<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ACCURIDE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3714 61-1109077
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION) CLASSIFICATION
CODE NUMBER)
</TABLE>
------------------------
2315 ADAMS LANE
HENDERSON, KY 42420
(502) 826-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANTS PRINCIPAL EXECUTIVE OFFICES)
------------------------------
WILLIAM P. GREUBEL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
2315 ADAMS LANE
HENDERSON, KY 42420
(502) 826-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------------
COPIES TO:
RANDALL C. BASSETT
LATHAM & WATKINS
633 WEST FIFTH STREET, SUITE 4000
LOS ANGELES, CALIFORNIA 90071
(213) 485-1234
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
PROPOSED AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER NOTE(1) PRICE(1) FEE
<S> <C> <C> <C> <C>
9 1/4% Senior Subordinated Notes due 2008 $200,000,000 100% $200,000,000 $59,000
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ACCURIDE CORPORATION
CROSS REFERENCE SHEET
PURSUANT TO RULE 404(A) AND ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF THE INFORMATION
REQUIRED BY PART I OF FORM S-4
<TABLE>
<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus... Outside Front Cover Page; Cross Reference
Sheet; Inside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front Cover Page; Outside Back Cover
Page
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............ Prospectus Summary; Risk Factors; Selected
Consolidated Financial Data
4. Terms of the Transaction................... The Exchange Offer; Certain Federal Income
Tax Considerations, Description of Notes
5. Pro Forma Financial Information............ Prospectus Summary; Selected Consolidated
Financial Data
6. Material Contacts with the Company Being
Acquired................................. Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters....................... Not Applicable
8. Interests of Named Experts and Counsel..... Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Not Applicable
10. Information with Respect to S-3
Registrants.............................. Not Applicable
11. Incorporation of Certain Information by
Reference................................ Not Applicable
12. Information with Respect to S-2 or S-3
Registrant............................... Not Applicable
13. Information with Respect to Registrants
Other Than S-3 or S-2 Registrants........ Prospectus Summary; Capitalization;
Selected Consolidated Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management; Certain
Relationships And Related Transactions;
Principal Stockholders; Description of
Credit Facility; Description of Notes;
Book Entry; Delivery and Form; Plan of
Distribution; Legal Matters; Experts;
Available Information; Consolidated
Financial Statements
14. Information with Respect to S-3
Companies................................ Not Applicable
15. Information with Respect to S-2 or S-3
Companies................................ Not Applicable
16. Information with Respect to Companies Other
Than S-2 or S-3 Companies................ Not Applicable
17. Information if Proxies, Consents or
Authorizations are to be Solicited....... Not Applicable
18. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer..................... Management; The Exchange Offer; Certain
Relationships And Related Transactions
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED , 1998.
PROSPECTUS
OFFER TO EXCHANGE
9 1/4% SENIOR SUBORDINATED NOTES DUE 2008, SERIES B
FOR ALL OUTSTANDING 9 1/4% SENIOR SUBORDINATED NOTES DUE 2008, SERIES A
OF
ACCURIDE CORPORATION
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON , 1998
UNLESS EXTENDED.
Accuride Corporation, a Delaware corporation ("Accuride" or the "Company"),
hereby offers (the "Exchange Offer"), upon the terms and subject to the
conditions set forth in this Prospectus and the accompanying Letter of
Transmittal (the "Letter of Transmittal"), to exchange $1,000 principal amount
of its 9 1/4% Senior Subordinated Notes due 2008 (the "Exchange Notes"), which
exchange has been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a registration statement of which this Prospectus
is a part (the "Registration Statement"), for each $1,000 principal amount of
its outstanding 9 1/4% Senior Subordinated Notes due 2008 (the "Private Notes"),
of which $200,000,000 in aggregate principal amount are outstanding as of the
date hereof. The form and terms of the Exchange Notes are the same as the form
and terms of the Private Notes except that (i) the exchange will have been
registered under the Securities Act, and, therefore, the Exchange Notes will not
bear legends restricting the transfer thereof and (ii) Holders of the Exchange
Notes will not be entitled to certain rights of Holders of the Private Notes
under the Registration Rights Agreement (as defined), which rights will
terminate upon the consummation of the Exchange Offer. The Exchange Notes will
evidence the same debt as the Private Notes (which they replace) and will be
entitled to the benefits of an indenture dated as of January 21, 1998 governing
the Private Notes and the Exchange Notes (the "Indenture"). The Private Notes
and the Exchange Notes are sometimes referred to herein collectively as the
"Notes." See "The Exchange Offer" and "Description of Notes."
The Notes will be unsecured, will be subordinated in right of payment to all
existing and future Senior Indebtedness (as defined) of the Company and will be
effectively subordinated to all obligations of the subsidiaries of the Company.
The Notes will rank PARI PASSU with any future senior subordinated indebtedness
of the Company and will rank senior to all other Subordinated Indebtedness of
the Company. See "Description of the Notes." As of December 31, 1997, after
giving pro forma effect to the Recapitalization (including the Private Notes),
the aggregate amount of the Company's outstanding Senior Indebtedness would have
been approximately $196.0 million ($60.0 million of which represents a guarantee
of amounts borrowed directly by the Company's Canadian subsidiary under the
Credit Facility (as defined)), the Company would have had no senior subordinated
indebtedness outstanding other than the Private Notes, and the Company's
subsidiaries would have had total liabilities of $53.2 million, excluding
obligations under the Credit Facility. In addition, on a pro forma basis after
giving effect to the Recapitalization, the Company would have had $95.0 million
of additional Senior Indebtedness available to be borrowed under the Revolver
(as defined). See "Pro Forma Consolidated Condensed Financial Statements," "Risk
Factors--Adverse Consequences of Holding Company Structure," "-- Subordination"
and "Description of the Notes."
The Exchange Notes will bear interest at the same rate and on the same terms
as the Private Notes. Consequently, the Exchange Notes will bear interest at the
rate of 9 1/4% per annum and the interest thereon will be payable semi-annually
on February 1 and August 1 of each year, commencing August 1, 1998. The Exchange
Notes will bear interest from and including the date of issuance of the Private
Notes (January 21, 1998). Holders whose Private Notes are accepted for exchange
will be deemed to have waived the right to receive any interest accrued on the
Private Notes.
SEE "RISK FACTORS," BEGINNING ON PAGE 15, FOR A DISCUSSION OF CERTAIN
FACTORS THAT INVESTORS SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER AND
AN INVESTMENT IN THE EXCHANGE NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
The date of this Prospectus is , 1998
<PAGE>
The Exchange Notes will be redeemable at the option of the Company, in whole
or in part, on or after February 1, 2003, at the redemption prices set forth
herein, plus accrued and unpaid interest thereon, if any, to the date of
redemption. In addition, at any time on or prior to February 1, 2002, the
Company may, at its option, redeem up to 40% of the original aggregate principal
amount of the Exchange Notes with the net proceeds of one or more Equity
Offerings (as defined), at a price equal to 109.25% of the aggregate principal
amount to be redeemed, together with accrued and unpaid interest, if any, to the
date of redemption; provided that at least 60% of the original aggregate
principal amount of the Exchange Notes remains outstanding immediately after
each such redemption. Upon the occurrence of a Change of Control (as defined),
the Company will have the option, at any time on or prior to February 1, 2003,
to redeem the Exchange Notes, in whole but not in part, at a redemption price
equal to 100% of the principal amount thereof plus the Applicable Premium (as
defined), together with accrued and unpaid interest, if any, to the date of
redemption. Upon the occurrence of a Change of Control, if the Company does not
so redeem such Exchange Notes or if a Change of Control occurs after February 1,
2003, the Company will be required to make an offer to purchase the Exchange
Notes at a price equal to 101% of the original aggregate principal amount
thereof, together with accrued and unpaid interest, if any, to the date of
purchase. The Company's ability to pay cash to the Holders of Exchange Notes
upon a repurchase may be limited by the Company's then existing financial
resources. See "Description of Notes -- Repurchase at the Option of Holders --
Change of Control."
The Company will accept for exchange any and all validly tendered Private
Notes not withdrawn prior to 5:00 p.m., New York City time, on , 1998,
unless the Exchange Offer is extended by the Company in its sole discretion (the
"Expiration Date"). Tenders of Private Notes may be withdrawn at any time prior
to the Expiration Date. Private Notes may be tendered only in integral multiples
of $1,000. The Exchange Offer is subject to certain customary conditions. See
"The Exchange Offer -- Conditions."
Based on an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters issued to third
parties, the Company believes that the Exchange Notes issued pursuant to the
Exchange Offer in exchange for Private Notes may be offered for resale, resold
and otherwise transferred by a Holder thereof (other than (i) a broker-dealer
who purchases such Exchange Notes directly from the Company to resell pursuant
to Rule 144A or any other available exemption under the Securities Act or (ii) a
person that is an affiliate of the Company within the meaning of Rule 405 under
the Securities Act), without compliance with the registration and prospectus
delivery provisions of the Securities Act; provided that the Holder is acquiring
the Exchange Notes in the ordinary course of its business and is not
participating, and had no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes. Holders of Private Notes
wishing to accept the Exchange Offer must represent to the Company, as required
by the Registration Rights Agreement, that such conditions have been met. Each
broker-dealer that receives Exchange Notes for its own account in exchange for
Private Notes, where such Private Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in exchange
for Private Notes where such Private Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. A
broker-dealer may not participate in the Exchange Offer with respect to the
Private Notes acquired other than as a result of market-making activities or
other trading activities. The Company has indicated its intention to make this
Prospectus (as it may be amended or supplemented) available to any broker-dealer
for use in connection with any such resale for a period of 90 days after the
Expiration Date. See "The Exchange Offer -- Resale of the Exchange Notes" and
"Plan of Distribution." The Company believes that none of the registered Holders
of the Private Notes is an affiliate (as such term is defined in Rule 405 under
the Securities Act) of the Company.
i
<PAGE>
Prior to the Exchange Offer, there has been no public market for the Notes.
The Exchange Notes will not be listed on any securities exchange, but the
Private Notes are eligible for trading in the National Association of Securities
Dealers, Inc.'s Private Offerings, Resales and Trading through Automatic
Linkages (PORTAL) market. There can be no assurance that an active market for
the Notes will develop. To the extent that a market for the Notes does develop,
the market value of the Notes will depend on market conditions (such as yields
on alternative investments), general economic conditions, the Company's
financial condition and certain other factors. Such conditions might cause the
Notes, to the extent that they are traded, to trade at a significant discount
from face value. See "Risk Factors -- Absence of Public Market; Restrictions on
Transfer."
