued
deferred compensation, incurred by the Company during the last three fiscal
years ended December 31, 1999, to or on behalf of the Chief Executive Officer
("CEO") and the four most highly paid executive officers, other than the CEO
(the "named executive officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards
------
Securities
Name and Underlying Other Annual
Principal Position Year Salary($) Bonus($)(1) Options/SARs(#) Compensation($)(2)
- ------------------ ---- --------- ----------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
Vincent Martin 1999 412,500 160,421 - 6,400
Chairman 1998 405,000 175,500 - 6,400
1997 390,000 248,182 - 6,350
Mark Train 1999 412,500 160,421 - 6,400
President and CEO 1998 380,000 164,667 - 6,400
1997 365,000 232,273 - 6,350
David Anderson 1999 203,769 127,360 - 10,400
Vice President (3) 1998 195,423 71,711 - 10,400
1997 184,812 85,324 - 10,350
Michael Gubesch 1999 164,000 164,000 - 6,400
Vice President 1998 156,000 156,000 5,000 6,240
1997 148,000 93,283 5,000 5,920
Robert Sandberg 1999 159,000 159,000 - 6,400
Vice President 1998 126,000 126,000 - 5,040
1997 124,385 124,385 5,000 4,975
</TABLE>
(1) Bonus earned upon achievement of performance objectives.
(2) Company contributions under qualified employees savings and profit
sharing plan.
(3) Mr. Anderson retired effective February 8, 2000.
The Company, by policy, provides that each of its officers, including the
named executive officers, is entitled to receive their base salaries for one
year after termination if the Company terminates their employment without cause.
If termination is for cause, which includes gross negligence in the course of
employment and other forms of misconduct, the salary continuation is forfeited.
Directors of the Company, other than salaried employees of the Company,
receive directors' fees of $15,000 per year and $1,000 per meeting. All
directors are reimbursed for reasonable out-of-pocket expenses incurred in
attending meetings of the Board of Directors.
<PAGE> 56
STOCK OPTIONS
On April 16, 1987, the Company adopted a nonqualified stock option plan,
which was amended on April 25, 1991 (the "Plan"). The Plan provides for the
grant to key employees and outside directors of the Company of options covering
shares of Common Stock. The Plan is administered by the Board of Directors which
has discretion to increase the number of shares covered by the Plan, select
optionees, designate the number of shares to be covered by each option,
establish vesting schedules, specify the amount and type of consideration to be
paid to the Company on exercise, and to specify certain other terms of the
options. The exercise price of options granted under the Plan must be at least
85% of the fair market value of Common Stock on the date of grant. The Company
has reserved 2,687,500 shares of Common Stock for issuance under the Plan
subject to adjustment for certain dilutive events. At December 31, 1999, options
to purchase 1,323,184 shares were outstanding. During fiscal 1999, options were
granted to purchase 27,000 shares of Common Stock at per share exercise prices
of $7.38 to $8.19 and options for 80,720 shares were exercised at exercise
prices of $1.30 to $7.69 per share. A total of 743,048 shares of Common Stock
remain available for future grants under the Plan.
No stock options were granted to the named executive officers during the
fiscal year ended December 31, 1999.
The following table shows certain information regarding stock options held
by the named executive officers as of December 31, 1999:
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at FY-End (#) Options/SARs
-------------------------- at FY-End ($)*
--------------
Name Shares Acquired
- ---- ---------------
on Value Realized ($) Exercisable Unexerciseable Exercisable Unexercisable
-- ------------------ ----------- -------------- ----------- -------------
Exercise(#)
-----------
<S> <C> <C> <C> <C> <C> <C>
Vincent Martin - - - - - -
Mark Train - - - - - -
David Anderson - - 60,000 - 19,375 -
Michael Gubesch - - 41,915 10,000 43,112 -
Robert Sandberg - - 43,439 5,000 22,111 -
</TABLE>
* Calculated based on the closing sale price of $7.25 per share on
December 31, 1999.
<PAGE> 57
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of shares of common stock as of February 15, 2000 by each person known
to the Company to own beneficially more than 5% of the common stock, each
director of the Company, the named executive officers, and all directors and
officers as a group.
The Company has determined beneficial ownership in accordance with the
rules of the Securities and Exchange Commission. Unless otherwise indicated, the
persons and entities included in the table have sole voting and investment power
with respect to all shares beneficially owned, subject to applicable community
property laws. Shares of common stock subject to options that are either
currently exercisable or exercisable within 60 days of February 15, 2000 are
treated as outstanding and beneficially owned by the option holder for the
purpose of computing the percentage ownership of the option holder. However,
these shares are not treated as outstanding for the purpose of computing the
percentage ownership of any other person.
<TABLE>
<CAPTION>
Name and Address of Number of
Beneficial Owner Shares Owned Percent
---------------- ------------ -------
<S> <C> <C>
VINCENT MARTIN 4,430,129 (1) 21.7%
411 East Wisconsin Avenue, Suite 2120
Milwaukee, WI 53202
MARK TRAIN 3,257,683 (2) 15.9%
411 East Wisconsin Avenue, Suite 2120
Milwaukee, WI 53202
STATE OF WISCONSIN INVESTMENT BOARD 2,080,675 (3) 10.2%
P.O. Box 7842
Madison, WI 53707
DIMENSIONAL FUND ADVISORS, INC. 1,326,699 (4) 6.5%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
UBS AG 1,316,689 (5) 6.4%
Bahnhofstrasse 45
8021, Zurich, Switzerland
ROBERT FLEMING, INC. 1,102,502 (6) 5.4%
320 Park Avenue, 11th Floor
New York, NY 10022
DAVID ANDERSON 88,263 (7) (15)
9009 N. 51st Street
Milwaukee, WI 53223
MICHAEL GUBESCH 96,275 (8) (15)
156 South Norwalk Road
Norwalk, OH 44857
WAYNE OLDENBURG 147,078 (9) (15)
8600 West Bradley Road
Milwaukee, WI 53224
FRANK JONES 65,086(10) (15)
6740 North St. Andrews Drive
Tucson, AZ 85718
</TABLE>
<PAGE> 58
<TABLE>
<S> <C> <C>
ROBERT SANDBERG 67,712(11) (15)
411 East Wisconsin Avenue, Suite 2125
Milwaukee, WI 53202
DAVID DRURY 67,863(12) (15)
922 South 70th Street
West Allis, WI 53214
WAYNE FETHKE 36,010(13) (15)
636 Science Drive
Madison, WI 53711
All directors and officers as a 8,465,996(14) 40.6%
group (thirteen persons)
</TABLE>
(1) Includes 4,430,004 shares that are subject to a voting agreement with
Saw Mill and certain of its affiliates and 125 shares that are not
subject to the voting agreement and that are held by a trust of which
Mr. Martin is trustee.
(2) Includes 3,256,679 shares that are subject to a voting agreement with
Saw Mill and certain of its affiliates and 1,004 shares that are not
subject to the voting agreement and that are held by trusts of which
Mr. Train is trustee.
(3) The State of Wisconsin Investment Board has reported to the Company
that a Schedule 13G was filed with the Securities and Exchange
Commission indicating that as of December 31, 1999, it had sole power
to vote 2,080,675 shares.
(4) Dimensional Fund Advisors has reported to the Company that a Schedule
13G was filed with the Securities and Exchange Commission indicating
that as of December 31, 1999, it had sole power to vote 1,326,699
shares.
(5) UBS AG has reported to the Company that a Schedule 13G was filed with
the Securities and Exchange Commission indicating that as of December
31, 1999, it had sole power to vote 1,315,689 shares and shared power
to vote 1,316,689 shares.
(6) Robert Fleming, Inc. has reported to the Company that a Schedule 13G
was filed with the Securities and Exchange Commission indicating that
as of December 31, 1999 it had sole power to vote 1,102,502 shares.
(7) Includes options to purchase 60,000 shares.
(8) Includes options to purchase 41,915 shares.
(9) Includes options to purchase 27,813 shares.
(10) Includes options to purchase 27,813 shares.
(11) Includes options to purchase 43,439 shares.
(12) Includes options to purchase 27,813 shares.
(13) Includes options to purchase 27,813 shares.
(14) Includes options to purchase 432,068 shares.
(15) Less than 1%.
<PAGE> 59
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 31, 2000, the Company announced that it had signed a definitive
merger agreement providing for the acquisition of the Company by a group
consisting of Jason's senior management and Saw Mill. The management members of
the group are Vincent L. Martin, Chairman of Jason, and Mark Train, President
and Chief Executive Officer of Jason (collectively, the "Management
Shareholders"). The merger agreement provides that shareholders of the Company
(other than the Company, Merger Sub or shareholders who perfect their
dissenters' rights) will receive $11.25 in cash for each share of Jason common
stock. Pursuant to this transaction, if completed, the Management Shareholders
will retain a continuing ownership interest in Jason by contributing part of
their shares of Jason common stock to an affiliate of Saw Mill in exchange for
shares of such affiliate's common stock, the Management Shareholders and certain
of their affiliates will receive the merger consideration of $11.25 for all
other shares owned by them, and the Management Shareholders will continue to
serve in their positions as executive officers of Jason after the merger and
will enter into new employment agreements with Jason after the merger. On a
combined basis, the Management Shareholders and such affiliates will receive
aggregate consideration equal to approximately $10.90 per share of Jason common
stock owned by them. The Management Shareholders have also agreed to allow Saw
Mill to vote their shares in favor of the merger.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. FINANCIAL STATEMENTS. The following financial statements of the Company
provided in Item 8.
Consolidated Balance Sheets - as of December 31, 1999 and December 25, 1998.
Consolidated Statements of Income - years ended December 31, 1999, December 25,
1998 and December 26, 1997.
Consolidated Statements of Shareholders' Equity - years ended December 31, 1999,
December 25, 1998 and December 26, 1997.
Consolidated Statements of Cash Flows - years ended December 31, 1999, December
25, 1998 and December 26, 1997.
Notes to Consolidated Financial Statements.
Report of Independent Accountants.
<PAGE> 60
2. FINANCIAL STATEMENT SCHEDULE:
Financial Statement Schedule for the years ended December 31, 1999, December 25,
1998 and December 26, 1997.
Schedule II Valuation and Qualifying Accounts and Reserves
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions, are inapplicable or the required information is
shown in the financial statements or notes thereto, and therefore have been
omitted.
3. EXHIBITS:
3.1 Articles of Incorporation of the Company, as amended.
3.2 Agreement and Plan of Merger between the Company (formerly known as
Jason Merger Corp.) and its predecessor Jason Incorporated, a Delaware
corporation.
3.3 By-Laws of the Company, as amended.
4.1 Specimen Common Stock certificate.
10.1 Jason Incorporated Deferred Compensation Plan for Employees dated
September 26, 1986.
10.2 Jason Employee Savings and Profit Sharing Plan effective January 1,
1986.
10.3 Jason Incorporated Management Incentive Compensation Plan effective
January 1, 1987.
10.4 Jason Incorporated Key Executive Incentive Compensation Plan effective
January 1, 1987.
10.5 Jason Incorporated 1987 Nonqualified Stock Option Plan dated April 16,
1987 as amended and restated January 30, 1989.
10.6 Amendment to Jason Incorporated 1987 Nonqualified Stock Option Plan,
effective January 30, 2000.
10.7 Jason Employee Savings and Profit Sharing Plan Modifications:
subsection 7.3(a) of Article VII, section 7.2 of Article VII, section
2.1, section 3.1, section 4.2, section 2.2, section 2.3, section 2.1,
section 6.4 and section 3.7.
10.8 Jason Incorporated Note Agreement dated as of October 1, 1989 re:
$10,000,000 10.60% Senior Subordinated Notes Due October 15, 2000.
10.9 Purchase and Sale Agreement dated June 28, 1991 for the purchase of the
assets of Sackner
10.10 Purchase and Sale Agreement dated May 31, 1991 for the purchase of the
assets of Lea.
10.11 Credit Agreement by and among Jason Incorporated, The First National
Bank of Chicago and The First National Bank of Boston, as amended.
10.12 Note Agreements dated as of November 15, 1992 re: $16,000,000 7.65%
Senior Secured Notes due December 1, 2002.
10.13 Stock Purchase Agreement between the Company and the majority
stockholders of Koller Industries, Inc.
10.14 Stock Purchase Agreement between the Company and the minority
stockholders of Koller Industries, Inc.
10.15 Form of Stock Purchase Agreement executed by the Company in connection
with the January 1994 private placement of common stock.
10.16 Purchase and Sale Agreement between the Company and Milsco
Manufacturing Company.
10.17 Second Amended and Restated Credit Agreement dated March 3, 1999 by and
among the Company, the First National Bank of Chicago and M&I Marshall
and Ilsley Bank
<PAGE> 61
10.18 Purchase and Sale Agreement, dated February 9, 1999, among Jason
Incorporated, Sealeze Corporation and Olin V. Hyde
10.19 Agreement and Plan of Merger dated as of January 30, 2000, among the
Company, Saw Mill Capital Fund II, L.P., Calendar Holdings, Inc.,
Calendar Acquisition Corp., Vincent L. Martin and Mark Train
10.20 Amendment No. 1 to Agreement and Plan of Merger, dated as of March 13,
2000, among the Company, Saw Mill Capital Fund II, L.P., Calendar
Holdings, Inc., Calendar Acquisition Corp., Vincent L. Martin and Mark
Train
21.1 Subsidiaries
23.1 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney
27 Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the three months ended
December 31, 1999.
(c) Exhibits.
The response to this portion of Item 14 is submitted as a separate
section of this report.
(d) Financial Statement Schedules.
SCHEDULE II - VALUATION AND QUALIFYING
ACCOUNTS AND RESERVES
(thousands of dollars)
<TABLE>
<CAPTION>
ADDITIONS
------------------------------
BALANCE AT CHARGED TO ACQUIRED BALANCE AT
BEGINNING COSTS ALLOWANCES END
OF YEAR AND EXPENSES AND RESERVES DEDUCTIONS OF YEAR
----------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999
Allowance for doubtful accounts.... $ 1,846 $ 600 $ 8 $ (349) $ 2,105
YEAR ENDED DECEMBER 25, 1998
Allowance for doubtful accounts.... $ 878 $ 836 $ 335 $ (203) $ 1,846
YEAR ENDED DECEMBER 26, 1997
Allowance for doubtful accounts.... $ 847 $ 306 $ - $ (275) $ 878
</TABLE>
<PAGE> 62
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
JASON INCORPORATED
BY /s/ Mark Train
--------------------
Mark Train
Chief Executive Officer
Date: March 29, 2000
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Mark Train and John J. Hengel, and each of them, as his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this report and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and to perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, were there or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Vincent L. Martin Chairman of the Board and March 29, 2000
---------------------------
Vincent L. Martin Director
/s/ Mark Train Chief Executive Officer, President March 29, 2000
--------------------------- and Director
Mark Train
/s/John J. Hengel Vice President Finance (Principal March 29, 2000
--------------------------- Financial and Accounting Officer)
John J. Hengel
/s/ Wayne C. Oldenburg Director March 29, 2000
---------------------------
Wayne C. Oldenburg
/s/ Wayne G. Fethke Director March 29, 2000
---------------------------
Wayne G. Fethke
/s/ Frank W. Jones Director March 29, 2000
---------------------------
Frank W. Jones
/s/ David J. Drury Director March 29, 2000
---------------------------
David J. Drury
</TABLE>
<PAGE> 63
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential Page
Number Number
------- ---------------
<S> <C> <C>
3.1 Articles of Incorporation of the Company, as amended. (1)
3.2 Agreement and Plan of Merger between the Company (formerly (1)
known as Jason Merger Corp.) and its predecessor, Jason
Incorporated, a Delaware corporation.
3.3 By-Laws of the Company, as amended.
4.1 Specimen Common Stock certificate. (2)
10.1 Jason Incorporated Deferred Compensation Plan for Employees (2)
dated September 26, 1986.
10.2 Jason Employee Savings & Profit Sharing Plan effective (2)
January 1, 1986.
10.3 Jason Incorporated Management Incentive Compensation Plan (2)
effective January 1, 1987.
10.4 Jason Incorporated Key Executive Incentive Compensation Plan (2)
effective January 1, 1987.
10.5 Jason Incorporated 1987 Nonqualified Stock Option Plan dated (3)
April 16, 1987 as amended and restated January 30, 1989.
10.6 Amendment to Jason Incorporated 1987 Nonqualified Stock
Option Plan, effective January 30, 2000.
10.7 Jason Employee Savings and Profit Sharing Plan (3)
Modifications: subsection 7.3(a) of Article VII, section 7.2
of Article VII, section 2.1, section 3.1, section 4.2,
section 2.2, section 2.3, section 2.1, section 6.4 and
section 3.7.
</TABLE>
<PAGE> 64
<TABLE>
<CAPTION>
Exhibit Sequential Page
Number Number
------- ---------------
<S> <C> <C>
10.8 Jason Incorporated Note Agreement dated as of October 1, 1989 (4)
re: $10,000,000 10.60% Senior Subordinated Notes Due October
15, 2000.
10.9 Purchase and Sale Agreement dated June 28, 1991 for the (5)
purchase of the assets of Sackner.
10.10 Purchase and Sale Agreement dated May 31, 1991 for the (5)
purchase of the assets of Lea.
10.11 Credit Agreement by and among Jason Incorporated, The First (6)
National Bank of Chicago and the First National Bank of
Boston, as amended.
10.12 Note Agreements dated as of November 15, 1992 re: $16,000,000 (6)
7.65% Senior Secured Notes due December 1, 2002.
10.13 Stock Purchase Agreement between the Company and the majority (7)
stockholders of Koller Industries, Inc.
10.14 Stock Purchase Agreement between the Company and the minority (7)
stockholders of Koller Industries, Inc.
10.15 Form of Stock Purchase Agreement executed by the Company in (8)
connection with the January 1994 private placement of common
stock.
10.16 Purchase and Sale Agreement between the Company and Milsco (9)
Manufacturing Company.
10.17 Second Amended and Restated Credit Agreement dated March 3,
1999 by and among the Company, the First National Bank of
Chicago and M&I Marshall and Ilsley Bank.
</TABLE>
2
<PAGE> 65
<TABLE>
<CAPTION>
Exhibit Sequential Page
Number Number
- ------- ---------------
<S> <C> <C>
10.18 Purchase and Sale Agreement, dated as of February 9, 1999,
among Jason Incorporated, Sealeze Corporation and Olin V.
Hyde.
10.19 Agreement and Plan of Merger dated as of January 30, 2000, (10)
among the Company, Saw Mill Capital Fund II, L.P., Calendar
Holdings, Inc., Calendar Acquisition Corp., Vincent L. Martin
and Mark Train.
10.20 Amendment No. 1 to Agreement and Plan of Merger, dated as of
March 13, 2000, among the Company, Saw Mill Capital Fund II,
L.P., Calendar Holdings, Inc., Calendar Acquisition Corp.,
Vincent L. Martin and Mark Train.
21.1 Subsidiaries.
23.1 Consent of PricewaterhouseCoopers LLP.
24.1 Power of Attorney. (11)
27 Financial Data Schedule.
(1) Exhibit incorporated by reference to the Company's Proxy Statement dated (and
filed with the Commission on) March 19, 1993.
(2) Exhibit incorporated by reference to the Company's Registration Statement filed
on Form S-1, Registration No. 33-13717, effective June 16, 1987.
(3) Exhibit incorporated by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended December 30, 1988.
(4) Exhibit incorporated by reference to the Company's Current Report on Form 8-K
dated June 30, 1989.
(5) Exhibit incorporated by reference to the Company's Current Report on Form 8-K
filed with the Commission on July 12, 1991.
(6) Exhibit incorporated by reference to the Company's Annual Report on Form 10-K
for the fiscal year ended December 25, 1992.
</TABLE>
3
<PAGE> 66
<TABLE>
<CAPTION>
Exhibit Sequential Page
Number Number
------ ------
<S> <C> <C>
(7) Exhibit incorporated by reference to the Company's Current Report on Form 8-K filed
with the Commission on December 8, 1993.
(8) Exhibit incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993.
(9) Exhibit incorporated by reference to the Company's Current Report on Form 8-K filed
with the Commission on January 12, 1995.
(10) Exhibit incorporated by reference to the Company's Current Report on Form 8-K filed
with the Commission on February 1, 2000.
(11) Appears on signature page to this report.
</TABLE>
4
<PAGE> 1
EXHIBIT 3.3
BY-LAWS
OF
JASON INCORPORATED
AS AMENDED AS OF
FEBRUARY 9, 2000
<PAGE> 2
REFERENCE TABLE
BY-LAWS OF
JASON INCORPORATED
<TABLE>
<CAPTION>
Section Subject Matter Page
------- -------------- ----
<S> <C> <C>
I OFFICES
1.01 Principal and Business Offices I-1
1.02 Registered Office I-1
II SHAREHOLDERS
2.01 Annual Meeting II-1
2.02 Special Meeting II-1
2.03 Place of Meeting II-1
2.04 Notice of Meeting II-1
2.05 Fixing of Record Date II-2
2.06 Voting Lists II-3
2.07 Quorum II-4
2.08 Conduct of Meetings II-4
2.09 Proxies II-5
2.10 Voting of Shares II-5
2.11 Voting of Shares by Certain Holders II-5
2.12 Waiver of Notice by Shareholders II-6
2.13 Action Without Meeting II-7
III BOARD OF DIRECTORS
3.01 General Powers and Number III-1
3.02 Tenure and Qualifications III-1
3.03 Regular Meetings III-1
3.04 Special Meetings III-1
3.05 Notice; Waiver III-1
3.06 Quorum III-2
3.07 Manner of Acting III-2
3.08 Conduct of Meetings III-2
3.09 Vacancies III-3
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
3.10 Compensation III-3
3.11 Presumption of Assent III-3
3.12 Committees III-4
3.13 Unanimous Consent Without Meeting III-4
3.14 Conduct of Meetings by or Through the Use of
Communications Equipment III-5
3.15 Executive Committee III-5
IV OFFICERS
4.01 Number IV-1
4.02 Appointment and Term of Office IV-1
4.03 Removal IV-1
4.04 Vacancies IV-1
4.05 Chairman of the Board and Chief Executive Officer IV-1
4.06 President IV-2
4.07 Executive or Senior Vice President IV-2
4.08 Vice Presidents IV-2
4.09 The Secretary IV-3
4.10 The Treasurer IV-3
4.11 Assistant Secretaries and Assistant Treasurers IV-4
4.12 Other Assistants and Acting Officers IV-4
4.13 Salaries IV-4
V CONTRACTS BETWEEN CORPORATION AND
RELATED PERSONS V-1
VI CONTRACTS, LOANS, CHECKS AND DEPOSITS:
SPECIAL CORPORATE ACTS
6.01 Contracts VI-1
6.02 Loans VI-1
6.03 Checks, Drafts, Etc. VI-1
6.04 Deposits VI-1
6.05 Voting of Securities Owned by this Corporation VI-1
VII CERTIFICATES FOR SHARES AND THEIR TRANSFER
7.01 Certificates for Shares VII-1
7.02 Facsimile Signatures and Seal VII-1
7.03 Signature by Former Officers VII-1
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
7.04 Transfer of Shares VII-1
7.05 Lost, Destroyed or Stolen Certificates VII-2
7.06 Consideration for Shares VII-2
7.07 Restrictions on Transfer VII-2
7.08 Stock Regulations VII-2
VIII INDEMNIFICATION, LIMITED LIABILITY AND INSURANCE
8.01 General Scope and Definitions VIII-1
8.02 Mandatory Indemnification VIII-2
8.03 Determination of Right to Indemnification VIII-3
8.04 Allowance of Expenses as Incurred VIII-3
8.05 Partial Indemnification VIII-4
8.06 Indemnification of Employees and Agents VIII-4
8.07 Limited Liability of Directors VIII-4
8.08 Severability of Provisions VIII-5
8.09 Nonexclusivity of Rights VIII-5
8.10 Purchase of Insurance VIII-5
8.11 Amendment VIII-5
IX SEAL IX-1
X AMENDMENTS
10.01 By Shareholders X-1
10.02 By-Law Fixing Quorum or Voting Requirements
for Shareholders X-1
10.03 By-Law Fixing Quorum or Voting Requirements for Directors X-1
10.04 By Directors X-2
10.05 Implied Amendments X-2
XI GENERAL
11.01 Gender XI-1
XII DIVIDENDS
12.01 Dividends XII-1
</TABLE>
iii
<PAGE> 5
BY-LAWS
OF
JASON INCORPORATED
ARTICLE I. OFFICES.
SECTION 1.01. Principal and Business Offices. The Corporation
may have such principal and other business offices, either within or without the
State of Wisconsin, as the Board of Directors may designate or as the business
of the Corporation may require from time to time.
SECTION 1.02. Registered Office. The registered office of the
Corporation required by the Wisconsin Business Corporation Law to be maintained
in the State of Wisconsin may be, but need not be, identical with the principal
office in the State of Wisconsin. The address of the registered office may be
changed from time to time by the Board of Directors. The business office of the
registered agent of the Corporation shall be identical to such registered
office.
I-1
<PAGE> 6
ARTICLE II. SHAREHOLDERS.
SECTION 2.01. Annual Meeting. The annual meeting of the
shareholders shall be held on the third Tuesday in the month of April of each
year at the hour of 10 a.m., or at such other time and date within six months
after the end of the Corporation's fiscal year as may be authorized by the Board
of Directors and set forth in the notice of meeting, for the purpose of electing
directors and for the transaction of such other business as may come before the
meeting. If the date fixed for the annual meeting shall be a legal holiday in
the State of Wisconsin, such meeting shall be held on the next succeeding
business day. If the election of directors shall not be held on the day
designated herein for any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as convenient.
SECTION 2.02. Special Meeting. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise prescribed by
applicable law, may be called by the Chairman of the Board (if one is
designated), the President or the Board of Directors, and shall be called by the
President at the written request of (a) the holders of not less than one-tenth
of all votes entitled to be cast on any issue proposed to be considered at the
special meeting, if such holders sign, date and deliver to the Corporation a
written request stating the purpose or purposes for such meeting, or (b)
one-third of the directors then in office. Only business within the purpose
described in the notice of a special meeting may be conducted at such meeting.
SECTION 2.03. Place of Meeting. The Board of Directors may
designate any place, either within or without the State of Wisconsin, as the
place of meeting for any annual meeting or for any special meeting called by the
Board of Directors. A waiver of notice signed by all shareholders entitled to
vote at a meeting may designate any place, either within or without the State of
Wisconsin, as the place for the holding of such meeting. If no designation is
made, or if a special meeting be otherwise called, the place of meeting shall be
the principal business office of the Corporation in the State of Wisconsin or
such other suitable place in the county of such principal office as may be
designated by the person(s) calling such meeting, but any meeting may be
adjourned to reconvene at any place designated by vote of a majority of the
shares represented thereat.
SECTION 2.04. Notice of Meeting.
II-1
<PAGE> 7
(a) 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 be delivered not less than 10 nor more than 60 days
before the date of such meeting to each shareholder of record entitled to vote
at such meeting and to any other shareholder entitled by the Wisconsin Business
Corporation Law or the Articles of Incorporation to receive notice of the
meeting. Such notice may be oral or written and may be communicated in person,
by telephone, telegraph, teletype, facsimile or other form of wire or wireless
communication, or by mail or private carrier. If mailed or delivered by private
carrier, such notice shall be deemed to be delivered when deposited in the
United States mail, with postage thereon prepaid, or when deposited with the
private carrier, as appropriate, addressed to the shareholder at his address as
it appears on the stock record books of the Corporation. Oral notice shall be
deemed to be delivered when communicated. If notice is given by telegraph,
teletype, facsimile or other form of wire or wireless communication, such notice
shall be deemed to be delivered when transmitted.
(b) If any shareholder meeting is adjourned to a
different date, time or place, notice need not be given of the new date, time
and place, if the new date, time and place is announced at the meeting before
adjournment. If a new record date for the adjourned meeting is, or must be
fixed, then notice must be given pursuant to the requirements of paragraph (a)
of this section 2.04 to those persons who are shareholders as of the new record
date.
(c) If the purpose of any shareholder meeting is
to consider a proposed amendment to the Articles of Incorporation, a plan of
merger or share exchange, the sale, lease, exchange or other disposition of all,
or substantially all of the Corporation's property, the dissolution of the
Corporation, or the removal of a director, the notice must so state and be
accompanied by, respectively, a copy or summary of the:
(i) Articles of Amendment;
(ii) plan of merger or share exchange; or
(iii) agreements regarding the disposition
of all the Corporation's property.
If the proposed corporate action creates dissenters' rights, the notice must
state that shareholders are or may be entitled to assert dissenters' rights, and
must be accompanied by a copy of sections 180.1301 to 180.1331 of the Wisconsin
Business Corporation Law.
II-2
<PAGE> 8
SECTION 2.05. Fixing of Record Date. For the purpose of
determining (a) shareholders entitled to notice of any meeting of shareholders
or any adjournment thereof; (b) shareholders entitled to demand a special
meeting; (c) shareholders entitled to vote or take any other action; or (d) a
listing of shareholders for any other purpose, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than 70 days and, in case of a meeting of
shareholders, not less than 10 days prior to the date on which the particular
action requiring such determination of shareholders is to be taken. When a
determination of shareholders entitled to vote at any meeting of shareholders
has been made as provided in this section, such determination shall be applied
to any adjournment thereof, except where the Board of Directors fixes a new
record date, which it shall do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting. If no record date is
fixed by the Board of Directors for the determination of shareholders entitled
to notice of, or to vote at, a meeting of shareholders, or shareholders entitled
to receive a share dividend or distribution, the record date for determination
of such shareholders shall be at the close of business on:
(a) With respect to an annual shareholder
meeting or any special meeting called by the Board of Directors or any person
specifically authorized by the Board of Directors or these By-Laws to call a
meeting, the day before the first notice is delivered to shareholders;
(b) With respect to the payment of a share
dividend, the date the Board of Directors authorizes the share dividend, and;
(c) With respect to a distribution to
shareholders, other than a distribution involving a purchase, redemption or
other acquisition of the Corporation's shares, the date on which the Board of
Directors authorizes the distribution.
The record date for determining shareholders entitled to demand a special
meeting is the date that the first shareholder signs the demand.
SECTION 2.06. Voting Lists. After fixing a record date for a
shareholder meeting, the Corporation shall prepare a list of the names of all of
its shareholders who are entitled to notice of such meeting. The list shall be
arranged by class or series of shares and shall show the address of and number
of shares held by each shareholder. The Corporation shall make the shareholder
list
II-3
<PAGE> 9
available for inspection by any shareholder at the Corporation's principal
office, or at a place identified in the meeting notice in the city where the
meeting will be held, for a period beginning two business days after notice of
the meeting is given and continuing until the date of the meeting. During the
period that the shareholder list is available for inspection, a shareholder or
his agent or attorney may, on written demand, inspect and, subject to the
requirements of the Wisconsin Business Corporation Law, copy the list, at his
expense, during regular business hours. The Corporation shall also make the
shareholder list available at the meeting, and any shareholder or his agent or
attorney may inspect the list at any time during the meeting or any adjournment
thereof. Failure to comply with the requirements of this section shall not
affect the validity of any action taken at such meeting.
SECTION 2.07. Quorum. If the Articles of Incorporation or the
Wisconsin Business Corporation Law provides for voting by a single voting group
on a matter, action on that matter is taken when voted upon by that voting
group. Shares entitled to vote as a separate voting group may take action on a
matter at a meeting only if a quorum of those shares exists with respect to that
matter. Unless the Articles of Incorporation, these By-Laws or the Wisconsin
Business Corporation Law provide otherwise, a majority of the votes entitled to
be cast on a matter by the voting group constitutes a quorum of that voting
group for action on that matter. If a quorum exists, the affirmative vote of the
majority of shares in a voting group entitled to vote on the subject matter
shall be the act of the voting group, unless the Articles of Incorporation,
these By-Laws or the Wisconsin Business Corporation Law requires a greater
number of affirmative votes. If the Articles of Incorporation or the Wisconsin
Business Corporation Law provide for voting by two or more voting groups on a
matter, action on that matter is taken only when voted upon by each of those
voting groups counted separately. Though less than a quorum of the outstanding
shares are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. Once a share is
represented for any purpose at a meeting, other than for the purpose of
objecting to holding the meeting or transacting business at the meeting, it is
considered present for purposes of determining whether a quorum exists for the
remainder of the meeting and for any adjournment of that meeting unless a new
record date is or must be set for that adjourned meeting.
SECTION 2.08. Conduct of Meetings. The Chairman of the Board,
if one be designated, and in his absence, the President or a Vice President, in
the order provided under sections 4.07, 4.08 and 4.09, and in their absence, any
person chosen by the shareholders present, shall call the meeting of the
shareholders to
II-4
<PAGE> 10
order and shall act as chairman of the meeting. The Secretary of the Corporation
shall act as secretary of all meetings of the shareholders. In the absence of
the Secretary, the presiding officer may appoint any other person to act as
secretary of the meeting.
SECTION 2.09. Proxies. At all meetings of shareholders, a
shareholder entitled to vote may vote in person or by proxy appointed in writing
by the shareholder or by his duly authorized attorney-in-fact. An appointment of
a proxy is effective when received by the Secretary or other officer or agent of
the Corporation authorized to tabulate votes. Except as provided in the
Wisconsin Business Corporation Law, a proxy may be revoked at any time before it
is voted, unless the proxy conspicuously states that it is irrevocable and the
appointment is coupled with an interest. A proxy may be revoked by written
notice filed with the Secretary or the acting secretary of the meeting or by
oral notice given by the shareholder to the presiding officer during the
meeting. The presence of a shareholder who has filed his proxy shall not of
itself constitute a revocation. No proxy shall be valid after 11 months from the
date of its execution, unless otherwise provided in the proxy. The Board of
Directors shall have the power and authority to make rules establishing
presumptions as to the validity and sufficiency of proxies.
SECTION 2.10. Voting of Shares. Each outstanding share shall
be entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders, except to the extent that the voting rights of the shares of any
class or classes are enlarged, limited or denied by this section 2.10, the
Articles of Incorporation or the Wisconsin Business Corporation Law. Shares of
this Corporation are not entitled to a vote if they are owned, directly or
indirectly, by a second domestic corporation or a foreign corporation and this
Corporation owns, directly or indirectly, a sufficient number of shares entitled
to elect a majority of the directors of the second domestic corporation or
foreign corporation. The foregoing sentence does not limit the power of a
corporation to vote shares held by it in a fiduciary capacity.
SECTION 2.11. Voting of Shares by Certain Holders.
(a) If the name signed on a vote, consent,
waiver or proxy appointment corresponds to the name of its shareholder, the
Corporation, if acting in good faith, may accept the vote, consent, waiver or
proxy appointment and give it effect as the act of the shareholder.
II-5
<PAGE> 11
(b) If the name signed on a vote, consent,
waiver or proxy appointment does not correspond to the name of its shareholder,
the Corporation, if acting in good faith, may accept the vote, consent, waiver
or proxy appointment and give it effect as the act of the shareholder if any of
the following apply:
(i) The shareholder is an entity and the
name signed purports to be that of an officer or agent of the entity.
(ii) The name signed purports to be that
of a personal representative, administrator, executor, guardian or conservator
representing the shareholder and, if the Corporation requests, evidence of
fiduciary status acceptable to the Corporation is presented with respect to the
vote, consent, waiver or proxy appointment.
(iii) The name signed purports to be that
of a receiver or trustee in bankruptcy of the shareholder and, if the
Corporation requests, evidence of this status acceptable to the Corporation is
presented with respect to the vote, consent, waiver or proxy appointment.
(iv) The name signed purports to be that
of a pledgee, beneficial owner or attorney-in-fact of the shareholder and, if
the Corporation requests, evidence acceptable to the Corporation of the
signatory's authority to sign for the shareholder is presented with respect to
the vote, consent, waiver or proxy appointment.
(v) Two or more persons are the
shareholder as co-owners or fiduciaries and the name signed purports to be the
name of at least one of the co-owners or fiduciaries and the person signing
appears to be acting on behalf of all co-owners or fiduciaries.
(c) The Corporation may reject a vote, consent,
waiver or proxy appointment if the Secretary or other officer or agent of the
Corporation who is authorized to tabulate votes, acting in good faith, has
reasonable basis for doubt about the validity of the signature on it or about
the signatory's authority to sign for the shareholder.
(d) The Corporation and its officer or agent who
accepts or rejects a vote, consent, waiver or proxy appointment in good faith
and in accordance with this section 2.11 are not liable in damages to the
shareholder for the consequences of the acceptance or rejection.
II-6
<PAGE> 12
(e) Corporate action based on the acceptance or
rejection of a vote, consent, waiver or proxy appointment under this section
2.11 is valid unless a court of competent jurisdiction determines otherwise.
SECTION 2.12. Waiver of Notice by Shareholders. Whenever any
notice is required to be given to any shareholder of the Corporation under the
Articles of Incorporation or By-Laws or any provision of law, a waiver thereof
in writing, signed at any time, whether before or after the time stated in the
notice, by the shareholder entitled to such notice, shall be deemed equivalent
to the giving of such notice. The waiver shall contain the same information as
would have been required to be included in such notice, except the time and
place of meeting, and shall be delivered to the Corporation for inclusion in the
corporate records. A shareholder's attendance at a meeting, in person or by
proxy, waives objection to all of the following: (a) lack of notice or defective
notice of the meeting, unless the shareholder at the beginning of the meeting or
promptly upon arrival objects to holding the meeting or transacting business at
the meeting; and (b) consideration of a particular matter at a meeting that is
not within the purpose described in the meeting notice, unless the shareholder
objects to consideration of the matter when it is presented.
SECTION 2.13. Action Without Meeting. Action required or
permitted to be taken at a shareholders meeting may be taken without a meeting
in any of the following ways: (a) without action by the Board of Directors, by
all shareholders entitled to vote on the action; and (b) if the Articles of
Incorporation so provide, by shareholders who would be entitled to vote at a
meeting those shares with voting power to cast not less than the minimum number
or, in the case of voting by groups, numbers of votes that would be necessary to
authorize or take the action at a meeting at which all shares entitled to vote
were present and voted, except action may not be taken under this item (b) with
respect to an election of directors for which shareholders may vote
cumulatively. Action under this section 2.13 must be evidenced by one or more
written consents describing the action taken, signed by the number of
shareholders necessary to take the action as provided in this section 2.13 and
delivered to the Corporation for inclusion in the corporate records. Action
taken under this section 2.13 is effective when consents representing the
required number of shares are delivered to the Corporation, unless the consent
specifies a different effective date. Within ten days after action taken under
(b) of the first sentence of this section 2.13 is effective, the Corporation
shall give notice of the action to shareholders who, on the record date
determined in accordance with the following sentence, were entitled to vote on
the action but whose shares were not represented on the written consent. If not
otherwise fixed under the terms of these By-Laws or in accordance with the
Wisconsin Business
II-7
<PAGE> 13
Corporation Law, the record date for determining shareholders entitled to take
action without a meeting is the date that the first shareholder signs the
consent. A consent signed under this section 2.13 has the effect of a meeting
vote and may be described as such in any document. If the Wisconsin Business
Corporation Law requires that notice of proposed action be given to shareholders
who are not entitled to vote on the action and the action is to be taken by
consent under this section 2.13, the Corporation shall give those nonvoting
shareholders written notice of the proposed action at least ten days before the
action becomes effective. The notice shall comply with the requirements of the
Wisconsin Business Corporation Law and shall contain or be accompanied by the
same material that would have been required to be sent to nonvoting shareholders
in a notice of meeting at which the proposed action would have been submitted to
the shareholders for action.
II-8
<PAGE> 14
ARTICLE III. BOARD OF DIRECTORS.
SECTION 3.01. General Powers and Number. The business and
affairs of the Corporation shall be managed under the direction of its Board of
Directors. The number of directors of the Corporation shall be six.
SECTION 3.02. Tenure and Qualifications. Each director shall
hold office until the next annual meeting of shareholders and until his
successor shall have been elected (unless there is a decrease in the number of
directors), or until his prior death, resignation or removal. Except as provided
in the Articles of Incorporation, a director may be removed from office only if
the number of votes cast to remove the director exceeds the number of votes cast
not to remove him. If a director is elected by a voting group of shareholders,
only the shareholders of that voting group may participate in the vote to remove
that director. A director may be removed by the shareholders only at a meeting
called for the purpose of removing a director, and the meeting notice shall
state that the purpose, or one of the purposes, of the meeting is removal of the
director.
SECTION 3.03. Regular Meetings. A regular meeting of the Board
of Directors shall be held without other notice than this By-Law immediately
after the annual meeting of shareholders, and each adjourned session thereof.
The place of such regular meeting shall be the same as the place of the meeting
of shareholders which precedes it, or such other suitable place as may be
announced at such meeting of shareholders. The Board of Directors may provide,
by resolution, the time and place, either within or without the State of
Wisconsin, for the holding of additional regular meetings without other notice
than such resolution.
SECTION 3.04. Special Meetings. Special meetings of the Board
of Directors may be called by or at the request of the Chairman of the Board,
the President, Secretary or any two directors. The person or persons authorized
to call special meetings of the Board of Directors may fix any place, either
within or without the State of Wisconsin, as the place for holding any special
meeting of the Board of Directors called by them, and if no other place is
fixed, the place of meeting shall be the principal business office of the
Corporation in the State of Wisconsin.
SECTION 3.05. Notice; Waiver. Notice of each meeting of the
Board of Directors (unless otherwise provided in or pursuant to section 3.03)
shall be delivered not less than 24 hours prior to the time of the meeting. Such
notice may be oral or written and may be communicated in person, by telephone,
III-1
<PAGE> 15
telegraph, teletype, facsimile or other form of wire or wireless communication
or by mail or private carrier. If mailed or delivered by private carrier, such
notice shall be deemed to be delivered when deposited in the United States mail,
with postage thereon prepaid, or when deposited with the private carrier, as
appropriate, addressed to the director at his business address or at such other
address as such director shall have designated in writing and filed with the
Secretary. Oral notice shall be deemed to be delivered when communicated. If
notice is given by telegraph, teletype, facsimile or other form of wire or
wireless communication, such notice shall be deemed to be delivered when
transmitted. Whenever any notice whatever is required to be given to any
director of the Corporation under the Articles of Incorporation, these By-Laws
or any provision of law, a waiver thereof in writing, signed at any time,
whether before or after the time stated in the notice, by the director entitled
to such notice, shall be deemed equivalent to the giving of such notice. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, unless the director at the beginning of the meeting or promptly
upon his arrival objects to holding the meeting or transacting business at the
meeting and does not thereafter vote for or assent to action taken at the
meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
SECTION 3.06. Quorum. Except as otherwise provided by law or
by the Articles of Incorporation or these By-Laws, a majority of the number of
directors set forth in section 3.01 shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but a majority
of the directors present (though less than such quorum) may adjourn the meeting
from time to time without further notice. Any amendment to this section 3.06 is
subject to the requirements set forth in section 10.03.
SECTION 3.07. Manner of Acting. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors, unless the act of a greater number is required by law or
by the Articles of Incorporation or these By-Laws. Any amendment to this section
3.07 is subject to the requirements of section 10.03.
SECTION 3.08. Conduct of Meetings. The Chairman of the Board,
and in his absence, the President or a Vice President who is a director, in the
order provided under sections 4.07, 4.08 and 4.09, and in their absence, any
director chosen by the directors present, shall call meetings of the Board of
Directors to order and shall act as chairman of the meeting. The Secretary of
the Corporation shall act as secretary of all meetings of the Board of
Directors, but in the absence
III-2
<PAGE> 16
of the Secretary, the presiding officer may appoint any Assistant Secretary or
any director or other person present to act as secretary of the meeting.
SECTION 3.09. Vacancies. Except as provided in the Articles of
Incorporation, any vacancy occurring in the Board of Directors, including a
vacancy created by an increase in the number of directors, may be filled until
the next succeeding annual election by (a) the Board of Directors; (b) the
affirmative vote of a majority of the directors then in office, if the directors
remaining in office constitute less than a quorum of the Board of Directors; or
(c) by vote of the shareholders as provided in section 2.07. Provided, that in
case of a vacancy created by the removal of a director by vote of the
shareholders, the shareholders shall have the right to fill such vacancy at the
same meeting or any adjournment thereof. If the vacant office was held by a
director elected by a voting group of shareholders, only the holders of shares
of the voting group may vote to fill the vacancy if it is filled by the
shareholders, and only the remaining directors elected by that voting group may
vote to fill the vacancy if it is filled by the directors. A vacancy that will
occur at a specific later date (by reason of resignation effective at a later
date) may be filled before the vacancy occurs, but the new director may not take
office until the vacancy occurs. The term of a director elected to fill a
vacancy expires at the next shareholders meeting at which directors are elected.
However, if his term expires, he shall continue to serve until his successor is
elected and qualified or until there is a decrease in the number of directors.
SECTION 3.10. Compensation. The Board of Directors, by
affirmative vote of a majority of the directors then in office, and irrespective
of any personal interest of any of its members, may establish reasonable
compensation of all directors for services to the Corporation as directors,
officers or otherwise, or may delegate such authority to an appropriate
committee. Members of the Board of Directors shall be paid their expenses, if
any, of attendance at each meeting of the Board of Directors. The Board of
Directors also shall have authority to provide for or to delegate authority to
an appropriate committee to provide for reasonable pensions, disability or death
benefits and other benefits or payments to directors, officers and employees and
to their estates, families, dependents or beneficiaries on account of prior
services rendered by such directors, officers and employees to the Corporation.
SECTION 3.11. Presumption of Assent. A director of the
Corporation who is present and is announced as present at a meeting of the Board
of Directors or a committee thereof of which he is a member at which action on
any corporate matter is taken shall be presumed to have assented to the action
taken unless (a) he dissented or abstained and his dissent or abstention is
entered in
III-3
<PAGE> 17
the minutes of the meeting; (b) he objects at the beginning of the meeting (or
promptly upon his arrival) to the holding of the meeting or transacting business
at the meeting; (c) he shall deliver written notice, in accordance with the
applicable requirements of law, of his dissent or abstention to the presiding
officer of the meeting before its adjournment or to the Corporation immediately
after adjournment of the meeting; or (d) he dissented or abstained and the
minutes of the meeting fail to show his dissent or abstention and he delivers to
the Corporation written notice of that failure; in accordance with the
applicable requirements of law, promptly after receiving the minutes. Such right
to dissent or abstain shall not apply to a director who voted in favor of such
action.
SECTION 3.12. Committees. Except as provided in the Articles
of Incorporation, the Board of Directors by resolution adopted by the
affirmative vote of a majority of the number of directors set forth in section
3.01 may designate one or more committees, each committee to consist of two or
more directors elected by the Board of Directors, which to the extent provided
in said resolution as initially adopted, and as thereafter supplemented or
amended by further resolution adopted by a like vote, shall have and may
exercise, when the Board of Directors is not in session, the powers of the Board
of Directors in the management of the business and affairs of the Corporation,
except that a committee may not do any of the following: (a) authorize dividends
or other distributions to shareholders; (b) elect any of the principal officers
of the Corporation; (c) fill vacancies in the Board of Directors or committees
created pursuant to this section 3.12; (d) approve or propose to shareholders
action that the Wisconsin Business Corporation Law requires to be approved by
shareholders; (e) amend the Articles of Incorporation; (f) adopt, amend or
repeal By-Laws; (g) approve a plan of merger not requiring shareholder approval;
(h) authorize or approve reacquisition of shares, except according to a formula
or method prescribed by the Board of Directors; or (i) authorize or approve the
issuance or sale or contract for sale of shares, or determine the designation of
relative rights, preferences and limitations of a class or series of shares,
except that the Board of Directors may authorize a committee or a senior
executive officer of the Corporation to do so within limits described by the
Board of Directors. Sections 3.03 to 3.11 of this Article III which govern
meetings, action without meetings, notice and waiver of notice, quorum and
voting requirements of the Board of Directors apply to committees and their
members. The Board of Directors may elect one or more of its members as
alternate members of any such committee who may take the place of any absent
member or members at any meeting of such committee, upon request by the
President or upon request by the chairman of such meeting.
III-4
<PAGE> 18
SECTION 3.13. Unanimous Consent Without Meeting. Any action
required or permitted by the Articles of Incorporation or By-Laws or any
provision of law to be taken by the Board of Directors (or a committee of the
Board of Directors) at a meeting or by resolution may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all the directors then in office. Action taken under this section 3.13 is
effective when the last director signs the consent, unless the consent specifies
a different effective date. A consent signed under this section 3.13 has the
effect of a unanimous vote taken at a meeting in which all directors were
present, and may be described as such in any document.
SECTION 3.14. Conduct of Meetings by or Through the Use of
Communications Equipment.
(a) Participation. Any or all directors may
participate in a regular or special meeting of the Board of Directors or in a
committee meeting of the Board of Directors by, or may conduct the meeting
through the use of, any means of communication by which any of the following
occurs: (i) all participating directors may simultaneously hear each other
during the meeting; or (ii) all communication during the meeting is immediately
transmitted to each participating director, and each participating director is
able to immediately send messages to all other participating directors. A
director participating in such a meeting is deemed to be present in person at
the meeting.
(b) Nature of the Meeting. If a meeting is
conducted pursuant to this section 3.14, the presiding officer at the meeting
shall inform each participating director that a meeting is taking place at which
official business may be transacted.
(c) Minutes of the Meeting. If requested by a
director, the Secretary of the Corporation shall prepare minutes of a meeting
pursuant to this section and distribute such minutes to each director.
SECTION 3.15. Executive Committee.
(a) Appointment. The Board of Directors, by
resolution adopted by a majority of the full Board, may designate one or more of
its members to constitute an Executive Committee. The designation of such
Committee and the delegation thereto of authority shall not operate to relieve
the Board of Directors, or any member thereof, of any responsibility imposed by
law.
III-5
<PAGE> 19
(b) Authority. When the Board of Directors is
not in session, the Executive Committee shall have and may exercise all of the
authority of the Board of Directors, except to the extent, if any, that such
authority shall be limited by the resolution appointing the Executive Committee
and except that the Executive Committee shall not have the authority of the
Board of Directors in reference to the actions described in paragraphs 3.12(a)
through (i) above.
(c) Tenure. Each member of the Executive
Committee shall hold office until the next regular annual meeting of the Board
of Directors following his designation and until his successor is designated as
a member of the Committee and is elected and qualified.
(d) Meetings. Regular meetings of the Executive
Committee may be held without notice at such times and places as the Executive
Committee may fix from time to time by resolution. Special meetings of the
Executive Committee may be called by any member thereof upon not less than 24
hours notice, stating the place, date and hours of the meeting, which notice may
be written or oral, and if mailed, shall be deemed to be delivered when
deposited in the United States mail, addressed to the members of the Executive
Committee at their business addresses. Any member of the Executive Committee may
waive notice of any meeting and no notice of any meeting need be given to any
member thereof who attends in person. The notice of any meeting of the Executive
Committee need not state the business proposed to be transacted at the meeting.
(e) Quorum. A majority of the members of the
Executive Committee shall constitute a quorum for the transaction of business at
any meeting thereof. Action of the Executive Committee must be authorized by the
affirmative vote of a majority of the members present at the meeting at which a
quorum is present.
(f) Action Without A Meeting. Any action which
may be taken at a meeting of the Executive Committee may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the members of the Executive Committee.
(g) Vacancies. Any vacancy in the Executive
Committee may be filled by a resolution adopted by a majority of the full Board
of Directors.
(h) Resignations and Removals. Any member of the
Executive Committee may be removed at any time, with or without cause, by
resolution adopted by a majority of the full Board of Directors. Any member of
III-6
<PAGE> 20
the Executive Committee may resign at any time by giving written notice to the
President or Secretary of the Corporation, and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
(i) Procedure. The Executive Committee shall
elect a presiding officer from its members and may fix its own rules and
procedures which shall not be inconsistent with these By-Laws. It shall keep
regular minutes of its proceedings and report the same to the Board of Directors
for its information at the first Board meeting following the Executive Committee
meeting.
III-7
<PAGE> 21
ARTICLE IV. OFFICERS
SECTION 4.01 Number. The principal officers of the Corporation
shall be a Chairman of the Board and Chief Executive Officer, if one be
appointed, a President, if one be appointed, an Executive or Senior Vice
President, if one be so designated (the foregoing being hereinafter referred to
as the "Senior Officers") and one or more other Vice Presidents (the number,
precedence and duties thereof to be determined by the Board of Directors), a
Secretary and a Treasurer, each of whom shall be appointed by the Board of
Directors. Such other officers and assistant officers as may be appointed by the
Board of Directors.
SECTION 4.02 Appointment and Term of Office. The officers of
the Corporation shall be appointed by the Board of Directors annually at the
first meeting of the Board of Directors held after each annual meeting of the
stockholders. If not held at such meeting, such appointments shall be made as
soon thereafter as practicable. The Board of Directors may create a new
principal office, including the addition of a new Vice President, and elect an
officer thereto at any regular or special meeting of the Board of Directors.
Each officer shall hold office until his successor shall have been duly elected
or until his prior death, resignation or removal.
SECTION 4.03 Removal. Any officer may be removed by the Board
of Directors whenever in its judgment the best interests of the Corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment shall not of
itself create contract rights.
SECTION 4.04 Vacancies. A vacancy in any principal office
because of death, resignation, removal, disqualification or otherwise, including
a vacancy caused by the creation of a new principal office by the Board of
Directors, may be filled by the Board of Directors for the unexpired portion of
the term.
SECTION 4.05 Chairman of the Board. The Chairman of the Board,
if one be elected, shall preside at all meetings of the stockholders and at all
meetings of the Board of Directors and exercise such other powers and perform
such other duties as may from time to time be assigned to him by the Board of
Directors or as may be prescribed by these By-Laws, as amended. If there is no
President, then the Chairman of the Board shall also be the principal executive
officer of the Corporation and shall have the powers and duties prescribed in
section 4.06 of these By-Laws, as amended. The Chairman of the Board shall have
authority to sign, execute and acknowledge, on behalf of the
IV-1
<PAGE> 22
Corporation, all contracts, deeds, mortgages, bonds, stock certificates, leases,
reports and all other documents or instruments necessary or proper to be
executed in the course of the Corporation's regular business, or which shall be
authorized by resolution of the Board of Directors. He may execute any such
documents or instruments without the attestation of any other corporate officer,
unless required by the Board of Directors, the transaction or operation of law.
Except as otherwise provided by law or the Board of Directors, he may authorize
the President and Chief Executive Officer, any Vice President or other officer
or agent of the Corporation to sign, execute and acknowledge such documents or
instruments in his place and stead. In general, he shall have such other powers
and duties as he may be called upon to perform by the Board of Directors.
SECTION 4.06 President and Chief Executive Officer. Subject to
such supervisory powers, if any, as may be given by the Board of Directors to
the Chairman of the Board, if there be such an officer, the President and Chief
Executive Officer shall be the principal executive officer of the Corporation
and shall, subject to the control of the Board of Directors, supervise, direct
and control the business and affairs of the Corporation and, in general,
supervise and manage the day-to-day business operations of the Corporation. In
addition, in the absence of the Chairman of the Board, if one be elected, or in
the event of his death, disability or refusal to act, the President shall
perform the duties of the Chairman of the Board, including, without limitation,
presiding at all meetings of the stockholders and at all meetings of the Board
of Directors, and when so acting shall have all the powers and duties of the
Chairman of the Board. He shall have authority, subject to such rules as may be
prescribed by the Board of Directors, to appoint such agents and employees of
the Corporation as he shall deem necessary, to prescribe their powers, duties
and compensation, and to delegate authority to them. Such agents and employees
shall hold office at the discretion of the President and Chief Executive
Officer. He shall have the authority to sign, execute and acknowledge, on behalf
of the Corporation, all contracts, deeds, mortgages, bonds, stock certificates,
leases, reports and all other documents or instruments necessary or proper to be
executed in the course of the Corporation's regular business, or which shall be
authorized by resolution of the Board of Directors. He may execute any such
documents or instruments without the attestation of any other corporate officer
unless required by the Board of Directors, the transaction or operation of law.
He may authorize any Vice President or other officer or agent of the Corporation
to sign, execute and acknowledge such documents or instruments in his place and
stead. He shall have the general powers and duties of management usually vested
in the office of President and Chief Executive Officer of the Corporation, and
shall have such
IV-2
<PAGE> 23
other powers and perform such other duties as may be prescribed by the Board of
Directors or these By-Laws, as amended.
SECTION 4.07 Executive or Senior Vice President. The Executive
or Senior Vice President, if one be appointed, shall assist the President in the
discharge of supervisory, managerial and executive duties and functions. In the
absence of the President, or if one not be appointed, the absence of the
Chairman of the Board and Chief Executive Officer or in the event of their
death, inability or refusal to act, the Executive or Senior Vice President shall
perform the duties of the President and when so acting shall have all the powers
and duties of the President. He shall perform such other duties as from time to
time may be assigned to him by the Board of Directors, the Chairman of the Board
and Chief Executive Officer, if one be elected, or the President.
SECTION 4.08 Vice Presidents. In the absence of the Chairman
of the Board and Chief Executive Officer, the President and Executive or Senior
Vice President or in the event of their death, inability or refusal to act, or
in the event for any reason it shall be impracticable for them to act
personally, the Vice President (or in the event there be more than one Vice
President, the Vice Presidents in the order designated by the Board of
Directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the Chairman of the Board and Chief
Executive Officer and the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon such officers. Any Vice
President may sign, if required by the Board of Directors, the transaction or
operation of law, with the Secretary or Assistant Secretary, certificates for
shares of the Corporation; and shall perform such other duties and have such
authority as from time to time may be delegated or assigned to him by the
Chairman of the Board and Chief Executive Officer, the President or by the Board
of Directors. The execution of any instrument of the Corporation by any Vice
President shall be conclusive evidence, as to third parties, of his authority to
act in such capacity.
SECTION 4.09 Secretary. The Secretary shall (a) keep the
minutes of the meetings of the stockholders and of the Board of Directors in one
or more books provided for that purpose; (b) see that all notices are duly given
in accordance with the provisions of these By-Laws or as required by law; (c) be
custodian of the corporate records and of the seal of the Corporation and see
that the seal of the Corporation is affixed to all documents, the execution of
which on behalf of the Corporation under its seal is duly authorized; (d) keep
or arrange for the keeping of a register of the post office address of each
stockholder which shall be furnished to the Secretary by such stockholder; (e)
if required by the Board of
IV-3
<PAGE> 24
Directors, the transaction or operation of law, sign with the Chairman of the
Board and Chief Executive Officer, if one be appointed, the President, if one be
appointed, the Executive or Senior Vice President, or a Vice President,
certificates for shares of the Corporation, the issuance of which shall have
been authorized by resolution of the Board of Directors; (f) have general charge
of the stock transfer books of the Corporation; and (g) in general, perform all
duties and exercise such authority as from time to time may be delegated or
assigned to him by the Chairman of the Board and Chief Executive Officer, the
President or by the Board of Directors.
SECTION 4.10 Treasurer. The Treasurer shall (a) have charge
and custody of and be responsible for all funds and securities of the
Corporation; (b) receive and give receipts for monies due and payable to the
Corporation from any source whatsoever, and deposit all such monies in the name
of the Corporation in such banks, trust companies or other depositaries as shall
be selected in accordance with the provisions of Article VI; and (c) in general,
perform all of the duties incident to the office of Treasurer and have such
other duties and exercise such other authority as from time to time may be
delegated or assigned to him by the Chairman of the Board and Chief Executive
Officer, the President or by the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the Board of Directors
shall determine.
SECTION 4.11 Assistant Secretaries and Assistant Treasurers.
There shall be such number of Assistant Secretaries and Assistant Treasurers
(one of whom may be termed "Controller") as the Board of Directors may from time
to time authorize. If required by the Board of Directors, the transaction or
operation of law, the Assistant Secretaries may sign with the Chairman of the
Board and Chief Executive Officer, if one be appointed, the President, if one be
appointed, the Executive or Senior Vice President or a Vice President
certificates for shares of the Corporation the issuance of which shall have been
authorized by a resolution of the Board of Directors. The Assistant Treasurers
shall respectively, if required by the Board of Directors, give bonds for the
faithful discharge of their duties in such sums and with such sureties as the
Board of Directors shall determine. The Assistant Secretaries and Assistant
Treasurers, in general, shall perform such duties and have such authority as
shall from time to time be delegated or assigned to them by the Secretary or the
Treasurer, respectively, or by the Chairman of the Board and Chief Executive
Officer, the President or the Board of Directors.
SECTION 4.12 Other Assistants and Acting Officers. The Board
of Directors shall have the power to appoint any person to act as assistant to
any
IV-4
<PAGE> 25
officer, or as agent for the Corporation in his stead, or to perform the duties
of such officer whenever for any reason it is impracticable for such officer to
act personally, and such assistant or acting officer or other agent so appointed
by the Board of Directors shall have the power to perform all the duties of the
office to which he is so appointed to be assistant, or as to which he is so
appointed to act, except as such power may be otherwise defined or restricted by
the Board of Directors.
SECTION 4.13 Salaries. The salaries of the officers shall be
fixed from time to time by the Board of Directors or a committee designated by
the Board for that purpose. The salaries of assistant officers may be set by
their immediate superior. No officer shall be prevented from receiving such
salary by reason of the fact that he is also a director of the Corporation.
IV-5
<PAGE> 26
ARTICLE V. CONTRACTS BETWEEN
CORPORATION AND RELATED PERSONS.
Any contract or other transaction between the Corporation and
one or more of its directors, or between the Corporation and any firm of which
one or more of its directors are members or employees, or in which he or they
are interested, or between the Corporation and any corporation or association of
which one or more of its directors are shareholders, members, directors,
officers or employees, or in which he or they are interested, shall be valid for
all purposes, notwithstanding his or their interest in such contract or
transaction, if any of the following is true:
(a) the material facts of the transaction and the
director's interest were disclosed or known to the Board of Directors or a
committee of the Board of Directors and the Board of Directors or committee
authorized, approved or specifically ratified the transaction in the manner
provided below;
(b) the material facts of the transaction and the
director's interest were disclosed or known to the shareholders entitled to vote
and they authorized, approved or specifically ratified the transaction by the
affirmative vote of a majority of the shares entitled to be counted in the
manner provided below; or
(c) the transaction was fair to the Corporation.
For purposes of (a) above, a contract or a transaction is
authorized, approved or specifically ratified if it received the affirmative
vote of a majority of the directors on the Board of Directors or on the
committee acting on the transaction who have no direct or indirect interest in
the transaction. If a majority of the directors who have no direct or indirect
interest in the transaction vote to authorize, approve or ratify the
transaction, a quorum is present for purposes of taking the action under this
ARTICLE V. The presence of, or a vote cast by, a director with a direct or
indirect interest in the transaction does not affect the validity of any action
taken under this ARTICLE V if the transaction is otherwise authorized, approved
or ratified as provided in this ARTICLE V.
For purposes of (b) above, a contract or transaction is
authorized, approved or specifically ratified if it receives the vote of a
majority of the shares entitled to be counted under this ARTICLE V. Shares owned
by or voted under the control of a director who has a direct or indirect
interest in the contract or transaction, and shares owned by or voted under the
control of an entity in which the director has a material financial interest or
in which the director is a general
V-1
<PAGE> 27
partner, may not be counted in a vote of shareholders to determine whether to
authorize, approve or ratify a contract or transaction. The vote of those shares
shall be counted in determining whether the transaction is approved under other
sections of these By-Laws. A majority of the shares, whether or not present,
that are entitled to be counted in a vote on the transaction under this ARTICLE
V constitutes a quorum for purposes of taking action under this ARTICLE V.
V-2
<PAGE> 28
ARTICLE VI. CONTRACTS, LOANS, CHECKS
AND DEPOSITS: SPECIAL CORPORATE ACTS.
SECTION 6.01. Contracts. The Board of Directors may authorize
any officer or officers, agent or agents, to enter into any contract or execute
or deliver any instrument in the name of and on behalf of the Corporation, and
such authorization may be general or confined to specific instances. In the
absence of other designation, all deeds, mortgages and instruments of assignment
or pledge made by the Corporation shall be executed in the name of the
Corporation by the President or one of the Vice Presidents and by the Secretary,
an Assistant Secretary, the Treasurer or an Assistant Treasurer. The Secretary
or an Assistant Secretary, when necessary or required, shall affix the corporate
seal, if any, thereto. When so executed, no other party to such instrument or
any third party shall be required to make any inquiry into the authority of the
signing officer or officers.
SECTION 6.02. Loans. No loans shall be contracted on behalf of
the Corporation unless authorized by or under the authority of a resolution of
the Board of Directors. Such authorization may be general or confined to
specific instances.
SECTION 6.03. Checks, Drafts, etc. All checks, drafts or other
orders for the payment of money, notes or other evidences of indebtedness issued
in the name of the Corporation shall be signed by such officer or officers,
agent or agents of the Corporation and in such manner as shall from time to time
be determined by or under the authority of a resolution of the Board of
Directors.
SECTION 6.04. Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the credit of the
Corporation in such banks, trust companies or other depositaries as may be
selected by or under the authority of a resolution of the Board of Directors.
SECTION 6.05. Voting of Securities Owned by this Corporation.
Subject always to the specific directions of the Board of Directors, (a) any
shares or other securities issued by any other corporation owned or controlled
by this Corporation may be voted at any meeting of security holders of such
other corporation by the Chairman of the Board of this Corporation if he be
present, or in his absence by the President or any Vice President of this
Corporation who may be present, and (b) whenever, in the judgment of the
Chairman of the Board, or in his absence, of the President or any Vice
President, it is desirable for this Corporation to execute a proxy or written
consent in respect to any shares or other
VI-1
<PAGE> 29
securities issued by any other corporation and owned by this Corporation, such
proxy or consent shall be executed in the name of this Corporation by the
President or one of the Vice Presidents of this Corporation, without necessity
of any authorization by the Board of Directors, affixation of corporate seal or
countersignature or attestation by another officer. Any person or persons
designated in the manner above stated as the proxy or proxies of this
Corporation shall have full right, power and authority to vote the shares or
other securities issued by such other corporation and owned by this Corporation
the same as such shares or other securities might be voted by this Corporation.
VI-2
<PAGE> 30
ARTICLE VII. CERTIFICATES FOR SHARES
AND THEIR TRANSFER.
SECTION 7.01. Certificates for Shares. Certificates
representing shares of the Corporation shall be in such form as shall be
determined by the Board of Directors. Each certificate shall state on its face
the name of the Corporation and that the Corporation is organized under the laws
of the State of Wisconsin and shall include the name of the person to whom
issued and the number and class of shares and the designation of series, if any,
that the certificate represents. Such certificates shall be signed by either the
Chairman of the Board and Chief Executive Officer, the President or a Vice
President, alone or together with the Secretary or an Assistant Secretary. All
certificates for shares shall be consecutively numbered or otherwise identified.
The name and address of the person to whom the shares represented thereby are
issued, with the number of shares and date of issue, shall be entered on the
stock transfer books of the Corporation. All certificates surrendered to the
Corporation for transfer shall be canceled and no new certificate shall be
issued until the former certificate for a like number of shares shall have been
surrendered and canceled, except as provided in section 7.05.
SECTION 7.02. Facsimile Signatures and Seal. The seal, if any,
of the Corporation on any certificates for shares may be a facsimile. The
signatures of the Chairman of the Board and Chief Executive Officer, the
President, a Vice President, the Secretary or an Assistant Secretary upon a
certificate may be facsimiles.
SECTION 7.03. Signature by Former Officers. If any officer who
has signed or whose facsimile signature has been placed upon any certificate for
shares shall have ceased to be such officer before such certificate is issued,
the certificate may be issued by the Corporation with the same effect as if he
were such officer at the date of its issue.
SECTION 7.04. Transfer of Shares. Prior to due presentment of
a certificate for shares for registration of transfer, the Corporation may treat
the registered owner of such shares as the person exclusively entitled to vote,
to receive notifications and otherwise to exercise all the rights and powers of
an owner. Where a certificate for shares is presented to the Corporation with a
request for registration of transfer, the Corporation shall not be liable to the
owner or any other person suffering loss as a result of such registration of
transfer if (a) there were on or with the certificate the necessary
endorsements, and (b) the Corporation had no duty to inquire into adverse claims
or had discharged any such
VII-1
<PAGE> 31
duty. The Corporation may require reasonable assurance that said endorsements
are genuine and effective and may require compliance with such other regulations
as may be prescribed by or under the authority of the Board of Directors.
SECTION 7.05. Lost, Destroyed or Stolen Certificates. Where
the owner claims that his certificate for shares has been lost, destroyed or
wrongfully taken, then a new certificate shall be issued in place thereof if the
owner (a) so requests before the Corporation has notice that such shares have
been acquired by a bona fide purchaser; and (b) satisfies such other reasonable
requirements as the Board of Directors or the President or Secretary may
prescribe, including, if requested, delivery to the Corporation of an indemnity
bond or other agreement of indemnity.
SECTION 7.06. Consideration for Shares. The Board of Directors
may authorize shares to be issued for consideration consisting of any tangible
or intangible property or benefit to the Corporation, including cash, promissory
notes, services performed, contracts for services to be performed or other
securities of the Corporation. Before the Corporation issues shares, the Board
of Directors shall determine that the consideration received or to be received
for the shares to be issued is adequate. The Board of Directors determination is
conclusive insofar as the adequacy of consideration for the issuance of shares
relates to whether the shares are validly issued, fully paid and nonassessable.
When the Corporation receives the consideration for which the Board of Directors
authorized the issuance of shares, the shares issued for that consideration are
fully paid and nonassessable. The Corporation may place in escrow shares issued
for a contract for future services or benefits or a promissory note, or make
other arrangements to restrict the transfer of the shares, and may credit
distributions in respect of the shares against their purchase price, until the
services are performed, the benefits are received or the note is paid. If the
services are not performed, the benefits are not received or the note is not
paid, the Corporation may cancel, in whole or in part, the shares escrowed or
restricted and the distributions credited.