The Company will not receive any proceeds from, and has agreed to bear the
expenses of, the Exchange Offer. No underwriter is being used in connection with
this Exchange Offer. See "The Exchange Offer -- Resale of the Exchange Notes."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF PRIVATE NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE EXCHANGE OFFER TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF
TRANSMITTAL, NOR ANY EXCHANGE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS OFFERING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT
PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS IN
CONNECTION THEREWITH. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
The Exchange Notes will be available initially only in book-entry form. The
Company expects that the Exchange Notes issued pursuant to the Exchange Offer
will be issued in the form of one or more fully registered global notes that
will be deposited with, or on behalf of, the Depository Trust Company ("DTC" or
the "Depositary") and registered in its name or in the name of Cede & Co., as
its nominee. Beneficial interests in the global note representing the Exchange
Notes will be shown on, and transfers thereof will be effected only through,
records maintained by the Depositary and its participants. After the initial
issuance of such global note, Exchange Notes in certificated form will be issued
in exchange for the global note only in accordance with the terms and conditions
set forth in the Indenture. See "The Exchange Offer -- Book-Entry Transfer" and
"Book Entry; Delivery and Form."
ii
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward-looking statements. The factors discussed under
"Risk Factors," among others, could cause actual results to differ materially
from those contained in forward-looking statements made in this Prospectus,
including, without limitation, in "Prospectus Summary--Summary Pro Forma
Consolidated Financial Data," "Business" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and in oral
statements made by authorized officers of the Company. When used in this
Prospectus, the words "estimate," "project," "anticipate," "expect," "intend,"
"believe" and similar expressions are intended to identify forward-looking
statements. All of these forward-looking statements are based on estimates and
assumptions made by management of the Company, which, although believed to be
reasonable, are inherently uncertain. Therefore, undue reliance should not be
placed upon such estimates and statements. No assurance can be given that any of
such statements or estimates will be realized and actual results will differ
from those contemplated by such forward-looking statements.
iii
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND OTHER FINANCIAL DATA,
INCLUDING THE FINANCIAL STATEMENTS AND THE NOTES THERETO, CONTAINED ELSEWHERE IN
THIS PROSPECTUS. UNLESS THE CONTEXT OTHERWISE REQUIRES, ALL REFERENCES TO THE
"COMPANY" OR "ACCURIDE" SHALL MEAN ACCURIDE CORPORATION AND ITS CONSOLIDATED
SUBSIDIARIES. THE COMPANY'S FISCAL YEAR IS THE CALENDAR YEAR. ALL MARKET SHARE
INFORMATION AND OTHER INDUSTRY DATA IN THIS PROSPECTUS ARE BASED ON COMPANY
ESTIMATES DERIVED FROM INTERNALLY GENERATED STUDIES AND INDUSTRY PUBLICATIONS.
UNLESS OTHERWISE INDICATED, ALL MARKET SHARE DATA IS FOR 1996. FOR CERTAIN
DEFINED TERMS USED IN THIS PROSPECTUS, SEE "GLOSSARY."
THE COMPANY
OVERVIEW
Accuride is North America's largest manufacturer and supplier of wheels and
rims ("Wheels") for heavy and medium commercial vehicles. The Company estimates
that it has a 68% share in the North American Wheel market segment for heavy and
medium trucks, buses, vans ("Heavy/Medium Trucks") and trailers ("Trailers").
The Company offers the broadest product line in the North American Heavy/ Medium
Truck and Trailer Wheel industry and is the only North American manufacturer and
supplier of both steel and aluminum Wheels for Heavy/Medium Trucks and Trailers
("Heavy/Medium Wheels"). For the year ended December 31, 1997, on an unaudited
pro forma basis after giving effect to the Recapitalization and the acquisition
of the interest in AKW, L.P. ("AKW"), Accuride's net sales and EBITDA (as
defined) would have been $313.9 million and $76.4 million, respectively. See
"--Summary Pro Forma Consolidated Financial Data."
The Company sells its Wheels primarily to Heavy/Medium Truck, Trailer and
Light Truck (as defined) original equipment manufacturers ("OEMs"). Major
customers include Ford Motor Company ("Ford"), Freightliner Corporation
("Freightliner"), General Motors Corporation ("General Motors"), Mack Trucks,
Inc. ("Mack"), Navistar International Transportation Corporation ("Navistar")
and Paccar, Inc. ("Paccar"). For over 10 years, the Company's steel Wheels have
been standard equipment at all North American Heavy/Medium Truck OEMs and at a
majority of North American Trailer OEMs. In addition, the Company's steel Wheels
are standard equipment at 82 of North America's 100 largest trucking fleets,
such as J.B. Hunt Transport Services ("J.B. Hunt"), Ryder Truck Rental, Inc.
("Ryder") and Schneider Specialized Carriers, Inc. ("Schneider"). The Company
believes that its leadership position results from its ability to consistently
deliver a broad range of high-quality Wheels cost-effectively.
By leveraging its customer relationships and leading position in the North
American Heavy/Medium Wheel segment, the Company has implemented a number of
growth initiatives to strengthen its position in the worldwide Wheel industry.
In May 1997, the Company and Kaiser Aluminum and Chemical Corporation ("Kaiser")
established AKW, a joint venture that manufactures and supplies aluminum Heavy/
Medium Wheels. The 50%-owned AKW joint venture replaced a twenty-five-year
buy-and-resell relationship with Kaiser and has significantly improved the
Company's ability to meet the growing aluminum Heavy/Medium Wheel needs of its
customers. In addition, in order to serve more effectively its customers in
Mexico and other Latin American countries, the Company recently established
Accuride de Mexico S.A. de C.V. ("ADM"), a 51%-owned venture with Industria
Automotriz S.A. de C.V. ("IaSa"), Mexico's only commercial vehicle Wheel
manufacturer. Furthermore, in order to expand its presence in the growing
segment for Light Truck Wheels, the Company is developing a new manufacturing
facility in Columbia, Tennessee (the "Tennessee Facility"), which is scheduled
to begin production in mid-1998.
1
<PAGE>
The North American commercial vehicle industry may be divided into three
segments: (i) Heavy/ Medium Trucks, (ii) Trailers and (iii) commercial and other
vehicles such as light commercial trucks, pick-up trucks, sport utility vehicles
and vans ("Light Trucks"). According to industry sources, new builds in the
North American Heavy/Medium Truck and Trailer segments have grown to 640,000
units in 1997 from 455,000 units in 1992. Over that same period, new builds in
the North American Light Truck segment have grown to 6.9 million units from 4.2
million units. Management believes that the growth in the North American
Heavy/Medium Truck and Trailer segments has been driven by the sustained
economic growth in North America and shorter fleet trade-in cycles, while the
growth in the North American Light Truck segment has been driven by the increase
in the popularity of sport utility vehicles and pick-up trucks, coupled with
sustained economic growth.
COMPETITIVE STRENGTHS
LEADING MARKET POSITION. The Company is the leading North American
manufacturer and supplier of steel and aluminum Wheels to the Heavy/Medium Truck
and Trailer segments with a 77% share in the steel Heavy/Medium Wheel segment
and a combined 68% share in the steel and aluminum Heavy/ Medium Wheel segment.
The Company believes that its market position is due, in large part, to its
long-standing customer relationships; broad, high-quality product line; and
low-cost manufacturing capabilities.
LONG-STANDING CUSTOMER RELATIONSHIPS. The Company believes that its
long-standing customer relationships provide it with a distinct competitive
advantage. The Company has a proven track record of customer service marked by a
consistent product supply through multiple manufacturing/distributing locations,
short production lead times, 99% on-time delivery and low defect rates. For over
10 years, the Company has been the only Wheel manufacturer whose steel Wheels
are standard equipment at all North American Heavy/Medium Truck OEMs. In
addition, the Company's steel Wheels are standard equipment at a majority of
North American Trailer OEMs and at 82 of North America's 100 largest trucking
fleets.
BROAD, HIGH-QUALITY PRODUCT LINE. The Company believes that it has the
broadest product line in the North American Heavy/Medium Wheel industry. Its
products are recognized by the industry and customers for their quality.
Accuride is the only North American manufacturer and supplier of both steel and
aluminum Heavy/Medium Wheels. In addition, the Company manufactures and supplies
single and dual steel Light Truck Wheels. The Company intends to enhance its
Light Truck Wheel product line and meet more fully its customers' Wheel needs by
establishing the Tennessee Facility, which is scheduled to begin production in
mid-1998.
LOW-COST MANUFACTURING. The Company believes that it is the low-cost North
American supplier of steel Heavy/Medium Wheels and that it operates the most
modern steel Heavy/Medium Wheel plants in North America. The Company
continuously strives to improve productivity, increase quality and lower costs.
Since 1991, the Company has invested over $50 million to modernize, upgrade and
automate its manufacturing plants. Operating costs have been reduced by
approximately $18 million in 1997 compared to 1994. Management has budgeted
approximately $13 million in 1998 for productivity initiatives and believes that
its emphasis on low-cost manufacturing will continue to yield significant
operational improvements. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations-- Liquidity and Capital Resources."
2
<PAGE>
GROWTH STRATEGIES
The Company plans to capitalize on its leading position in the North
American Wheel industry to broaden its product line further and to expand its
business globally by focusing on the following growth strategies:
EXPAND ALUMINUM SHARE. The Company believes that it can leverage its AKW
joint venture to increase its 24% share of the growing aluminum Heavy/Medium
Wheel segment and to expand its customer base. Historically, the Company often
could not satisfy customer demand for aluminum Heavy/Medium Wheels because of
Kaiser's capacity constraints. Since its inception, however, AKW has increased
its capacity by over one-third. Despite this recent expansion, AKW continues to
operate at or near capacity and is in the process of increasing capacity further
to satisfy customer demand.
INCREASE LIGHT TRUCK WHEEL SHARE. The Company plans to aggressively pursue
opportunities in the North American Light Truck Wheel segment by leveraging its
existing OEM relationships through the application of technology to create
value-added products. The Company, in conjunction with a leading automotive trim
supplier, recently introduced a chrome-plated plastic, cladded single steel
Wheel marketed under the name Chrome Tech-Registered Trademark- (the "Chrome
Tech Wheel"), which management believes has the potential to penetrate the Wheel
segments for Light Trucks and passenger cars. The Chrome Tech Wheel combines the
aesthetics of aluminum with the cost advantages of steel. The Tennessee Facility
will begin producing Chrome Tech Wheels for Ford's Expedition, Navigator and
F-series trucks in mid-1998.
EXPAND LATIN AMERICAN POSITION. As OEMs expand their manufacturing
operations into Mexico and other Latin American countries, they are looking to
their suppliers to support them at a local level. The ADM venture will serve as
a platform to supply the growing Latin American assembly operations of many of
the Company's top customers, including Ford, Freightliner, General Motors,
Navistar, Paccar and Volvo Trucks North America ("Volvo").
ESTABLISH GLOBAL PRESENCE. Accuride believes that it will be able to build
on its long-standing customer relationships and extensive product offering to
become a global, single source Wheel manufacturer and supplier. Currently, the
Company has the ability to supply its customers from manufacturing locations in
the U.S., Canada and Latin America. Management believes that opportunities exist
to develop global manufacturing capabilities through joint ventures, alliances
and business combinations with leading Wheel manufacturers in Europe, South
America and Asia.
CORPORATE HISTORY.
Originally called Firestone Steel Products, Accuride was formed in 1905 as a
division of the Firestone Tire and Rubber Company. In 1986, the Company
separated from its parent and became Accuride Corporation, a Delaware
corporation. In 1988, the Company was purchased by Phelps Dodge Corporation
("Phelps Dodge"), the sole owner prior to the Recapitalization. See "The
Recapitalization."
3
<PAGE>
THE RECAPITALIZATION
On November 17, 1997 the Company entered into the Subscription and
Redemption Agreement (the "Subscription Agreement") with Phelps Dodge and Hubcap
Acquisition L.L.C. ("Hubcap Acquisition"). Pursuant to the Subscription
Agreement, Hubcap Acquisition made a common equity investment of $108.0 million
in the Company (the "Equity Investment") in consideration for the Company's
issuance to Hubcap Acquisition of shares of common stock of the Company, par
value $.01 per share ("the Common Stock"). The Company used the proceeds from
the Equity Investment, together with approximately $380.0 million of aggregate
proceeds from certain financings described below (collectively, the
"Financings") to (i) redeem shares of Common Stock and obtain a noncompetition
agreement from Phelps Dodge for aggregate consideration of $468.0 million
(collectively, the "Redemption"), and (ii) pay an estimated $20.0 million in
transaction fees and expenses. The Redemption price of $468.0 million was
adjusted for changes in working capital and the difference between actual and
projected capital expenditures, in each case through December 31, 1997. The
adjustment resulted in a reduction in the Redemption price and that the
reduction was used to reduce borrowings under the Revolver (as defined in the
next paragraph). The Equity Investment, Redemption and Financings are
collectively referred to as the "Recapitalization." Immediately after the
closing of the Recapitalization (the "Closing"), Hubcap Acquisition owned 90% of
the Common Stock and Phelps Dodge owned 10% of the Common Stock. Shortly after
the Recapitalization, the Company sold additional shares of Common Stock and
granted options to purchase Common Stock to senior management of the Company
representing, in the aggregate, 10% of the fully diluted equity of the Company.
The Financings included (i) an aggregate of approximately $180.0 million of
bank borrowings by the Company, including $135.0 million of borrowings under
senior secured term loans (the "Term Loans") and $45.0 million of borrowings
under a $140.0 million senior secured revolving credit facility (the "Revolver"
and, together with the Term Loans, the "Credit Facility"), and (ii) $200.0
million aggregate principal amount of Notes. The Revolver will be available for
the Company's working capital requirements and the implementation of the
Company's growth strategy. See "Description of the Credit Facility."
4
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
The Exchange Offer........... The Company is offering to exchange $1,000 principal amount
of Exchange Notes for each $1,000 principal amount of
Private Notes that are properly tendered and accepted. The
Company will issue Exchange Notes on or promptly after the
Expiration Date. There is $200,000,000 aggregate principal
amount of Private Notes outstanding. See "The Exchange Offer
-- Purpose of the Exchange Offer."
Based on an interpretation by the staff of the Commission
set forth in no-action letters issued to third parties, the
Company believes that the Exchange Notes issued pursuant to
the Exchange Offer in exchange for Private Notes may be
offered for resale, resold and otherwise transferred by a
Holder thereof (other than (i) a broker-dealer who purchases
such Exchange Notes directly from the Company to resell
pursuant to Rule 144A or any other available exemption under
the Securities Act or (ii) a person that is an affiliate of
the Company within the meaning of Rule 405 under the
Securities Act), without compliance with the registration
and prospectus delivery provisions of the Securities Act;
provided that the Holder is acquiring Exchange Notes in the
ordinary course of its business and is not participating,
and had no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes. Each
broker-dealer that receives Exchange Notes for its own
account in exchange for Private Notes, where such Private
Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. A broker-dealer may
not participate in the Exchange Offer with respect to the
Private Notes acquired other than as a result of
market-making activities or other trading activities. See
"The Exchange Offer -- Resale of the Exchange Notes."
Registration Rights
Agreement.................. The Private Notes were sold by the Company on January 21,
1998 to BT Alex. Brown Incorporated, Citicorp Securities and
J.P. Morgan Securities Inc. (collectively, the "Initial
Purchasers") pursuant to a Purchase Agreement, dated January
15, 1998, by and among the Company and the Initial
Purchasers (the "Purchase Agreement"). Pursuant to the
Purchase Agreement, the Company and the Initial Purchasers
entered into a Registration Rights Agreement, dated as of
January 21, 1998 (the "Registration Rights Agreement"),
which grants the Holders of the Private Notes certain
exchange and registration rights. The Exchange Offer is
intended to satisfy such rights, which will terminate upon
the consummation of the Exchange Offer. See "The Exchange
Offer -- Termination of Certain Rights."
Expiration Date.............. The Exchange Offer will expire at 5:00 p.m., New York City
time, on , 1998, unless the Exchange Offer is extended
by the Company in its sole discretion, in which case the
term "Expiration Date" shall mean the latest date and time
to which the Exchange Offer is
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
extended. See "The Exchange Offer -- Expiration Date;
Extensions; Amendments."
Accrued Interest on the
Exchange Notes and the
Private Notes.............. The Exchange Notes will bear interest from and including the
date of issuance of the Private Notes (January 21, 1998).
Holders whose Private Notes are accepted for exchange will
be deemed to have waived the right to receive any interest
accrued on the Private Notes. See "The Exchange Offer --
Interest on the Exchange Notes."
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain customary
conditions that may be waived by the Company. The Exchange
Offer is not conditioned upon any minimum aggregate
principal amount of Private Notes being tendered for
exchange. See "The Exchange Offer -- Conditions."
Procedures for Tendering
Private Notes.............. Each Holder of Private Notes wishing to accept the Exchange
Offer must complete, sign and date the Letter of
Transmittal, or a facsimile thereof, in accordance with the
instructions contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal, or such
facsimile, together with such Private Notes and any other
required documentation to U.S. Trust Company of California,
N.A., as exchange agent (the "Exchange Agent"), at the
address set forth herein. By executing the Letter of
Transmittal, the Holder will represent to and agree with the
Company that, among other things, (i) the Exchange Notes to
be acquired by such Holder of Private Notes in connection
with the Exchange Offer are being acquired by such Holder in
the ordinary course of its business, (ii) if such Holder is
not a broker-dealer, such Holder is not currently
participating in, does not intend to participate in, and has
no arrangement or understanding with any person to
participate in a distribution of the Exchange Notes, (iii)
if such Holder is a broker-dealer registered under the
Exchange Act or is participating in the Exchange Offer for
the purposes of distributing the Exchange Notes, such Holder
will comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a
secondary resale transaction of the Exchange Notes acquired
by such person and cannot rely on the position of the staff
of the Commission set forth in no-action letters (see "The
Exchange Offer -- Resale of Exchange Notes"), (iv) such
Holder understands that a secondary resale transaction
described in clause (iii) above and any resales of Exchange
Notes obtained by such Holder in exchange for Private Notes
acquired by such Holder directly from the Company should be
covered by an effective registration statement containing
the selling securityholder information required by Item 507
or Item 508, as applicable, of Regulation S-K of the
Commission and (v) such Holder is not an "affiliate," as
defined in Rule 405 under the Securities Act, of the
Company. If the Holder is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Private
Notes that were acquired as a result of market-making
activities or other trading activities, such Holder will be
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
required to acknowledge in the Letter of Transmittal that
such Holder will deliver a prospectus in connection with any
resale of such Exchange Notes; however, by so acknowledging
and by delivering a prospectus, such Holder will not be
deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. See "The Exchange Offer --
Procedures for Tendering."
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose Private Notes are registered in
the name of a broker, dealer, commercial bank, trust company
or other nominee and who wishes to tender such Private Notes
in the Exchange Offer should contact such registered Holder
promptly and instruct such registered Holder to tender on
such beneficial owner's behalf. If such beneficial owner
wishes to tender on such owner's own behalf, such owner
must, prior to completing and executing the Letter of
Transmittal and delivering such owner's Private Notes,
either make appropriate arrangements to register ownership
of the Private Notes in such owner's name or obtain a
properly completed bond power from the registered Holder.
The transfer of registered ownership may take considerable
time and may not be able to be completed prior to the
Expiration Date. See "The Exchange Offer -- Procedures for
Tendering."
Guaranteed Delivery
Procedures................. Holders of Private Notes who wish to tender their Private
Notes and whose Private Notes are not immediately available
or who cannot deliver their Private Notes, the Letter of
Transmittal or any other documentation required by the
Letter of Transmittal to the Exchange Agent prior to the
Expiration Date must tender their Private Notes according to
the guaranteed delivery procedures set forth under "The
Exchange Offer -- Guaranteed Delivery Procedures."
Acceptance of the Private
Notes and Delivery of the
Exchange Notes............. Subject to the satisfaction or waiver of the conditions to
the Exchange Offer, the Company will accept for exchange any
and all Private Notes that are properly tendered in the
Exchange Offer prior to the Expiration Date. The Exchange
Notes issued pursuant to the Exchange Offer will be
delivered on the earliest practicable date following the
Expiration Date. See "The Exchange Offer --Terms of the
Exchange Offer."
Withdrawal Rights............ Tenders of Private Notes may be withdrawn at any time prior
to the Expiration Date. See "The Exchange Offer --
Withdrawal of Tenders."