SECTION 7.07. Restrictions on Transfer. The face or reverse
side of each certificate representing shares shall bear a conspicuous notation
of any restriction imposed upon the transfer of such shares.
SECTION 7.08. Stock Regulations. The Board of Directors shall
have the power and authority to make all such further rules and regulations not
inconsistent with applicable law as it may deem expedient concerning the issue,
transfer and registration of certificates representing shares of the
Corporation.
VII-2
<PAGE> 32
ARTICLE VIII. INDEMNIFICATION, LIMITED LIABILITY
AND INSURANCE.
SECTION 8.01. General Scope and Definitions.
(a) The rights of directors and officers of the
Corporation provided in this ARTICLE VIII shall extend to the fullest extent
permitted by the Wisconsin Business Corporation Law and other applicable laws as
in effect from time to time.
(b) For purposes of this ARTICLE VIII, "Corporation"
means a domestic corporation and any domestic or foreign predecessor of a
domestic corporation where the predecessor corporation's existence ceased upon
the consummation of a merger or other transaction.
(c) For purposes of this ARTICLE VIII, "director or
officer" of a corporation means any of the following:
(i) an individual who is or was a director or
officer of the Corporation;
(ii) an individual who, while a director or officer
of the Corporation, is or was serving at the Corporation's request as a
director, officer, partner, trustee, member of any governing or decision-making
committee, employee or agent of another corporation or foreign corporation,
partnership, joint venture, trust or other enterprise;
(iii) an individual who, while a director or officer
of the Corporation, is or was serving an employee benefit plan because his
duties to the Corporation also imposed duties on or otherwise involved services
by the person to the plan or to participants in or beneficiaries of the plan;
and
(iv) unless the context requires otherwise, the
estate or personal representative of a director or officer.
(d) For purposes of this ARTICLE VIII, "expenses" means
fees, costs, charges, disbursements, attorneys' fees and any other expenses
incurred in connection with a proceeding, including a proceeding in which a
director or officer asserts his rights under this ARTICLE VIII.
VIII-1
<PAGE> 33
(e) For purposes of this ARTICLE VIII, "liability"
includes the obligation to pay a judgment, settlement, penalty, assessment,
forfeiture or fine including an excise tax assessed with respect to an employee
benefit plan, and reasonable expenses.
(f) For purposes of this ARTICLE VIII, "party" includes
an individual who was or is, or who is threatened to be made, a named defendant
or respondent in a proceeding.
(g) For purposes of this ARTICLE VIII, "proceeding"
means any threatened, pending or completed civil, criminal, administrative or
investigative action, suit, arbitration or other proceeding, whether formal or
informal, which involves foreign, federal, state or local law (including federal
or state securities laws) and which is brought by or in the right of the
Corporation or by any other person.
SECTION 8.02. Mandatory Indemnification.
(a) To the extent that a director or officer has been
successful on the merits or otherwise in the defense of any proceeding
(including, without limitation, the settlement, dismissal, abandonment or
withdrawal of any action where he does not pay or assume any material
liability), or in connection with any claim, issue or matter therein, the
Corporation shall indemnify the director or officer against expenses actually
and reasonably incurred by him in connection with such proceeding to the extent
that he was a party to the proceeding because he is a director or officer.
(b) In cases not included under subsection (a), the
Corporation shall indemnify any director or officer against any liability
actually and reasonably incurred by the director or officer in a proceeding to
which the director or officer was a party because he is a director or officer,
unless the liability was incurred because the director or officer breached or
failed to perform a duty he owes to the Corporation and the breach or failure to
perform constitutes any of the following: (i) a willful failure to deal fairly
with the Corporation or its shareholders in connection with a matter in which
the director or officer has a material conflict of interest; (ii) a violation of
criminal law, unless the director or officer had reasonable cause to believe his
conduct was lawful or no reasonable cause to believe his conduct was unlawful;
(iii) a transaction from which the director or officer derived an improper
personal profit; or (iv) willful misconduct. The termination of a proceeding by
judgment, order, settlement or conviction, or upon a plea of no contest or an
equivalent plea, does not, by itself, create a
VIII-2
<PAGE> 34
presumption that indemnification of the director or officer is not required
under this subsection.
(c) Indemnification under this section is not required
to the extent that the director or officer has previously received
indemnification or allowance of expenses from any person, including the
Corporation, in connection with the same proceeding.
(d) A director or officer who seeks indemnification
under this ARTICLE VIII shall make a written request to the Corporation.
SECTION 8.03. Determination of Right to Indemnification.
Unless otherwise provided by the Articles of Incorporation or by written
agreement between the director or officer and the Corporation, the director or
officer seeking indemnification under section 8.02(b) shall make a written
request to the Corporation for indemnification which shall designate one of the
following means for determining his right to indemnification: (a) by a majority
vote of a quorum of the Board of Directors or a committee of directors,
consisting of directors not at the time parties to the same or related
proceedings; (b) by independent legal counsel selected by a quorum of the Board
of Directors or its committee in the manner prescribed in subsection (a) or, if
unable to obtain such a quorum or committee, by a majority vote of the full
Board of Directors, including directors who are parties to the same or related
proceedings; (c) by a panel of three arbitrators consisting of one arbitrator
selected by those directors entitled under (b) to select independent legal
counsel, one arbitrator selected by the director or officer seeking
indemnification and one arbitrator selected by the two arbitrators previously
selected; or (d) by an affirmative vote of a majority of the Corporation's
shares; provided, however, that shares owned by, or voted under the control of,
persons who are at the time parties to the same or related proceedings, whether
as plaintiffs or defendants or in any other capacity, may not be voted in making
the determination. The director or officer may apply to a court of competent
jurisdiction for review of an adverse determination under this section.
Any determination hereunder shall be made pursuant to
procedures consistent with the Wisconsin Business Corporation Law unless
otherwise agreed by the Corporation and the person seeking indemnification. Such
determination shall be completed and eligible expenses, if any, shall be paid to
the person requesting indemnification hereunder within 60 days of the
Corporation's receipt of the written request required hereunder.
VIII-3
<PAGE> 35
SECTION 8.04. Allowance of Expenses as Incurred. Upon written
request of a director or officer who is a party to a proceeding, the Corporation
shall pay or reimburse his reasonable expenses as incurred if the director or
officer provides the Corporation with all of the following: (a) a written
affirmation of his good faith belief that he has not breached or failed to
perform his duties to the Corporation; and (b) a written undertaking, executed
personally or on his behalf, to repay the allowance and, if required by the
Corporation, to pay reasonable interest on the allowance to the extent that it
is ultimately determined under section 8.03 that indemnification under section
8.02 is not required and indemnification is not otherwise ordered by a court.
The undertaking under this subsection shall be an unlimited general obligation
of the director or officer and may be accepted without reference to his ability
to repay the allowance. The undertaking may be secured or unsecured.
SECTION 8.05. Partial Indemnification.
(a) If it is determined pursuant to section 8.03 of this
ARTICLE VIII that a director or officer is entitled to indemnification as to
some claims, issues or matters in connection with any proceeding, but not as to
other claims, issues or matters, the person or persons making such determination
shall reasonably determine those liabilities which are the result of claims,
issues or matters that are a proper subject for indemnification hereunder in
light of all of the circumstances.
(b) If it is determined pursuant to section 8.03 of this
ARTICLE VIII that certain expenses incurred by a director or officer are for any
reason unreasonable in amount in light of all the circumstances, the person or
persons making such determination shall authorize the indemnification of the
director or officer for only such amounts as he or they shall deem reasonable.
SECTION 8.06. Indemnification of Employees and Agents. The
Board of Directors, may, in its sole discretion, provide indemnification and/or
allowance of expenses in advance of a final determination of any proceeding to
an employee or agent of the Corporation who is not a director or officer in
connection with any proceeding in which the employee or agent was a defendant
because of his actions as an employee or agent of the Corporation; provided,
however, that prior to such indemnification or allowance of expenses, the Board
of Directors shall first determine that the employee or agent acted in good
faith and in a manner he reasonably believed to be in and not opposed to the
best interests of the Corporation.
VIII-4
<PAGE> 36
SECTION 8.07. Limited Liability of Directors.
(a) Except as provided in the Articles of Incorporation,
a director shall not be liable to the Corporation, its shareholders, or any
person asserting rights on behalf of the Corporation or its shareholders, for
damages, settlements, fees, fines, penalties or other monetary liabilities
arising from a breach of, or failure to perform, any duty resulting solely from
his status as a director, unless the person asserting liability proves that the
breach or failure to perform constitutes any of the acts of misconduct listed in
section 8.02(b) of this ARTICLE VIII.
SECTION 8.08. Severability of Provisions. The provisions of
this ARTICLE VIII and the several rights to indemnification, advancement of
expenses and limitation of liability created hereby are independent and
severable and, if any such provision and/or right shall be held by a court of
competent jurisdiction in which a proceeding relating to such provisions and/or
rights is brought to be against public policy or otherwise to be unenforceable,
the other provisions of this ARTICLE VIII shall remain enforceable and in full
effect.
SECTION 8.09. Nonexclusivity of Rights. The rights to
indemnification and advancement of expenses provided for in this ARTICLE VIII
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any agreement
authorized by the Board of Directors, any By-Law of the Corporation, any vote of
shareholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity. Notwithstanding the
foregoing, the Corporation shall not indemnify a director or officer, or permit
a director or officer to retain any allowance of expenses pursuant to any such
additional rights unless it is determined by or on behalf of the Corporation
that the director or officer did not breach or fail to perform a duty he owes to
the Corporation which constitutes conduct under section 8.02(b). A director or
officer who is a party to the same or related proceeding for which
indemnification or an allowance of expenses is sought may not participate in a
determination under this subsection.
SECTION 8.10. Purchase of Insurance. The Corporation may
purchase and maintain insurance on behalf of any person who is a director or
officer of the Corporation, to the extent that such director or officer is
insurable and such insurance coverage can be secured by the Corporation at
rates, and in amounts and subject to such terms and conditions as shall be
determined in good faith to be reasonable and appropriate by the Board of
Directors of the Corporation.
VIII-5
<PAGE> 37
SECTION 8.11. Amendment. No amendment or repeal of this
ARTICLE VIII shall be effective to reduce the obligations of the Corporation
under this ARTICLE VIII with respect to any proceeding based upon occurrences
which take place prior to such amendment or repeal.
VIII-6
<PAGE> 38
ARTICLE IX. SEAL.
The Board of Directors may provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
Corporation and the state of incorporation and the words "Corporate Seal."
IX-1
<PAGE> 39
ARTICLE X. AMENDMENTS.
SECTION 10.01. By Shareholders. Except as limited by sections
10.02 and 10.03 or by applicable law, these By-Laws may be altered, amended or
repealed and new By-Laws may be adopted by the shareholders by affirmative vote
of not less than a majority of the shares present or represented at any annual
or special meeting of the shareholders at which a quorum is in attendance.
SECTION 10.02 By-Law Fixing Quorum or Voting Requirements for
Shareholders. If authorized by the Articles of Incorporation, the shareholders
may adopt or amend a By-Law that fixes a greater or lower quorum requirement or
greater voting requirement for shareholders or voting groups of shareholders
than is otherwise provided by these By-Laws or the Wisconsin Business
Corporation Law. The adoption or amendment of a By-Law that adds, changes or
deletes a greater or lower quorum requirement or a greater voting requirement
for the shareholders must meet the same quorum requirement and be adopted by the
same vote and voting groups required to take action under the quorum and voting
requirements then in effect. A By-Law that fixes a greater or lower quorum
requirement or greater voting requirement for shareholders under this section
10.02 may not be adopted, altered, amended or repealed by the Board of
Directors.
SECTION 10.03. By-Law Fixing Quorum or Voting Requirements for
Directors. A By-Law that fixes a greater or lower quorum requirement or a
greater voting requirement for the Board of Directors may be amended or repealed
as follows:
(a) If originally adopted by the shareholders, only by
the shareholders, unless the By-Law provides otherwise as permitted by this
section 10.03; and
(b) if originally adopted by the Board of Directors,
either by the shareholders or by the Board of Directors.
A By-Law adopted or amended by the shareholders that fixes a greater or lower
quorum requirement or a greater voting requirement for the Board of Directors
may provide that it may be amended or repealed only by a specified vote of
either the shareholders or the Board of Directors. Action by the Board of
Directors to adopt or amend a By-Law that changes the quorum or voting
requirement for the Board of Directors must meet the same quorum requirement and
be adopted by the same vote required to take action under the quorum and voting
requirements then
X-1
<PAGE> 40
in effect, unless a different voting requirement is specified in accordance with
the prior sentence.
SECTION 10.04. By Directors. The Board of Directors may amend
or repeal these By-Laws or adopt new By-Laws except to the extent (a) the
Articles of Incorporation, section 10.02 or 10.03 of these By-Laws or any
provision of the Wisconsin Business Corporation Law reserve that power
exclusively to the shareholders; or (b) the shareholders in adopting, amending
or repealing a particular By-Law provide within these By-Laws that the Board of
Directors may not amend, repeal or readopt that By-Law.
SECTION 10.05. Implied Amendments. Any action taken or
authorized by the shareholders or by the Board of Directors, which would be
inconsistent with the By-Laws then in effect but is taken or authorized by
affirmative vote of not less than the number of shares or the number of
directors required to amend the By-Laws so that the By-Laws would be consistent
with such action, shall be given the same effect as though the By-Laws had been
temporarily amended or suspended so far, but only so far, as is necessary to
permit the specific action so taken or authorized.
X-2
<PAGE> 41
ARTICLE XI. GENERAL.
SECTION 11.01. Gender. As used in these By-Laws wherever
appropriate, the masculine gender shall also refer to the feminine gender.
XI-1
<PAGE> 42
ARTICLE XII. DIVIDENDS.
SECTION 12.01. Dividends. The Board of Directors may from time
to time declare, and the Corporation may pay, dividends on the Corporation's
outstanding shares in the manner and upon the terms and conditions provided by
law.
XII-1
<PAGE> 1
EXHIBIT 10.6
Amendment to Jason Incorporated 1987 Nonqualified Stock Option Plan
Adopted by the Board of Directors
Effective January 30, 2000
RESOLVED, that, notwithstanding anything to the contrary contained in
the Option Plan or in any agreement, document or instrument executed pursuant to
the Option Plan, upon the occurrence of a Change in Control (as defined in this
resolution), all outstanding options granted pursuant to the Option Plan which
have not already become fully vested at the time of the Change in Control shall
immediately become fully vested and available for purchase. The term "Change in
Control," as used in this resolution, means either of the following:
(a) the Merger; or
(b) any other merger, recapitalization or other business
combination of the Corporation, with or into another corporation, or an
acquisition of securities or assets by the Corporation, pursuant to which the
Corporation is not the continuing or surviving corporation or pursuant to which
any shares of the Corporation's common stock would be converted into cash,
securities or other property, other than a transaction in which the holders of
at least 50% of the Corporation's common stock immediately prior to such
transaction will own at least 50% of the total voting power of the then
outstanding securities of the surviving corporation immediately after such
transaction; and
FURTHER RESOLVED, that effective as of December 31, 1999, in the case
of the retirement of the holder of any option granted pursuant to the Option
Plan, the exercise period for such option shall be one year from the date of
such holder's retirement from employment with the Company, unless the exercise
period would expire for reasons other than the expiration of such one-year
period.
<PAGE> 1
EXHIBIT 10.17
EXECUTION COPY
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
WITH
JASON INCORPORATED,
THE LENDERS PARTY HERETO,
THE FIRST NATIONAL BANK OF CHICAGO, AS AGENT
March 3, 1999
<PAGE> 2
EXHIBITS
EXHIBIT A - Note
EXHIBIT B - Opinion
EXHIBIT C - Compliance Certificate
Schedule I to Compliance Certificate
EXHIBIT D - Assignment Agreement
Exhibit I to Assignment Agreement
(Notice of Assignment)
SCHEDULES
SCHEDULE 1-A - Unrestricted Subsidiaries
SCHEDULE 5.7 - Litigation and Contingent Obligations
SCHEDULE 5.8 - Subsidiaries
SCHEDULE 5.14 - Ownership of Properties
SCHEDULE 6.13 - Investments
SCHEDULE 6.15 - Permitted Liens
4
<PAGE> 3
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of
March 3, 1999, is among Jason Incorporated, a Wisconsin corporation, the
Lenders, The First National Bank of Chicago, as Agent, and amends and restates
in its entirety the Original Credit Agreement. The parties hereto agree as
follows:
ARTICLE I
DEFINITIONS; EFFECTIVENESS AND ASSUMPTIONS
1.1. Definitions. As used in this Agreement:
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or division thereof,
whether through purchase of assets, merger or otherwise or (ii) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions at least a majority (in number of vote) of the securities
of a corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage of voting power) of the outstanding
partnership interests of a partnership.
"Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Revolving Loans made by the Lenders to the
Borrower of the same Type and, in the case of Eurodollar Rate Advances, for the
same Interest Period.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
A Person shall be deemed to control another Person if the controlling Person
owns 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, by contract or otherwise.
"Agent" means The First National Bank of Chicago in its
capacity as contractual representative for the Lenders pursuant to Article X
hereof (and not in its individual capacity as a Lender or in its capacity as
Collateral Agent), and any successor Agent appointed pursuant to Article X
hereof.
"Aggregate Commitment" means the aggregate of the Commitments
of all the Lenders, as reduced from time to time pursuant to the terms hereof.
"Agreement" means this Second Amended and Restated Credit
Agreement, as it may be amended, restated, supplemented or otherwise modified
and in effect from time to time.
"Agreement Accounting Principles" means generally accepted
accounting principles as in effect on December 31, 1997, applied in a manner
consistent with that used in preparing the financial statements referred to in
Section 5.4 hereof.
7
<PAGE> 4
"Alternate Base Rate" means, for any day, a fluctuating rate
of interest per annum equal to the higher of (i) the Corporate Base Rate for
such day and (ii) the sum of (a) the Federal Funds Effective Rate for such day
and (b) one-half of one percent (1/2%) per annum.
"Applicable Commitment Fee Rate" means, one-quarter of one
percent (0.25%) per annum, as adjusted from time to time thereafter pursuant to
Section 2.19.
"Applicable L/C Fee Rate" means, three-quarters of one percent
(0.75%) per annum, as adjusted from time to time thereafter pursuant to Section
2.19.
"Asset Sale" means the sale, lease or other disposition by the
Borrower or any Restricted Subsidiary to any Person (other than the Borrower or
any Restricted Subsidiary) of any property of the Borrower or such Restricted
Subsidiary (other than sales or consignments of inventory in the ordinary course
of business).
"Authorized Officer" means any of the Chairman, CEO, President
or Controller of the Borrower, acting singly.
"Available Commitment" means, with respect to any Lender, the
difference between (a) the amount of such Lender's Commitment and (b) the sum of
(i) the outstanding principal balance of Revolving Loans made by such Lender and
(ii) such Lender's L/C Interests .
"Benefited Parties" shall have the meaning set forth in the
Intercreditor Agreement.
"Borrower" means Jason Incorporated, a Wisconsin corporation,
and its successors and assigns, including a debtor-in-possession on behalf of
Borrower.
"Borrowing Date" means a date on which an Advance is made
hereunder.
"Borrowing Notice" is defined in Section 2.7 hereof.
"Business Day" means (i) with respect to any borrowing,
payment or rate selection of Loans bearing interest at the Eurodollar Rate, a
day (other than a Saturday or Sunday) on which banks are open for business in
Chicago and New York and on which dealings in United States dollars are carried
on in the London interbank market and (ii) for all other purposes a day (other
than a Saturday or Sunday) on which banks are open for business in Chicago.
"Capitalized Lease" of a Person means any lease of property by
such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount
of the obligations of such Person under Capitalized Leases which would be
capitalized on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"Cash Interest Expense" means, for any period, total interest
expense for such period, whether paid or accrued, in accordance with Agreement
Accounting Principles,
8
<PAGE> 5
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to all letters of credit and net costs under Hedging
Agreements, but excluding interest expense not payable in cash (including
amortization of discount).
"Change in Control" means (i) individuals who constitute the
Board of Directors of the Borrower on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Borrower's shareholders, was approved by a vote
of at least three-fourths of the directors comprising the Incumbent Board
(either by a specific vote or by approvals of the proxy statement of the
Borrower in which such person is named as a nominee for director, without
objection to such nomination) ("Incumbent Board Vote") shall be, for the purpose
of this clause (i), considered as though such person were a member of the
Incumbent Board; (ii) any "person" (as such term is defined in Section 14(d) of
the Securities Exchange Act of 1934 (the "Exchange Act")), other than the "Key
Executives" (as defined below), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of 30% or more of
the combined voting power of the Borrower's outstanding securities ordinarily
having the right to vote at elections of directors; or (iii) Mark Train and
Vincent L. Martin (the "Key Executives") collectively cease to own or control,
directly or indirectly, more than twenty-five percent (25%) of the combined
voting power of the Borrower's outstanding securities ordinarily having the
right to vote at elections of directors; provided that if either of the Key
Executives dies and the Incumbent Board votes to confirm, in the case of Mr.
Martin and approve, in the case of Mr. Train, the appointment of the surviving
Key Executive as Chief Executive Officer of the Borrower by an Incumbent Board
Vote, no Change of Control shall be deemed to have occurred thereby.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time, and includes any successor
statute thereof.
"Collateral" means all property and interests in property now
owned or hereafter acquired by Borrower in or upon which a security interest,
lien or mortgage is granted to the Collateral Agent, for the benefit of the
Benefited Parties, or to the Agent, for the benefit of the Lenders, whether
under the Security Agreement, under any of the Collateral Documents or under any
of the other Loan Documents.
"Collateral Agent" shall mean First Chicago in its capacity as
collateral agent pursuant to the terms of the Intercreditor Agreement, or any
successor collateral agent appointed pursuant to the terms of the Intercreditor
Agreement.
"Collateral Documents" shall mean all agreements, instruments
and documents executed in connection with this Agreement, including, without
limitation, the Intercreditor Agreement, the Security Agreement and all other
security agreements, loan agreements, notes, guarantees, mortgages, leasehold
mortgages, deeds of trust, subordination agreements, pledges, powers of
attorney, consents, assignments, contracts, fee letters, notices, leases,
financing statements and all other written matter whether heretofore, now, or
hereafter executed by or on behalf of Borrower or any of its Subsidiaries and
delivered to the Agent, the Collateral Agent or any of the Lenders, together
with all amendments and supplements thereto and modifications and restatements
thereof, and all agreements and documents referred to therein or contemplated
thereby.
9
<PAGE> 6
"Commitment" means, for each Lender, the obligation of such
Lender to make Revolving Loans and to purchase participations in Letters of
Credit, not exceeding the amount set forth opposite its signature below, as such
amount may be modified from time to time pursuant to the terms hereof.
"Contingent Obligation" of a Person means any agreement,
undertaking or arrangement by which such Person assumes, guarantees, endorses,
contingently agrees to purchase or provide funds for the payment of, or
otherwise becomes or is contingently liable upon, the obligation or liability of
any other Person, or agrees to maintain the net worth or working capital or
other financial condition of any other Person, or otherwise assures any creditor
of such other Person against loss, including, without limitation, any comfort
letter, operating agreement, take-or-pay contract or application for a letter of
credit.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any of its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"Corporate Base Rate" means the corporate base of interest
announced by First Chicago from time to time, changing when and as said
corporate base rate changes.
"Default" means an event described in Article VII hereof.
"EBIT" means, for any period, the sum of (a) earnings before
income taxes for such period and (b) interest expense for such period.
"Effective Date" shall have the meaning set forth in Section
1.3 hereof.
"Environmental Lien" shall mean a lien in favor of any
governmental entity for (a) any liability under federal or state environmental
laws or regulations, or (b) damages arising from, or costs incurred by such
governmental entity in response to, a release or threatened release of a
hazardous or toxic waste, substance or constituent or other substance into the
environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time including (unless the context otherwise
requires) any rules or regulations promulgated thereunder.
"Estimated Net Cash Proceeds" means, with respect to any Asset
Sale, the Borrower's good faith estimate of the amount of Net Cash Proceeds to
be received in connection with such Asset Sale, prior to the actual consummation
of such Asset Sale.
"Eurodollar Advance" means an Advance which bears interest at
the Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar
Loan for the relevant Interest Period, the rate determined by the Agent to be
the rate at which deposits in U.S. dollars are offered by First Chicago to
first-class banks in the London interbank market at approximately 11 a.m.
(London time) two Business Days prior to the first day of such Interest Period,
in the
10
<PAGE> 7
approximate amount of First Chicago's relevant Eurodollar Loan and having a
maturity approximately equal to such Interest Period, as adjusted for Reserves.
"Eurodollar Loan" means a Revolving Loan, or portion thereof,
which bears interest at the Eurodollar Rate.
"Eurodollar Margin" means three-quarters of one percent
(0.75%) per annum, as adjusted from time to time pursuant to Section 2.19.
"Eurodollar Rate" means, with respect to a Eurodollar Loan for
the relevant Interest Period, the Eurodollar Base Rate applicable to such
Interest Period plus the then applicable Eurodollar Margin. The Eurodollar Rate
shall be rounded to the next higher multiple of 1/16 of 1% if the rate is not
such a multiple.
"Federal Funds Effective Rate" means, for any day, an interest
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 on such day, as published for such day (or, if such day is
not a Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations at approximately 10 a.m.
(Chicago time) on such day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by the Agent in its sole
discretion.
"First Chicago" means The First National Bank of Chicago, in
its individual capacity, and its successors.
"Floating Rate" means, for any day, a rate per annum equal to
(i) the Alternate Base Rate for such day plus (ii) the then applicable Floating
Rate Margin, changing when and as the Alternate Base Rate changes.
"Floating Rate Advance" means an Advance which bears interest
at the Floating Rate.
"Floating Rate Loan" means a Revolving Loan which bears
interest at the Floating Rate.
"Floating Rate Margin" shall be zero percent (0.00%) per annum
as adjusted from time to time pursuant to Section 2.19.
"Funded Debt" means Indebtedness of the Borrower and its
Subsidiaries which by its terms is due more than one year from the date of the
creation thereof or which may be extended or renewed at the option of the
Borrower or any Subsidiary to a date more than one year from such date.
"Hedging Agreements" means any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, dollar-denominated or cross-currency interest rate
11
<PAGE> 8
exchange agreements, forward currency exchange agreements, interest rate swap,
cap or collar protection agreements, forward rate currency or interest rate
options, puts and warrants.
"Indebtedness" of a Person means such Person's (i) obligations
for borrowed money, (ii) obligations representing the deferred purchase price of
property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (iii)
obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances, or other
instruments, (v) Capitalized Lease Obligations, (vi) Rate Hedging Obligations,
(vii) Contingent Obligations, (viii) Off Balance Sheet Liabilities and (ix)
obligations for which such Person is obligated pursuant to a letter of credit,
including, in the case of the Borrower, Reimbursement Obligations under the
Letters of Credit.
"Intercreditor Agreement" shall mean that certain
Intercreditor Agreement dated as of June 27, 1991 by and among the Lenders, the
Agent, the Collateral Agent and the holders of the Senior Debt, as such
agreement has been and may hereafter be amended, restated, supplemented or
otherwise modified from time to time.
"Interest Coverage Ratio" means, for any period, the ratio of
(a) Borrower's EBIT for such period to (b) Borrower's Cash Interest Expense for
such period.
"Interest Expense" means, for any period, total interest
expense for such period, whether paid or accrued, in accordance with Agreement
Accounting Principles.
"Interest Period" means, with respect to a Eurodollar Loan, a
period of one (1), two (2), three (3) months or, subject to availability, six
(6) months commencing on a Business Day selected by the Borrower pursuant to
this Agreement. Such Interest Period shall end on (but exclude) the day which
corresponds numerically to such date one, two, three or six months thereafter;
provided, however, that if there is no such numerically corresponding day in
such next, second, third or sixth succeeding month, such Interest Period shall
end on the last Business Day of such next, second, third or sixth succeeding
month. If an Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next succeeding Business
Day, provided, however, that if said next succeeding Business Day falls in a new
calendar month, such Interest Period shall end on the immediately preceding
Business Day.
"Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade), deposit account or contribution of capital by such Person to any other
Person or any investment in, or purchase or other acquisition of, the stock,
partnership interests, notes, debentures or other securities of any other Person
made by such Person.
"L/C Draft" means a draft drawn on the Agent pursuant to a
Letter of Credit.
"L/C Interest" shall have the meaning ascribed to such term in
Section 2.17(ii).
12
<PAGE> 9
"L/C Obligations" means an amount equal to the aggregate of
the amount then available for drawing under each of the Letters of Credit and
the face amounts of all outstanding L/C Drafts corresponding to the Letters of
Credit, which L/C Drafts have been accepted by the Agent.
"Lenders" means the lending institutions listed on the
signature pages of this Agreement and their respective successors and assigns.
"Lending Installation" means, with respect to a Lender or the
Agent, any office, branch, Subsidiary or affiliate of such Lender or the Agent.
"Letter of Credit" means, collectively, the letters of credit
to be issued by the Agent pursuant to Section 2.17 hereof.
"Leverage Ratio" means, at any time, the ratio of (a) the
total amount of the Borrower's Funded Debt at such time to (b) the Borrower's
Net Worth at such time.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan Documents" means this Agreement, the Notes and the other
Collateral Documents and all other documents, instruments and agreements
executed in connection therewith or contemplated thereby.
"Material Adverse Change" means a change in the business,
properties, prospects, condition (financial or otherwise) or results of
operations of the Borrower and its Subsidiaries which is likely to have a
Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect on
(i) the business, properties, condition (financial or otherwise), results or
operations, or prospects of the Borrower and its Subsidiaries taken as a whole,
(ii) the ability of the Borrower to perform its obligations under the Loan
Documents, or (iii) the validity or enforceability of any of the Loan Documents
or the rights or remedies of the Agent, the Collateral Agent or the Lenders
thereunder.
"Multiemployer Plan" means a Plan maintained pursuant to a
collective bargaining agreement or any other arrangement to which the Borrower
or any member of the Controlled Group is party to which more than one employer
is obligated to make contributions.
"Net Cash Proceeds" shall mean the cash proceeds of Asset
Sales net of the costs of disposition, taxes paid or payable as a result thereof
and amounts applied to the repayment of Indebtedness (other than the "Benefited
Obligations" as defined in the Intercreditor Agreement) secured by a Lien on the
assets which were the subject of such Asset Sale.
"Net Worth" means the aggregate amount of common shareholder's
equity as determined from a consolidated balance sheet of the Borrower, prepared
in accordance with Agreement Accounting Principles.
13
<PAGE> 10
"Note" means a promissory note, in substantially the form of
Exhibit A hereto, duly executed by the Borrower and payable to the order of a
Lender in the amount of its Commitment, including any amendment, restatement,
modification, renewal or replacement of such Note.
"Notice of Assignment" is defined in Section 12.3.2. hereof.
"Obligations" means all unpaid principal of and accrued and
unpaid interest (whether or not allowed) on the Notes, all L/C Obligations, all
accrued and unpaid fees and all expenses, reimbursements, indemnities and other
obligations of the Borrower to the Lenders or to any Lender, the Agent, the
Collateral Agent or any indemnified party hereunder arising under the Loan
Documents and all obligations of the Borrowers to any Lender or the Agent under
any Hedging Agreements.
"Off Balance Sheet Liabilities" of a Person means (a) any
repurchase obligation of liability of such Person or any of its Subsidiaries
with respect to accounts or notes receivable sold by such Person or any of its
Subsidiaries, (b) any liability under any sale and leaseback transactions which
do not create a liability on the consolidated balance sheet of such Person, (c)
any liability under any financing lease or so-called "synthetic" lease
transaction or tax retention operating lease transaction or (d) any obligations
arising with respect to any other transaction which is the functional equivalent
of or takes the place of borrowing and which has an implied, attributable or
actual interest component which is deductible for federal tax purposes but which
does not constitute a liability on the consolidated balance sheets of such
Person and its Subsidiaries. Off-Balance Sheet Liabilities for any Person shall
not include obligations of such Person arising with respect to an operating
lease of any property or asset (other than a Capitalized Lease ) by such Person
as lessee which does not include any attributable interest component which is
deductible for federal tax purposes.
"Original Credit Agreement" means that certain Amended and
Restated Credit Agreement dated as of January 28, 1994 among Jason Incorporated,
a Delaware corporation, the financial institutions party thereto as "Lenders,"
The First National Bank of Chicago, as "Agent" thereunder, and The First
National Bank of Boston, as "Co-Agent" thereunder.
"Participants" is defined in Section 12.2.1 hereof.
"Payment Date" means the last Business Day of each calendar
month.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Percentage" means, with respect to any Lender, the amount
obtained by dividing such Lender's Commitment by the Aggregate Commitment,
expressed as a percentage.
"Permitted Equipment Sales" means (i) the sale of any
Equipment which is contemporaneously replaced with Equipment of equal or greater
value performing the same or a similar function as the Equipment sold and (ii)
in addition to the sales of Equipment permitted in clause (i) above, sales of
Equipment in an aggregate amount of $500,000 and sales of Equipment
14
<PAGE> 11
aggregating less than $100,000 in a single transaction in any calendar year
after the $500,000 level has been reached.
"Permitted Purchase Money Indebtedness" means indebtedness
contemporaneously incurred or assumed for the purpose of financing seventy-five
percent (75%) or more of the acquisition, construction, repair or improvement
cost of any fixed assets; provided that the aggregate amount of all such
indebtedness shall not exceed $2,000,000 in the aggregate at any time
outstanding.
"Person" means any natural person, corporation, firm, joint
venture, partnership, association, enterprise, trust or other entity or
organization, or any government or political subdivision or any agency,
department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered
by Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code as to which the Borrower or any member of the Controlled Group
may have any liability.
"Purchasers" is defined in Section 12.3.1. hereof.
"Rate Hedging Obligations" of a Person means any and all
obligations of such Person, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), under Hedging
Agreements, and any and all cancellations, buy backs, reversals, terminations or
assignments thereof.
"Rate Option" means the Eurodollar Rate or the Floating Rate.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor
thereto or other regulation or official interpretation of said Board of
Governors relating to reserve requirements applicable to member banks of the
Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors relating
to the extension of credit by banks for the purpose of purchasing or carrying
margin stocks applicable to member banks of the Federal Reserve System.
"Reimbursement Obligations" is defined in Section 2.17(iii)
hereof.
"Rentals" of a Person means the aggregate fixed amounts
payable by such Person under any lease of real or personal property having an
original term (including any required renewals or any renewals at the option of
the lessor or lessee) of one year or more but does not include any amounts
payable under Capitalized Leases of such Person.
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such section, with
respect to a Plan, excluding, however, such events as to which the PBGC by
regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event, provided, however, that
15
<PAGE> 12
a failure to meet the minimum funding standards of Section 412 of the Code and
of Section 302 of ERISA shall be a Reportable Event regardless of the issuance
of any such waiver of the notice requirement in accordance with either Section
4043(a) of ERISA or Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate holding at
least 62-1/2% of the aggregate outstanding principal balance of the Revolving
Loans or, if there are no Revolving Loans outstanding, Lenders in the aggregate
having at least 62-1/2% of the Aggregate Commitment.
"Reserves" shall mean the maximum reserves requirement, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) with respect to "Eurocurrency liabilities" or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined or category of extensions of
credit or other assets which includes loans by a non-United States office of any
Lender to United States residents.
"Restricted Subsidiary" of a Person means (i) any corporation
(other than an Unrestricted Subsidiary) more than 50% of the outstanding
securities having ordinary voting power of which shall at the time be owned or
controlled, directly or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any
partnership, association, joint venture or similar business organization (other
than an Unrestricted Subsidiary) more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Restricted
Subsidiary" shall mean a Restricted Subsidiary of the Borrower.
"Revolving Loan" means, with respect to a Lender, such
Lender's portion of any Advance made pursuant to Section 2.1.
"Secured Obligations" means, collectively, (i) the Obligations
and (ii) all Rate Hedging Obligations owing by the Borrower to one or more of
the Lenders or one or more of their affiliates.
"Security Agreement" means that certain Security Agreement
dated as of June 27, 1991 executed by the Borrower in favor of the Collateral
Agent for the benefit of the Benefited Parties, as amended, restated,
supplemented or otherwise modified from time to time.
"Senior Debt" means the indebtedness of Borrower evidenced by
those certain: (a) 7.65% Senior Notes due December 1, 2002 ("7.65% Senior
Notes") of the Borrower in the aggregate principal amount of $16,000,000 issued
by the Borrower pursuant to those certain Note Agreements dated as of November
15, 1992 (the "7.65% Senior Note Agreements"), (b) 7.72% Senior Notes due April
27, 2004 ("7.72% Senior Notes") of the Borrower in the aggregate principal
amount of $25,000,000 issued by the Borrower pursuant to those certain Note
Agreements dated as of April 26, 1994 (the "7.72% Senior Note Agreements") and
(c) 7.34% Senior Notes due May 31, 2005 ("7.34% Senior Notes") of the Borrower
in the aggregate principal amount of $20,000,000 issued by the Borrower pursuant
to those certain Note Agreements dated as of April 26, 1994 (the "7.34% Senior
Note Agreements"). The above
16
<PAGE> 13
mentioned notes and agreements being collectively referred to herein as the
"Senior Notes" and the "Senior Note Agreements" as the case may be.
"Senior Subordinated Debt" means the indebtedness of Borrower
evidenced by those certain 10.60% Senior Subordinated Notes due October 15, 2000
("Subordinated Notes") of Borrower in the original aggregate principal amount of
$10,000,000 issued by the Borrower pursuant to those certain Note Agreements
dated as of October 1, 1989 (the "Subordinated Note Agreements").
"Single Employer Plan" means a Plan maintained by the Borrower
or any member of the Controlled Group for employees of the Borrower or any
member of the Controlled Group.
"Subordinated Indebtedness" of a Person means any Indebtedness
of such Person the payment of which is subordinated to payment of the Secured
Obligations to the written satisfaction of the Required Lenders, and with
respect to the Borrower, shall include the Senior Subordinated Debt.
"Subsidiary" of a Person means (i) any corporation more than
50% of the outstanding securities having ordinary voting power of which shall at
the time be owned or controlled, directly or indirectly, by such Person or by
one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, association, joint venture or similar
business organization more than 50% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled. Unless
otherwise expressly provided, all references herein to a "Subsidiary" shall mean
a Subsidiary of the Borrower and shall include both Restricted Subsidiaries and
Unrestricted Subsidiaries.
"Termination Date" means March 3, 2004.
"Transferee" is defined in Section 12.4 hereof.
"Type" means, with respect to any Revolving Loan, its nature
as a Floating Rate Loan or a Eurodollar Loan.
"Unfunded Liabilities" means the amount (if any) by which the
present value of all vested nonforfeitable benefits under all Single Employer
Plans exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans, and (ii) in the case of Multiemployer Plans, the withdrawal liability
that would be incurred by the Controlled Group if all members of the Controlled
Group completely withdrew from all Multiemployer Plans.
"Unmatured Default" means an event which, but for the lapse of
time or the giving of notice, or both, would constitute a Default.
"Unrestricted Subsidiary" shall mean the Subsidiaries of
Borrower set forth on Schedule 1-A hereto.
"Year 2000 Issues" means anticipated costs, problems and
uncertainties associated with the inability of certain computer applications to
effectively handle data including dates on and after January 1, 2000, as such
inability affects the business, operations, and
17
<PAGE> 14
financial condition of the Borrower and its Subsidiaries and the Borrower's or
its Subsidiaries' material customers, suppliers and vendors.
1.2. Construction of Terms. The defined terms used in this
Agreement shall be equally applicable to both the singular and plural forms of
the defined terms. When an amount is expressed in this Credit Agreement in
United States Dollars in calculating the Borrower's compliance with such
provision where the Borrower or its Subsidiaries deal in a different currency,
the "Exchange Rate" (as defined below) shall be utilized in making such
computation. "Exchange Rate" means, in relation to the purchase of one currency
(for purposes of this definition the "first currency") with another currency
(for purposes of this definition the "second currency") on a given date, the
spot rate of exchange quoted by the Agent for the amount in question, in the
London interbank foreign exchange market at or about 11:00 a.m. London time on
such date for the purchase of the first currency with the second currency.
1.3. Effectiveness of this Agreement. Upon the satisfaction of
all of the conditions precedent set forth in Section 4.1 of this Agreement (the
date upon which such conditions precedent are satisfied being hereinafter
referred to as the "Effective Date"), this Agreement shall become effective and
the Original Credit Agreement be amended and restated in its entirety in
accordance with the provisions of Section 9.14 hereof. Without in any way
limiting the foregoing, upon the effectiveness of this Agreement, any Default or
Unmatured Default which may have arisen as a result of the failure by the
Collateral Agent to have a valid and perfected security interest in and lien on
65% of the outstanding capital stock of Power Brushes Ltd. shall be and is
hereby waived.
ARTICLE II
THE CREDITS
2.1. Revolving Loans. Upon the satisfaction of the conditions
precedent set forth in Sections 4.1 and 4.2 hereof, from and including the date
of this Agreement and prior to the Termination Date, each Lender severally
agrees, on the terms and conditions set forth in this Agreement, to make
Revolving Loans to the Borrower from time to time in amounts not to exceed in
the aggregate at any one time outstanding the difference between (a) such
Lender's Commitment and (b) the aggregate amount of such Lender's L/C Interests.
Subject to the terms of this Agreement, the Borrower may borrow, repay and
reborrow at any time prior to the Termination Date. On the Termination Date, the
Borrower shall repay in full the outstanding principal balance of the Revolving
Loans.
2.2. Ratable Loans. Each Advance consisting of Revolving Loans
shall consist of Revolving Loans made by each Lender ratably in proportion to
such Lender's respective Percentage.
2.3. Rate Options. The Advances may be Floating Rate Advances
or Eurodollar Advances, or a combination thereof, selected by the Borrower in
accordance with Section 2.7. The Borrower may select, in accordance with Section
2.7, Rate Options and Interest Periods
18
<PAGE> 15
applicable to the Revolving Loans; provided that there shall be no more than six
Interest Periods in effect with respect to the Revolving Loans at any time.
2.4. Optional Payments; Mandatory Prepayments.
(A) The Borrower may from time to time repay, without penalty
or premium (1) all outstanding Floating Rate Advances, or (2) in a minimum
aggregate amount of $1,000,000 or any integral multiple of $500,000 in excess
thereof, any portion of the outstanding Floating Rate Advances. A Eurodollar
Rate Advance may not be repaid prior to the last day of the applicable Interest
Period.
(B) (1) Upon the sale, transfer or other disposition of any
assets of Borrower (other than sales of the Borrower's inventory in the ordinary
course of its business and Permitted Equipment Sales), the Borrower shall make a
mandatory prepayment of the Revolving Loans in an amount equal to 100% of the
net proceeds thereof, after taxes actually paid; provided, however, that if the
aggregate outstanding principal balance of the Revolving Loans is less than the
net proceeds of such sale, transfer or other disposition, such mandatory
prepayment shall be limited to the aggregate outstanding principal balance of
the Revolving Loans together with all interest and fees related thereto.
(2) If at any time the aggregate outstanding principal balance
of the Revolving Loans shall exceed the Aggregate Commitment minus the L/C
Obligations, then Borrower shall promptly pay to the Agent, for the ratable
account of the Lenders, such amount as may be necessary to eliminate such
excess.
2.5. Revolving Loan Commitment Fee and Reduction of
Commitments. The Borrower agrees to pay to the Agent for the ratable account of
each Lender a commitment fee, accruing at the Applicable Commitment Fee Rate, on
the difference of (a) the daily unborrowed portion of such Lender's Commitment
minus (b) the amount of such Lender's L/C Interests, from the date of this
Agreement to and including the Termination Date, payable on the last Business
Day of each calendar quarter hereafter and on the Termination Date. The Borrower
may permanently reduce the Aggregate Commitment in whole, or in part ratably
among the Lenders in integral multiples of $1,000,000, upon at least five
Business Days' written notice to the Agent, which notice shall specify the
amount of any such reduction; provided, however, that the amount of the
Aggregate Commitment may at no time be reduced below the sum of the aggregate
principal amount of the outstanding Revolving Loans at such time plus the L/C
Obligations at such time. All accrued commitment fees shall be payable on the
effective date of any termination of the obligations of the Lenders to make
Revolving Loans hereunder.
2.6. Method of Borrowing. Not later than 2:00 p.m. (Chicago
time) on each Borrowing Date, each Lender shall make available its Revolving
Loan or Revolving Loans, in funds immediately available in Chicago to the Agent
at its address specified pursuant to Article XIII hereof. The Agent will make
the funds so received from the Lenders available to the Borrower at the Agent's
aforesaid address.
2.7. Method of Selecting Types and Interest Periods for
Advances. The Borrower shall select the Type of Advance and, in the case of each
Eurodollar Advance, the
19
<PAGE> 16
Interest Period applicable to each Advance from time to time. The Borrower shall
give the Agent irrevocable notice (a "Borrowing Notice") not later than 10:00
a.m. (Chicago time) on the Borrowing Date of each Floating Rate Advance and
three Business Days before the Borrowing Date for each Eurodollar Advance,
specifying:
(i) the Borrowing Date, which shall be a Business Day, of
such Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurodollar Advance, the Interest
Period applicable thereto.
Changes in the rate of interest on that portion of any Advance maintained as a
Floating Rate Loan will take effect simultaneously with each change in the
Alternate Base Rate. Each Eurodollar Rate Advance shall bear interest from and
including the first day of the Interest Period applicable thereto to (but not
including) the last day of such Interest Period at the interest rate determined
as applicable to such Eurodollar Rate Advance. The Borrower shall select
Interest Periods so that it is not necessary to repay or prepay all or any
portion thereof bearing interest at the Eurodollar Rate prior to the last day of
the applicable Interest Period in order to make mandatory repayments or
prepayments as required pursuant to the terms hereof.
2.8. Minimum Amount of Each Advance. Each Eurodollar Rate
Advance shall be in the minimum amount of $2,000,000 (and in multiples of
$500,000 if in excess thereof), and each Floating Rate Advance shall be in the
minimum amount of $250,000 (and in multiples of $100,000 if in excess thereof),
provided, however, that any Floating Rate Advance may be in the amount of the
unused Aggregate Commitment.
2.9. Method of Selecting Types and Interest Periods for
Conversion and Continuation of Advances.
(i) Right to Convert. The Borrower may elect from time to
time, subject to the provisions of Section 2.3 and
Section 2.8, to convert all or any part of a
Revolving Loan of any Type into any other Type or
Types of Revolving Loans; provided that any
conversion of any Eurodollar Rate Advance shall be
made on, and only on, the last day of the Interest
Period applicable thereto.
(ii) Automatic Conversion and Continuation. Floating Rate
Advances shall continue as Floating Rate Loans unless
and until such Floating Rate Loans are converted into
Eurodollar Loans. Eurodollar Advances shall continue
as Eurodollar Loans until the end of the then
applicable Interest Period therefor, at which time
such Eurodollar Advances shall be automatically
converted into Floating Rate Advances unless the
Borrower shall have given the Agent notice in
accordance with Section 2.9(iv) requesting that, at
the end of such Interest Period, such Eurodollar Rate
Advances continue as a Eurodollar Loan.
20
<PAGE> 17
(iii) No Conversion Post-Default or Post-Unmatured Default.
Notwithstanding anything to the contrary contained in
Section 2.9(i) or 2.9(ii), no Revolving Loan may be
converted into or continued as a Eurodollar Loan
(except with the consent of the Required Lenders)
when any Default or Unmatured Default has occurred
and is continuing.
(iv) Conversion/Continuation Notice. The Borrower shall
give the Agent irrevocable notice (a
"Conversion/Continuation Notice") of each conversion
of a Revolving Loan or continuation of a Eurodollar
Loan not later than 10:00 a.m. (Chicago time) at
least one Business Day, in the case of a conversion
into a Floating Rate Loan, or three Business Days, in
the case of a conversion into or continuation of a
Eurodollar Loan, prior to the date of the requested
conversion or continuation, specifying: (1) the
requested date (which shall be a Business Day) of
such conversion or continuation; (2) the amount and
Type of the Revolving Loan to be converted or
continued; and (3) the amount and Type(s) of
Revolving Loan(s) into which such Revolving Loan is
to be converted or continued and, in the case of a
conversion into or continuation of a Eurodollar Loan,
the duration of the Interest Period applicable
thereto.
2.10. Default Rate. After the occurrence of a Default, at
the option of the Required Lenders, the Obligations shall bear interest at a
rate per annum equal to the Alternate Base Rate plus the applicable Floating
Rate Margin plus two percent (2.0%).
2.11. Method of Payment. All payments of principal, interest,
and fees hereunder shall be made, without setoff, deduction or counterclaim, in
immediately available funds to the Agent at the Agent's address specified
pursuant to Article XIII, or at any other Lending Installation of the Agent
specified in writing by the Agent to the Borrower, by noon (local time) on the
date when due and shall be made ratably among the Lenders. Each payment
delivered to the Agent for the account of any Lender shall be delivered promptly
by the Agent to such Lender in the same type of funds which the Agent received
at its address specified pursuant to Article XIII or at any Lending Installation
specified in a notice received by the Agent from such Lender. The Agent is
hereby authorized to charge the account of the Borrower maintained with First
Chicago for each payment of principal, interest and fees as it becomes due
hereunder.
2.12. Notes; Telephonic Notices. Each Lender is hereby
authorized to record the principal amount of each of its Revolving Loans and
each repayment with respect to its Revolving Loans on the schedule attached to
its Note; provided, however, the failure to so record shall not affect the
Borrower's obligations under such Note. The Borrower hereby authorizes the
Lenders and the Agent to extend Advances, effect selections of Types of Advances
and to transfer funds based on telephonic notices made by any person or persons
the Agent or any Lender in good faith believes to be acting on behalf of the
Borrower. The Borrower agrees to deliver promptly to the Agent a written
confirmation signed by an Authorized Officer, if such confirmation is requested
by the Agent or any Lender, of each telephonic notice. If the written
confirmation differs in any material respect from the action taken by the Agent
and the Lenders, the telephonic notice shall govern.
21
<PAGE> 18
2.13. Interest Payment Dates; Interest and Fee Basis. Interest
accrued on each Floating Rate Loan shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any date
on which the Floating Rate Loan is prepaid due to acceleration and at maturity.
Interest accrued on each Eurodollar Loan shall be payable on the last day of its
applicable Interest Period, on any date on which the Eurodollar Loan is prepaid,
whether by acceleration or otherwise, and at maturity. Interest accrued on each
Eurodollar Loan having an Interest Period longer than three months shall also be
payable on the last day of each three-month interval during such Interest
Period. Interest shall be payable for the day a Revolving Loan is made but not
for the day of any payment on the amount paid if payment is received prior to
noon (local time) at the place of payment. If any payment of principal of or
interest on a Revolving Loan shall become due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day and, in the
case of a principal payment, such extension of time shall be included in
computing interest in connection with such payment.
2.14. Notification of Advances, Interest Rates, Prepayments
and Aggregate Commitment Reductions. Promptly, but in any event not later than
12:00 noon with respect to any Borrowing Notice, after receipt thereof, the
Agent will notify each Lender of the contents of each Aggregate Commitment
reduction notice, Borrowing Notice, Continuation/Conversion Notice, and
repayment notice received by it hereunder. The Agent will notify each Lender of
the interest rate applicable to each Eurodollar Loan promptly upon determination
of such interest rate and will give each Lender prompt notice of each change in
the Alternate Base Rate.
2.15. Lending Installations. Each Lender may book its Loans at
any Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or telex
notice to the Agent and the Borrower, designate a Lending Installation through
which Revolving Loans will be made by it and for whose account Revolving Loan
payments are to be made.
2.16. Non-Receipt of Funds by the Agent. Unless the Borrower
or a Lender, as the case may be, notifies the Agent prior to the date on which
it is scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Revolving Loan or (ii) in the case of the Borrower, a payment of
principal, interest or fees to the Agent for the account of the Lenders, that it
does not intend to make such payment, the Agent may assume that such payment has
been made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (i) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day or (ii) in the case of payment by the
Borrower, the interest rate applicable to the relevant Revolving Loan.
2.17. Letter of Credit Facility.
22
<PAGE> 19
(i) Letters of Credit. Upon receipt of duly executed
applications therefor, and such other documents, instructions and agreements as
the Agent may require, and subject to the provisions of Article IV, the Agent
will issue letters of credit for the account of the Borrower, on terms as are
satisfactory to the Agent; provided, however, that no Letter of Credit will be
issued for the account of the Borrower by the Agent if on the date of issuance,
before or after taking such Letter of Credit into account, (a) the aggregate
outstanding amount of the Revolving Loans and the L/C Obligations exceeds the
aggregate amount of the Available Commitment or (b) the aggregate outstanding
amount of the L/C Obligations exceeds $10,000,000 (or such other amount as the
Borrower and the Agent may from time to time mutually agree); and provided,
further, that no Letter of Credit shall be issued which has an expiration date
later than the date which is forty-five (45) Business Days immediately preceding
the Termination Date.
(ii) Letter of Credit Participation. Immediately upon the
issuance of each Letter of Credit by the Agent hereunder, each Lender shall be
deemed to have automatically, irrevocably and unconditionally purchased and
received from the Agent an undivided interest and participation in and to such
Letter of Credit, the obligations of the Borrower in respect thereof, and the
liability of the Agent thereunder (collectively, an "L/C Interest") in an amount
equal to the amount available for drawing under such Letter of Credit multiplied
by such Lender's Percentage. The Agent will notify each Lender promptly upon
presentation to it of an L/C Draft or upon any other draw under a Letter of
Credit. On or before the Business Day on which the Agent makes payment of each
such L/C Draft or, in the case of any other draw on a Letter of Credit, on
demand of the Agent, each Lender shall make payment to the Agent in immediately
available funds of an amount equal to such Lender's Percentage of the amount of
such payment or draw. The obligation of each Lender to reimburse the Agent under
this Section 2.17(ii) shall be unconditional, continuing, irrevocable and
absolute. In the event that any Lender fails to make payment to the Agent of any
amount due under this Section 2.17(ii), the Agent shall be entitled to receive,
retain and apply against such obligation the principal and interest otherwise
payable to such Lender hereunder until the Agent receives such payment from such
Lender or such obligation is otherwise fully satisfied, and such Lender shall
thereby be deemed to have received such principal or interest payment owing to
it; provided, however, that nothing contained in this sentence shall relieve
such Lender of its obligation to reimburse the Agent for such amount in
accordance with this Section 2.17(ii).
(iii) Reimbursement Obligation. The Borrower agrees
unconditionally, irrevocably and absolutely to pay immediately to the Agent, for
the account of the Lenders, the amount of each advance which may be drawn under
or pursuant to a Letter of Credit issued for its account or an L/C Draft related
thereto (such obligation of the Borrower to reimburse the Agent for an advance
made under a Letter of Credit or L/C Draft being hereinafter referred to as a
"Reimbursement Obligation" with respect to such Letter of Credit or L/C Draft).
If the Borrower at any time fails to repay a Reimbursement Obligation pursuant
to this Section 2.17(iii), the Borrower shall be deemed to have elected to
borrow from the Lenders, as of the date of the advance giving rise to such
Reimbursement Obligation, a Floating Rate Advance equal in amount to the amount
of the unpaid Reimbursement Obligation, the proceeds of which Advance shall be
used to repay such Reimbursement Obligation.
(iv) Cash Collateral. Notwithstanding anything to the contrary
herein or in any application for a Letter of Credit, after the occurrence of any
Default or Unmatured Default, the Borrower shall, upon the Agent's demand,
deliver to the Agent for the benefit of the Lenders,
23
<PAGE> 20
cash, or other collateral of a type satisfactory to the Required Lenders, having
a value, as determined by such Lenders, equal to the aggregate outstanding L/C
Obligations. Any such collateral shall be held by the Agent in a separate
account appropriately designated as a cash collateral account in relation to
this Agreement and the Letters of Credit and retained by the Agent for the
benefit of the Lenders as collateral security for the Borrower's obligations in
respect of this Agreement and each of the Letters of Credit and L/C Drafts. Such
amounts shall be applied to reimburse the Agent for drawings or payments under
or pursuant to Letters of Credit or L/C Drafts, or if no such reimbursement is
required, to payment of such of the other Obligations as the Agent shall
determine. Any amounts remaining in any cash collateral account established
pursuant to this Section 2.17(iv) following payment in full of all of the
Obligations, which are not to be applied to reimburse the Agent for amounts
actually paid or to be paid by the Agent in respect of a Letter of Credit or L/C
Draft, shall be returned to the Borrower (after deduction of the Agent's
expenses incurred in connection with such cash collateral account).
(v) Letter of Credit Fees. The Borrower agrees to (a) pay
quarterly in arrears, to the Agent for the ratable benefit of the Lenders, a
letter of credit fee, accruing at the Applicable L/C Fee Rate, on the aggregate
amount available for drawing under all of the standby Letters of Credit and (b)
pay all customary fees and other issuance, amendment, negotiation and
presentment expenses and related charges customarily charged by the Agent in
connection with the issuance by the Agent of standby and commercial Letters of
Credit.
2.18. Obligations Under Hedging Agreements. Prior to such time
as the Intercreditor Agreement is amended to permit Obligations under Hedging
Agreements which do not constitute "Interest Rate Agreements" (as defined in the
Intercreditor Agreement) to be "Benefited Obligations" (as defined in the
Intercreditor Agreement), payments made hereunder shall be applied first to all
Obligations under Hedging Agreements exclusive of Interest Rate Contracts and
second to Obligations consisting of Hedging Agreements which are not Interest
Rate Contracts.
2.19. Adjustments to Interest Rate Margins and Fees. The
Eurodollar Margin, the Floating Rate Margin, the Applicable Commitment Fee Rate
and the Applicable L/C Fee Rate shall be based on the Interest Coverage Ratio in
accordance with the table below. The Interest Coverage Ratio shall be determined
from the financial statements delivered by the Borrower pursuant to Sections
6.1(i) and (ii). If, as determined on the basis of the quarterly compliance
certificate delivered by the Borrower pursuant to Section 6.1 of this Agreement,
the Borrower has maintained an Interest Coverage Ratio greater than the levels
set forth in the table below, calculated on the basis of the four fiscal
quarters then ended, the Eurodollar Margin, the Floating Rate Margin, the
Applicable Commitment Fee Rate and the Applicable L/C Fee Rate shall each be
adjusted to the amounts set forth in the table opposite the applicable Interest
Coverage Ratio level. The adjustment, if any, shall be applied retroactively,
beginning on the first Business Day of the three month fiscal period commencing
immediately after the period covered by the compliance certificate. If,
subsequent to an adjustment in the Eurodollar Margin, the Floating Rate Margin,
the Applicable Commitment Fee Rate and the Applicable L/C Fee Rate, the
Borrower's Interest Coverage Ratio, as determined on the basis of the quarterly
compliance certificate delivered by the Borrower pursuant to Section 6.1 of this
Agreement, calculated on the basis of the four fiscal quarters then ended, is
less than the Interest Coverage Ratio level corresponding to the earlier
adjustment, the Eurodollar Margin, the Floating Rate Margin, the Applicable
Commitment Fee Rate and the Applicable L/C Fee Rate shall be adjusted
24
<PAGE> 21
in accordance with the table set forth below, such adjustment to be applied
retroactively, beginning on the first Business Day of the fiscal quarter
commencing immediately after the period covered by the compliance certificate.
<TABLE>
<CAPTION>
- -------------------- ------------------ ------------------ ------------------ ------------------
INTEREST FLOATING RATE EURODOLLAR APPLICABLE APPLICABLE
COVERAGE RATIO MARGIN MARGIN COMMITMENT L/C
FEE RATE FEE RATE
- -------------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Greater than or 0.0% 0.75% 0.25% 0.75%
equal to 3.25 to
1.0
- -------------------- ------------------ ------------------ ------------------ ------------------
Below 3.25 to 0.0% 1.0% 0.375% 1.0%
1.0 but greater
than or equal to
3.0 to 1.0
- -------------------- ------------------ ------------------ ------------------ ------------------
Below 3.0 to 1.0 0.25% 1.25% 0.375% 1.25%
but greater than
or equal to 2.75
to 1.0
- -------------------- ------------------ ------------------ ------------------ ------------------
Below 2.75 to 0.50% 1.50% 0.375% 1.5%
1.0 but greater
than or equal
to 2.50 to 1.0
- -------------------- ------------------ ------------------ ------------------ ------------------
Below 2.50 to 0.50% 1.75% 0.375% 1.75%
1.0
- -------------------- ------------------ ------------------ ------------------ ------------------
</TABLE>
Interest and commitment fees shall be calculated for actual days elapsed on the
basis of a 360-day year.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. Yield Protection. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any interpretation thereof, or the
compliance of any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation
to any tax, duty, charge or withholding on or from payments due from
the Borrower (excluding federal taxation of the overall net income of
any Lender or applicable Lending Installation and any such tax, duty,
charge or withholding in effect as of the date of this Agreement), or
changes the basis of taxation of payments to any Lender in respect of
its Revolving Loans, its L/C Interests, the Letters of Credit or other
amounts due it hereunder (excluding federal taxation of the overall net
income of any Lender or applicable Lending Installation and any such
change in effect as of the date of this Agreement), or
25
<PAGE> 22
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or any applicable Lending Installation (other
than reserves and assessments taken into account in determining the
interest rate applicable to Eurodollar Loans) with respect to its
Loans, or L/C Interest or the Letters of Credit, or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending Installation
of making, funding or maintaining the Revolving Loans, the L/C Interest
or the Letters of Credit or reduces any amount received by any Lender
or any applicable Lending Installation in connection with the Revolving
Loans, the L/C Interests or the Letters of Credit or requires any
Lender or any applicable Lending Installation to make any payment
calculated by reference to the amount of Revolving Loans or L/C
Interests held or interest received by it or the Letters of Credit, by
an amount deemed material by such Lender;
then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an amount
received which such Lender determines is attributable to making, funding and
maintaining its Revolving Loans and its Commitment.
3.2. Changes in Capital Adequacy Regulations. If a Lender
determines the amount of capital required or expected to be maintained by such
Lender, any Lending Installation of such Lender or any corporation controlling
such Lender is increased as a result of a "Change" (as defined below), then,
within 15 days of demand by such Lender, the Borrower shall pay such Lender the
amount necessary to compensate for any shortfall in the rate of return on the
portion of such increased capital which such Lender determines is attributable
to this Agreement, its Revolving Loans, its L/C Interests, the Letters of Credit
or its obligation to make Revolving Loans hereunder (after taking into account
such Lender's policies as to capital adequacy); provided, however, that the
Borrower shall not be obligated to pay any such amount or amounts to the extent
such amount or amounts result from a Change which took effect more than 90 days
prior to the date of delivery of the demand described above. "Change" means (i)
any change after the date hereof in the "Risk-Based Capital Guidelines" (as
defined below) or (ii) any adoption of or change in any other law, governmental
or quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date hereof which
affects the amount of capital required or expected to be maintained by any
Lender or any Lending Installation or any corporation controlling any Lender.
"Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in
effect in the United States on the date hereof including transition rules, and
(ii) the corresponding capital regulations promulgated by regulatory authorities
outside the United States implementing the July 1988 report of the Basle
Committee on Banking Regulation and Supervisory Practices Entitled
"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted prior
to the date hereof.
3.3. Availability of Types of Advances. If any Lender
determines that maintenance of its Eurodollar Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation or directive,
whether or not having the force of law, or if the Required Lenders determine
that (i) deposits of a type and maturity appropriate to match fund
26
<PAGE> 23
Eurodollar Advances are not available or (ii) the interest rate applicable to a
Type of Advance does not accurately reflect the cost of making or maintaining
such an Advance, then the Agent shall suspend the availability of the affected
Type of Advance and require any Advances of the affected Type to be repaid.
3.4. Funding Indemnification. If any payment of a Eurodollar
Advance occurs on a date which is not the last day of the applicable Interest
Period (other than as required by a Lender pursuant to Section 3.3 above),
whether because of acceleration, prepayment, amortization requirements, or
otherwise, or a Eurodollar Advance is not made on the date specified by the
Borrower for any reason other than default by the Lenders, the Borrower will
indemnify each Lender for any loss or cost incurred by it resulting therefrom,
including, without limitation, any loss or cost in liquidating or employing
deposits acquired to fund or maintain such Eurodollar Advance.
3.5. Lender Statements; Survival of Indemnity. To the extent
reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its Eurodollar Loans to reduce any liability of the
Borrower to such Lender under Sections 3.1 and 3.2 or to avoid the
unavailability of a Type of Advance under Section 3.3, so long as such
designation is not disadvantageous to such Lender. Each Lender shall deliver a
written statement for such Lender as to the amount due, if any, under Section
3.1, 3.2 or 3.4. Such written statement shall set forth in reasonable detail the
calculations upon which such Lender determined such amount and shall be final,
conclusive and binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a
Eurodollar Loan shall be calculated as though each Lender funded its Eurodollar
Loan through the purchase of a deposit of the type and maturity corresponding to
the deposit used as a reference in determining the Eurodollar Rate applicable to
such Eurodollar Loan, whether in fact that is the case or not. Unless otherwise
provided herein, the amount specified in the written statement shall be payable
on demand after receipt by the Borrower of the written statement. The
obligations of the Borrower under Sections 3.1, 3.2 and 3.4 shall survive
payment of the Obligations and termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. Effectiveness of this Agreement. This Agreement shall
become effective if, and only if, the following conditions precedent are
satisfied on or before March 15, 1999: (i) this Agreement has been signed by the
Borrower and each of the Lenders; and (ii) the Borrower has furnished to the
Agent each of the following, with sufficient copies for each of the Lenders:
(i) Copies of the Articles of Incorporation of the
Borrower, together with all amendments, and a
certificate of good standing, both certified by the
appropriate governmental officer in its jurisdiction
of incorporation;
(ii) Copies, certified by the Secretary or Assistant
Secretary of the Borrower, of its By-Laws and of its
Board of Directors' resolutions (and resolutions of
other bodies, if any are deemed necessary by counsel
for any Lender) authorizing the execution of the Loan
Documents;
27
<PAGE> 24
(iii) An incumbency certificate, executed by the Secretary
or Assistant Secretary of the Borrower, which shall
identify by name and title and bear the signature of
the officers of the Borrower authorized to sign the
Loan Documents and to make borrowings hereunder, upon
which certificate the Lenders shall be entitled to
rely until informed of any change in writing by the
Borrower;
(iv) A certificate, signed by the chief financial
officer of the Borrower, stating that on the
Effective Date no Default or Unmatured Default has
occurred and is continuing;
(v) A written opinion of the Borrower's counsel,
addressed to the Lenders in form and substance
satisfactory to the Agent in the form attached as
Exhibit B hereto;
(vi) A fully executed copy of the Master Assignment
Agreement; and
(vii) Such other documents as any Lender or its counsel may
have reasonably requested.
4.2. Each Advance and Letter of Credit. The Lenders shall not
be required to make any Advance and the Agent shall not be required to issue any
Letter of Credit, unless on the applicable Borrowing Date, or in the case of a
Letter of Credit, the date on which the Letter of Credit is to be issued:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties
contained in Article V are true and correct as of
such Borrowing Date except for changes, including,
without limitation, changes in the Schedules,
reflecting transactions permitted by this
Agreement.
(iii) All legal matters incident to the making of such
Advance shall be satisfactory to the Lenders and
their counsel.
Each Borrowing Notice with respect to each such Advance and
the letter of credit application with respect to a Letter of Credit shall
constitute a representation and warranty by the Borrower that the conditions
contained in Sections 4.2(i) and (ii) have been satisfied. Any Lender may
require a duly completed compliance certificate in substantially the form of
Exhibit C hereto as a condition to making an Advance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
5.1. Corporate Existence and Standing. Each of the Borrower
and its Restricted Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the
28
<PAGE> 25
laws of its jurisdiction of incorporation and has all requisite authority to
conduct its business in each jurisdiction in which its business is conducted.
5.2. Authorization and Validity. The Borrower has the
corporate power and authority and legal right to execute and deliver the Loan
Documents and to perform its obligations thereunder. The execution and delivery
by the Borrower of the Loan Documents and the performance of its obligations
thereunder have been duly authorized by proper corporate proceedings, and the
Loan Documents constitute legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.
5.3. No Conflict; Government Consent. Neither the execution
and delivery by the Borrower of the Loan Documents, nor the consummation of the
transactions therein contemplated, nor compliance with the provisions thereof
will violate any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on the Borrower or any of its Subsidiaries or the
Borrower's or any Subsidiary's articles of incorporation or by-laws or the
provisions of any indenture, instrument or agreement to which the Borrower or
any of its Subsidiaries is a party or is subject, or by which it, or its
property, is bound, or conflict with or constitute a default thereunder, or
result in the creation or imposition of any Lien in, of or on the property of
the Borrower or a Subsidiary pursuant to the terms of any such indenture,
instrument or agreement other than the Senior Notes. No order, consent,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is required
in connection with the execution, delivery and performance of, or the legality,
validity, binding effect or enforceability of, any of the Loan Documents.
5.4. Financial Statements. The December 31, 1997 financial
statements of the Borrower together with its Form 10-Q for the quarters ended
March 31, 1998, June 30, 1998, and September 30, 1998 heretofore delivered to
the Lenders were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly
present the financial condition and operations of the Borrower and its
Subsidiaries at such dates and the results of their operations for the periods
then ended.
5.5. Material Adverse Change. Since December 31, 1997, there
has been no change in the business, properties, prospects, condition (financial
or otherwise) or results of operations of the Borrower and its Subsidiaries
which could have a Material Adverse Effect.