Certain Federal Income Tax
Considerations............. For a discussion of certain material federal income tax
considerations relating to the exchange of the Exchange
Notes for the Private Notes, see "Certain Federal Income Tax
Considerations."
Exchange Agent............... U.S. Trust Company of California, N.A. is serving as the
Exchange Agent in connection with the Exchange Offer.
</TABLE>
7
<PAGE>
THE EXCHANGE NOTES
The Exchange Offer applies to $200,000,000 aggregate principal amount of the
Private Notes. The form and terms of the Exchange Notes are the same as the form
and terms of the Private Notes except that (i) the exchange will have been
registered under the Securities Act and therefore, the Exchange Notes will not
bear legends restricting the transfer thereof and (ii) Holders of the Exchange
Notes will not be entitled to certain rights of Holders of the Private Notes
under the Registration Rights Agreement, which rights will terminate upon
consummation of the Exchange Offer. The Exchange Notes will evidence the same
debt as the Private Notes (which they replace) and will be issued under, and be
entitled to the benefits of, the Indenture. For further information and for
definitions of certain capitalized terms used below, see "Description of Notes."
<TABLE>
<S> <C>
Securities Offered............ $200,000,000 principal amount of 9 1/4% Senior Subordinated
Notes due 2008.
Issuer........................ Accuride Corporation
Maturity Date................. February 1, 2008.
Interest Payment Dates........ Interest on the Notes will accrue from the Issuance Date (as
defined) and be payable in cash semi-annually in arrears on
February 1 and August 1, of each year, commencing August 1,
1998.
Optional Redemption........... On or after February 1, 2003, the Notes will be redeemable,
in whole or in part, at the redemption prices set forth
herein, together with accrued and unpaid interest, if any,
to the date of redemption. In addition, at any time on or
prior to February 1, 2002, the Company may redeem up to 40%
of the original aggregate principal amount of the Notes with
the net proceeds of one or more Equity Offerings, at a
redemption price equal to 109.25% of the aggregate principal
amount to be redeemed, together with accrued and unpaid
interest, if any, to the date of redemption; provided that
at least 60% of the original aggregate principal amount of
the Notes remains outstanding immediately after each such
redemption. See "Description of the Notes--Optional
Redemption."
Change of Control............. Upon the occurrence of a Change of Control, the Company will
have the option, at any time prior to February 1, 2003, to
redeem the Notes, in whole but not in part, at a redemption
price equal to 100% of the aggregate principal amount
thereof plus the Applicable Premium, together with accrued
and unpaid interest, if any, to the date of redemption. Upon
the occurrence of a Change of Control, if the Company does
not so redeem the Notes or if a Change of Control occurs
after February 1, 2003, the Company will be required to make
an offer to purchase the Notes at a price equal to 101% of
the principal amount thereof, together with accrued and
unpaid
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
interest, if any, to the date of repurchase. See
"Description of the Notes--Repurchase at the Option of
Holders--Change of Control."
Ranking....................... The Notes will be unsecured, will be subordinated in right
of payment to all existing and future Senior Indebtedness of
the Company and will be effectively subordinated to all
obligations of the subsidiaries of the Company. The Notes
will rank PARI PASSU with any future senior subordinated
indebtedness of the Company and will rank senior to all
other Subordinated Indebtedness of the Company. As of
December 31, 1997, on a pro forma basis after giving effect
to the Recapitalization (including the offering of the
Private Notes), the aggregate amount of the Company's
outstanding Senior Indebtedness would have been
approximately $196.0 million ($60.0 million of which
represents a guarantee of amounts borrowed directly by the
Company's Canadian subsidiary under the Credit Facility),
the Company would have had no senior subordinated
indebtedness outstanding other than the Notes and the
Company's subsidiaries would have had total liabilities of
$53.2 million, excluding obligations under the Credit
Facility. On a pro forma basis after giving effect to the
Recapitalization, the Company would have had $95.0 million
of additional Senior Indebtedness available to be borrowed
under the Revolver. See "Pro Forma Consolidated Condensed
Financial Statements," "Risk Factors--Adverse Consequences
of Holding Company Structure" and "--Subordination."
Certain Covenants............. The indenture under which the Notes will be issued (the
"Indenture") contains covenants that, subject to certain
exceptions, limit, among other things, the ability of the
Company and/or its Restricted Subsidiaries to (i) pay
dividends or make certain other restricted payments or
investments; (ii) incur additional Indebtedness and issue
disqualified stock; (iii) create liens on assets; (iv)
merge, consolidate, or sell all or substantially all of
their assets; (v) enter into certain transactions with
affiliates; (vi) create restrictions on dividends or other
payments by Restricted Subsidiaries of the Company; (vii)
create guarantees of indebtedness by Restricted
Subsidiaries; and (viii) incur other senior subordinated
indebtedness. In addition, the covenant relating to
transactions with affiliates permits transactions by the
Company with customers, clients, suppliers, or purchasers or
sellers of goods or services which are entered into in the
ordinary course of business and are deemed fair by the Board
of Directors or senior management. The effect of this
exception is to permit transactions on reasonable terms
entered into in the ordinary course of business with
affiliates of the Company. See "Description of the Notes."
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
No Personal Liability of
Directors, Officers, Employees
and Stockholders.............. No director, officer, employee, incorporator or stockholder
of the Company or any Guarantor shall have any liability for
any obligations of the Company or the Guarantors under the
Exchange Notes, the Guarantees or the Indenture or any claim
based on, in respect of, or by reason of such obligation, or
their creation. Such waiver may not be effective to waive
liabilities under the federal securities laws and it is the
view of the Commission that such a waiver is against public
policy.
</TABLE>
RISK FACTORS
See "Risk Factors" beginning on page 15 for a discussion of certain factors
that should be considered in connection with the Exchange Offer.
10
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
The following table sets forth certain summary historical consolidated
financial and other data of the Company. The historical consolidated financial
data of the Company for the fiscal years ended December 31, 1995, December 31,
1996, and December 31, 1997 have been derived from, and should be read in
conjunction with, the audited historical consolidated financial statements of
the Company and the related notes thereto included elsewhere in this Prospectus.
The unaudited historical consolidated financial data for the fiscal year ended
December 31, 1994 have been derived from the Company's unaudited consolidated
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included in the unaudited
consolidated financial statements of the Company. See "--Summary Pro Forma
Consolidated Financial Data," "Pro Forma Consolidated Condensed Financial
Statements," "Selected Historical Consolidated Financial and Other Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical consolidated financial statements of the Company
and the related notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
--------------------------------------------------
1994 1995 1996 1997(A)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING DATA:
Net sales............................................... $ 333,556 $ 357,802 $ 307,830 $ 332,966
Gross profit............................................ 59,020 64,549 61,723 65,994(b)
Selling, general and administrative..................... 16,938 16,869 17,941 21,316
Income from operations.................................. 42,082 47,680 43,782 44,678(b)
Interest income (expense), net.......................... 701 717 400 385
Equity in earnings of affiliates........................ 308 300 115 4,384
Other income (expense), net (c)......................... (1,684) (1,375) (381) 548
Net income.............................................. 24,301 26,592 26,466 27,837
OTHER DATA:
EBITDA (as defined) (d)................................. $ 62,928 $ 70,101 $ 64,023 $ 76,888
EBITDA margin (as defined) (e).......................... 18.8% 19.5% 20.8% 21.8%
Net cash provided by (used in):
Operating activities.................................. 44,600 50,012 43,678 38,219
Investing activities.................................. (6,342) (6,766) (9,370) (47,065)
Financing activities.................................. (14,900) (57,718) (37,463) 9,953
Cash interest expense (f)............................... 90 35 33 145
Depreciation and amortization........................... 20,538 21,121 20,126 20,726
Capital expenditures.................................... 6,535 6,960 9,584 24,032
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents............................... $ 23,938 $ 9,466 $ 6,311 $ 7,418
Working capital......................................... 33,385 34,785 38,608 27,416
Total assets............................................ 341,014 298,900 288,703 347,447
Total debt.............................................. -- -- -- 16,040
Stockholder's equity.................................... 271,262 239,081 228,451 256,055
</TABLE>
- ------------------------
(a) Results of operations for the year ended December 31, 1997 do not reflect
net sales and gross profit for aluminum Wheels subsequent to May 1997 due to
the formation of the AKW joint venture. Net sales and gross profit for
aluminum Wheels were $32.1 million and $2.5 million, respectively, for the
period beginning on May 1, 1996 and ending on December 31, 1996. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Overview" and "Pro Forma Consolidated Condensed Financial
Statements."
11
<PAGE>
(b) Gross profit and income from operations for the year ended December 31, 1997
reflects $7.1 million of costs incurred in connection with the strike in
early 1997 at the Company's facility in Ontario, Canada (the "Ontario
Facility").
(c) Other income (expense), net consists of currency hedging and foreign
exchange gains and losses related to the Company's Canadian operations.
(d) EBITDA (as defined) represents income from operations plus depreciation and
amortization plus equity in earnings of affiliates, plus (i) $7.1 million
representing the impact of the strike at the Ontario Facility incurred
during the first quarter of 1997 and (ii) $1.0 million of restructuring
charges incurred in 1995. EBITDA (as defined) is not intended to represent
cash flows from operations as defined by generally accepted accounting
principles ("GAAP") and should not be considered as an alternative to net
income as an indicator of the Company's operating performance or to cash
flows as a measure of liquidity. EBITDA (as defined) is included in this
Prospectus as it is a basis upon which the Company assesses its financial
performance and certain covenants in the Company's borrowing arrangements
are tied to similar measures.
(e) EBITDA margin (as defined) represents EBITDA (as defined) before equity in
earnings of affiliates as a percentage of net sales.
(f) Cash interest expense represents accrued interest expense exclusive of
amortization of deferred financing costs. For all periods presented, there
was no amortization of deferred financing costs.
12
<PAGE>
SUMMARY PRO FORMA CONSOLIDATED FINANCIAL DATA
The following table sets forth (i) summary pro forma consolidated statement
of operations and other data of the Company for the year ended December 31, 1997
and (ii) summary historical and pro forma consolidated balance sheet data at
December 31, 1997. The summary pro forma consolidated statement of operations
and other data give effect to the (a) Recapitalization and (b) the acquisition
of the interest in AKW as if such transactions had occurred on January 1, 1997.
The summary pro forma consolidated balance sheet data at December 31, 1997 gives
effect to the Recapitalization as if it had occurred on December 31, 1997. The
summary pro forma consolidated financial data should not be considered
indicative of actual results that could have been achieved if the
Recapitalization and the acquisition of the interest in AKW had been consummated
on the dates indicated and the summary pro forma consolidated financial data do
not purport to indicate financial condition or results of operations as of any
future date or for any future period. The data presented below should be read in
conjunction with the historical consolidated financial statements of the
Company, including the related notes thereto, included elsewhere in this
Prospectus, "Pro Forma Consolidated Condensed Financial Statements" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
PRO FORMA
------------
YEAR ENDED
DECEMBER 31,
1997
------------
<S> <C>
(DOLLARS IN THOUSANDS) (UNAUDITED)
OPERATING DATA:
Net sales...................................................................................... $ 313,911
Gross profit................................................................................... 64,859(a)
Selling, general and administrative............................................................ 21,816
Income from operations......................................................................... 43,043(a)
Interest income (expense), net (b)............................................................. (34,305)(c)
Equity in earnings of affiliates............................................................... 5,519
Other income (expense), net (d)................................................................ 548
Net income..................................................................................... 7,906
OTHER DATA:
EBITDA (as defined) (e)........................................................................ $ 76,388
EBITDA Margin (as defined) (f)................................................................. 22.6%
Cash interest expense (g)...................................................................... 33,635(c)
Depreciation and amortization.................................................................. 20,727
Capital expenditures........................................................................... 24,036
Ratio of earnings to fixed charges (h)......................................................... 1.37x
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, 1997
-----------------------
HISTORICAL PRO FORMA
---------- -----------
<S> <C> <C>
(UNAUDITED)
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents....................................................... $ 7,418 $ 7,418
Working capital................................................................. 27,416 27,547
Total assets.................................................................... 347,447 359,843
Total debt...................................................................... 16,040 396,040(c)
Stockholders' equity (deficit).................................................. 256,055 (93,945)
</TABLE>
- ------------------------
(a) Gross profit and income from operations for the year ended December 31, 1997
reflect $7.1 million of costs incurred in connection with the strike in
early 1997 at the Ontario Facility.
(b) A 0.125% increase or decrease in the weighted average interest rate would
change the pro forma interest expense by $0.5 million for the fiscal year
ended December 31, 1997. Each $5.0 million
13
<PAGE>
increase or decrease in borrowings under the Revolver would change pro forma
interest expense by $0.4 million for the fiscal year ended December 31,
1997.
(c) In addition to the effect of the Recapitalization, pro forma interest
expense reflects (from the date incurred) ADM's $14.7 million of
indebtedness outstanding as of December 31, 1997. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
(d) Other income (expense), net consists of currency hedging and foreign
exchange gains and losses related to the Company's Canadian operations.
(e) EBITDA (as defined) represents income from operations plus depreciation and
amortization plus equity in earnings of affiliates, plus $7.1 million
representing the impact of the strike at the Ontario Facility incurred
during the first quarter of 1997. EBITDA (as defined) is not intended to
represent cash flows from operations as defined by GAAP and should not be
considered as an alternative to net income as an indicator of the Company's
operating performance or to cash flows as a measure of liquidity. EBITDA (as
defined) is included in this Prospectus as it is a basis upon which the
Company assesses its financial performance and certain covenants in the
Company's borrowing arrangements are tied to similar measures.
(f) EBITDA Margin (as defined) represents EBITDA (as defined) before equity in
earnings of affiliates as a percentage of net sales.
(g) Pro forma cash interest expense represents pro forma accrued interest
expense exclusive of pro forma amortization of deferred financing costs. For
the fiscal year ended December 31, 1997 pro forma amortization of deferred
financing costs was $1.2 million.
(h) For purposes of these computations, earnings consist of income before income
taxes plus fixed charges (exclusive of capitalized interest) less
undistributed earnings in unconsolidated joint ventures. Fixed charges
consist of interest expense (including capitalized interest), amortization
of deferred financing costs and one-third of rental expense (the portion
deemed representative of the interest factor).
14
<PAGE>
RISK FACTORS
HOLDERS OF THE PRIVATE NOTES SHOULD CONSIDER CAREFULLY, IN ADDITION TO THE
OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, THE FOLLOWING FACTORS BEFORE
DECIDING TO TENDER THE PRIVATE NOTES IN THE EXCHANGE OFFER. THE RISK FACTORS SET
FORTH BELOW ARE GENERALLY APPLICABLE TO THE PRIVATE NOTES AS WELL AS THE
EXCHANGE NOTES.
FAILURE TO EXCHANGE PRIVATE NOTES
The Exchange Notes will be issued in exchange for Private Notes only after
timely receipt by the Exchange Agent of such Private Notes, a properly completed
and duly executed Letter of Transmittal and all other required documentation.
Therefore, Holders of Private Notes desiring to tender such Private Notes in
exchange for Exchange Notes should allow sufficient time to ensure timely
delivery. Neither the Exchange Agent nor the Company is under any duty to give
notification of defects or irregularities with respect to tenders of Private
Notes for exchange. Private Notes that are not tendered or are tendered but not
accepted will, following consummation of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer thereof. In addition, any
Holder of Private Notes who tenders in the Exchange Offer for the purpose of
participating in a distribution of the Exchange Notes will be required to comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction. Each broker-dealer that receives
Exchange Notes for its own accounts in exchange for Private Notes, where such
Private Notes were acquired by such broker-dealer as a result of market-making
activities or any other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. To
the extent that Private Notes are tendered and accepted in the Exchange Offer,
the trading market for untendered and tendered but unaccepted Private Notes
could be adversely affected due to the limited amount, or "float," of the
Private Notes that are expected to remain outstanding following the Exchange
Offer. Generally, a lower "float" of a security could result in less demand to
purchase such security and could, therefore, result in lower prices for such
security. For the same reason, to the extent that a large amount of Private
Notes are not tendered or are tendered and not accepted in the Exchange Offer,
the trading market for the Exchange Notes could be adversely affected. See "Plan
of Distribution" and "The Exchange Offer."
SIGNIFICANT INDEBTEDNESS
The Company continues to be highly leveraged after the Recapitalization. At
December 31, 1997, on a pro forma basis after giving effect to the
Recapitalization, the Company's total indebtedness would have been $396.0
million and its total stockholders' deficit would have been $93.9 million. The
Company may incur additional indebtedness in the future, subject to limitations
imposed by the Indenture and the Revolver. At December 31, 1997, on a pro forma
basis after giving effect to the Recapitalization, the Company would have had
$95.0 million of additional indebtedness available to be borrowed under the
Revolver. See "The Recapitalization," "Capitalization," "Pro Forma Consolidated
Condensed Financial Statements," "Description of the Notes" and "Description of
the Credit Facility."
The Company's ability to make scheduled payments of, or pay interest on, or
to refinance its indebtedness (including the Notes) depends on its future
performance, which, to a certain extent, is subject to general economic,
financial, competitive and other factors beyond its control. Based upon the
current level of operations and anticipated growth, the Company believes that
available cash flow, together with available borrowings under the Credit
Facility and other sources of liquidity will be adequate to meet the Company's
anticipated future requirements for working capital, capital expenditures,
scheduled payments of principal of and interest on its indebtedness, and
interest on the Notes and the implementation of its growth initiatives. However,
all or a portion of the principal payments at maturity on the Notes may
15
<PAGE>
require refinancing. There can be no assurance that the Company's business will
generate sufficient cash flow from operations or that future borrowings will be
available in an amount sufficient to enable the Company to service its
indebtedness, including the Notes, or to make necessary capital expenditures, or
that any refinancing would be available on commercially reasonably terms or at
all. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."
The Company's high degree of leverage may have important consequences for
the Company and the holders of the Notes (the "Holders") including, but not
limited to, the following: (i) the ability of the Company to obtain additional
financing for acquisitions, working capital, capital expenditures or other
purposes, if necessary, may be impaired or such financing may not be available
on terms favorable to the Company; (ii) a substantial portion of the Company's
cash flow will be used to pay the Company's interest expense and debt
amortization, which will reduce the funds that would otherwise be available to
the Company for its operations and future business opportunities; (iii) a
substantial decrease in net operating cash flows or an increase in expenses of
the Company could make it difficult for the Company to meet its debt service
requirements and force it to modify its operations; (iv) the Company may be more
highly leveraged than its competitors, which may place it at a competitive
disadvantage; (v) the Company's high degree of leverage may make it more
vulnerable to a downturn in its business or the economy generally; (vi) all of
the indebtedness incurred in connection with the Credit Facility and all of
ADM's existing indebtedness will become due prior to the time principal payments
in respect of the Notes will be made; and (vii) the Indenture, the Credit
Facility will contain financial and restrictive covenants that limit the ability
of the Company and its subsidiaries to, among other things, borrow additional
funds, dispose of assets or pay cash dividends. See "Description of the
Notes--Repurchase at the Option of Holders-- Change of Control," "Description of
the Credit Facility" and "The Recapitalization."
A significant portion of the outstanding indebtedness of the Company will
bear interest at variable rates. While the Company has entered into one or more
interest rate protection agreements to limit its exposure to increases in such
interest rates, such agreements will not eliminate the exposure to variable
rates. Any increase in the interest rates on the Company's indebtedness will
reduce funds available to the Company for its operations and future business
opportunities and will exacerbate the consequences of the Company's leveraged
capital structure.
ADVERSE CONSEQUENCES OF HOLDING COMPANY STRUCTURE
A substantial portion of the Company's operations is conducted through its
subsidiaries and through ventures with third parties. See "Business--Strategic
Alliances." Consequently, the Notes will be effectively subordinated to the
obligations of the Company's subsidiaries and such ventures, including the
guarantee by its subsidiaries of obligations under the Credit Facility (and the
obligations of the Company's Canadian subsidiary, which will be the primary
obligor under a portion of the Term Loans). In the event of an insolvency,
liquidation or other reorganization of any of the subsidiaries of the Company,
the creditors of the Company (including the Holders), as well as stockholders of
the Company, will have no right to proceed against the assets of such
subsidiaries or ventures or to cause the liquidation or bankruptcy of such
subsidiaries or ventures under Federal bankruptcy laws. Creditors of such
subsidiaries and ventures, including lenders under the Credit Facility, would be
entitled to payment in full from such assets before the Company would be
entitled to receive any distribution therefrom. Except to the extent that the
Company may itself be a creditor with recognized claims against such
subsidiaries and such ventures, claims of creditors of such subsidiaries or such
ventures will have priority with respect to the assets and earnings of such
subsidiaries over the claims of creditors of the Company, including claims under
the Notes. In addition, as a result of a substantial portion of the Company's
operations being conducted through subsidiaries and ventures, the Company's
operating cash flow and its ability to service its indebtedness,
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including the Notes, is dependent upon the operating cash flow of its
subsidiaries and ventures and the payment of funds by such subsidiaries and
ventures to the Company in the form of loans, dividends or otherwise. As of
December 31, 1997, on a pro forma basis after giving effect to the
Recapitalization, the subsidiaries of the Company would have had total
liabilities of $53.2 million, excluding guarantees and direct borrowings of
indebtedness under the Credit Facility. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and Capital
Resources."