5.6. Taxes. The Borrower and its Subsidiaries have filed all
United States federal tax returns and all other tax returns which are required
to be filed and have paid all taxes due pursuant to said returns or pursuant to
any assessment received by the Borrower or any of its Subsidiaries, except such
taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided. No tax liens have been filed and no claims are
being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of any
taxes or other governmental charges are adequate.
29
<PAGE> 26
5.7. Litigation and Contingent Obligations. Except as set
forth on Schedule 5.7 hereto, there is no litigation, arbitration, governmental
investigation, proceeding or inquiry pending or, to the knowledge of any of
their officers, threatened against or affecting the Borrower or any of its
Subsidiaries which could have a Material Adverse Effect. Except as otherwise set
forth on Schedule 5.7 hereto, other than any liability incident to such
litigation, arbitration or proceedings, the Borrower has no material contingent
obligations not provided for or disclosed in the financial statements referred
to in Section 5.4.
5.8. Subsidiaries. Schedule 5.8 hereto contains an accurate
list of all of the presently existing Restricted Subsidiaries of the Borrower,
setting forth their respective jurisdictions of incorporation and the percentage
of their respective capital stock owned by the Borrower or other Restricted
Subsidiaries. All of the issued and outstanding shares of capital stock of such
Restricted Subsidiaries have been duly authorized and issued and are fully paid
and non-assessable.
5.9. ERISA. The Unfunded Liabilities of all Single Employer
Plans do not in the aggregate exceed $750,000 as of the date hereof. Neither the
Borrower nor any other member of the Controlled Group has incurred, or is
reasonably expected to incur any withdrawal liability to Multiemployer Plans in
excess of $100,000 in the aggregate. Each Plan complies in all material respects
with all applicable requirements of law and regulations, no Reportable Event has
occurred with respect to any Plan, neither the Borrower nor any other members of
the Controlled Group has withdrawn from any Plan or initiated steps to do so,
and no steps have been taken to reorganize or terminate any Plan.
5.10. Accuracy of Information. No information, exhibit or
report heretofore or hereafter furnished by the Borrower or any of its
Subsidiaries to the Agent, the Collateral Agent or to any Lender in connection
with the negotiation of, or compliance with, the Loan Documents contains any
material misstatement of fact or omits to state a material fact or any fact
necessary to make the statements contained therein not misleading.
5.11. Regulation U. Margin stock (as defined in Regulation U)
constitutes less than 25% of those assets of the Borrower and its Subsidiaries
which are subject to any limitation on sale, pledge, or other restriction
hereunder or under the Collateral Documents.
5.12. Material Agreements. Neither the Borrower nor any
Subsidiary is a party to any agreement or instrument or subject to any charter
or other corporate restriction which could have a Material Adverse Effect.
Neither the Borrower nor any Subsidiary is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in (i) any agreement to which it is a party, which default could have
a Material Adverse Effect or (ii) any agreement or instrument evidencing or
governing Indebtedness.
5.13. Compliance with Laws. The Borrower and its Subsidiaries
have complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof, having jurisdiction over the conduct of their respective
businesses or the ownership of their respective properties, the failure to
comply with which could result in a Material Adverse Effect. Neither the
Borrower nor any Subsidiary has received any notice to the effect that its
operations are not in material compliance with any of the requirements of
applicable federal, state and local environmental, health and safety statutes
30
<PAGE> 27
and regulations or the subject of any federal or state investigation evaluating
whether any remedial action is needed to respond to a release of any toxic or
hazardous waste or substance into the environment, which non-compliance or
remedial action could have a Material Adverse Effect.
5.14. Ownership of Properties. Except as set forth on Schedule
5.14 hereto, on the date of this Agreement, the Borrower and its Subsidiaries
will have good title, free of all Liens other than those permitted by Section
6.15, to all of the properties and assets reflected in the financial statements
as owned by it except for properties disposed of since the date of such
financial statements.
5.15. Investment Company Act. Neither the Borrower nor any
Subsidiary thereof is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
5.16. Public Utility Holding Company Act. Neither the Borrower
nor any Subsidiary is a "holding company" or a "Subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "Subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
5.17. Subordinated Indebtedness. Pursuant to that certain
Consent of and Amendment by the Holders of Senior Subordinated Notes among the
holders of the Senior Subordinated Debt, the Lenders and the Borrower,
$30,000,000 of the Obligations constitute senior indebtedness which is entitled
to the benefits, and subject to the limitations, of the subordination provisions
of the Senior Subordinated Debt and all other outstanding Subordinated
Indebtedness.
5.18. Insurance. The certificate signed by the President or
Chief Financial Officer of the Borrower, that attests to the existence and
adequacy of, and summarizes, the property and casualty insurance program carried
by the Borrower and that has been furnished by the Borrower to the Agent and the
Lenders, is complete and accurate. This summary includes the insurer's or
insurers' name(s), policy number(s), expiration date(s), amount(s) of coverage,
type(s) of coverage, exclusion(s), and deductibles. This summary also includes
similar information, and describes any reserves, relating to any self-insurance
program that is in effect.
5.19. Year 2000 Issues. The Borrower and its Subsidiaries have
made a full and complete assessment of the Year 2000 Issues and have a realistic
and achievable program for remediating the Year 2000 Issues on a timely basis.
Based on such assessment and program, the Borrower does not reasonably
anticipate that Year 2000 Issues are reasonably likely to have a Material
Adverse Effect.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders
shall otherwise consent in writing:
31
<PAGE> 28
6.1. Reporting. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Lenders:
(i) Within ninety (90) days after the close of each of its fiscal
years, an unqualified audit report certified by independent
certified public accountants, acceptable to the Lenders,
prepared in accordance with generally accepted accounting
principles, including consolidated balance sheets as of the
end of such period, related consolidated profit and loss and
reconciliation of surplus statements, and a consolidated
statement of cash flows, accompanied by (a) any management
letter prepared by said accountants, (b) a certificate of
such accountants that, in the course of their examination
necessary for their certification of the foregoing, they have
obtained no knowledge of any Default or Unmatured Default, or
if, in the opinion of such accountants, any Default or
Unmatured Default shall exist, stating the nature and status
thereof and (c) a letter from said accountants addressed to
the Lenders acknowledging that the Lenders are extending
credit in primary reliance on such financial statements and
authorizing such reliance.
(ii) Within twenty-five (25) days after the close of each fiscal
month of each of its fiscal years, unaudited consolidated
balance sheets as at the close of each such period and
consolidated profit and loss and reconciliation of surplus
statements and a consolidated statement of cash flows for the
period from the beginning of such fiscal year to the end of
such fiscal month, all certified by its chief financial
officer.
(iii) As soon as available, but in any event within 30 days after
the beginning of each fiscal year of the Borrower, a copy of
the plan and forecast (including a projected consolidated
balance sheet, income statement and funds flow statement) of
the Borrower for such fiscal year.
(iv) Together with the monthly and annual financial statements
required hereunder, a compliance certificate in substantially
the form of Exhibit C hereto (but without Schedule I thereto)
signed by its chief financial officer stating that no Default
or Unmatured Default exists, or if any Default or Unmatured
Default exists, stating the nature and status thereof.
(v) Within twenty-five (25) days of the close of each of its
fiscal quarters, a compliance certificate in substantially the
form of Exhibit C hereto (including Schedule I thereto) signed
by its chief financial officer showing the calculations
necessary to determine compliance with Section 6.22 of this
Agreement and stating that no Default or Unmatured Default
exists, or if any Default or Unmatured Default exists, stating
the nature and status thereof.
(vi) Within 270 days after the close of each fiscal year, a
statement of the Unfunded Liabilities of each Single Employer
Plan, certified as correct by an actuary enrolled under ERISA.
32
<PAGE> 29
(vii) As soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with
respect to any Plan, a statement, signed by the chief
financial officer of the Borrower, describing said Reportable
Event and the action which the Borrower proposes to take with
respect thereto.
(viii) As soon as possible and in any event within 10 days after
receipt by the Borrower, a copy of (a) any notice or claim to
the effect that the Borrower or any of its Subsidiaries is or
may be liable to any Person as a result of the release by the
Borrower, any of its Subsidiaries, or any other Person of any
toxic or hazardous waste or substance into the environment,
and (b) any notice alleging any violation of any federal,
state or local environmental, health or safety law or
regulation by the Borrower or any of its Subsidiaries, (which,
in either case, could have a Material Adverse Effect).
(ix) Promptly upon the furnishing thereof to the shareholders of
the Borrower, copies of all financial statements, reports and
proxy statements so furnished.
(x) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular
reports which the Borrower or any of its Subsidiaries files
with the Securities and Exchange Commission.
(xi) Such other information (including non-financial information)
as the Agent, the Collateral Agent or any Lender may from time
to time reasonably request.
6.2. Use of Proceeds. The Borrower will use the proceeds of
the Advances to provide funds for the working capital needs of the Borrower and
its Restricted Subsidiaries and other general corporate purposes and to repay
outstanding Revolving Loans. The Borrower will not, nor will it permit any
Subsidiary to, use any of the proceeds of the Revolving Loans to purchase or
carry any "margin stock" (as defined in Regulation U) or to make any Acquisition
unless the target of such Acquisition shall immediately become a Restricted
Subsidiary upon consummation of the transaction.
6.3. Notice of Default. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of the occurrence of
any Default or Unmatured Default and of any other development, financial or
otherwise, which might have a Material Adverse Effect.
6.4. Conduct of Business. The Borrower will, and will cause
each Restricted Subsidiary to, carry on and conduct its business in
substantially the same manner and in substantially the same fields of enterprise
as it is presently conducted and to do all things necessary to remain duly
incorporated, validly existing and in good standing as a domestic corporation in
its jurisdiction of incorporation and maintain all requisite authority to
conduct its business in each jurisdiction in which its business is conducted.
6.5. Taxes. The Borrower will, and will cause each Restricted
Subsidiary to, pay when due all taxes, assessments and governmental charges and
levies upon it or its income, profits or property, except those which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been set aside.
33
<PAGE> 30
6.6. Insurance. The Borrower will, and will cause each
Restricted Subsidiary to, maintain with financially sound and reputable
insurance companies insurance on all their property in such amounts and covering
such risks as is consistent with sound business practice, and the Borrower will
furnish to any Lender upon request full information as to the insurance carried.
6.7. Compliance with Laws. The Borrower will, and will cause
each Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject; provided
that the failure of any Unrestricted Subsidiary to comply with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject shall not constitute a breach of this Section 6.7 unless such
failure to comply is likely to have a Material Adverse Effect.
6.8. Maintenance of Properties. The Borrower will, and will
cause each Restricted Subsidiary to, do all things necessary to maintain,
preserve, protect and keep its properties in good repair, working order and
condition, and make all necessary and proper repairs, renewals and replacements
so that its business carried on in connection therewith may be properly
conducted at all times.
6.9. Inspection. The Borrower will, and will cause each
Subsidiary to, permit the Lenders, by their respective representatives and
agents, to inspect any of the properties, corporate books and financial records
of the Borrower and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each Subsidiary, and to
discuss the affairs, finances and accounts of the Borrower and each Subsidiary
with, and to be advised as to the same by, their respective officers at such
reasonable times and intervals as the Lenders may designate.
6.10. Merger. The Borrower will not, nor will it permit any
Subsidiary to, merge or consolidate with or into any other Person, except (i)
that a Subsidiary may merge with and into the Borrower, and (ii) that a
Subsidiary may merge with a Restricted Subsidiary (provided, that the survivor
of any such merger is also a Restricted Subsidiary).
6.11. Sale of Assets.
(A) Sale of Property. The Borrower will not, nor will it
permit any Restricted Subsidiary to, lease, sell or otherwise dispose of all, or
a substantial portion of, its property, assets or business to any other Person
except for sales of inventory in the ordinary course of business. For purposes
of this Section, "substantial portion" means assets that, together with all
other assets of the Borrower and its Restricted Subsidiaries previously disposed
of (other than inventory in the ordinary course of business) as permitted by
this Section during the twelve-month period ending with the month in which any
such lease, sale or other disposition occurs, (i) represent more than 10% of the
consolidated assets of the Borrower and its Subsidiaries as would be shown in
the consolidated financial statements of the Borrower and its Subsidiaries as at
the beginning of such twelve-month period, or (ii) are responsible for more than
10% of the consolidated net sales or of the consolidated net income of the
Borrower and its Subsidiaries as reflected in the financial statements referred
to in clause (i) above.
34
<PAGE> 31
(B) Sale of Accounts. The Borrower will not, nor will it
permit any Restricted Subsidiary to, sell or otherwise dispose of any notes
receivable or accounts receivable, with or without recourse.
6.12. Sale and Leaseback. The Borrower may, and may permit any
Restricted Subsidiary to, sell or transfer any property, in an aggregate amount
not to exceed $5,000,000, in order to concurrently or subsequently lease as
lessee such or similar property.
6.13. Investments and Acquisitions. The Borrower will not, nor
will it permit any Restricted Subsidiary to, make or suffer to exist any
Investments (including, without limitation, loans and advances to, and other
Investments in, Subsidiaries), or commitments therefor, or to create any
Subsidiary or to become or remain a partner in any partnership or joint venture,
or to make any Acquisition of any Person, except:
(i) Short-term obligations of, or fully guaranteed by,
the United States of America.
(ii) Commercial paper rated A-1 or better by Standard and
Poor's Rating Services or P-1 or better by Moody's
Investors Service, Inc.
(iii) Demand deposit accounts maintained in the ordinary
course of business.
(iv) Certificates of deposit issued by and time deposits
with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000.
(v) Other Investments in existence on the date hereof and
described in Schedule 6.13 hereto.
(vi) Investments (other than Investments referred to in
(v) above) (a) in Unrestricted Subsidiaries or any
other Persons in which the Borrower or its Restricted
Subsidiary has a joint venture interest not to exceed
in the aggregate for all such Investments under this
clause (vi)(a) $4,000,000 at any time and (b) in
Restricted Subsidiaries.
(vii) Loans to the Borrower's or a Restricted Subsidiary's
employees not to exceed $500,000 in the aggregate
outstanding for all such employees at any time (other
than advances to employees for travel and
entertainment purposes).
(viii) Acquisitions consummated pursuant to negotiated
acquisition agreements on a non-hostile basis.
6.14. Contingent Obligations. The Borrower will not, nor
will it permit any Subsidiary to, make or suffer to exist any Contingent
Obligation (including, without limitation, any Contingent Obligation with
respect to the obligations of a Subsidiary), except (a) by endorsement of
instruments for deposit or collection in the ordinary course of business and (b)
Contingent Obligations incurred in connection with the guarantee of or issuance
of any comfort
35
<PAGE> 32
letters in connection with the debt of any Restricted Subsidiary by
Jason or any other Restricted Subsidiary.
6.15. Liens. The Borrower will not, nor will it permit any
Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the
property of the Borrower or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or levies
on its property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings
and for which adequate reserves in accordance with generally
accepted principles of accounting shall have been set aside on
its books.
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the
ordinary course of business which secure payment of
obligations not more than 60 days past due or which are being
contested in good faith by appropriate proceedings and for
which adequate reserves shall have been set aside on its
books.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions,
or other social security or retirement benefits, or similar
legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a
nature generally existing with respect to properties of a
similar character and which do not in any material way affect
the marketability of the same or interfere with the use
thereof in the business of the Borrower or the Subsidiaries.
(v) Liens existing on the date hereof and described in Schedule
6.15 hereto.
(vi) Liens in favor of the Collateral Agent granted pursuant to any
Loan Document.
(vii) Liens securing Permitted Purchase Money Indebtedness with
respect to assets purchased with the proceeds of such
Permitted Purchase Money Indebtedness.
6.16. Landlord Consents and Waiver. With respect to each lease
of premises entered into after the date hereof, the Borrower shall deliver to
the Collateral Agent a landlord waiver, in form and substance acceptable to the
Collateral Agent, executed by the Borrower and the lessor of such premises.
6.17. Rentals. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist obligations for Rentals in
excess of $10,000,000 during any one fiscal year in the aggregate for the
Borrower and its Subsidiaries.
6.18. Letters of Credit. The Borrower will not, nor will it
permit any Restricted Subsidiary to, apply for or become liable upon any letter
of credit other than the Letters of Credit.
36
<PAGE> 33
6.19. Affiliates. The Borrower will not, and will not permit
any Subsidiary to, enter into any transaction (including, without limitation,
the purchase or sale of any property or service) with, or make any payment or
transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary than the Borrower or such Subsidiary would obtain in a
comparable arm's-length transaction.
6.20. Subordinated Indebtedness. The Borrower will not, and
will not permit any Subsidiary to, make any amendment or modification to the
indenture, note or other agreement evidencing or governing any Subordinated
Indebtedness, or directly or indirectly voluntarily prepay, defease or in
substance defease, purchase, redeem, retire or otherwise acquire, any
Subordinated Indebtedness (except as permitted under Section 6.21(iii)).
6.21. Prepayments on Indebtedness. Borrower will not make any
prepayment with respect to Indebtedness (whether by set off or otherwise) other
than (i) the Obligations, (ii) prepayments of amounts outstanding under the
Senior Note Agreements; provided that no Default or Unmatured Default shall have
occurred and be continuing at the date of such payment or would result therefrom
and (iii) required prepayments as set forth in Section 2.1 of the Subordinated
Note Agreements as in effect as of the date hereof, subject to compliance with
the provisions contained in Section 8.1 thereof.
6.22. Financial Covenants. The Borrower will not:
(A) Interest Coverage Ratio. Permit the Interest Coverage
Ratio, calculated on the basis of the immediately preceding four fiscal quarters
of Borrower to be less than 2.25 to 1.0.
(B) Minimum Net Worth. Permit its Net Worth, at any time, to
be less than the sum of (a) $110,000,000 and (b) seventy percent (70%) of
Borrower's net income (with no adjustment for any net losses but with an
adjustment for any stock repurchases, provided that the aggregate amount of
adjustments for all such capital stock repurchases may not exceed $20,000,000)
for the period beginning with January 1, 1999 through and including the last day
of the immediately preceding fiscal quarter.
(C) Leverage Ratio. Permit the Leverage Ratio at any time,
from and after the date hereof until the Termination Date, to be greater than
1.35 to 1.00.
(D) Calculation of Financial Covenants. The financial
covenants set forth in this Section 6.22 shall be calculated on a consolidated
basis including the Borrower and all of its Subsidiaries.
6.23 Year 2000. The Borrower will and will cause each of its
Subsidiaries to take all actions reasonably necessary to assure that the Year
2000 Issues will not have a Material Adverse Effect. Upon the Agent's or any
Lender's request, the Borrower will provide Lender a description of the Year
2000 program of the Borrower and its Subsidiaries, including updates and
progress reports. Borrower will advise the Agent of any reasonably anticipated
Material Adverse Effect as a result of Year 2000 Issues.
37
<PAGE> 34
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events
shall constitute a Default:
7.1. Any representation or warranty made or deemed made by or
on behalf of the Borrower or any of its Subsidiaries to the Lenders, the Agent
or the Collateral Agent under or in connection with this Agreement, any
Revolving Loan, or any certificate or information delivered in connection with
this Agreement or any other Loan Document shall be materially false on the date
as of which made.
7.2. Nonpayment of principal of any Note when due, nonpayment
of any Reimbursement Obligations when due, or nonpayment of interest upon any
Note or of any commitment fee, letter of credit fee or other obligations under
any of the Loan Documents within five days after the same becomes due.
7.3. The breach by the Borrower of any of the terms or
provisions of Article VI.
7.4. The breach by the Borrower (other than a breach which
constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the terms or
provisions of this Agreement which is not remedied within thirty (30) days after
the earlier to occur of written notice from the Agent or any Lender thereof or
the date on which Borrower knew or should have known of the breach.
7.5. Failure of the Borrower or any of its Subsidiaries to pay
any Indebtedness when due; or the default by the Borrower or any of its
Subsidiaries in the performance of any term, provision or condition contained in
any agreement under which any Indebtedness was created or is governed, or any
other event shall occur or condition exist, the effect of which is to cause, or
to permit the holder or holders of such Indebtedness to cause, such Indebtedness
to become due prior to its stated maturity; or any Indebtedness of the Borrower
or any of its Subsidiaries shall be declared to be due and payable or required
to be prepaid (other than by a regularly scheduled payment) prior to the stated
maturity thereof.
7.6. The Borrower or any of its Subsidiaries shall (i) have an
order for relief entered with respect to it under the Federal bankruptcy laws as
now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any substantial part of its property, (iv) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an
answer or other pleading denying the material allegations of any such proceeding
filed against it, (v) take any corporate action to authorize or effect any of
the foregoing actions set forth in this Section 7.6, (vi) fail to contest in
good faith any appointment or proceeding described in Section 7.7, or (vii) not
pay, or admit in writing its inability to pay, its debts generally as they
become due.
38
<PAGE> 35
7.7. Without the application, approval or consent of the
Borrower or any of its Subsidiaries, a receiver, trustee, examiner, liquidator
or similar official shall be appointed for the Borrower or any of its
Subsidiaries or any substantial part of its property, or a proceeding described
in Section 7.6(iv) shall be instituted against the Borrower or any of its
Subsidiaries and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 30 consecutive days.
7.8. Any court, government or governmental agency shall
condemn, seize or otherwise appropriate, or take custody or control of all or
any substantial portion (as defined in Section 6.11) of the property of the
Borrower or any of its Subsidiaries.
7.9. The Borrower or any of its Subsidiaries shall fail within
30 days to pay, bond or otherwise discharge any judgment or order for the
payment of money in excess of $250,000, which is not stayed on appeal or
otherwise being appropriately contested in good faith.
7.10. The Unfunded Liabilities of all Single Employer Plans
shall exceed in the aggregate $750,000 or any Reportable Event shall occur in
connection with any Plan.
7.11. The Borrower or any other member of the Controlled Group
shall have been notified by the sponsor of a Multiemployer Plan that it has
incurred withdrawal liability to such Multiemployer Plan in an amount which,
when aggregated with all other amounts required to be paid to Multiemployer
Plans by the Borrower or any other member of the Controlled Group as withdrawal
liability (determined as of the date of such notification), exceeds $100,000 or
requires payments exceeding $50,000 per annum.
7.12. The Borrower or any other member of the Controlled group
shall have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plans is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, if as a result of such reorganization or
termination the aggregate annual contributions of the Borrower and the other
members of the Controlled Group (taken as a whole) to all Multiemployer Plans
which are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
respective plan years of each such Multiemployer Plan immediately preceding the
plan year in which the reorganization or termination occurs by an amount
exceeding $100,000.
7.13. The Borrower or any of its Subsidiaries shall be the
subject of any proceeding or investigation pertaining to the release by the
Borrower or any of its Subsidiaries, or any other Person of any toxic or
hazardous waste or substance into the environment, or any violation of any
federal, state or local environmental, health or safety law or regulation, which
in either case, could have a Material Adverse Effect.
7.14. Any Change in Control shall occur.
7.15. The occurrence of any "default", as defined in any Loan
Document (other than this Agreement or the Notes) or the breach of any of the
terms or provisions of any Loan Document (other than this Agreement or the
Notes), which default or breach continues beyond any period of grace therein
provided.
39
<PAGE> 36
7.16. (i) Nonpayment by the Borrower of any obligation under
any Hedging Agreement with any Lender or (ii) the breach by the Borrower of any
term, provision or condition contained in any such Hedging Agreement, which
breach continues beyond any period of grace therein provided.
7.17. A Material Adverse Change shall occur in the business
condition (financial or otherwise), operations, performance, properties or
prospects of Borrower.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. Acceleration. If any Default described in Section 7.6 or
7.7 occurs with respect to the Borrower, the obligations of the Lenders to make
Revolving Loans hereunder and the obligation of the Agent to issue Letters of
Credit shall automatically terminate and the Obligations shall immediately
become due and payable without any election or action on the part of the Agent
or any Lender. If any other Default occurs, the Required Lenders may terminate
or suspend the obligations of the Lenders to make Revolving Loans hereunder and
the obligation of the Agent to issue Letters of Credit hereunder, or declare the
Obligations to be due and payable, or both, whereupon the Obligations shall
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which the Borrower hereby expressly waives.
If, within 30 days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Revolving
Loans hereunder as a result of any Default (other than any Default as described
in Section 7.6 or 7.7 with respect to the Borrower) and before any judgment or
decree for the payment of the Obligations due shall have been obtained or
entered, the Required Lenders (in their sole discretion) shall so direct, the
Agent shall, by notice to the Borrower, rescind and annul such acceleration
and/or termination.
8.2. Amendments. Subject to the provisions of this Article
VIII, the Required Lenders (or the Agent with the consent in writing of the
Required Lenders) and the Borrower may enter into agreements supplemental hereto
for the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrower hereunder or
waiving any Default hereunder; provided, however, that no such supplemental
agreement shall, without the consent of each Lender:
(i) Extend the maturity of any Revolving Loan or Note or
reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest or
fees thereon.
(ii) Modify the percentage specified in the definition of
Required Lenders.
(iii) Extend the Termination Date, or reduce the amount or
extend the payment date for, the mandatory payments
required under Section 2.5, or increase the amount of
the Commitment of any Lender hereunder, or permit the
Borrower to assign its rights under this Agreement.
(iv) Amend this Section 8.2.
40
<PAGE> 37
(v) Release Collateral (as defined in the Collateral
Documents, respectively) constituting 50% or more of
the consolidated assets of the Borrower.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under Section 12.3.2 without obtaining the consent of any of
the Lenders.
8.3. Preservation of Rights. No delay or omission of the
Lenders, the Agent or the Collateral Agent to exercise any right under the Loan
Documents shall impair such right or be construed to be a waiver of any Default
or an acquiescence therein, and the making of a Revolving Loan or the issuance
of a Letter of Credit notwithstanding the existence of a Default or the
inability of the Borrower to satisfy the conditions precedent to such Revolving
Loan or issue such Letter of Credit shall not constitute any waiver or
acquiescence. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by the Lenders required pursuant to Section 8.2, and then only to the
extent in such writing specifically set forth. All remedies contained in the
Loan Documents or by law afforded shall be cumulative and all shall be available
to the Agent, the Collateral Agent and the Lenders until the Obligations have
been paid in full.
ARTICLE IX
GENERAL PROVISIONS
9.1. Survival of Representations. All representations and
warranties of the Borrower contained in this Agreement shall survive delivery of
the Notes and the making of the Revolving Loans herein contemplated.
9.2. Governmental Regulation. Anything contained in this
Agreement to the contrary notwithstanding, no Lender shall be obligated to
extend credit to the Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.
9.3. Taxes. Any taxes (excluding federal income taxes on the
overall net income of any Lender) or other similar assessments or charges
payable or ruled payable by any governmental authority in respect of the Loan
Documents shall be paid by the Borrower, together with interest and penalties,
if any.
9.4. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
9.5. Entire Agreement. The Loan Documents embody the entire
agreement and understanding among the Borrower, the Agent, the Collateral Agent
and the Lenders and supersede all prior agreements and understandings among the
Borrower, the Agent, the Collateral Agent and the Lenders relating to the
subject matter thereof.
41
<PAGE> 38
9.6. Several Obligations; Benefits of this Agreement. The
respective obligations of the Lenders hereunder are several and not joint and no
Lender shall be the partner or agent of any other (except to the extent to which
the Agent is authorized to act as such). The failure of any Lender to perform
any of its obligations hereunder shall not relieve any other Lender from any of
its obligations hereunder. In addition to expenses set forth above, the Borrower
agrees to reimburse the Agent, promptly after the Agent's request therefor, for
each audit, collateral analysis or other business analysis performed by or for
the benefit of the Lenders, the Agent or the Collateral Agent in connection with
this Agreement or the other Loan Documents in an amount equal to $400.00 per day
for each person employed to perform such audit or analysis, plus all costs and
expenses (including without limitation, travel expenses) incurred by the Agent
in the performance of such audit or analysis. This Agreement shall not be
construed so as to confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and assigns.
9.7. Expenses; Indemnification. The Borrower shall reimburse
the Agent for any costs, internal charges and out-of-pocket expenses (including
attorneys' fees and time charges of attorneys for the Agent, which attorneys may
be employees of the Agent, paid or incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, review, amendment, modification,
and administration of the Loan Documents. The Borrower also agrees to reimburse
the Agent, the Collateral Agent and the Lenders for any costs, internal charges
and out-of-pocket expenses (including attorneys' fees and time charges of
attorneys for the Agent, the Collateral Agent and the Lenders, which attorneys
may be employees of the Agent, the Collateral Agent or the Lenders) paid or
incurred by the Agent, the Collateral Agent or any Lender in connection with the
collection and enforcement of the Loan Documents. The Borrower further agrees to
indemnify the Agent, the Collateral Agent and each Lender, its directors,
officers and employees against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor whether or not the Agent, the Collateral
Agent or any Lender is a party thereto) which any of them may pay or incur
arising out of or relating to this Agreement, the other Loan Documents, the
transactions contemplated hereby or the direct or indirect application or
proposed application of the proceeds of any Revolving Loan hereunder. The
obligations of the Borrower under this Section shall survive the termination of
this Agreement. In addition to expenses set forth above, the Borrower agrees to
reimburse the Agent, promptly after the Agent request therefor, for each audit,
collateral analysis or other business analysis performed by or for the benefit
of the Lenders and the Agent in connection with this Agreement in an amount
equal to $400.00 per day for each person employed to perform such audit or
analysis, plus all costs and expenses (including, without limitation, travel
expenses) incurred by the Agent in the performance of such audit or analysis.
9.8. Numbers of Documents. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Agent with
sufficient counterparts so that the Agent may furnish one to each of the
Lenders.
9.9. Accounting. Except as provided to the contrary herein,
all accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
42
<PAGE> 39
9.10. Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
9.11. Nonliability of Lenders. The relationship between the
Borrower and the Lenders and the Agent shall be solely that of borrower and
lender. Neither the Agent nor any Lender shall have any fiduciary
responsibilities to the Borrower. Neither the Agent nor any Lender undertakes
any responsibility to the Borrower to review or inform the Borrower of any
matter in connection with any phase of the Borrower's business or operations.
9.12. GOVERNING LAW. THE AGENT HEREBY ACCEPTS THIS AGREEMENT,
ON BEHALF OF ITSELF AND THE LENDERS, AT CHICAGO, ILLINOIS BY ACKNOWLEDGING AND
AGREEING TO IT THERE. ANY DISPUTE BETWEEN THE BORROWER AND THE AGENT, THE
COLLATERAL AGENT, ANY LENDER, OR ANY OTHER HOLDER OF SECURED OBLIGATIONS ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE,
SHALL BE RESOLVED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
9.13. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY
TRIAL.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION
(B), EACH OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED
EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, BUT THE
PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. EACH OF THE PARTIES
HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. BORROWER AGREES THAT THE AGENT, THE
COLLATERAL AGENT, ANY LENDER OR ANY HOLDER OF SECURED OBLIGATIONS SHALL HAVE THE
RIGHT TO PROCEED AGAINST BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION TO
ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER THE BORROWER OR (2)
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS OR
TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON.
BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY
PROCEEDING BROUGHT BY SUCH PERSON TO REALIZE
43
<PAGE> 40
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH PERSON. BORROWER WAIVES
ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON
HAS COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION.
(C) SERVICE OF PROCESS. BORROWER WAIVES PERSONAL SERVICE OF
ANY PROCESS UPON IT AND, AS ADDITIONAL SECURITY FOR THE OBLIGATIONS, IRREVOCABLY
APPOINTS CT CORPORATION SYSTEM, BORROWER'S REGISTERED AGENT, WHOSE ADDRESS IS
208 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60604, AS BORROWER'S AGENT FOR THE
PURPOSE OF ACCEPTING SERVICE OF PROCESS ISSUED BY ANY COURT. BORROWER
IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN ANY JURISDICTION SET FORTH
ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES
HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
(E) WAIVER OF BOND. BORROWER WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS
OR PROCEEDING TO REALIZE ON THE COLLATERAL (INCLUDING, WITHOUT LIMITATION, REAL
PROPERTY COLLATERAL) OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS OR TO
ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PARTY, OR TO
ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER, PRELIMINARY OR
PERMANENT INJUNCTION, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
(F) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH
OTHER PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF THIS SECTION 9.13, WITH ITS COUNSEL.
44
<PAGE> 41
9.14. Restatement of Original Credit Agreement. Effective as
of the Effective Date, this Agreement amends and restates the Original Credit
Agreement in its entirety. It is the intent of the parties hereto that this
Agreement not constitute a novation, that this Agreement replace in its entirety
the Original Credit Agreement, and that from and after the Effective Date the
Original Credit Agreement be of no further force or effect. Upon and as of the
Effective Date, each Lender shall have a Commitment in the amount set forth
opposite its name on the signature pages hereof, and the "Commitments" of the
Original Lenders under the Original Credit Agreement shall automatically
terminate. Upon and as of the Effective Date, the Borrower hereby reaffirms its
obligations under the Collateral Documents (as such term is defined in the
Original Credit Agreement) executed in connection with the Original Credit
Agreement.
ARTICLE X
THE AGENT
10.1. Appointment; Nature of Relationship. The First National
Bank of Chicago is hereby appointed Agent hereunder and under each other Loan
Document, and each of the Lenders irrevocably authorizes the Agent to act as the
contractual representative of such Lender with only the rights and duties
expressly set forth herein and in the other Loan Documents. The Agent agrees to
act as such upon the express conditions contained in this Article X. It is
expressly understood the Agent shall not have either a fiduciary relationship or
any fiduciary responsibilities in respect of any Lender by reason of this
Agreement. In its capacity as the Lenders' contractual representative, the Agent
(i) does not assume any fiduciary duties to any of the Lenders, (ii) is a
"representative" of the Lenders within the meaning of Section 9-105 of the
Uniform Commercial Code and (iii) is acting as an independent contractor, the
rights and duties of which are limited to those expressly set forth in this
Agreement and the other Loan Documents. Each of the Lenders agrees to assert no
claim against the Agent on any agency theory or any other theory of liability
for breach of fiduciary duty, all of which claims each Lender waives.
10.2. Powers. The Agent and the Collateral Agent shall have
and may exercise such powers under the Loan Documents as are specifically
delegated to the Agent or the Collateral Agent, as applicable, by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
Each of the Agent and the Collateral Agent shall have no implied duties or
fiduciary duties to the Lenders, or any obligation to the Lenders to take any
action under the Loan Documents except in the case of the Collateral Agent or
the Agent as to any action specifically provided by the Loan Documents to be
taken by the Agent or the Collateral Agent, as applicable.
10.3. General Immunity. Neither the Agent, the Collateral
Agent nor any of their respective directors, officers, agents or employees shall
be liable to the Borrower, the Lenders or any Lender for any action taken or
omitted to be taken by it or them hereunder or under any other Loan Document or
in connection herewith or therewith except, in the case of the Agent, to the
extent such action or inaction is found in a final judgment by a court of
competent jurisdiction to have arisen solely from the gross negligence or
willful misconduct of such Person.