SUBORDINATION
The Company's obligations under the Notes will be subordinated and junior in
right of payment to all existing and future Senior Indebtedness of the Company.
As of December 31, 1997, on a pro forma basis after giving effect to the
Recapitalization, the aggregate amount of the Company's outstanding Senior
Indebtedness would have been approximately $196.0 million ($60.0 million of
which represents a guarantee of amounts borrowed directly by the Company's
Canadian subsidiary under the Credit Facility). Additional Senior Indebtedness
may be incurred by the Company from time to time, subject to certain
restrictions imposed by the Indenture and the Credit Facility. By reason of such
subordination, in the event of an insolvency, liquidation or other
reorganization of the Company, the lenders under the Credit Facility and other
creditors who are holders of Senior Indebtedness must be paid in full before the
Holders may be paid; accordingly, there may be insufficient assets remaining
after payment of prior claims to pay amounts due on the Notes. In addition,
under certain circumstances, no payments may be made with respect to the Notes
if a default exists with respect to certain Senior Indebtedness. See
"--Restrictive Debt Covenants," "Description of the Credit Facility" and
"Description of the Notes--Subordination."
ENCUMBRANCES ON ASSETS
In addition to being subordinated to all existing and future Senior
Indebtedness of the Company, the Notes are not secured by any of the assets of
the Company and its subsidiaries. The Company's obligations under the Credit
Facility are secured by (i) all the common stock of existing and subsequently
acquired direct domestic subsidiaries and direct foreign subsidiaries that are
not corporations and (ii) 66% of the common stock of each existing and
subsequently acquired first tier foreign subsidiary of the Company that is a
corporation (except that, as security for the payment of the Tranche A (as
defined) loan the Company has pledged and granted a security interest in the
remaining 34% of the common stock of the Company's Canadian subsidiary). If the
obligors under such facility becomes insolvent or is liquidated, or if payment
under such facility is accelerated, the lenders under such facility are entitled
to exercise the remedies available to a secured lender under applicable law. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources," "Description of the Credit
Facility" and "Description of the Notes."
DEPENDENCE ON MAJOR CUSTOMERS
The Company derived approximately 19%, 17% and 15% of its 1997 net sales
from Ford, Navistar and Freightliner, respectively. The Company has been a
supplier to these companies for many years, and continually engages in efforts
to improve and expand on its relations with each of these customers. The Company
has also supported its position with these customers through direct and active
contact with end users, trucking fleets and dealers, and has located certain of
its sales personnel in offices near these customers and most of its other major
customers. There can be no assurance, however, that the Company will maintain or
improve these relationships or that the Company will continue to supply these
customers or any of its other customers at current levels. The loss of a
significant portion of sales to Ford, Freightliner or Navistar could have a
material adverse effect on the Company's business. In addition, the delay or
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cancellation of material orders from, or design, development, delivery or
product problems at, Ford, Freightliner or Navistar or any of the Company's
major customers could have a material adverse effect on the Company. See
"Business--Customers."
THE OEM SUPPLIER INDUSTRY
The Company is a supplier to the Heavy/Medium Truck, Trailer and Light Truck
industries, which are characterized by a small number of OEMs that are able to
exert considerable pressure on component and system suppliers to reduce costs,
improve quality and provide additional design and engineering capabilities. OEMs
continue to demand and receive price reductions and measurable increases in
quality through their use of competitive selection processes, rating programs
and various other arrangements. Although the Company has been able to offset a
portion of such price reductions through production cost savings, there can be
no assurance that it will be able to continue to generate such cost savings in
the future. If the Company were unable to generate sufficient production cost
savings in the future to offset such price reductions, its profitability would
be adversely affected. Additionally, OEMs have generally required component and
system suppliers to provide more design engineering input at earlier stages of
the product development process, the costs of which have, in some cases, been
absorbed by the suppliers. There can be no assurance that future price
reductions, increased quality standards or additional engineering capabilities
required by OEMs will not have a material adverse effect on the Company.
CYCLICAL NATURE OF INDUSTRY
The Heavy/Medium Wheel and Light Truck Wheel industries are highly cyclical
and, in large part, dependent upon the overall strength of the demand for
Heavy/Medium Trucks, Trailers and Light Trucks. The Heavy/Medium Truck, Trailer
and Light Truck industries for which the Company supplies Wheels have
historically experienced significant fluctuations in demand based on such
factors as general economic conditions, interest rates, government regulations
and consumer confidence. There can be no assurance that the Heavy/Medium Truck,
Trailer and Light Truck industries supplied by the Company will not experience
downturns in the future. A significant decrease in overall consumer demand for
Heavy/Medium Trucks, Trailers and/or Light Trucks could have a material adverse
effect on the Company. In addition, the Company's operations are seasonal as a
result of regular customer maintenance and model changeover shutdowns, which
typically occur in the third quarter of each calendar year, resulting in
decreased net sales and profitability during the Company's third fiscal quarter.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
LABOR RELATIONS
At December 31, 1997, approximately 68% of the Company's employees in the
United States at its Henderson, Kentucky facility (the "Henderson Facility")
were represented by the United Auto Workers Union (the "UAW") and approximately
80% of the Company's employees in Canada at the Ontario Facility were
represented by the Canadian Auto Workers Union (the "CAW"). Collective
bargaining agreements with the UAW and the CAW affecting these employees expire
in February 1998 and March 2000, respectively. The Company's current contract
with the UAW covering employees at the Henderson Facility expired in February
1998. The Company was not able to negotiate a mutually acceptable agreement with
the UAW. Therefore, a strike occurred at the Henderson Facility on February 20,
1998. The Company is continuing to operate with its salaried employees and
contractors. On March 31, 1998, the members of the UAW rejected the Company's
final offer for a new contract. Effective as of March 31, 1998, the Company
began an indefinite lockout, which was prompted by continuing reports to
management that some individuals planned to re-enter the plant and harass
employees and damage
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equipment and machinery. Currently, there is, and the Company believes that
there will be, no supply disruption to the Company's customer base; however,
there can be no assurance to that effect. A supply disruption to the Company's
customer base could have a material adverse effect on the Company.
The Company's existing contract with CAW-represented workers was implemented
in March 1997, following a 53-day strike in which there was no supply disruption
to the Company's customer base. Management estimates that the strike affected
pretax earnings by $7.1 million. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Overview." The strike occurred as
a result of the CAW's demand for a contract that had similar terms and
conditions to the contracts that had been negotiated three months earlier among
the CAW and Ford, General Motors and Chrysler. The Company was not willing to
agree to many of these terms, which included limitations on existing management
rights and significant increases in benefits and wages. Ultimately, the Company
achieved a reduction in the CAW's original demands. See "Business--Employees."
DEPENDENCE ON RAW MATERIALS
The raw materials on which the Company depends are steel and aluminum.
Although steel is generally available from a number of sources, the Company has
obtained favorable sourcing by negotiating high-volume contracts with terms
ranging from 1 to 3 years. AKW sources aluminum for its Wheels from various
third-party suppliers. While the Company believes that its supply contracts can
be renewed on acceptable terms, there can be no assurance that such agreements
can be renewed on such terms or at all. A substantial interruption in the
Company's supply of steel or aluminum could have a material adverse effect on
the Company. In addition, although the prices of steel and aluminum have not
been volatile in recent periods and the Company has had success in passing
through steel price increases to its customers, there can be no assurance that
there will not be rapid and significant changes in the price of these materials
or that the Company will be able to pass on any such cost increases to its
customers. See "Business--Supplier Relationships."
COMPETITION
Due to the breadth of the Company's product line, the Company competes with
different companies in different market segments. Several of these competitors
have substantially greater financial resources than the Company. The Company's
principal competitor in the dual steel Heavy/Medium Wheel and single steel Light
Truck Wheel segments is Hayes Lemmerz International, Inc. ("Hayes Wheels").
Recently, Hayes Wheels has been consolidating the operations of smaller
participants in the dual steel Heavy/ Medium Wheel segment. In addition, Hayes
Wheels has established a significant global presence through its acquisition of
European wheel producer Lemmerz Holding GmbH ("Lemmerz"). Hayes Wheels is the
market leader in the single Light Truck Wheel segment and in the passenger car
wheel segment, which are more diversified segments than the other segments in
which the Company competes. The Company has only recently begun to compete in
the single Light Truck Wheel segment. In the dual steel Light Truck Wheel
segment, the Company's principal competitor is Meritor Automotive, Inc.
("Meritor"), which has a 12% share. Meritor and the Company are the only
suppliers of steel dual Light Truck Wheels in North America. In the dual
aluminum Heavy/Medium Wheel segment, the Company's principal competitor is Alcoa
Aluminum Corporation of America ("Alcoa"), which has the leading share in that
segment. Alcoa does not produce steel Wheels. Ford, Freightliner and Navistar,
which are major customers of the Company, produce some Wheels internally to meet
their respective Wheel needs. These OEMs may expand their internal production of
Wheels, shift sourcing to other suppliers or take other actions that could
reduce the market for the Company's products and have a material adverse effect
on the Company. There can be no assurance that the Company will not encounter
increased competition in the future in its several industry segments or that the
Company's expansion in its segments and planned entry into
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additional segments will not expose the Company to an increasing number of
well-capitalized competitors. See "Business--Competition."