45
<PAGE> 42
10.4. No Responsibility for Loans, Recitals, etc. Neither the
Agent, the Collateral Agent nor any of their respective directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into, or verify (i) any statement, warranty or representation made in
connection with any Loan Document or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of any obligor
under any Loan Document; (iii) the satisfaction of any condition specified in
Article IV, except receipt of items required to be delivered to the Agent; or
(iv) the validity, effectiveness or genuineness of any Loan Document or any
other instrument or writing furnished in connection therewith. The Agent shall
not be responsible to any Lender for any recitals, statements, representations
or warranties herein or in any other Loan Documents, for the perfection or
priority of any of any of the Liens on any of the Collateral, or for the
execution, effectiveness, genuineness, validity, legality, enforceability,
collectible, or sufficiency of this Agreement or any of the other Loan Documents
or the transactions contemplated thereby, or for the financial condition of any
guarantor of any and all Obligations, the Borrower or any of its Subsidiaries.
10.5. Action on Instructions of Lenders. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
and under any other Loan Document in accordance with written instructions signed
by the Required Lenders, and such instructions and any action taken or failure
to act pursuant thereto shall be binding on all of the Lenders and on all
holders of Notes. The Agent shall be fully justified in failing or refusing to
take any action hereunder and under any other Loan Document unless it shall
first be indemnified to its satisfaction by the Lenders pro rata against any and
all liability, cost and expense that it may incur by reason of taking or
continuing to take any such action.
10.6. Employment of Agents and Counsel. The Agent may execute
any of its duties as Agent hereunder and under any other Loan Document by or
through employees, agents, and attorneys-in-fact and shall not be answerable to
the Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
10.7. Reliance on Documents; Counsel. The Agent shall be
entitled to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and, in respect
to legal matters, upon the opinion of counsel selected by the Agent, which
counsel may be employees of the Agent.
10.8. Agent's Reimbursement and Indemnification. The Lenders
agree to reimburse and indemnify the Agent and the Collateral Agent ratably in
proportion to their respective Commitment (i) for any amounts not reimbursed by
the Borrower for which the Agent or the Collateral Agent is entitled to
reimbursement by the Borrower under the Loan Documents, (ii) for any other
expenses incurred by the Agent or the Collateral Agent on behalf of the Lenders,
in connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents and (iii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent or the Collateral Agent in any way
relating to or arising out of the Loan Documents or any other document delivered
in
46
<PAGE> 43
connection therewith or the transactions contemplated thereby, or the
enforcement of any of the terms thereof or of any such other documents, provided
that no Lender shall be liable for any of the foregoing to the extent any of the
foregoing is found in a final judgment by a court of competent jurisdiction to
have arisen solely from the gross negligence or willful misconduct of the Agent
or the Collateral Agent, as the case may be.
10.9. Rights as a Lender. With respect to its Commitment,
Revolving Loans made by it and the Notes issued to it, the Agent shall have the
same rights and powers hereunder and under any other Loan Document as any Lender
and may exercise the same as though they were not the Agent as the case may be,
and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent may accept
deposits from, lend money to, and generally engage in any kind of trust, debt,
equity or other transaction, in addition to those contemplated by this Agreement
or any other Loan Document, with the Borrower or any of its Subsidiaries in
which the Borrower or such Subsidiary is not restricted hereby from engaging
with any other Person.
10.10. Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon the Agent, the Collateral Agent,
any Original Lender or any other Lender and based on the financial statements
prepared by the Borrower and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and the other Loan Documents. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent, the Collateral Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents.
10.11. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower, and the Agent may
be removed at any time with or without cause by written notice received by the
Agent from the Required Lenders. Upon any such resignation or removal of the
Agent, the Required Lenders shall have the right to appoint, on behalf of the
Borrower and the Lenders, a successor Agent. If no successor Agent shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within thirty days after the retiring Agent's giving notice of
resignation, then the retiring Agent may appoint, on behalf of the Borrower and
the Lenders, a successor Agent. Such successor Agent shall be a commercial bank
having capital and retained earnings of at least $50,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents. After the Agent's resignation or removal, the
provisions of this Article X shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as the
Agent hereunder and under the other Loan Documents.
10.12. Intercreditor Agreement. (A) Each Lender hereby
authorizes the Agent to execute an amendment to the Intercreditor Agreement to
the extent necessary in connection with this Agreement, on behalf of and for the
benefit of such Lender, and each Lender agrees to be bound by the terms of the
Intercreditor Agreement as so amended. Each Lender hereby authorizes the
Collateral Agent to enter into (or amend, as applicable) each of the Collateral
47
<PAGE> 44
Documents to which it is a party and to take all action contemplated by such
documents. The Agent shall not enter into or consent to any further amendment,
modification, termination or waiver of any provision contained in the
Intercreditor Agreement without the prior consent of the Required Lenders. Each
Lender agrees that no Lender shall have the right individually to seek to
realize upon the security granted by any Collateral Document, it being
understood and agreed that such rights and remedies may be exercised solely by
the Collateral Agent for the benefit of the Benefited Parties upon the terms of
the Intercreditor Agreement and the Collateral Documents.
(B) The Agent shall not give any direction to the Collateral
Agent (other than with respect to arrangements for the delivery of Net Cash
Proceeds of Assets Sales as provided in Subsections 17(b)(i) and (ii) of the
Intercreditor Agreement in its capacity as Agent hereunder, unless such
direction has been approved by the requisite parties in the accordance with the
terms of the Intercreditor Agreement; provided that any such direction approved
or rejected by the Required Lenders shall be given on behalf of all of the
Lenders.
10.13. Release of Collateral. Upon the effectiveness of this
Agreement, the Lenders hereby authorize the Collateral Agent to release any Lien
granted to or held by the Collateral Agent upon the capital stock of Power
Brushes Ltd. Upon request by the Collateral Agent at any time, the Lenders will
confirm in writing the Collateral Agent's authority to release the aforesaid
Collateral pursuant to this Section 10.13. The Borrower understands that,
notwithstanding the foregoing, the Borrower shall not be entitled to any such
release from the Collateral Agent until such time as the Collateral Agent
receives the necessary consent from the "Applicable Requisite Directing Parties"
(as defined in the Intercreditor Agreement).
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. Setoff. In addition to, and without limitation of, any
rights of the Lenders under applicable law, if the Borrower becomes insolvent,
however evidenced, or any Default or Unmatured Default occurs, any indebtedness
from any Lender to the Borrower (including all account balances, whether
provisional or final and whether or not collected or available) may be offset
and applied toward the payment of the Obligations owing to such Lender, whether
or not the Obligations, or any part hereof, shall then be due.
11.2. Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Obligations (other than payments
received pursuant to Sections 3.1 or 3.4) in a greater proportion than that
received by any other Lender, such Lender agrees, promptly upon demand, to
purchase a portion of the Obligations held by the other Lenders so that after
such purchase each Lender will hold its ratable proportion of Obligations. If
any Lender, whether in connection with setoff or amounts which might be subject
to setoff or otherwise, receives collateral or other protection for its
Obligation or such amounts which may be subject to setoff, such Lender agrees,
promptly upon demand, to take such action necessary such that all Lenders share
in the benefits of such collateral ratably in proportion to the Obligations
owing to them. In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made.
48
<PAGE> 45
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. Successors and Assigns. The terms and provisions of the
Loan Documents shall be binding upon and inure to the benefit of the Borrower
and the Lenders and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents and (ii) any assignment by any Lender must be made in compliance
with Section 12.3 hereof. Notwithstanding clause (ii) of this Section, any
Lender may at any time, without the consent of the Borrower or the Agent, assign
all or any portion of its rights under this Agreement and its Notes to a Federal
Reserve Bank; provided, however, that no such assignment shall release the
transferor Lender from its obligations hereunder. The Agent may treat the payee
of any Note as the owner thereof for all purposes hereof unless and until such
payee complies with Section 12.3 hereof in the case of an assignment thereof or,
in the case of any other transfer, a written notice of the transfer is filed
with the Agent. Any assignee or transferee of a Note agrees by acceptance
thereof to be bound by all the terms and provisions of the Loan Documents. Any
request, authority or consent of any Person, who at the time of making such
request or giving such authority or consent is the holder of any Note, shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
12.2. Participations.
12.2.1. Permitted Participants; Effect. Any Lender
may, in the ordinary course of its business and in accordance
with applicable law, at any time sell to one or more banks or
other entities ("Participants") participating interests in any
Revolving Loan owing to such Lender, any Note held by such
Lender, any Commitment of such Lender, any L/C Interest of
such Lender or any other interest of such Lender under the
Loan Documents on a pro-rata or non pro-rata basis. In the
event of any such sale by a Lender of participating interests
to a Participant, such Lender's obligations under the Loan
Documents shall remain unchanged, such Lender shall remain
solely responsible to the other parties hereto for the
performance of such obligations, such Lender shall remain the
holder of any such Note for all purposes under the Loan
Documents, all amounts payable by the Borrower under this
Agreement shall be determined as if such Lender had not sold
such participating interests, and the Borrower and the Agent
shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under the
Loan Documents except that, for purposes of Article III
hereof, the Participants shall be entitled to the same rights
as if they were Lenders.
12.2.2. Voting Rights. Each Lender shall retain the
sole right to approve, without the consent of any Participant,
any amendment, modification or waiver of any provision of the
Loan Documents other than any amendment, modification or
waiver with respect to any Revolving Loan or Commitment in
which such Participant has an interest which forgives
principal, interest or fees or reduces the interest rate or
fees payable pursuant to the terms of this Agreement with
respect to any such Revolving Loan or Commitment, postpones
any date fixed for any
49
<PAGE> 46
regularly-scheduled payment of principal of, or interest or
fees on, any such Revolving Loan or Commitment, releases any
guarantor of any such Loan or releases any substantial portion
of collateral, if any, securing any such Revolving Loan.
12.2.3. Benefit of Setoff. The Borrower agrees that
each Participant shall be deemed to have the right of setoff
provided in Section 11.1 hereof with respect to its
participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender
under the Loan Documents, provided that each Lender shall
retain the right of setoff provided in Section 11.1 hereof
with respect to the amount of participating interests sold to
each Participant. The Lenders agree to share with each
Participant, and each Participant, by exercising the right of
setoff provided in Section 11.1 hereof, agrees to share with
each Lender, any amount received pursuant to the exercise of
its right of setoff, such amounts to be shared in accordance
with Section 11.2 as if each Participant were a Lender.
12.3. Assignments.
12.3.1. Permitted Assignments. Any Lender may, in the
ordinary course of its business and in accordance with
applicable law, at any time assign to one or more banks or
other entities ("Purchasers") all or any part of its rights
and obligations under the Loan Documents on a pro-rata or non
pro-rata basis. Such assignment shall be substantially in the
form of Exhibit D hereto and shall not be permitted hereunder
unless such assignment is either for all of such Lender's
rights and obligations under the Loan Documents or involves
loans and commitments in an aggregate amount of at least
$5,000,000.
12.3.2. Effect; Effective Date. Upon (i) delivery to
the Agent of a notice of assignment, substantially in the form
attached as Exhibit I to Exhibit D hereto (a "Notice of
Assignment") and (ii) payment of a $3,500 fee to the Agent for
processing such assignment, such assignment shall become
effective on the effective date specified in such Notice of
Assignment. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender
party to this Agreement and any other Loan Documents executed
by the Lenders and shall have all the rights and obligations
of a Lender under the Loan Documents, to the same extent as if
it were an original party hereto, and no further consent or
action by the Borrower, the Lenders or the Agent shall be
required to release the transferor Lender with respect to the
percentage of the Aggregate Commitment and Revolving Loans
assigned to such Purchaser. Upon the consummation of any
assignment to a Purchaser pursuant to this Section 12.3.2, the
transferor Lender, the Agent and the Borrower shall make
appropriate arrangements so that replacement Notes are issued
to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case
in principal amounts reflecting their Commitment, as adjusted
pursuant to such assignment.
50
<PAGE> 47
12.4. Dissemination of Information. The Borrower authorizes
each Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in such
Lender's possession concerning the creditworthiness of the Borrower and its
Subsidiaries.
ARTICLE XIII
NOTICES
13.1. Giving Notice. Except as otherwise permitted by Section
2.12 with respect to borrowing notices, all notices and other communications
provided to any party hereto under this Agreement or any other Loan Documents
shall be in writing or by telex or by facsimile and addressed or delivered to
such party at its address set forth below its signature hereto or at such other
address as may be designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid, shall be deemed
given when received; any notice, if transmitted by telex or facsimile, shall be
deemed given when transmitted (answerback confirmed in the case of telexes).
13.2. Change of Address. The Borrower, the Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one agreement, and any of the
parties hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrower, the
Agent, the Lenders, and each party has notified the Agent by telex or telephone,
that it has taken such action.
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent
have executed this Agreement as of the date first above written.
JASON INCORPORATED
By:
----------------------------
Mark Train
President
Address:
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Mark Train
Telephone No. 414/277-9300
Facsimile No. 414/277-9445
51
<PAGE> 48
Commitment: THE FIRST NATIONAL BANK OF
$30,000,000 CHICAGO, Individually and as
Agent
By:
-----------------------
Jennifer Gilpin
Title:
Address:
One First National Plaza
Chicago, Illinois 60670
Attention: Jennifer Gilpin
Telephone No. 312/732-5867
Facsimile No. 312/732-1117
52
<PAGE> 49
Commitment: M&I MARSHALL & ILSLEY BANK
$20,000,000
By:___________________________
Kathleen T. Coleman
Vice President
Address:
770 N. Water Street
P.O. Box 2035
Milwaukee, WI 53201-2035
Attention: Kathleen T. Coleman
Telephone No. 414/765-7958/7606
Facsimile No. 414/765-7625
53
<PAGE> 1
EXHIBIT 10.18
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made and entered into this
9th day of February, 1999 by and among JASON INCORPORATED, a Wisconsin
corporation ("Purchaser"), SEALEZE CORPORATION, a Virginia corporation
("Seller"), and OLIN V. HYDE (the "Shareholder").
RECITALS
Purchaser, Seller and the Shareholder acknowledge the
following:
A. Seller is engaged in the business of manufacturing and
selling strip brush products and related products to industrial and commercial
customers throughout the United States, Canada and other countries.
B. Seller desires to sell to Purchaser and Purchaser desires
to purchase and acquire from Seller all of the assets of Seller described below.
C. The Shareholder holds all of the outstanding stock of
Seller.
AGREEMENTS
In consideration of the recitals and mutual agreements which
follow, the parties agree as follows:
1. Transfer of Assets. Subject to the terms and conditions of
this Agreement, Seller agrees to sell and deliver to Purchaser and Purchaser
agrees to purchase and accept from Seller as the same shall exist on the Closing
Date (as defined in section 6), all of Seller's right, title and interest in and
to all of Seller's properties and rights of every kind and all of the operating
assets of Seller, wherever located and regardless of whether reflected on its
books, including, without limitation, Seller's business as a going concern and
the following assets, other than the Excluded Assets (as defined in section 2)
(collectively, the "Purchased Assets"):
1.01 Personal Property. All machinery, equipment,
leasehold improvements, tools, tooling, fixtures, furniture, furnishings and
other personal property and tangible assets, including, without limitation, the
personal property listed on Schedule 1.01.
1.02 Vehicles. Except as described in section 2, all
automobiles, trucks, trailers, automotive equipment and other owned vehicles, if
any, including, without limitation, the vehicles listed on Schedule 1.02
("Vehicles").
<PAGE> 2
1.03 Intangible Assets. All of Seller's right, title
and interest in and to all domestic and foreign patents, formulas, processes,
techniques, formulations, customer lists, supplier lists, operating records,
work orders, customer contracts, licenses, trade names, trademarks, service
marks, copyrights, government approvals, permits and authorizations (and
applications for any of the foregoing) and all technical know-how, trade
secrets, confidential information and other similar intangible assets,
including, without limitation, the use of the name "Sealeze" and all variations
of and logos associated with such name, the intangible assets described on
Schedule 1.03 and the goodwill associated with all of the foregoing
(collectively, the "Intangible Assets").
1.04 Leases. Leases of equipment and other tangible
personal property, which are described on Schedule 1.04, and all rights of
Seller thereunder ("Leases").
1.05 Contracts. Contracts or commitments entered into
by Seller, and all obligations and rights thereunder which are described on
Schedule 1.05 ("Contracts").
1.06 Prepaid Assets. All prepaid assets, including the
prepaid items listed on Schedule 1.06 (collectively, "Prepaid Assets").
1.07 Documents. Except for Seller's corporate minute
book and related corporate records, all records, computer software (including
without limitation the Telemagic software license, the TIW software license and
the SBT software license) and documents, books, supplier and customer lists,
work orders, copies of audit information and correspondence, drawings, copies of
financial information and all other documents used in connection with the
operation of Seller that are not exclusively personal to the Shareholder
("Documents").
1.08 Accounts Receivable. Except for the Excluded
Receivables (as defined in section 2.04), all trade and other accounts and notes
receivable and all notes, bonds and other evidences of indebtedness and rights
to receive payment from any person held by Seller, including the accounts
receivable listed on Schedule 1.08 ("Receivables").
1.09 Inventory. All inventories of raw materials,
work-in-process, finished goods, spare parts and supplies ("Inventory").
1.10 Licenses and Permits. Other than Seller's
business license from the County of Chesterfield, Virginia, all of Seller's
rights in all government licenses, permits and authorizations (and any
applications for any of the foregoing) held by Seller
2
<PAGE> 3
that are necessary for the operation of Seller's business, all of which are
listed on Schedule 1.10 ("Licenses and Permits").
1.11 Real Property. All right, title and interest of
Seller, whether in fee, lease or any other interest, in and to the real estate,
buildings, fixtures and improvements owned by Seller, including Seller's fee
ownership interest in the property legally described on Schedule 1.11 (the "Real
Property").
1.12 Claims. All claims or rights under insurance
policies owned by or obtained on behalf of Seller in respect of Purchased Assets
and Assumed Liabilities (as defined in section 3) and all causes of action,
judgments, claims and demands relating to the Purchased Assets and Assumed
Liabilities.
1.13 Employee Benefit Plans. All of Seller's rights in
employee benefit plans assumed by Purchaser as described in section 12.02 (the
"Employee Benefit Plans").
2. Assets Excluded From Sale. There shall be excluded
from this transfer the following assets of Seller (collectively, the "Excluded
Assets"):
2.01 Cash and Cash Equivalents. All of Seller's cash
and cash equivalents and marketable securities.
2.02 Tax Refunds. Any federal, state or local income
tax refunds or claims related to the operation of Seller on or prior to the
Closing Date.
2.03 Excluded Contracts. Any contracts or commitments
(the "Excluded Contracts") entered into by or on behalf of Seller, and all
obligations thereunder, which are not described on Schedule 1.05.
2.04 Accounts Receivable. All accounts receivable of
Seller listed on Schedule 2.04 (collectively the "Excluded Receivables").
2.05 Other Items. The automobile owned by Seller and
used by the Shareholder and the computer and desk located at the Shareholder's
home, all of which are further described on Schedule 2.05.
2.06 Insurance Policies. All casualty, liability or
other insurance policies owned by or obtained on behalf of Seller and all claims
or rights under any such insurance policies in respect of the Excluded
Liabilities (as defined in section 4) and the Excluded Assets.
3
<PAGE> 4
3. Assumption of Liabilities. As partial consideration
for the purchase of the Purchased Assets, Purchaser hereby assumes and agrees to
pay, perform and discharge to the extent not theretofore performed, paid or
discharged, the following liabilities and/or obligations of Seller as the same
shall exist on the Closing Date (collectively, the "Assumed Liabilities"):
3.01 Accounts Payable. All accounts payable which are
reflected on the statement of Operating Working Capital as of the Closing Date
(as defined in section 5.03).
3.02 Accrued Expenses. All accrued expenses which are
reflected on the statement of Operating Working Capital as of the Closing Date.
3.03 Products Liability. All liabilities and
obligations of Seller resulting from, arising out of or relating to product
liability claims ("Product Liability Claims") involving products manufactured by
Seller and shipped by Purchaser after the Closing Date.
3.04 Contracts and Leases. Subject to section 4, all
liabilities and/or obligations existing as of, arising after or to be performed
after the Closing Date under or with respect to the Contracts and Leases.
3.05 Employee Benefit Plans. All liabilities of Seller
with respect to Employee Benefit Plans assumed by Purchaser as described in
section 12.02.
4. Excluded Liabilities. Except as otherwise expressly
provided in section 3 of this Agreement, Purchaser shall not assume, pay,
perform or discharge, and the term "Assumed Liabilities" shall not include, and
Seller shall promptly pay and discharge when due, any debts, liabilities,
obligations or commitments of Seller, whether actual, contingent or accrued,
including without limitation the following (collectively, the "Excluded
Liabilities"):
4.01 Termination of Employees. Any claims made by any
employee of Seller as of the Closing Date who is not thereafter employed on or
after the Closing Date by Purchaser subject to Purchaser's obligations pursuant
to section 10.03.
4.02 Employment-Related Claims. To the extent not
accrued on the statement of Operating Working Capital as of the Closing Date,
the following claims relating to employees of Seller:
(a) all liabilities and obligations of Seller
incurred on or prior to the Closing Date resulting from workers' compensation
claims made on or prior to the Closing Date, and claims made on or before the
Closing Date for hospitalization or
4
<PAGE> 5
medical expenses. Neither Seller nor the Shareholder shall have any liability
with respect to post-Closing claims for hospitalization or medical expenses of
employees hired by Purchaser pursuant to section 10.03;
(b) all liabilities of Seller relating to
employee life insurance claims for deaths on or prior to the Closing Date;
(c) all liabilities and obligations of Seller
for any claim made on or prior to the Closing Date for short-term or long-term
disability; and
(d) except to the extent accrued on the
statement of Operating Working Capital as of the Closing Date, all liabilities
and obligations of Seller as of the Closing Date relating to employee
compensation.
4.03 Taxes. Except to the extent accrued on the
statement of Operating Working Capital as of the Closing Date, any liabilities
for taxes, including real estate, income, withholding, sales, use and other
taxes, incurred at any time by Seller or arising with respect to the Purchased
Assets on or before the Closing Date, including any deferred taxes.
4.04 Benefit Plans. Except as set forth in section 3,
any liability under any Pension Plan, Welfare Plan or Fringe Benefit Plan (as
defined in section 9.28) maintained or contributed to by Seller, including any
Simplified Employee Pension-Individual Retirement Account and any cafeteria
plan.
4.05 Excluded Contracts. Any obligations or
liabilities with respect to the Excluded Contracts.
4.06 Distribution Payable. The Distribution Payable as
Provision for Income Taxes described on Seller's financial statements, and any
obligation relating thereto.
5. Purchase Price.
5.01 Amount to Seller. Purchaser shall, in addition to
assuming the Assumed Liabilities, pay to Seller in the manner set forth below an
amount equal to (a) $18,600,000, less (b) the "Bonus Amount" as defined below,
plus (c) the amount by which the Operating Working Capital as of the Closing
Date exceeds the Operating Working Capital as of September 30, 1998 or minus (d)
the amount by which the Operating Working Capital as of the Closing Date is less
than the Operating Working Capital as of September 30, 1998, as the case may be
(the "Purchase Price"). The term "Operating Working Capital" as used herein
shall mean the excess of Seller's accounts receivable, inventory and prepaid
expenses over its accounts payable, accrued payroll and
5
<PAGE> 6
other accrued expenses. The Operating Working Capital as of September 30, 1998
is agreed to be $1,518,000 (as set forth on Schedule 5.01(a)), adjusted for
consistent accounting treatment with the statement of Operating Working Capital
as of the Closing Date. The Operating Working Capital shall be calculated as at
both September 30, 1998 and the Closing Date in accordance with section 5.03.
The "Bonus Amount" means the $181,018.53 ($167,609.75
in bonuses payable to certain of Seller's employees, plus 8% for payroll taxes
and other expenses), described in the memorandum set forth on Schedule 5.01(b)
(the "Bonus Memorandum"). Purchaser will pay the bonuses to the employees in
accordance with the terms of the Bonus Memorandum dated December 9, 1999.
Purchaser shall refund to Seller in immediately available funds, as an
adjustment to the Purchase Price, any bonus in respect of any such employee who
resigns or is terminated for cause on or before August 31, 1999; provided that
in no event shall such adjustment exceed $31,018.53.
5.02 Manner of Payment of the Purchase Price. At
Closing, Purchaser shall:
(a) assume the Assumed Liabilities; and
(b) pay to Seller $18,600,000, less the Bonus
Amount, in accordance with Seller's directions, through a bank wire transfer
(the "Cash Payment").
5.03 Post-Closing Adjustments.
(a) As soon as practicable but not later than 45
days after the Closing, Purchaser's independent certified public accountant
(PricewaterhouseCoopers) shall audit Seller to determine its Operating Working
Capital as of the Closing Date and prepare and deliver to the parties a proposed
statement of Seller's Operating Working Capital as of the Closing Date (the
"Proposed Closing Date Operating Working Capital"). The Proposed Closing Date
Operating Working Capital shall be prepared in accordance with generally
accepted accounting principles (except as set forth on Schedule 5.03 and as
otherwise agreed upon by the parties) and in accordance with the following:
(i) Seller's accounts receivable will
be valued at face amount less adjustment for [a] any known claims, price
adjustments or returns, and [b] uncollectibility. Seller's accounts receivable
at September 30, 1998 will be adjusted to reflect accounting treatment
consistent with the statement of Operating Working Capital as of Closing Date.
(ii) The valuation of Seller's
inventory will be based upon a physical inventory taken the day after the
Closing Date. Such inventory shall be
6
<PAGE> 7
observed by representatives of Purchaser and Seller. Appropriate adjustment for
slow-moving and obsolete inventory will be made in accordance with generally
accepted accounting principles. Seller's inventory at September 30, 1998 will be
adjusted to reflect accounting treatment consistent with the statement of
Operating Working Capital as of the Closing Date.
(iii) The difference in Seller's
prepaid expenses as of the Closing Date and as of September 30, 1998 has been
calculated as set forth on Schedule 5.03(iii) and shall be reflected in the
Operating Working Capital calculation.
(iv) Seller's accounts payable and
accrued payroll and other accrued expenses shall be calculated as of the Closing
Date. Seller's accounts payable and accrued payroll and other accrued expenses
at September 30, 1998 will be adjusted to reflect accounting treatment
consistent with the statement of Operating Working Capital as of the Closing
Date. Operating Working Capital shall not include any Excluded Assets or
Excluded Liabilities.
(v) The statement of Operating Working
Capital as of the Closing Date shall not include any assets and/or liability for
the Bonus Amount.
The independent certified public
accountants shall permit Purchaser, Seller and their designated representatives
or advisors to review all accounting records and all work papers and
computations used by them in the preparation of the Proposed Closing Date
Operating Working Capital. If Seller does not give notice of dispute to
Purchaser within 15 days of receiving the Proposed Closing Date Operating
Working Capital, the parties agree that the Proposed Closing Date Operating
Working Capital shall become the Operating Working Capital as of the Closing
Date. If Seller gives notice of dispute to Purchaser within such 15-day period,
Seller and Purchaser shall negotiate in good faith to resolve the dispute. If,
after 15 days from the date notice of dispute is given hereunder, Seller and
Purchaser cannot agree on the resolution of the dispute, the parties shall
designate an independent certified public accounting firm acceptable to
Purchaser and Seller to resolve the dispute, whose decision as to the Operating
Working Capital as of the Closing Date shall be conclusive and binding upon
Seller and Purchaser. The expenses pertaining to any dispute resolution
hereunder shall be shared equally by Seller and Purchaser.
(b) If, upon final determination of the
Operating Working Capital as of the Closing Date, the Operating Working Capital
as of the Closing Date is less than the Operating Working Capital as of
September 30, 1998, Seller shall pay to Purchaser the amount of such difference
plus interest from the Closing Date to the date of payment at the rate of 8% per
annum. If, upon final determination of the Operating Working Capital as of the
Closing Date, the Operating Working Capital as of the Closing Date is more than
the Operating Working Capital as of September 30, 1998, Purchaser
7
<PAGE> 8
shall pay to Seller the amount of such difference plus interest from the Closing
Date to the date of payment at the rate of 8% per annum. Any such amount shall
be paid by wire transfer within ten days of the final determination of the
Operating Working Capital as of the Closing Date.
5.04 Allocation of Purchase Price. The parties shall
allocate the Purchase Price to the assets in accordance with the following: (1)
working capital assets as reflected in the final determination of the Operating
Working Capital as of the Closing Date, (2) fixed assets equal to the tax net
book value of the assets as of the Closing Date, and (3) goodwill. The parties
are to report the federal, state and local income tax and other tax consequences
of the transactions contemplated by this Agreement in a manner consistent with
such allocation, including without limitation, the preparation and filing of
Form 8594 or any successor form.
6. Closing. The closing (the "Closing") of the transactions
pursuant to this Agreement shall take place on February 9, 1999 ("Closing Date")
at the offices of Hirschler, Fleischer, Weinberg, Cox & Allen, or such other
time and place as Seller and Purchaser may agree. The effective time of the
Closing shall be deemed to be 11:59 p.m. eastern daylight savings time on the
Closing Date.
7. Seller's and Shareholder's Obligations Prior to or at the
Closing.
7.01 Deliveries. Seller and the Shareholder hereby agree
that they shall, prior to or at the Closing, deliver or convey or cause to be
delivered or conveyed to Purchaser:
(a) A General Bill of Sale in substantially the form
of Exhibit A, duly executed by Seller.
(b) An assignment of Seller's rights, title and
interest in any assignable Licenses and Permits and originals (or copies if
originals are not available) of all Licenses and Permits, whether or not
assignable.
(c) An Assignment and Assumption of Contracts and
Leases in substantially the form of Exhibit B (the "Assignment and Assumption
Agreement"), duly executed by Seller.
(d) Duly executed titles to all Vehicles included in
the Purchased Assets, if any.
(e) The Documents.
8
<PAGE> 9
(f) The written opinion letter dated as of the
Closing Date of Hirschler, Fleischer, Weinberg, Cox & Allen, counsel for Seller
and the Shareholder, in substantially the form of Exhibit C.
(g) Certified copies of resolutions adopted by
Seller's Board of Directors and the Shareholder authorizing the sale of the
Purchased Assets to Purchaser in accordance with the terms hereof and the
execution, delivery and performance of this Agreement and all agreements
contemplated hereby.
(h) Duly executed assignments of the Intangible
Assets.
(i) A certificate of good standing for Seller issued
by the Secretary of State of the Commonwealth of Virginia dated within ten days
of the Closing Date.
(j) A written estoppel certificate from each lessor
of real property listed on Schedule 7.01(j), if any, and each party to each
Contract and Lease that requires by its terms or law such party's consent to
assignment to Purchaser, acknowledging and certifying that (a) such party is a
party to a lease or contract of a certain date; (b) the lease or contract has
not been amended or modified or, if it has, reciting the date and substance of
such modification; (c) the lease or contract is in full force and effect; (d) as
of the date of the certificate, Seller is not in default under the lease or
contract; and (e) that such party consents to the assignment of such lease or
contract to Purchaser in conjunction with the transactions contemplated by this
Agreement.
(k) Articles of Amendment to Seller's Articles of
Incorporation, changing Seller's name to eliminate the word "Sealeze."
(l) Employment and Consulting Agreement in
substantially the form of Exhibit D (the "Employment and Consulting Agreement"),
duly executed by Olin V. Hyde.
(m) Special Warranty Deed, duly executed by Seller,
for the Real Property, free and clear of all liens and encumbrances, except
municipal and zoning ordinances, real estate taxes not yet due and payable and
other easements and restrictions of record which do not materially interfere
with the conduct of the operations currently conducted on the Real Property or
materially detract from the value of the Real Property as currently used,
together with (i) an assignment of Seller's right, title and interest in any
certificates, licenses, permits, authorizations or appraisals relating to the
Real Property, and (ii) a sworn affidavit stating Seller's FEIN and that Seller
is not a foreign person for purposes of section 1445 of the Internal Revenue
Code and Treasury Regulation section 1.1445-2T.
9
<PAGE> 10
(n) Releases of the UCC filings and the security
interest of Wachovia Bank (or any other lender) in any of the Purchased Assets.
(o) An executed copy of the Transfer Agreement
Relating to Employee Benefit Plans.
(p) The Schedules to this Agreement.
(q) Closing Certificate of the officers of Seller
certifying officer incumbency, etc.
(r) Such other instruments as Purchaser may
reasonably request to vest in Purchaser all of Seller's right, title and
interest in and to the Purchased Assets.
8. Purchaser's Obligations Prior to or at the Closing.
8.01 Deliveries. Purchaser hereby agrees that it shall,
prior to or at the Closing, deliver or cause to be delivered to Seller:
(a) A bank wire transfer in the amount of
$18,600,000, less the Bonus Amount, in accordance with Seller's instructions.
(b) The written opinion letter dated as of the
Closing Date of Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c.,
counsel for Purchaser, in substantially the form of Exhibit E.
(c) Certified copy of the resolutions adopted by
Purchaser's Board of Directors authorizing the purchase of the Purchased Assets
and the assumption of the Assumed Liabilities from Seller in accordance with
this Agreement and the execution, delivery and performance of this Agreement and
all agreements contemplated hereby.
(d) The Assignment and Assumption Agreement, duly
executed by Purchaser.
(e) The Employment and Consulting Agreement, duly
executed by Purchaser.
(f) Certificate of Status for Purchaser issued by the
Department of Financial Institutions of the State of Wisconsin dated within ten
days of the Closing Date.
10
<PAGE> 11
(g) A current survey dated within 30 days of Closing
of the Real Property prepared by duly licensed land surveyors acceptable to
Purchaser. For each parcel the survey shall: (i) show the boundaries of the
property; (ii) contain a proper and complete legal description of the property
and show the total number of acres in the property and the number of acres, if
any, located within dedicated streets and highways; (iii) show all dedicated
public streets providing access to the property and locate any areas of
restricted access; (iv) show all existing improvements (e.g., buildings,
driveways, powerlines and transformers and fences); (v) locate all recorded and
visible easements and rights of way; (vi) show the location of any easements
necessary to bring offsite improvements to the property; and (vii) show any
encroachments upon the property. The survey shall contain a certification
acceptable to Purchaser's counsel that the surveyor has surveyed the property
and shown all improvements and encroachments and that the surveyor's liability
extends to those who purchase, mortgage or guarantee title to the property
within at least one year from the date of the survey and such other ALTA
certification as are acceptable to the title insurance company selected by
Purchaser for removal of the surveyed exceptions in the title insurance policy.
Purchaser shall have until Closing to object any condition not permitted by this
Agreement.
(h) A title insurance commitment, ALTA Form B-1970
issued by a title company acceptable to Purchaser, agreeing to issue to
Purchaser, upon recording of the deed described in this Agreement, an owner's
policy in an amount acceptable to Purchaser and showing title to the Real
Property to be in the condition called for by this Agreement, subject only to
financial encumbrances which shall be discharged by Seller at or before Closing
and containing such endorsements as Purchaser or Purchaser's lenders may
require. Purchaser shall have until Closing to object to any condition of title
not permitted by this Agreement.