POTENTIAL EXPOSURE TO ENVIRONMENTAL LIABILITIES
The Company's operations are subject to various foreign, federal, state and
local environmental laws, ordinances and regulations, including, without
limitation, those governing discharges into the air and water, the storage,
handling and disposal of solid and hazardous wastes, the remediation of soil and
groundwater contaminated by petroleum products or hazardous substances or
wastes, and the health and safety of employees (collectively, "Environmental
Laws"). Under certain Environmental Laws, a current or previous owner or
operator of property may be liable for the costs of removal or remediation of
certain hazardous substances or petroleum products on, under or in such
property, without regard to whether the owner or operator knew of, or caused,
the presence of the contaminants, and regardless of whether the practices that
resulted in the contamination were legal at the time they occurred. The presence
of, or failure to remediate properly such substances, may adversely affect the
ability to sell or rent such property or to borrow using such property as
collateral. Persons who generate, arrange for the disposal or treatment of, or
dispose of hazardous substances may be liable for the costs of investigation,
remediation or removal of such hazardous substances at or from the disposal or
treatment facility, regardless of whether such facility is owned or operated by
such person. Additionally, the owner of a site may be subject to common law
claims by third parties based on damages and costs resulting from environmental
contamination emanating from a site. Compliance with Environmental Laws,
stricter interpretations of or amendments to any such laws, or more vigorous
enforcement policies by regulatory agencies with respect to any of them may
require material expenditures by the Company. The nature of the Company's
current and former operations and the history of industrial uses at its
facilities expose the Company to the risk of liabilities or claims with respect
to environmental and worker health and safety matters that could have a material
adverse effect on the Company. Phelps Dodge has indemnified the Company with
respect to environmental liabilities at the Henderson Facility and the Ontario
Facility, subject to certain limitations, and Kaiser has indemnified the Company
with respect to environmental liabilities at the AKW facilities, subject to
certain limitations. See "Business--Environmental Matters."
DIFFICULTY IN ACHIEVING GROWTH STRATEGIES
The growth strategies that have been developed by the Company are based on
the Company's review of its operations and its competitive position. The Company
plans to make significant expenditures to (i) expand in Mexico and into other
Latin American countries through its ADM venture, (ii) expand its aluminum Wheel
production facilities in the United States and (iii) expand its presence in the
Light Truck Wheel market segment. In addition, the Company's strategies include
seeking to form or acquire a global presence through joint ventures, alliances
and other business combinations. The Company may decide to alter or discontinue
certain aspects of the growth strategies described herein and may adopt
alternative or additional strategies. In addition, there can be no assurance
that any such strategies, if implemented, will be successful or will improve
operating results. Certain of the Company's growth strategies entail the risks
of foreign operations, including the impact of foreign tax and other
regulations, currency fluctuations and political and economic instability. As
the Company enters new geographic markets and industry segments or attempts to
increase its shares of existing markets and segments, it may encounter
significant competition from the primary participants in such markets or
segments, some of whom have substantially greater resources than the Company.
Other conditions may exist, such as unforeseen costs and expenses or an economic
downturn, that may offset any improved operating results that are attributable
to such growth strategies. See "--Competition" and "Business--Growth
Strategies."
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FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements concerning the
Company's operations, economic performance and financial condition, including,
in particular, the likelihood of the Company's success in developing and
expanding its business. These statements are based upon a number of assumptions
and estimates that are inherently subject to significant uncertainties and
contingencies, many of which are beyond the control of the Company, and reflect
future business decisions that are subject to change. Some of these assumptions
inevitably will not materialize, and unanticipated events will occur that will
affect the Company's results. The Company's actual results may differ materially
from the results discussed in such forward-looking statements because of a
number of factors, including those identified in this "Risk Factors" section and
elsewhere in this Prospectus. See "Prospectus Summary," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business."
The forward-looking statements are made as of the date of this Offering
Memorandum, and the Company assumes no obligation to update the forward-looking
statements or to update the reasons why actual results could differ from those
in the forward-looking statements.
DEPENDENCE ON KEY MANAGEMENT
The Company's success depends largely upon the abilities and experience of
certain key management personnel. The loss of the services of one or more of
such key personnel, and in particular William P. Greubel, the Company's
President and Chief Executive Officer, could have a material adverse effect on
the Company. The Company does not maintain key-man life insurance policies on
any of its executives. See "Management."
CONTROL BY KKR AFFILIATES
Approximately 87% of the issued and outstanding shares of Common Stock are
held by Hubcap Acquisition. Hubcap Acquisition is a Delaware limited liability
company whose members are KKR 1996 Fund L.P. and KKR Partners II, L.P. KKR 1996
Fund L.P., which owns more than a 95% equity interest in Hubcap Acquisition, is
a Delaware limited partnership whose sole general partner is KKR Associates 1996
L.P. KKR Associates 1996 L.P. is a Delaware limited partnership whose sole
general partner is KKR 1996 GP L.L.C. KKR 1996 GP L.L.C. is a Delaware limited
liability company whose members are also the members of the limited liability
company that is the general partner of Kohlberg Kravis Roberts & Co. L.P.
("KKR"). Accordingly, affiliates of KKR will control the Company and have the
power to elect all of its directors, appoint new management and approve any
action requiring the approval of the Company's shareholders, including adopting
amendments to the Company's Certificate of Incorporation and approving mergers
or sales of substantially all of the Company's assets. There can be no assurance
that the interests of KKR and its affiliates will not conflict with the
interests of the Holders. See "Management," "Principal Stockholders" and
"Certain Relationships and Related Transactions."
RESTRICTIVE DEBT COVENANTS
The Credit Facility and the Indenture contain numerous financial and
operating covenants that limit the discretion of the Company's management with
respect to certain business matters. These covenants place significant
restrictions on, among other things, the ability of the Company to incur
additional indebtedness, to create liens or other encumbrances, to make certain
payments and investments and to sell or otherwise dispose of assets and merge or
consolidate with other entities. The Credit Facility also requires the Company
to meet certain financial ratios and tests. A failure to comply with the
obligations contained in the Credit Facility or the Indenture could result in an
event of default under either the Credit
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Facility or the Indenture, which could result in the acceleration of the related
debt and the acceleration of debt under other instruments evidencing
indebtedness that may contain cross-acceleration or cross-default provisions.
If, as a result thereof, a default occurs with respect to Senior Indebtedness,
the subordination provisions in the Indenture would likely restrict payments to
the Holders. See "Description of the Credit Facility," "Description of the
Notes--Subordination" and "--Certain Covenants."
CHANGE OF CONTROL
The Indenture provides that, unless the Company elects to redeem the Notes
prior to 2003, upon the occurrence of a Change of Control, the Company will make
an offer to purchase all or any part of the Notes at a price in cash equal to
101% of the aggregate principal amount thereof plus accrued and unpaid interest,
if any, to the date of purchase. The Credit Facility prohibits the Company from
repurchasing any Notes, except with certain proceeds of one or more Equity
Offerings. The Credit Facility also provides that certain change of control
events with respect to the Company would constitute a default thereunder. Any
future credit agreements or other agreements relating to Senior Indebtedness to
which the Company becomes a party may contain similar restrictions and
provisions. In the event a Change of Control occurs at a time when the Company
is prohibited from purchasing the Notes, or if the Company is required to make
an Asset Sale Offer (as defined) pursuant to the terms of the Notes, the Company
could seek the consent of its lenders to purchase the Notes or could attempt to
refinance the borrowings that contain such prohibition. If the Company does not
obtain such a consent or refinance such borrowings, the Company would remain
prohibited from purchasing the Notes. In such case, the Company's failure to
purchase tendered Notes would constitute an Event of Default (as defined) under
the Indenture. If, as a result thereof, a default occurs with respect to any
Senior Indebtedness, the subordination provisions in the Indenture would likely
restrict payments to the Holders. The provisions relating to a Change of Control
included in the Indenture may increase the difficulty of a potential acquirer
obtaining control of the Company. See "Description of the Notes--Repurchase at
the Option of Holders--Change of Control," "--Subordination" and "Description of
the Credit Facility."
FRAUDULENT CONVEYANCE RISKS
Management of the Company believes that the indebtedness represented by the
Notes is being incurred for proper purposes and in good faith, and that based on
present forecasts, asset valuations and other financial information, the Company
will be solvent, will have sufficient capital for carrying on its business and
will be able to pay its debts as they mature. See "--Significant Indebtedness."
Notwithstanding management's belief, however, if a court of competent
jurisdiction in a suit by an unpaid creditor or a representative of creditors
(such as a trustee in a bankruptcy or a debtor-in-possession) were to find that,
at the time of incurrence of such indebtedness, the Company was rendered
insolvent, was rendered insolvent by reason of such incurrence, was engaged in a
business or transaction for which its remaining assets constituted unreasonably
small capital, intended to incur, or believed that it would incur, debts beyond
its ability to pay such debts as they matured, or intended to hinder, delay or
defraud its creditors, and that the indebtedness was incurred for less than
reasonably equivalent value, then such court could, among other things, (i) void
all or a portion of the Company's obligations to the Holders, the result of
which would be that the Holders might not be repaid in full and/or (ii)
subordinate the Company's obligations to the Holders to other existing or future
indebtedness of the Company to a greater extent than would otherwise be the
case, the effect of which would be to entitle such other creditors to be paid in
full before any payment could be made on the Notes.
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YEAR 2000 COMPLIANCE
The Company utilizes a significant number of computer software programs and
operating systems across its entire organization, including applications used in
sales, shipping, financial business systems and various administrative
functions. To the extent that the Company's software applications contain source
code that is unable to appropriately interpret the upcoming calendar year "2000"
and beyond, some level of modification or replacement of such applications will
be necessary. The Company is working to identify its applications that are not
"Year 2000" compliant and plans to modify or replace such applications, as
necessary. The Company also has begun to address whether significant customers
and suppliers may have Year 2000 compliance issues which will affect their
interaction with the Company. Given information known at this time about the
Company's systems that are non-compliant, coupled with the Company's ongoing,
normal course-of-business efforts to upgrade or replace critical systems, as
necessary, management does not expect Year 2000 compliance costs to have any
material adverse impact on the Company. No assurance can be given, however, that
all of the Company's systems, and those of significant customers and suppliers,
will be Year 2000 compliant or the failure to achieve substantial Year 2000
compliance will not have a material adverse effect on the Company.
LACK OF PRIOR MARKET FOR THE EXCHANGE NOTES
The Exchange Notes are being offered to the Holders of the Private Notes.
The Private Notes were offered and sold in January 21, 1998 to a small number of
institutional investors and are eligible for trading in the PORTAL Market. The
Company does not intend to apply for a listing of the Exchange Notes on a
securities exchange. There is currently no established market for the Exchange
Notes and there can be no assurance as to the liquidity of markets that may
develop for the Exchange Notes, the ability of the Holders of the Exchange Notes
to sell their Exchange Notes or the price at which such Holders would be able to
sell their Exchange Notes. If such markets were to exist, the Exchange Notes
could trade at prices that may be lower than the initial market values thereof
depending on many factors, including prevailing interest rates and the markets
for similar securities. Although there is currently no market for the Exchange
Notes, the Initial Purchasers have advised the Company that they currently
intend to make a market in the Exchange Notes. However, the Initial Purchasers
are not obligated to do so, and any market making with respect to the Exchange
Notes may be discontinued at any time without notice.