(i) An executed copy of the Transfer Agreement
Relating to Employee Benefit Plans.
(j) Closing Certificate of the officers of Purchaser
certifying officer incumbency, etc.
9. Representations and Warranties of Seller and the
Shareholder. Seller and the Shareholder, jointly and severally, hereby represent
and warrant to Purchaser that the following statements are true as of the
Closing Date:
9.01 Corporate Organization. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia. Seller has the corporate power and authority to own
its property and carry on its business as now conducted. Seller is not licensed
or qualified to do business in any other state or jurisdiction and is not
required to be licensed or qualified in any other state or jurisdiction.
11
<PAGE> 12
9.02 Authority. Seller has all necessary corporate power to
execute and deliver this Agreement and to consummate the transactions provided
for herein. The execution and delivery of this Agreement by Seller and the
performance by it of the obligations to be performed hereunder have been duly
authorized by all necessary and appropriate corporate action. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby do not and will not conflict with, or result in a breach of, or
constitute a default under the terms or conditions of Seller's Articles of
Incorporation or By-Laws, any court or administrative order or process, any
agreement or instrument to which Seller or the Shareholder is a party or by
which Seller or the Shareholder is bound or any statute or regulation of any
governmental agency. This Agreement and all documents contemplated hereby are
valid and binding obligations of Seller and the Shareholder enforceable in
accordance with their terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and subject to
general principles of equity. The Shareholder owns all of the issued and
outstanding capital stock of Seller.
9.03 Financial Statements. Schedule 9.03 contains copies of
(a) the unaudited balance sheets of Seller as of September 30, 1998 and as of
each year end, December 31, 1994 through December 31, 1997; and (b) unaudited
statements of income of Seller for each such period. The September 30, 1998
balance sheet shall hereinafter be referred to as the "Balance Sheet" and
September 30, 1998 shall hereinafter be referred to as the "Balance Sheet Date."
Each such balance sheet and income statement (x) was prepared in accordance with
Seller's books of account and records; (y) is true and correct in all material
respects and presents fairly the financial position of Seller as of the date
specified and the results of its operations for the period then ended; and (z)
except as described on Schedule 9.03, has been prepared in accordance with
generally accepted accounting principles consistently applied by Seller. Such
statements of income do not contain any items of special or nonrecurring income
or any other income not earned in the ordinary course of business except as
expressly specified therein, and such financial statements include all
adjustments, which consist only of normal recurring accruals (the effect of
which will not, individually or in the aggregate, be materially adverse),
necessary for such fair representation. Seller's books of account, as well as
its minute books and stock records, are complete and correct in all material
respects.
9.04 Liabilities. To Seller's and the Shareholder's knowledge,
Seller has no liabilities, direct or contingent, absolute, known or unknown, or
any outstanding evidence of indebtedness, except (a) as reflected on the Balance
Sheet; (b) liabilities incurred in the ordinary course of business since the
Balance Sheet Date, consistent with Seller's prior practice and which, in the
aggregate, do not result in any material adverse change in the financial
condition of Purchaser's business or the
12
<PAGE> 13
Purchased Assets from that set forth on the Balance Sheet; and (c) as reflected
on Schedule 9.04. None of such liabilities were incurred other than in the
ordinary course of business. To Seller's and the Shareholder's knowledge, there
are no material defaults under any terms or conditions of any indebtedness,
liability, Contract, Lease or obligation of Seller assumed by Purchaser, or
circumstances which form the basis for the assertion of any such default other
than as specified in (a), (b) or (c) hereof.
9.05 Accounts Receivable. All of the Receivables reflected on
the Balance Sheet arose in the ordinary course of business and represent amounts
payable by a buyer for goods actually sold or services actually performed, and
to Seller's and the Shareholder's knowledge, are not subject to any
counterclaims or setoffs except as set forth on Schedule 9.05 and are current
except as set forth on Schedule 9.05. Receivables arising after the Balance
Sheet Date have arisen in the ordinary course of business, represent amounts
payable by a buyer for goods actually sold or services actually performed and to
Seller's and the Shareholder's knowledge, are not subject to any counterclaims
or setoffs except as set forth on Schedule 9.05.
9.06 Inventory. The value at which the Inventory is carried on
the Balance Sheet reflects the customary inventory valuation policy consistently
applied by Seller of stating inventory on the current cost of material valuation
method of accounting for inventory. To Seller's and the Shareholder's knowledge,
the Inventory is in good condition and usable and salable in the ordinary course
of business consistent with past practice. Inventory has been acquired only in
the ordinary course of business. No Inventory has been consigned to others.
Seller owns the Inventory free and clear of any liens or encumbrances.
9.07 Business Changes. Except as set forth on Schedule 9.07,
since the Balance Sheet Date, there has not been:
(a) any material adverse change in the condition
(financial or other) or in the operations, business, properties or assets of, or
material damage, destruction or loss (whether or not covered by insurance)
affecting Seller or the Purchased Assets;
(b) any sale, lease, abandonment or other disposition of
any material equipment or other operating property comprising the Purchased
Assets which causes any material adverse impact upon Seller except for
dispositions of Inventory in the ordinary course of business;
(c) any transfer of the Purchased Assets by Seller to any
shareholder, officer, director, employee or affiliate of Seller or any other
transfer of Purchased Assets outside of the ordinary course of business;
13
<PAGE> 14
(d) any extraordinary increase in compensation of any
officer, director or employee (including, without limitation, any extraordinary
increase pursuant to any bonus, pension, profit sharing or other plan or
commitment) or the adoption of any new benefit program, plan or other
arrangement for officers, directors or employees which would have a material
adverse impact on Seller's business other than the Bonus Amounts, or, to
Seller's and the Shareholder's knowledge, any material deviation from the
ordinary and usual course by Seller in the conduct of its business;
(e) any material change in accounting methods or
practices followed by Seller, including changes to amortization or depreciation
policies or write-downs in the value of any Inventory or Receivables;
(f) any material increase in any obligations or
liabilities (whether absolute, accrued, contingent or otherwise and whether due
or to become due), except items incurred in the ordinary course of business and
generally consistent with past practice;
(g) any mortgage, pledge or creation of any lien,
charge, security interest or other encumbrance on any of the Purchased Assets
(except those created in the ordinary course of business and generally
consistent with past practice and identified on Schedule 9.07(g));
(h) any contract for the sale of Seller's business,
or any part thereof or for the purchase of another business, whether by merger,
consolidation, exchange of stock or otherwise (other than negotiations with
respect to this Agreement);
(i) any written or, to Seller's and the Shareholder's
knowledge, oral notice (i) that any customer of Seller which accounted for 5% or
more of Seller's total net sales for the prior 12 months may terminate its
relationship with Seller or (ii) of termination or potential termination of any
other contract, lease or relationship which individually or in the aggregate has
a material adverse effect upon Seller's business or the Purchased Assets; or
(j) any encounter with any labor union organizing
activity, any actual or threatened employee strikes, work stoppages, slow downs
or lockouts or any material change in the relationships with its employees,
agents, customers or suppliers.
9.08 Real Property Owned and Leased. The Real Property is
the only real property owned or leased or otherwise utilized in connection with
Seller's business or to which Seller has any right, title or interest. Except
for the Real Property, Seller does not own a fee interest in any real estate.
Seller is not a party to any lease or similar agreement under which Seller is a
lessor or sublessor of or makes available for use by any third party any real
property owned or leased by Seller or any portion of premises
14
<PAGE> 15
otherwise occupied by Seller. Except for items 2 through 11 of Schedule B-II of
title commitment #ST 99100169 Fourth Reissue issued by Old Republic National
Title Insurance Company, Seller has good and marketable fee title to the Real
Property, free and clear of all mortgages, liens, security interests, easements,
covenants, rights of way and other encumbrances or restrictions of any nature
whatsoever. Notwithstanding the foregoing, Seller and the Shareholder represent
and warrant without exception that Chesterfield County does not have any right
of first refusal or option to purchase the Real Property nor is the Real
Property subject to any right of reverter in favor of Chesterfield County
pursuant to (i) those certain Protective Covenants, Conditions and Restrictions
For the Chesterfield Airport Industrial Park, recorded in the Clerk's Office,
Circuit Court, Chesterfield County, Virginia (the "Clerk's Office"), in Deed
Book 1778, page 1764; (ii) a Real Estate Agreement dated January 27, 1988,
contained in a Deed recorded in the Clerk's Office in Deed Book 1925, page 1179,
and rerecorded in the Clerk's Office in Deed Book 1964, page 1084; (iii) a March
10, 1988 First Amendment to Real Estate Agreement dated January 27, 1988 and
recorded in the Clerk's Office in Deed Book 1964, page 1106; and (iv) contained
in a Deed recorded in Deed Book 1925, page 1179 (collectively, the "Real Estate
Documents") with respect to the transfer of Real Property from Seller to
Purchaser. Seller is not a lessee or sublessee under any lease of real property.
9.09 Condition of Real Property. To Seller's and the
Shareholder's knowledge, there are no structural or nonstructural defects in any
of the buildings or other improvements situated on the Real Property and all
building systems, structures, fixtures and improvements owned, leased or used by
Seller are in all material respects in good condition and working order
(reasonable wear and tear excepted). Seller and the Shareholder have no notice
or knowledge that aggregate capital expenditures in excess of $10,000 on the
Real Property will be necessary in the next 12 months to carry on the business
of Seller as it is presently conducted nor are any such expenditures planned.
9.10 Floodplain. Except as described on Schedule 9.10 or in
the survey described in section 8.01(g), to Seller's and the Shareholder's
knowledge, no part of the Real Property is located on or contains a
governmentally-recognized floodplain, flood prone area, flood risk area, wetland
or similarly restricted area.
9.11 Access. To Seller's and the Shareholder's knowledge and
except as described in the survey described in section 8.01(g), there is full
and free vehicular access to and from public highways and roads to the Real
Property and all utility companies providing utilities to the Real Property have
adequate rights of access to provide the services necessary for the conduct of
the business now conducted upon the Real Property and neither Seller nor the
Shareholder has knowledge of any fact or condition that could result in
termination or limitation of such access.
15
<PAGE> 16
9.12 Building Code Compliance. Neither Seller nor the
Shareholder has notice or knowledge of any government agency or court order
requiring repairs, alterations or corrections of any existing conditions in the
Real Property. To Seller's and the Shareholder's knowledge, the Real Property
complies in all material respects with all federal, state and municipal laws,
ordinances, orders, regulations and requirements.
9.13 Zoning. To Seller's and the Shareholder's knowledge and
except as set forth on Schedule 9.13, the current use and improvements on the
Real Property are permitted under the governing zoning laws and ordinances and
are not nonconforming or a special use or special exception. Neither Seller nor
the Shareholder has notice or knowledge of any contemplated change in this
zoning classification.
9.14 Planned Public Improvements and Special Assessments.
Neither Seller nor the Shareholder has notice or knowledge of any planned or
contemplated public improvements that may result in special assessments against
the Real Property or otherwise materially affect the availability of utility
service or access to the Real Property. There are currently no special
assessments affecting the Real Property.
9.15 Insurance. A summary of the insurance Seller maintains
is set forth in Schedule 9.15. All premiums on policies due to the date hereof
have been paid. Seller has not, within the last three fiscal years, had any
application for insurance rejected or any insurance policy canceled or
withdrawn.
9.16 Compliance with Law. Except as disclosed in Schedule
9.16, to Seller's and the Shareholder's knowledge, the operation of its business
and the use of the Purchased Assets and the Real Property are not in default
under or in violation of any applicable federal, state or local laws or
ordinances or any order, rule or regulation of any federal, state or local
agency or body, including, without limitation, any criminal laws, zoning and
building codes, energy, safety, health, employment-related, antitrust, wage and
hour laws, orders, rules or regulations, applicable to Seller, the Real Property
or the Purchased Assets, which, in Seller's and the Shareholder's reasonable
opinion, would have a material adverse impact on Seller's business.
9.17 Environmental Disclosures.
(a) Schedule 9.17 lists with expiration dates all
permits, licenses, approvals and consents issued by or received from foreign,
federal, interstate, state or local government agencies (including local
sewerage districts) relating to Environmental Laws or Hazardous Substances (the
"Environmental Permits") which are held by Seller or otherwise relate to the
Real Property or the business of Seller.
16
<PAGE> 17
(b) Schedule 9.17 describes (i) the storage, use,
generation, disposal, release, emission, dispersal, spilling, leaking, dumping,
or migration of Hazardous Substances by Seller at the Real Property during the
period Seller owned or occupied the Real Property and (ii) any storage, use,
generation, disposal, release, emission, dispersal, spilling, leaking, dumping,
or migration of Hazardous Substances at the Real Property prior to the period
Seller owned or occupied the Real Property.
(c) Schedule 9.17 lists all above-ground or below-
ground storage tanks on the Real Property and identifies all products and
materials ever to have been stored in such tanks.
For purposes of this Agreement, the term "Environmental
Laws" shall mean all foreign, federal, interstate, state and local laws,
including statutes, rules, regulations, other governmental orders, guidances,
restrictions, ordinances and requirements, all contractual obligations and all
common law relating to the discharge, disposal, release, emission, dispersal,
spilling, leaking, dumping, or migration of Hazardous Substances, air
pollutants, water pollutants or process waste water or the disposal of solid or
hazardous waste or otherwise relating to the environment, or hazardous
substances or employee health and safety, including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Solid Waste Disposal Act, the Clean Air Act, the Water Pollution Control
Act, the Oil Pollution Prevention Act, the Resource Conservation and Recovery
Act of 1976, the Superfund Amendments and Reauthorization Act, the Occupational
Safety and Health Act of 1970, the Toxic Substances Control Act, the Hazardous
Materials Transportation Act (all the same as may have been amended), rules and
regulations of the U.S. Environmental Protection Agency, rules and regulations
of the U.S. Nuclear Regulatory Agency, rules and regulations of the U.S.
Department of Transportation, state environmental protection statutes, and rules
and regulations of any state or local department of environmental or natural
resources or any state or local environmental protection agency now or hereafter
in effect. The term "Hazardous Substances" shall mean all hazardous and toxic
substances, wastes and materials, any pollutants or contaminants (including,
without limitation, petroleum products, asbestos and raw materials which include
hazardous constituents), fumes, soot, smoke, acids, alkalis, chemicals, liquids,
gases, vapors, wastes and materials and any other similar substances or
materials which are regulated under, or as to which liability may be imposed as
of the date hereof under, Environmental Laws.
9.18 Environmental Regulation. Except as disclosed on
Schedule 9.18:
(a) The Environmental Permits constitute all
permits, licenses, approvals and consents from foreign, federal, interstate,
state or local government agencies relating to Environmental Laws or Hazardous
Substances required
17
<PAGE> 18
for the conduct of the business of Seller and the use or the operation of the
Real Property in compliance with Environmental Laws. Seller is in material
compliance with each Environmental Permit and the Environmental Permits are each
in full force and effect. Neither Seller nor the Shareholder has received any
notice, written or, to the Seller's or Shareholder's knowledge, oral, of any
violation of any Environmental Permit and no proceeding for the suspension,
revocation or cancellation of any Environmental Permit is pending or, to
Seller's and the Shareholder's knowledge, threatened. No plan, application,
report, certificate or other document filed with or furnished to any government
agency by Seller in connection with any Environmental Law or Environmental
Permit contained any untrue statement of material fact or omitted any statement
of material fact necessary to make the statements made not misleading.
(b) Seller has duly filed with government agencies
all reports, returns and other filings required to be filed with respect to the
Real Property under Environmental Laws and the Environmental Permits and has
made available to Purchaser complete copies of all environmental filings
described in this subparagraph.
(c) Seller's business and the Real Property have
been and are being operated in all material respects in accordance with all
Environmental Laws and Environmental Permits. Neither Seller nor the Shareholder
has received any notice nor does Seller or the Shareholder have any knowledge
that Seller's business or the Real Property are not in compliance with, or are
subject to liability under any Environmental Laws and Environmental Permits.
(d) There are no actions, suits, claims,
investigations or proceedings, either judicial or administrative, or
governmental or administrative investigations pending or, to the best of
Seller's and the Shareholder's knowledge, threatened against Seller, its
business or the Real Property which in any case asserts or alleges (i) Seller or
the Real Property violated any Environmental Law; (ii) Seller or the Real
Property violated or are in default with respect to any Environmental Permit or
any order, writ, judgment, variance, award or decree of any foreign, federal,
interstate, state or local governmental authority; (iii) Seller is required to
clean up or take an investigation, remedial or other response action or
otherwise has liability or must bear costs (including any third party toxic tort
liability) with respect to the generation, storage, treatment, recycling,
disposal, discharge or other release or threatened release of any Hazardous
Substance on the Real Property or elsewhere; or (iv) Seller is required to
contribute to the cost of any past, present or future clean up or remedial or
other response action which arises out of or is related to the generation,
storage, treatment, recycling, disposal, discharge or other release or
threatened release of any Hazardous Substance by Seller. Seller and the Real
Property are not subject to any judgment, stipulation, order, decree or
agreement arising under Environmental Laws.
18
<PAGE> 19
(e) Except as set forth on Schedule 9.18(e), (i)
no Hazardous Substances have been generated, stored, treated, recycled or
disposed of (intentionally or unintentionally), nor have Seller or the
Shareholder arranged for disposal of Hazardous Substances, on, under, from or at
the Real Property or any other facility or property, including any offsite
disposal facility and/or such generation, storage, treatment, recycling or
disposal or arrangement for disposal will not result in any requirement for
investigation or cleanup or any liability (contingent or otherwise) under any
Environmental Law; (ii) there has been no release or threatened release of any
Hazardous Substance at, on, under or from the Real Property or any other
facility or property owned or operated at any time by Seller and/or such release
or threatened release will not result in any requirement for investigation or
cleanup or any liability (contingent or otherwise) under any Environmental Law
(and the Real Property is not contaminated with any Hazardous Substances); (iii)
for so long as Seller has owned the Real Property, there have not been nor are
there now any materials containing asbestos or PCBs on the Real Property; and
(iv) to Seller's and the Shareholder's knowledge, there have been no activities
on the Real Property or any other facility owned or operated at any time by
Seller which would subject Purchaser or any subsequent owner, lessee, occupant
or operator of the Real Property to damages, penalties, injunctive relief or
cleanup costs or any other liability under any Environmental Law, common law
theory of liability or any other theory of liability. Except as set forth on
Schedule 9.18 and except as set forth in the Environmental Report issued to
Purchaser by Virginia Geotechnical Services, P.C. dated February 4,1999 (the
"Environmental Report"), to Seller's and the Shareholder's knowledge, no
property adjacent to the Real Property has ever been used for the treatment,
recycling or disposal (intentional or unintentional) of Hazardous Substances nor
has there been a release or threatened release of any Hazardous Substances from
such adjacent property and/or will not subject the Purchaser to damages,
penalties, injunctive relief, cleanup costs or any other liability under
Environmental Law, common law theory of liability or any other theory of
liability. All treatment, storage, recycling or disposal of Hazardous Substances
has been conducted off the Real Property and in material compliance with all
Environmental Laws and Environmental Permits and/or will not subject the
Purchaser to damages, penalties, injunctive relief, cleanup costs or any other
liability under Environmental Law, common law theory of liability or any other
theory of liability. Seller and the Shareholder have provided Purchaser and its
representatives with full access to the Real Property and have provided
Purchaser with copies of all environmental reports relating thereto in their
possession.
(f) Except as described on Schedule 9.18(f) or in
the Environmental Report, to Seller's and the Shareholder's knowledge, there are
no wetlands on the Real Property and Seller is in material compliance with any
applicable wetlands requirements and laws. To Seller's and the Shareholder's
knowledge, and except as described in the Environmental Report, Seller and the
Real Property are in material compliance with all applicable requirements of the
Chesterfield County Preservation Ordinance.
19
<PAGE> 20
9.19 Title to the Purchased Assets. Except as
specifically disclosed on Schedule 9.19 and as set forth in Section 9.08 with
respect to the Real Property, Seller has good and marketable title to (or
interest in with respect to Leases and Contracts) all of the Purchased Assets,
(including without limitation licenses to the Telemagic software, the TIW
software and the SBT software) free and clear of all security interests, title
retention agreements, liens, mortgages, encumbrances and restrictions. Except
for the Excluded Assets, the Purchased Assets and the property subject to the
Leases constitute all of the property used in the operation of Seller's
business. Seller is conveying or assigning to Purchaser all of its right, title
and interest in and to the Purchased Assets.
9.20 Personal Property Leased. Schedule 1.04 sets
forth a list of all machinery, equipment, Vehicles and other tangible personal
property used in the operation of Seller which is covered by a lease to which
Seller is a party and which comprise part of the Purchased Assets.
9.21 Condition of the Purchased Assets. Except as
set forth in the schedules to this Agreement, no written or, to Seller's and the
Shareholder's knowledge, oral notice from any governmental body or other person
has been served upon Seller or the Shareholder or upon any of the Purchased
Assets or other assets leased, occupied or operated by Seller claiming any
violation of any law, ordinance, code, rule or regulation or requiring, or
calling attention to the need for, any work, repairs, construction, alterations
or installation on or in connection with such property with respect to which
Seller has not complied. Except as set forth on Schedule 9.21, to Seller's and
the Shareholder's knowledge, no material maintenance is needed with respect to
the Purchased Assets. To Seller's and the Shareholder's knowledge, except as set
forth on Schedule 9.21, the Purchased Assets are in all respects in good
condition and working order (reasonable wear and tear excepted), and are all
located on the Real Property.
9.22 Contracts. Except for the Leases and
Contracts described on Schedules 1.04 and 1.05, Seller does not have any written
or, to Seller's and the Shareholder's knowledge, oral commitments, leases or
contracts. All of the Leases and Contracts are legally valid and binding and in
full force and effect with respect to the parties thereto and neither Seller
nor, to Seller's or the Shareholder's knowledge, any of the other parties to any
of the Leases or Contracts is in material default thereof. Seller and the
Shareholder have no knowledge of any claimed breach of any of the Leases or
Contracts or of the occurrence of any event which, after the passage of time or
the giving of notice or both, would constitute a material default by Seller or
any other party to any Lease or Contract. None of the rights of Seller under the
Leases or Contracts, subject to any requirement pursuant to the terms and
conditions thereof to obtain consent, will be impaired by the consummation of
the transactions contemplated by this Agreement and all of the rights of Seller
thereunder will be enforceable by Purchaser after Closing
20
<PAGE> 21
without the consent or agreement of any other party (except for consents
delivered by Seller at Closing). Seller has delivered to Purchaser copies or
descriptions of all the Leases and Contracts, all of which are true and complete
and include all amendments or modifications. All of the Contracts and Leases
were entered into in the ordinary course of business.
9.23 Litigation and Proceedings. Except as set forth on
Schedule 9.23, Seller and the Shareholder have no knowledge of and have received
no notice of any suit, action or legal, administrative, arbitration or other
proceeding, Product Liability Claim, unemployment or termination of employment
claim, employment compensation claim, environmental claim, infringement claim,
claim for breach of contract or lease, or material accident pending against
Seller that affects the Purchased Assets or Assumed Liabilities and, to Seller's
and the Shareholder's knowledge, Seller is not under investigation with respect
to any charge concerning violation of any law or administrative regulations,
federal, local or state, and, to Seller's and the Shareholder's knowledge, no
set of facts or circumstances exist or have existed which would constitute a
basis for any such action, proceeding, investigation, suit or arbitration.
Except as set forth on Schedule 9.23, Seller is not now under any judgment,
order, injunction or decree of any court, administrative agency or other
governmental authority which would have a material adverse effect on Seller.
9.24 Restrictions on Personnel. Except as set forth on
Schedule 9.24, to Seller's and the Shareholder's knowledge, no officer or
employee of Seller (hereinafter referred to as the Employees) has entered into,
in his or her capacity as an individual, any agreement which is now in effect
with any person, corporation, partnership or business organization (other than
Seller) requiring such Employee to assign to any such person or entity any
interest in any invention or trade secrets or to keep confidential any trade
secrets or containing any prohibition or restriction of competition or
solicitation of customers.
9.25 Employee Compensation. Schedule 9.25 sets forth
the name of each Employee who is employed under a written employment agreement.
9.26 Employment Policies. Seller has provided to
Purchaser all of Seller's written employment policies presently in effect for
the Employees. To Seller's and the Shareholder's knowledge, there are no
employment policies not in writing.
9.27 Taxes. Except as set forth on Schedule 9.27, all
federal, state, county and local income, excise, sales, use, gross receipts, ad
valorem payroll and other taxes, fees and assessments imposed on Seller and all
federal and state payroll taxes withheld by Seller, all in relation to the
operation of Seller prior to the Closing Date or as a result of the transactions
contemplated hereby (except as responsibility for taxes as a result of the
transactions contemplated hereby may be allocated to Purchaser under
21
<PAGE> 22
section 16.05), have been or will be duly, timely and fully reported, paid and
discharged by Seller.
22
<PAGE> 23
9.28 Employee Benefit Plans.
(a) Schedule 9.28 lists all "employee pension
benefit plans," as such term is defined in section 3(2) of the Employee
Retirement Income Security Act of 1974 ("ERISA") without regard to any
exemptions from any requirements thereunder issued by the United States
Department of Labor in regulations or otherwise, maintained, sponsored or
contributed to by Seller (the "Pension Plans"). The term "Pension Plan" shall
also include any terminated employee pension benefit plan previously maintained,
sponsored or contributed to by Seller which, as of the Closing Date, has not
distributed all of its assets in full satisfaction of accrued benefits.
(b) Seller has made available to Purchaser true
and complete copies of (i) the documents governing each of the Pension Plans as
in effect on the Closing Date; (ii) the most recent annual report prepared and
filed on the appropriate Internal Revenue Service Form 5500 series, including
all required attachments, for each of the Pension Plans subject to such
reporting requirements; and (iii) the most recent determination letter issued by
the Internal Revenue Service concerning the qualification of any Pension Plan
pursuant to section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code").
(c) None of the assets of Seller are subject to
any lien, constructive or otherwise, arising under ERISA section 4068.
(d) All Pension Plans constitute "qualified" plans
within the meaning of Code section 401(a) or simplified employee pensions
within the meaning of Code section 408(k) and the plans' respective trusts are
tax exempt pursuant to Code section 501(a) or Code section 408(e)(i).
(e) Schedule 9.28 lists all "employee welfare
benefit plans," as defined in ERISA section 3(1), without regard to any
exemptions from any requirements thereunder issued by the United States
Department of Labor in regulations or otherwise, maintained, sponsored or
contributed to by Seller (the "Welfare Plans"). The term "Welfare Plans" shall
also include any terminated employee welfare benefit plan previously maintained,
sponsored or contributed to by Seller which, as of the Closing Date, has not
distributed all of its assets and/or satisfied all of its obligations.
(f) Seller has made available to Purchaser true
and complete copies of the documents governing each of the Welfare Plans as in
effect on the Closing Date.
(g) Schedule 9.28 lists all plans or programs to
provide fringe benefits to Seller's employees (other than Pension Plans and
Welfare Plans), including, but not limited to, vacation, sick leave, severance
pay, nonqualified deferred
23
<PAGE> 24
compensation plans and other insurance plans or related benefits (the "Fringe
Benefit Plans"). The term "Fringe Benefit Plan" shall include the trusts and
other funding vehicles relating to the Fringe Benefit Plans. The term "Fringe
Benefit Plan" shall also include any terminated fringe benefit plan previously
maintained, sponsored or contributed to by Seller which, as of the Closing Date,
has not distributed all of its assets and/or satisfied all of its obligations.
(h) Seller has made available to Purchaser true
and complete copies of the documents governing each Fringe Benefit Plan.
(i) Except as set forth on Schedule 9.28, Seller
has no direct or indirect, formal or informal, plan, fund or program to change
any Pension Plan, Welfare Plan or Fringe Benefit Plan that would affect any
employee whose employment with Seller has terminated as a result of this
Agreement. Seller has made no material modification, within the meaning of ERISA
section 102 and the regulations thereunder, to any existing Pension Plan or
Welfare Plan which is not set forth in the Pension Plan or Welfare Plan
documents provided to Purchaser.
(j) For purposes of this section 9.28, "Seller"
shall include the Seller and all members of any controlled group of corporations
(within the meaning of Code section 414(b), relevant Treasury Regulations and
Pension Benefit Guaranty Corporation regulations issued pursuant to ERISA
section 4001), any group of trades or businesses under common control (within
the meaning of Code section 414(c), relevant Treasury Regulations and Pension
Benefit Guaranty Corporation regulations issued pursuant to ERISA section 4001)
and any affiliated service group (within the meaning of Code section 414(m) and
relevant Treasury Regulations and proposed Treasury Regulations) of which Seller
is a member.
(k) Except as disclosed on Schedule 9.28, Seller
has never been obligated to contribute to any multiemployer plan within the
meaning of ERISA section 3(37).
(l) To the knowledge of Seller and the
Shareholder, the Pension Plans, the Welfare Plans and the Fringe Benefit Plans
have been administered in all respects in compliance with the applicable
requirements of ERISA, the Code, the plan document and all other applicable
rules, regulations and laws. The Pension Plans meet all applicable requirements,
in form and in operation, for favorable tax treatment under the Code. There are
no outstanding issues relating back to the Pension Plans, Welfare Plans and
Fringe Benefit Plans pending before the Internal Revenue Service, Department of
Labor, or the Pension Benefit Guaranty Corporation ("PBGC"). Each Pension Plan
has been amended to conform to applicable law, including the Tax Reform Act of
1986, the Omnibus Reconciliation Act of 1989, Unemployment Compensation
Amendments of 1992 and the Omnibus Reconciliation Act of 1993. To Seller's or
the Shareholder's
24
<PAGE> 25
knowledge, with respect to each Pension Plan, Welfare Plan and Fringe Benefit
Plan, all reporting and disclosure requirements have been met for all years.
(m) All required contributions pursuant to the
Pension Plans, Welfare Plans and Fringe Benefit Plans for all periods prior to
the Closing Date have been made or will be made or are adequately reflected as
accruals in accordance with generally accepted accounting principles on the
Seller's financial statements prior to the Closing Date.
(n) There are no pending or, to the knowledge of
Seller or the Shareholder, threatened claims, lawsuits or arbitrations which
have been inserted or instituted against the Pension Plans, Welfare Plans or
Fringe Benefit Plans or any fiduciaries thereof with respect to their duties to
the Pension Plans, Welfare Plans or Fringe Benefit Plans, including the assets
of any trusts under any Pension Plans, Welfare Plans or Fringe Benefit Plans.
(o) With respect to each Pension Plan, Welfare
Plan and Fringe Benefit Plan other than the Simplified Employee
Pension-Individual Retirement Accounts, the Seller has furnished to the
Purchaser written descriptions including administrative procedures that have
been adopted that may have established a precedent upon which participants,
beneficiaries, or alternate payees may rely. Except as disclosed on Schedule
9.28, to Seller's or the Shareholder's knowledge, no representations or
communications with respect to participation, eligibility for benefits, vesting,
benefit accrual or coverage under the Pension Plans, Welfare Plans or Fringe
Benefit Plans have been made to the Seller's employees other than those which
are in accordance with the terms of such Pension Plans, Welfare Plans or Fringe
Benefit Plans in effect immediately prior to the Closing Date.
(p) With respect to any Welfare Plan which is a
"group health plan" as defined in Code section 4980B, the Seller, to Seller's or
the Shareholder's knowledge, has complied with the continuation coverage
requirements of Code section 4980B for any periods prior to the Closing Date.
(q) With respect to each Pension Plan, Welfare
Plan and Fringe Benefit Plan other than the Simplified Employee
Pension-Individual Retirement Accounts, the Seller has furnished to the
Purchaser copies of any investment management agreements, fiduciary insurance
policies, fidelity bonds, rules, regulations or policies of the Trustees or any
committee thereunder, all of which are true and complete.
(r) Except as disclosed on Schedule 9.28, to the
knowledge of Seller and the Shareholder, since December 31, 1974, no fiduciary
of the Pension Plans or Welfare Plans other than the Simplified Employee
Pension-Individual Retirement Accounts has engaged in any "prohibited
transaction"" (as defined in ERISA
25
<PAGE> 26
section 406 or Code section 4975) nor has any fiduciary breached any fiduciary
responsibility, as described in Part IV of Title I of ERISA with respect to such
Pension Plans or Welfare Plans.
(s) Except as disclosed in Schedule 9.28, no
Welfare Plan or Fringe Benefit Plan other than the Simplified Employee
Pension-Individual Retirement Accounts provides any form of post-retirement
health benefits to retired employees of the Seller, other than benefits required
to be provided pursuant to Code section 4980B.
9.29 Labor Matters.
(a) There are no union collective bargaining
agreements, letters of understanding, agreements modifying same or other labor
contracts. Except as disclosed on Schedule 9.29, Seller is not a party to any
pending arbitration or grievance proceeding or other claim relating to any
contract or laws regarding employment practices nor, to Seller's and the
Shareholder's knowledge, is any such action threatened.
(b) Seller is not bound by nor does it have
knowledge of any court, administrative agency, arbitration, tribunal, commission
or board decree, judgment, decision, agreement or settlement relating to (i) any
collective bargaining agreements or other labor or employment agreements
(including, without limitation, the wages, hours or other terms or conditions of
employment contained therein); (ii) unfair labor practices; (iii) union
representation proceedings or attempts to organize a collective bargaining unit;
(iv) employment discrimination (v) wrongful discharge; (vi) wage/hour matters;
(vii) unemployment compensation; (viii) worker's compensation; (ix) occupational
safety and health, safe work place or employee right-to-know laws; (x)
affirmative action, government contracts or contract compliance laws; (xi)
immigration laws; (xii) employment-related tort, or retaliation claims; (xiii)
laws governing an employee's right to continued coverage under a group health
insurance plan; (xiv) plant closing and mass lay-off laws; (xv) family and
medical leave laws; (xvi) noncompete, confidentiality or trade secret
agreements; or (xvii) any other labor or employment-related claim which may in
any way materially and adversely affect Seller or the Purchased Assets. Except
as set forth on Schedule 9.29, Seller and the Shareholder have no notice nor
knowledge of any such pending or threatened employment-related claim, charge or
investigation, or, by or on behalf of current or former employees of Seller, or
applicants for employment with Seller, or of any current investigation by any
government agency relating to employment or safety issues pertaining to Seller.
(c) Seller has made all required payments that are
due and payable to the appropriate governmental authorities with respect to
applicable unemployment compensation reserve accounts for its employees in the
Commonwealth of Virginia. Seller has no regular, full-time employees except in
Virginia.
26
<PAGE> 27
(d) Except as disclosed on Schedule 9.29, there is
no pending or threatened charge, complaint or petition by, against or involving
Seller before the National Labor Relations Board or any state or local agency
and no labor strike, slowdown or work stoppage, other material labor trouble,
material labor, grievance or representation question is pending, or to Seller's
or the Shareholder's knowledge, threatened against Seller.
(e) Prior to the Closing Date, Seller shall have
given notice to each of its employees that effective as of the Closing Date such
employees no longer will be employees of Seller and as of Closing shall become
employees of Purchaser, and shall furnish such employees and appropriate
governmental authorities such other notice as may be required by and in
accordance with applicable laws and regulations, including, without limitation,
any applicable plant closing or mass lay-off laws.
(f) Nothing contained in this Agreement shall
confer upon any of the Seller's employees any rights or remedies of any nature
or kind whatsoever, including, without limitation, any right to employment or
continued employment for any specified period.
9.30 Disclosure and Reliance. Disclosures made by
Seller and the Shareholder in any schedule to this Agreement shall be deemed to
be a disclosure with respect to all representations, warranties and covenants
set forth herein. However, all disclosures must be sufficiently complete such
that the related warranty or representation contained in this Agreement does not
contain any untrue statement or fact or omit to state any fact required to make
the statements therein contained not materially misleading under the
circumstances existing as of the date hereof. No warranty or representation by
Seller or the Shareholder contained in this Agreement contains or will contain
any untrue statement of fact or omits or will omit to state any fact required to
make the statements therein contained not materially misleading under the
circumstances existing as of the date hereof.
9.31 Intangible Assets. Schedule 1.03 contains a true
and complete list of all patents, invention disclosures, trademarks, trade
names, service marks and licenses owned by Seller and all pending applications
and applications to be filed therefor. Except as set forth on Schedule 9.31, all
Intangible Assets are fully assignable and are being transferred hereunder free
and clear of any adverse claims or interests. Except as set forth on Schedule
9.31, no licenses or agreements have been granted or entered into by Seller
relating to any of the Intangible Assets. Except for the Intangible Assets, in
Seller's and the Shareholder's reasonable judgment, no other patents,
trademarks, trade names, service marks, copyrights, computer software, trade
secrets, licenses or applications therefor are necessary for the operation of
Seller's business as
27
<PAGE> 28
currently conducted. Except as set forth on Schedule 9.31, to Seller's and the
Shareholder's knowledge, the operation of Seller and the use of its products by
customers have not involved any infringement or misappropriation, and Seller and
the Shareholder have no notice or knowledge of, (a) any claim against Seller for
infringement of any patents, trademarks, trade names, service marks, copyrights
or licenses of others; or (b) the misappropriation of the trade secrets of
others.
9.32 Letters of Credit. There exist no outstanding
letters of credit used by Seller in the operation of its business, including
letters of credit delivered by third parties for Seller's benefit.
9.33 Unlawful Payments. To Seller's and the
Shareholder's knowledge, no payments of cash or other consideration have been
made to any person, entity or government by Seller or on Seller's behalf with
respect to operation of its business by any agent, employee, officer, director,
shareholder or other person or entity which were unlawful under the laws of the
United States or any state or other government having appropriate jurisdiction.
9.34 Disabled Employees. To Seller's and the
Shareholder's knowledge, no Employee was eligible for long-term disability but
had not been certified as such as of the Closing Date. Except as set forth on
Schedule 9.34, no Employee was, as of the Closing Date, on medical leave.
9.35 Subsidiaries. Seller has no subsidiaries. Seller
has no interest, direct or indirect, and has no commitment to purchase any
interest, direct or indirect, in any other corporation, partnership, joint
venture or other business enterprise or entity. Seller's business has not been
conducted through any direct or indirect subsidiary or affiliate of Seller or
any shareholder of Seller.
9.36 Government License and Regulation. Seller has all
domestic and foreign governmental licenses and permits necessary to conduct its
business and own and use the Purchased Assets, and such licenses and permits are
in full force and effect. Except as set forth on Schedule 9.36, all rights of
Seller under such licenses and permits are transferable to Purchaser solely upon
the assignment of such licenses and permits by Seller to Purchaser hereunder,
and will be exercisable by Purchaser after the consummation of the transactions
contemplated by this Agreement. No proceeding is pending or, to Seller's and the
Shareholder's knowledge, threatened regarding the revocation or limitation of
any governmental license or permit and there is no basis or grounds for any such
revocation or limitation.
9.37 Employment Contracts. Except as set forth on
Schedule 9.37, Seller has no employment contract with any person, nor any
contract with any Employee involving termination, retirement or termination pay,
deferred compensation, profit
28
<PAGE> 29
sharing or pension plans, employee benefit plans or other employee benefits or
post-employment benefits of any kind. Schedule 9.37 lists (a) the names, job
descriptions and total compensation of each director, employee or consultant of
Seller; (b) the fringe benefits currently furnished to such persons and (c) all
loans, leases and other financial arrangements to or from Seller with any
Employee, officer, director or consultant.
9.38 Year 2000 Compliance. Seller's Telemagic
telemarketing software ("Telemagic") will correctly recognize, calculate, sort,
store, display and otherwise process data involving dates prior to, during and
after the year 2000 A.D., including but not limited to correct processing of
leap years, and the operation and functionality of Telemagic shall in no way be
materially adversely affected by the approach, occurrence or passing of the
calendar date January 1, 2000 ("Year 2000 Compliant"). Seller has verified that
Telemagic is Year 2000 Compliant either by appropriate and adequate testing
using scenarios spanning dates prior to and after the year 2000 A.D. or by
receipt of a written warranty, which is by its terms assignable to Purchaser, a
copy of which is attached to Schedule 9.38, from the developer of Telemagic
warranting that Telemagic is Year 2000 Compliant and providing adequate remedies
in the event of a breach of such warranty.
9.39 Assets and Sales. Assuming that the Purchase Price
payable by Purchaser to Seller under this Agreement is not determinative in
calculating total assets under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, neither Seller nor, as Seller's "ultimate parent entity," the
Shareholder, has total assets or annual net sales of $10,000,000 or more. The
Shareholder has no regularly prepared financial statement showing total assets
or annual net sales of $10,000,000 or more.
10. Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to Seller that:
10.01 Corporate Organization. Purchaser is a
corporation duly organized and validly existing under the laws of the State of
Wisconsin and, based solely on a certificate of the Department of Financial
Institutions of the State of Wisconsin (the "Department"), (a) has filed with
the Department during its most recently completed report year of the required
annual report; (b) is not the subject of a proceeding under Wisconsin Statutes
section 180.1421 to cause its administrative dissolution; (c) no determination
has been made by the Department that grounds exist for such action; (d) no
filing has been made with the Department of a decree of dissolution with respect
to Purchaser; and (e) Articles of Dissolution of Purchaser have not been filed
with the Department. Purchaser has the corporate power and authority to own its
property and carry on its business. Purchaser is duly licensed and qualified to
do business and is in good standing in the Commonwealth of Virginia.
29
<PAGE> 30
10.02 Authority. Purchaser has all necessary corporate
power to execute and deliver this Agreement and to consummate the transactions
provided for herein. The execution and delivery of this Agreement by Purchaser
and the performance by it of its obligations to be performed hereunder have been
duly authorized by all necessary and appropriate corporate action. The execution
and delivery of this Agreement, and the consummation of the transactions
contemplated hereby do not and will not conflict with, or result in a breach of,
or constitute a default under, the terms or conditions of Purchaser's Articles
of Incorporation or By-Laws or any court or administrative order or process, any
agreement or instrument to which Purchaser is a party or by which it is bound or
by any statute or regulation of any governmental agency. This Agreement and the
documents contemplated hereby are valid and binding obligations of Purchaser
enforceable in accordance with their terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and
subject to general principles of equity.
10.03 Hiring of Employees. As soon as practicable on or
after the Closing Date, Purchaser shall give notice to each of Seller's
employees that effective as of the Closing Date such employees shall be at-will
employees of Purchaser.
10.04 Bonus Amount. Purchaser shall pay the Bonus
Amount to employees in accordance with section 5.01 and Schedule 5.01(b).
10.05 Warranties True and Correct. No warranty or
representation by Purchaser contained in this Agreement contains or will contain
any materially untrue statement of fact or omits or will omit to state any
material fact required to make the statements therein contained not misleading
under the circumstances existing as of the date hereof.
10.06 Purchaser's Knowledge. Nothing has come to
Purchaser's attention during the course of Purchaser's due diligence that is, or
in Purchaser's reasonable judgment is likely to result in, a breach of any of
Seller's or the Shareholder's representations and warranties made in this
Agreement except for matters disclosed in this Agreement or the Schedules
hereto.
11. Mutual Covenants.
11.01 Books and Records. The parties agree that, for the
purpose of this section, the "Access Period" is defined as the longer of (a) a
period of five years following the Closing Date or (b) the period of time
beginning on the Closing Date and ending on the date on which taxes may no
longer be assessed under the applicable statutes of limitation, including the
period of waivers or extensions thereof. Seller and the Shareholder hereby
covenant and agree to maintain in a reasonably accessible place,
30
<PAGE> 31
during the Access Period, the books and records not delivered to Purchaser
hereunder relating to Seller wherever located and to provide copies of such
books and records to Purchaser or its representative upon Purchaser's reasonable
request at Purchaser's expense. Seller and the Shareholder agree to notify
Purchaser prior to disposing of any such books and records and, upon request
made within sixty days after receipt of such notice, to deliver such books and
records to Purchaser at Purchaser's expense. With respect to the books and
records delivered to Purchaser hereunder (including the Documents), Purchaser
hereby covenants and agrees to give Seller and the Shareholder the same access
for the same time period and agrees to give Seller and the Shareholder the same
notice and right in the event of any proposed disposition of such books and
records.
11.02 Litigation Assistance. With respect to any claim
relating to Seller's business which is not assumed by Purchaser hereunder,
Purchaser agrees to fully cooperate and assist Seller in defending such claim or
lawsuit at Seller's sole expense. Such cooperation and assistance shall include
providing personnel (experienced in litigation matters) to assist in the
production of documents and to participate in consultations, depositions and
trial, to the same extent as if Purchaser was defending such claim or lawsuit.
Upon written request, Seller shall reimburse Purchaser for all reasonable
out-of-pocket expenses actually incurred by Purchaser (including regular rates
of salary, wages and traveling expenses) solely for purposes of providing the
cooperation and assistance required hereunder. With respect to any claim
relating to Seller which is assumed by Purchaser hereunder, Seller and the
Shareholder agree to give Purchaser the same assistance on the same terms and
under the same conditions.
11.03 Reporting Assistance. Purchaser agrees to
cooperate and timely assist Seller in preparing information for various
authorities after the Closing Date on the condition that such information
relates to the purchase contemplated by this Agreement or the Purchased Assets.
This information includes, but is not limited to, accounting and tax workbooks,
responses to audit requests, other filings to tax authorities (e.g., payroll,
property, sales and use taxes and other information necessary to comply with
federal, state and local laws). Seller shall reimburse Purchaser, upon written
request, for all reasonable out-of-pocket expenses actually incurred by
Purchaser (including regular rates of salary, wages and traveling expenses)
solely for purposes of providing the cooperation and assistance required
hereunder. Seller and the Shareholder agree to provide the same reporting
assistance to Purchaser on the same terms and under the same conditions.
12. Covenants and Agreements of Seller.
12.01 Employee Benefits. Seller shall pay promptly when
due severance pay, vacation pay, termination compensation and other benefits
payable to
31
<PAGE> 32
employees of Seller due on or prior to the Closing Date or payable by Seller in
relation to Seller's termination of the employment of any employees on or prior
to the Closing Date.
12.02 Seller's Benefit Plans. Seller agrees that
Purchaser shall assume no responsibility to maintain or provide benefits
pursuant to any Pension Plan, Welfare Plan or Fringe Benefit Plan, including,
without limitation, any plan to provide medical or health benefits to retired
employees of Seller, that is not specifically assumed or listed as not to be
assumed, by Purchaser hereunder as set forth on Schedule 12.02. Purchaser shall
become the successor sponsor only of any Pension Plans, Welfare Plans or Fringe
Benefit Plans which are listed as assumed on Schedule 12.02. Except for such
amounts that are included on the statement of Operating Working Capital as of
the Closing Date, Seller shall remain responsible for the benefits, including,
without limitation, benefits provided pursuant to any Pension Plan, Welfare Plan
or Fringe Benefit Plan, with respect to any employee of Seller on paid or unpaid
leave of absence, worker's compensation, short-term disability or long-term
disability as of the Closing Date. Seller agrees to forward to Purchaser any of
the following amounts that were actually paid to or withheld by Seller prior to
the Closing Date: (a) cafeteria plan deferrals, (b) employee withholdings or
payments for health, dental or COBRA premiums, and (c) Pension Plan employee
deferrals. Seller also agrees to pay Purchaser for its pro-rata share of any
employer payments to Pension Plans that are required under the terms of such
plans as in effect on the Closing Date, disregarding any hours of service
requirements for employer contributions.
12.03 Account Debtors. If Seller or the Shareholder
receives any payment from an account debtor with respect to a Receivable, it
shall promptly remit the payment to Purchaser. Purchaser is authorized to
endorse any instrument of payment to Seller or the Shareholder pursuant to its
rights hereunder. If Purchaser receives any payments from an account debtor with
respect to an Excluded Receivable, it shall promptly remit the payment to
Seller. If any Receivables written off in the post Closing adjustment under
Section 5.03 are subsequently collected, Purchaser shall promptly remit such
payment(s) to Seller or its successor.
13. Indemnification by Seller and the Shareholder.
13.01 Generally. Notwithstanding the Closing, Seller and
its successors and the Shareholder, jointly and severally, agree to indemnify,
defend and hold Purchaser and its directors, officers, employees, agents,
shareholders, successors and assigns harmless from and against any damage,
liability, loss, cost or deficiency (including, but not limited to, reasonable
attorneys' fees, punitive damages and other costs and expenses incident to
proceedings or investigations or the defense or settlement of any claim)
("Purchaser's Damages") arising out of, resulting from or relating to:
32
<PAGE> 33
(a) any inaccuracy in or breach of a representation or
warranty of Seller or the Shareholder pursuant to this Agreement, including
schedules and certificates delivered pursuant hereto that is (i) made in
ss.9.01, 9.02, 9.03, 9.08, 9.29, or 9.35, or (ii) the breach of which relates
solely to the Purchased Assets or the Assumed Liabilities;
(b) any failure of Seller or the Shareholder to duly
perform any term, provision, covenant or agreement to be performed by Seller or
the Shareholder pursuant to this Agreement which failure does not give rise to
indemnification pursuant to ss.13.01(a); and
(c) any and all accrued, contingent or other
liabilities, debts, obligations and commitments of Seller not expressly assumed
by Purchaser pursuant to this Agreement, including, but not limited to, Excluded
Liabilities, brokerage fees, expenses referred to in section 16.05, any bulk
sales liability referred to in section 16.06 and any sales or use tax
liabilities arising out of or relating to the conduct of Seller prior to the
Closing Date or as a result of the transactions contemplated hereby.
The representations and warranties of Seller and the
Shareholder shall survive for a period of 12 months after Closing, or such
longer period as specified herein. The representations and warranties in
sections 9.01, 9.02 and 9.19 shall survive indefinitely. Seller's and the
Shareholder's obligation to indemnify Purchaser with respect to a particular
claim under section 9 shall extend beyond the applicable period set forth above
if Purchaser, acting in good faith, asserts such claim within the applicable
period.
13.02 Procedure. Purchaser shall give Seller and the
Shareholder prompt notice in writing of any written claim, demand, assessment,
action, suit or proceeding to which the indemnity set forth in this section
applies ("Notice of Claim"). If such claim or demand is evidenced by a court
pleading, Purchaser shall give Notice of Claim within ten days of receipt of
such pleading. If such claim or demand is evidenced by some other writing or
notice from a third party, Purchaser shall give Notice of Claim within ten days
of the date it receives a notice of such claim.
Purchaser shall furnish to Seller and the Shareholder in
reasonable detail such information as Purchaser may have with respect to such
claim or demand (including, without limitation, copies of any summons,
complaints or other pleadings which may have been served on Purchaser or its
agents and any written claim, demand, invoice, billing or other document
evidencing the same). Failure to give timely notice of a matter which may give
rise to an indemnification claim shall not affect the rights of Purchaser to
collect such claims from Seller and/or the Shareholder so long as such failure
to so notify does not materially adversely affect the Seller's or the
Shareholder's ability to defend such claim against a third party.
33
<PAGE> 34
If Purchaser's request for indemnification arises from
the claim of a third party, the written notice shall permit Seller or the
Shareholder to assume control of the defense of such claim or any litigation
resulting from such claim. Failure by Seller or the Shareholder to so notify
Purchaser of its or their election to defend a complaint by a third party within
ten days shall be a waiver by Seller and the Shareholder of its or their right
to respond to such complaint and within ten days after notice thereof shall be a
waiver by Seller and the Shareholder of its or their right to assume control of
the defense of such claim or litigation. If Seller or the Shareholder assumes
control of the defense of such claim or litigation resulting therefrom, Seller
or the Shareholder shall take all reasonable steps necessary in the defense or
settlement of such claim or litigation resulting therefrom, and Seller and the
Shareholder shall hold Purchaser harmless from and against all damages arising
out of or resulting from any settlement approved by Seller or the Shareholder or
any judgment in connection with such claim or litigation. Notwithstanding
Seller's or the Shareholder's assumption of the defense of such third-party
claim or demand, Purchaser shall have the right to participate in the defense of
such third-party claim or demand at its own expense. Seller and the Shareholder
shall not, in the defense of such claim or litigation, consent to entry of any
judgment or enter into any settlement, except in either case with a written
consent of Purchaser, which consent shall not be unreasonably withheld, delayed
or conditioned. Purchaser shall furnish Seller and the Shareholder in reasonable
detail all information Purchaser may have with respect to any such third-party
claim and shall make available to Seller and the Shareholder and their
representatives all records and other similar materials which are reasonably
required in the defense of such third-party claim and shall otherwise cooperate
with and assist Seller and the Shareholder in the defense of such third-party
claim. If Seller or the Shareholder do not assume control of the defense of any
such third-party claim or litigation resulting therefrom, Purchaser may defend
against such claim or litigation in such manner as it may reasonably deem
appropriate, and Seller and the Shareholder shall indemnify Purchaser from any
damages and reasonable costs indemnifiable under this section incurred in
connection therewith.
13.03 Limitations. Except for Seller's and the Shareholder's
obligations to indemnify Purchaser under subsections 13.01(b) and (c) of this
Agreement, no indemnification with respect to representations and warranties in
this Agreement shall be payable by Seller or the Shareholder to Purchaser unless
and until Purchaser's Damages exceed an amount equal to 1% of the Purchase
Price, as adjusted pursuant to section 5.03. At such time that Purchaser's
Damages exceed such amount, Seller and the Shareholder shall be liable to
Purchaser for all of Purchaser's Damages incurred thereafter. No indemnification
under section 13.01 of this Agreement shall be payable by Seller or the
Shareholder to Purchaser in excess of an amount equal to 10% of the Purchase
Price, as adjusted pursuant to section 5.03. Purchaser shall be entitled to
recover any amounts owed to Purchaser pursuant to this section directly from
Seller or the Shareholder upon demand. The limitations set forth in this section
13.03 shall not apply
34
<PAGE> 35
to (a) the representations and warranties in sections 9.01, 9.02 and 9.19; (b)
liabilities for income taxes described in ss.4.03 and the Distribution Payable
described in ss.4.06; or (c) actions based on Seller's or the Shareholder's
fraudulent (i) conduct, (ii) misrepresentation, (iii) omission; provided,
however, neither Seller nor the Shareholder shall have any indemnification
obligation for amounts reimbursed or paid to Purchaser under applicable
insurance policies or other forms of reimbursement to Purchaser.
(b) If Chesterfield County asserts a right of first
refusal or option or if the Real Property is subject to a right of reverter in
favor of Chesterfield County arising under the Real Estate Documents, the Seller
or the Shareholder shall have the right to attempt to have Chesterfield County
waive or otherwise not assert such rights. Such right to cure by Seller or the
Shareholder shall exist for so long as Purchaser is able to operate from the
Real Property at no additional cost or penalty to Purchaser, and provided that
such attempt to cure does not adversely affect Purchaser's disposition of the
Real Estate. Additionally, Purchaser agrees to make timely a claim under the
title insurance policy referenced in Section 9.08 and prosecute such claim to
completion with respect to any claim asserted by Chesterfield County relating to
a right of first refusal, option or right of reverter arising under the Real
Estate Documents from the transfer of the Real Property from Seller to
Purchaser. To the extent that the Purchaser incurs Purchaser's Damages in excess
of amounts recovered by the Purchaser under the title policy referenced in
Section 9.08, the Seller and the Shareholder, jointly and severally, shall
indemnify the Purchaser for one-half of such excess Purchaser Damages up to, but
not in excess of, 10% of the Purchase Price. The Seller's and the Shareholder's
indemnification obligation with respect to such excess Purchaser's Damages shall
expire, and be of no further force and effect, three (3) years from the date
hereof.
14. Indemnification by Purchaser.
14.01 Generally. Notwithstanding the Closing, Purchaser
and its successors agree to indemnify, defend and hold Seller and the
Shareholder, and Seller's directors, officers, employees, agents, shareholder,
successors and assigns harmless from and against any damage, liability, loss,
cost or deficiency (including, but not limited to, reasonable attorneys' fees,
punitive damages and other costs and expenses incident to proceedings or
investigations or the defense or settlement of any claim) ("Seller's Damages")
arising out of, resulting from or relating to:
(a) any inaccuracy in or breach of a
representation or warranty of Purchaser pursuant to this Agreement, including
certificates and schedules delivered pursuant hereto;
35
<PAGE> 36
(b) any failure of Purchaser to duly perform or
satisfy the Assumed Liabilities or duly perform any term, provision, covenant or
agreement to be performed by Purchaser pursuant to this Agreement; and
(c) subject to the terms of this Agreement, any
liability or obligation arising out of events which occur after the Closing Date
with respect to Purchaser's business, including, but not limited to,
post-Closing Date violations by Purchaser of law or regulations.
Purchaser's representations and warranties to
Seller and the Shareholder shall survive Closing for a period of 12 months.
14.02 Procedure. The procedural rules set forth in
section 13.02 shall apply with respect to indemnification by Purchaser;
provided, however, that the parties' obligations under section 13.02 shall be
reversed, as appropriate.
15. Covenant Not to Compete.
15.01 Noncompetition. Within the United States, Canada,
the United Kingdom, Germany, The Netherlands, Brazil, Mexico, Portugal, Sweden,
France, China and/or Romania, neither Seller nor the Shareholder shall, directly
or indirectly, during the five-year period beginning on the Closing Date and
ending on the anniversary thereof in calendar year 2004 (the "Restricted
Period"), engage or assist in the manufacture or sale of any products that are
the same as or of a type substantially similar to products currently
manufactured by Seller.
15.02 Confidentiality. During the Restricted Period,
Seller and the Shareholder shall keep secret and retain in strictest confidence
and shall not use for the benefit of Seller, the Shareholder or others any and
all confidential matters of Seller's business as of the Closing Date, including,
without limitation, trade secrets of Seller and shall not disclose such
confidential matters to anyone other than Purchaser without the express written
consent of Purchaser or as required by law, except for such confidential matters
that (a) are or become generally available to the public other than as a result
of a disclosure by Seller or the Shareholder; or (b) become available to Seller
or the Shareholder on a nonconfidential basis from a source other than Purchaser
or any of its representatives, provided that such source is not bound by a
confidentiality agreement with, or other contractual, legal or fiduciary
obligation of confidentiality to, Purchaser or any other party with respect to
such information.
15.03 Employees. During the Restricted Period, Seller
and the Shareholder shall not, directly or indirectly, encourage to leave the
employment of Purchaser or in any way solicit for employment any person who is
employed by Purchaser immediately after the Closing Date.
36
<PAGE> 37
16. Provisions of General Applicability.
16.01 General. This Agreement may be amended only by an
agreement in writing signed by the parties hereto. This Agreement shall be
governed by and subject to the laws of the Commonwealth of Virginia without
reference to choice of law provisions thereof. The failure of any party to
insist, in any one or more instances, upon performance of any of the terms and
conditions of this Agreement shall not be construed as a waiver or
relinquishment of any rights granted hereunder or of the future performance of
any such term, covenant or condition. In the event of any controversy concerning
the rights or obligations under this Agreement, such rights or obligations shall
be enforceable in a court of equity by a decree of specific performance. Such
remedy shall, however, be cumulative and nonexclusive. If any provision, clause
or part of this Agreement, or the application thereof under certain
circumstances, is held invalid, the remainder of this Agreement, or the
application of each provision, clause or part under other circumstances, shall
not be affected thereby, and any court of competent jurisdiction may so modify
the objectionable portion as to make it valid, reasonable and enforceable.
Without limiting the foregoing, the court shall have the right to sever and/or
modify entire provisions, subprovisions, phrases, terms and/or words.
16.02 Further Assurances. Upon reasonable request, from
time to time, each party agrees that it shall (or direct its employees to, if
applicable) execute and deliver all documents, make all rightful oaths, testify
in any proceedings and do all other acts which may be necessary or desirable in
the reasonable opinion of the other party to protect or record the right or
title of Purchaser to the Purchased Assets or to aid in the prosecution or
defense of any rights arising therefrom, all without further consideration.
37
<PAGE> 38
16.03 Notices. Any notice to be given hereunder shall
be deemed given and sufficient if in writing and delivered or mailed by
registered or certified mail, in the case of Seller or the Shareholder, to:
Mr. Olin V. Hyde
8900 Bellefonte Road
Richmond, VA 23229
with a copy to:
Hirschler, Fleischer, Weinberg, Cox & Allen
701 East Byrd Street, 15th Floor
Richmond, VA 23219
Attn: James L. Weinberg, Esq.
and, in the case of Purchaser, to:
Jason Incorporated
411 East Wisconsin Avenue,
Suite 2500
Milwaukee, WI 53202
Attn: Vincent L. Martin, Chairman
with a copy to:
Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c.
1000 North Water Street, Suite 2100
P.O. Box 514000
Milwaukee, WI 53203-3400
Attn: Richard W. Graber, Esq.
16.04 Benefit. This Agreement shall be binding upon and
inure to the benefit of and shall be enforceable by Purchaser, Seller, the
Shareholder and their respective successors and assigns. This Agreement may not
be assigned without the written consent of the other party or parties hereto.
16.05 Expenses. All expenses incurred by Seller, the
Shareholder or Purchaser in connection with the transactions contemplated
hereby, including, without limitation, legal, accounting and brokerage fees
shall be the responsibility of and for the account of the party which ordered
the particular service or incurred the particular expense, except as provided
herein. Purchaser, Seller and the Shareholder represent and warrant to each
other that there are no brokerage or finder's fees in connection with the
transactions contemplated hereby resulting from any actions taken by them,
except for the
38
<PAGE> 39
fees payable to Harris Williams & Co., for which Seller and the Shareholder
shall be solely liable, and the parties hereby indemnify, save and hold each
other harmless from and against claims by any other broker or finder for a fee
or expense which is based in any way on an agreement, arrangement or
understanding made or alleged to have been made by them related to the
transactions contemplated hereby. Any and all (a) federal, state, local or other
taxes, arising out of, resulting from or relating to Seller's sale of the
Purchased Assets, including taxes based on income and transfer (except as set
forth below), sales, use and gross receipts taxes, and (b) 50% of the costs of
the survey and title insurance shall be paid by and for the account of Seller
and the Shareholder as the case may be. Seller and the Shareholder shall be
jointly and severally liable for such amounts. Seller and the Shareholder shall
be jointly and severally responsible for and shall pay as and when due any
applicable grantor's tax. Purchaser shall be responsible for and shall pay as
and when due any applicable state and local record taxes, 50% of the costs of
the survey and title insurance and the costs of the Environmental Report.
16.06 Bulk Sales. Seller and the Shareholder hereby
indemnify, defend and hold Purchaser harmless from any and all liabilities,
losses, costs, damages or expenses (including, without limitation, reasonable
attorneys' fees) arising out of or relating to claims asserted against Purchaser
under the Virginia Bulk Sales Law or any other applicable bulk sales law.
16.07 Entire Agreement. This Agreement and the
schedules and other documents to be delivered pursuant hereto constitute the
entire agreement among the parties hereto and there are no agreements,
representations or warranties which are not set forth herein. All prior
negotiations, agreements and understandings are superseded hereby.
16.08 Public Announcement. Except as required by law,
no public announcement of the transactions contemplated hereby shall be made by
way of press release, disclosure to the trade or otherwise except with the
mutual approval of the parties.
39
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day, month and year first above written.
JASON INCORPORATED
BY /s/ Mark Twain
----------------------------------
Its
----------------------------------
SEALEZE CORPORATION
BY /s/ Olin V. Hyde
----------------------------------
Olin V. Hyde, President
SHAREHOLDER:
/s/ Olin V. Hyde
--------------------------------------
Olin V. Hyde
Exhibits
- --------
A. General Bill of Sale.
B. Assignment and Assumption Agreement.
C. Legal Opinion of Hirschler, Fleischer, Weinberg, Cox & Allen.
D. Employment and Consulting Agreement.
E. Legal Opinion of Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c.
40
<PAGE> 1
EXHIBIT 10.20
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF MERGER
This Amendment No. 1 dated as of March 13, 2000, to that Agreement and
Plan of Merger ("Merger Agreement") dated as of January 30, 2000, among Saw Mill
Capital Fund II, L.P., a Delaware limited partnership ("Saw Mill"), Calendar
Holdings, Inc., a Delaware corporation and a wholly-owned subsidiary of Saw Mill
("Parent"), Calendar Acquisition Corp., a Wisconsin corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), Jason Incorporated, a
Wisconsin corporation (the "Company"), Vincent L. Martin ("Chairman") and Mark
Train ("Chief Executive Officer" and together with the Chairman, the
"Shareholders"). Capitalized terms used herein and not defined shall have the
meaning given them in the Merger Agreement.
WHEREAS, Section 7.02(a) of the Merger Agreement requires the Company
to file the Proxy Statement with the SEC no later than March 15, 2000;
WHEREAS, the parties agree that it is in the best interests of the
parties to delay filing the Proxy Statement with the SEC by up to nine days.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained and intending to be legally bound
hereby, the parties hereby agree as follows:
1. The parties hereby agree that the proviso relating to filing of the
Proxy Statement with the SEC contained in Section 7.02(a) of the Merger
Agreement is hereby amended to read as follows:
"provided that subject to Saw Mill's, Parent's and Merger Sub's
compliance with the immediately-preceding sentence, in no event
shall the Company file the Proxy Statement with the SEC any later
than the date 54 days after the date hereof."
2. All other terms and provisions of the Merger Agreement shall remain
unchanged and in full force and effect.
[Signatures on Following Page]
<PAGE> 2
IN WITNESS WHEREOF, Saw Mill, Parent, Merger Sub, Shareholders and the
Company have caused this Amendment No. 1 to the Agreement and Plan of Merger to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
SAW MILL CAPITAL FUND II, L.P.
By: Saw Mill Investments II, LLC,
Its General Partner
By: /s/ Howard Unger
----------------------
Name: Howard Unger
Title: President
CALENDAR HOLDINGS, INC.
By: /s/ Howard Unger
---------------------------
Name: Howard Unger
Title: President
CALENDAR ACQUISITION CORP.
By: /s/ Howard Unger
---------------------------
Name: Howard Unger
Title: President
JASON INCORPORATED
By: /s/ Mark Train
---------------------------
Name: Mark Train
Title: Chief Executive Officer
/s/ Vincent L. Martin
-------------------------------
VINCENT L. MARTIN
/s/ Mark Train
-------------------------------
MARK TRAIN
<PAGE> 1
JASON INCORPORATED EXHIBIT 21.1
SUBSIDIARIES
10-K
<TABLE>
<CAPTION>
NAME JURISDICTION PERCENT
OWNERSHIP
- -------------------------------------------- --------------------- ---------------------------
<S> <C> <C>
Osborn de Venezuela Venezuela 100.00
Jason Industrial Products International Barbados 100.00
Jason Nevada, Inc. Nevada 100.00
Braden Nevada, Inc. Nevada 100.00
Deltak Nevada, Inc. Nevada 100.00
Janesville de Mexico Mexico 79.69
Jason Ohio Corporation Ohio 100.00
JacksonLea de Mexico Mexico 100.00
JacksonLea Canada Canada 100.00
Jason Canada, Inc. Canada 100.00
Jason Components Shenzhen China 100.00
Jason Components Shanghai China 100.00
Jason Holding GmbH Germany 100.00
Jason GmbH Germany 99.98
Danline GmbH Germany 100.00
Osborn International AB Sweden 99.98
Kohlswa Prod. AB Sweden 100.00
A/S Borstefabriken Dan Denmark 100.00
Osborn International Romania Romania 59.99
Jason UK Limited UK 100.00
Jason Holdings UK Limited UK 100.00
Janesville Products Limited UK 100.00
Osborn International Ltd UK 100.00
Webb Jarratt Limited UK 100.00
Dendix International Ltd UK 100.00
Forcepass Limited UK 100.00
Osborn International SA France 100.00
Beamnatural Limited UK 100.00
Osborn International LTDA Portugal 100.00
Lee & James Limited UK 100.00
Osborn International LDA Brazil 100.00
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements listed below of Jason Incorporated of our report dated February 1,
2000, except as to Note 15 which is as of February 15, 2000 relating to the
financial statements and financial statement schedule, which appears in this
form 10-K
1. Registration Statement on Form S-8 (Registration No. 33-18791)
2. Registration Statement on Form S-8 (Registration No. 33-30688)
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
March 29, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
JASON INCORPORATED CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1999, AND
CONSOLIDATED INCOME STATEMENT FOR THE TWELVE MONTH PERIOD ENDED
DECEMBER 31, 1999. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000813471
<NAME> JASON INCORPORATED
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> DEC-26-1998
<PERIOD-END> DEC-31-1999
<CASH> 5304
<SECURITIES> 0
<RECEIVABLES> 53099
<ALLOWANCES> 0<F1>
<INVENTORY> 48801
<CURRENT-ASSETS> 120597
<PP&E> 195522
<DEPRECIATION> 92941
<TOTAL-ASSETS> 311897
<CURRENT-LIABILITIES> 75812
<BONDS> 70208<F2>
0
0
<COMMON> 35968
<OTHER-SE> 104401
<TOTAL-LIABILITY-AND-EQUITY> 311897
<SALES> 423865
<TOTAL-REVENUES> 423865
<CGS> 323841
<TOTAL-COSTS> 323841
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6132
<INCOME-PRETAX> 29237
<INCOME-TAX> 11475
<INCOME-CONTINUING> 17762
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17762
<EPS-BASIC> 0.87<F3>
<EPS-DILUTED> 0.86
<FN>
<F1>COMPANY PRESENTS RECEIVABLES ON A NET BASIS IN COMPLIANCE
WITH ARTICLE 10 REGULATION S-X.
<F2>INCLUDES ALL NON-CURRENT PORTION OF DEBT OBLIGATIONS.
<F3>THE EPS UNDER THE EPS PRIMARY TAG REPRESENTS BASIC
EARNINGS PER SHARE IN ACCORDANCE WITH STATEMENT OF FINANCIAL
ACCOUNTING STANDARD NO. 128 EARNINGS PER SHARE.
</FN>
</TABLE>