The liquidity of, and trading market for, the Exchange Notes also may be
adversely affected by general declines in the market for similar securities.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Private Notes were sold by the Company on January 21, 1998 (the
"Issuance Date") to the Initial Purchasers pursuant to the Purchase Agreement.
The Initial Purchasers subsequently sold the Private Notes to (i) "qualified
institutional buyers" ("QIBs"), as defined in Rule 144A under the Securities Act
("Rule 144A"), in reliance on Rule 144A and (ii) in offshore transactions in
reliance on Regulation S under the Securities Act. As a condition to the sale of
the Private Notes, the Company and the Initial Purchasers entered into the
Registration Rights Agreement on January 21, 1998. Pursuant to the Registration
Rights Agreement, the Company agreed that, unless the Exchange Offer is not
permitted by applicable law or Commission policy, it would (i) file with the
Commission a Registration Statement under the Securities Act with respect to the
Exchange Notes within 120 days after the Closing Date, (ii) use its best efforts
to cause such Registration Statement to become effective under the Securities
Act within 200 days after the Closing Date and (iii) commence the Exchange Offer
and use its best efforts to issue, on or prior to 230 days after the Closing
Date, Exchange Notes in exchange for all Private Notes tendered prior thereto in
the Exchange Offer. A copy of the Registration Rights Agreement has been filed
as an exhibit to the Registration Statement. The Registration Statement is
intended to satisfy certain of the Company's obligations under the Registration
Rights Agreement and the Purchase Agreement.
RESALE OF THE EXCHANGE NOTES
With respect to the Exchange Notes, based upon an interpretation by the
staff of the Commission set forth in certain no-action letters issued to third
parties, the Company believes that a Holder (other than (i) a broker-dealer who
purchases such Exchange Notes directly from the Company to resell pursuant to
Rule 144A or any other available exemption under the Securities Act or (ii) any
such Holder that is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) who exchanges Private Notes for Exchange Notes in the
ordinary course of business and who is not participating, does not intend to
participate, and has no arrangement with any person to participate, in a
distribution of the Exchange Notes, will be allowed to resell Exchange Notes to
the public without further registration under the Securities Act and without
delivering to the purchasers of the Exchange Notes a prospectus that satisfies
the requirements of Section 10 of the Securities Act. However, if any Holder
acquires Exchange Notes in the Exchange Offer for the purpose of distributing or
participating in the distribution of the Exchange Notes or is a broker-dealer,
such Holder cannot rely on the position of the staff of the Commission
enumerated in certain no-action letters issued to third parties and must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction, unless an exemption from registration
is otherwise available. Each broker-dealer that receives Exchange Notes for its
own account in exchange for Private Notes, where such Private Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Private Notes where such Private Notes
were acquired by such broker-dealer as a result of market-making or other
trading activities. A broker-dealer may not participate in the Exchange Offer
with respect to the Private Notes acquired other than as a result of
market-making activities or other trading activities. Pursuant to the
Registration Rights Agreement, the Company has agreed to make this Prospectus,
as it may be amended or supplemented from time to time, available to
broker-dealers for use in connection with any resale for a period of 90 days
after the Expiration Date. See "Plan of Distribution."
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TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Private
Notes validly tendered and not withdrawn prior to the Expiration Date. The
Company will issue $1,000 principal amount of Exchange Notes in exchange for
each $1,000 principal amount of outstanding Private Notes surrendered pursuant
to the Exchange Offer. Private Notes may be tendered only in integral multiples
of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Private Notes except that (i) the exchange will be registered under the
Securities Act and, therefore, the Exchange Notes will not bear legends
restricting the transfer thereof and (ii) Holders of the Exchange Notes will not
be entitled to any of the rights of Holders of Private Notes under the
Registration Rights Agreement, which rights will terminate upon the consummation
of the Exchange Offer. The Exchange Notes will evidence the same indebtedness as
the Private Notes (which they replace) and will be issued under, and be entitled
to the benefits of, the Indenture, which also authorized the issuance of the
Private Notes, such that both series of Notes will be treated as a single class
of debt securities under the Indenture.
As of the date of this Prospectus, $200,000,000 in aggregate principal
amount of the Private Notes are outstanding. Only a registered Holder of the
Private Notes (or such Holder's legal representative or attorney-in-fact) as
reflected on the records of the Trustee under the Indenture may participate in
the Exchange Offer. There will be no fixed record date for determining
registered Holders of the Private Notes entitled to participate in the Exchange
Offer.
Holders of the Private Notes do not have any appraisal or dissenters' rights
under the Indenture in connection with the Exchange Offer. The Company intends
to conduct the Exchange Offer in accordance with the provisions of the
Registration Rights Agreement and the applicable requirements of the Securities
Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
the rules and regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Private Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering Holders
of Private Notes for the purposes of receiving the Exchange Notes from the
Company.
Holders who tender Private Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Private
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time on
, 1998, unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will (i) notify the
Exchange Agent of any extension by oral or written notice, and (ii) mail to the
registered Holders an announcement thereof which shall include disclosure of the
approximate number of Private Notes deposited to date, each prior to 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date.
The Company reserves the right, in its reasonable discretion, (i) to delay
accepting any Private Notes, (ii) to extend the Exchange Offer or (iii) if any
conditions set forth below under "-- Conditions" shall not have been satisfied,
to terminate the Exchange Offer by giving oral or written notice of such delay,
extension or termination to the Exchange Agent. Any such delay in acceptance,
extension, termination or
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<PAGE>
amendment will be followed as promptly as practicable by oral or written notice
thereof to the registered Holders. If the Exchange Offer is amended in a manner
determined by the Company to constitute a material change, the Company will
promptly disclose such amendment by means of a prospectus supplement that will
be distributed to the registered Holders, and the Company will extend the
Exchange Offer for a period of five to ten business days, depending upon the
significance of the amendment and the manner of disclosure to the registered
Holders, if the Exchange Offer would otherwise expire during such five to ten
business day period.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest at the same rate and on the same terms
as the Private Notes. Consequently, the Exchange Notes will bear interest at a
rate equal to 9 1/4% per annum. Interest on the Exchange Notes will be payable
semi-annually in arrears on each February 1 and August 1, commencing August 1,
1998. Holders of Exchange Notes will receive interest on August 1, 1998 from the
Issuance Date. Holders of Private Notes that are accepted for exchange will be
deemed to have waived the right to receive any interest accrued on the Private
Notes.
PROCEDURES FOR TENDERING
Only a registered Holder of Private Notes may tender such Private Notes in
the Exchange Offer. To tender in the Exchange Offer, a Holder of Private Notes
must complete, sign and date the Letter of Transmittal, or a facsimile thereof,
have the signatures thereon guaranteed if required by the Letter of Transmittal,
and mail or otherwise deliver such Letter of Transmittal or such facsimile to
the Exchange Agent at the address set forth below under "-- Exchange Agent" for
receipt prior to the Expiration Date. In addition, either (i) certificates for
such Private Notes must be received by the Exchange Agent along with the Letter
of Transmittal, (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Private Notes, if such procedure is
available, into the Exchange Agent's account at the Depositary pursuant to the
procedure for book-entry transfer described below, must be received by the
Exchange Agent prior to the Expiration Date or (iii) the Holder must comply with
the guaranteed delivery procedures described below.
The tender by a Holder that is not withdrawn prior to the Expiration Date
will constitute an agreement between such Holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF PRIVATE NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR PRIVATE NOTES SHOULD BE
SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR OTHER NOMINEES TO EFFECT THE ABOVE
TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner(s) of the Private Notes whose Private Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender should contact the registered Holder
promptly and instruct such registered Holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on such owner's own
behalf, such owner must, prior to completing and executing the Letter of
Transmittal and delivering such owner's Private Notes, either make appropriate
arrangements to register ownership of the Private Notes in such owner's name or
obtain a properly completed bond power from the registered Holder. The transfer
of registered ownership may take considerable time.
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Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "-- Withdrawal of Tenders"), as the case may be, must be guaranteed
by an Eligible Institution (as defined below) unless the Private Notes tendered
pursuant thereto are tendered (i) by a registered Holder who has not completed
the box titled "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be made by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "Eligible Guarantor Institution" within
the meaning of Rule 17Ad-15 under the Exchange Act which is a member of one of
the recognized signature guarantee programs identified in the Letter of
Transmittal (each, an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
Holder of any Private Notes listed therein, such Private Notes must be endorsed
or accompanied by a properly completed bond power, signed by such registered
Holder as such registered Holder's name appears on such Private Notes.
If the Letter of Transmittal or any Private Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
The Exchange Agent and the Depositary have confirmed that any financial
institution that is a participant in the Depositary's system may utilize the
Depositary's Automated Tender Offer Program to tender Private Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Private Notes will be determined
by the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Private
Notes not properly tendered or any Private Notes the Company's acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the right to waive any defects, irregularities or conditions of
tender as to particular Private Notes. The Company's interpretation of the terms
and conditions of the Exchange Offer (including the instructions in the Letter
of Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Private Notes must be
cured within such time as the Company shall determine. Although the Company
intends to notify Holders of defects or irregularities with respect to tenders
of Private Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Private Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived.
While the Company has no present plan to acquire any Private Notes that are
not tendered in the Exchange Offer or to file a registration statement to permit
resales of any Private Notes that are not tendered pursuant to the Exchange
Offer, the Company reserves the right in its sole discretion to purchase or make
offers for any Private Notes that remain outstanding subsequent to the
Expiration Date or, as set forth below under "-- Conditions," to terminate the
Exchange Offer and, to the extent permitted by applicable law, purchase Private
Notes in the open market, in privately negotiated transactions or otherwise. The
terms of any such purchases or offers could differ from the terms of the
Exchange Offer.
By tendering, each Holder of Private Notes will represent to the Company
that, among other things, (i) Exchange Notes to be acquired by such Holder of
Private Notes in connection with the Exchange Offer are being acquired by such
Holder in the ordinary course of the respective business of such Holder, (ii)
such Holder has no arrangement or understanding with any person to participate
in the distribution of the Exchange Notes, (iii) if such Holder is a resident of
the State of California, it falls under the self-executing institutional
investor exemption set forth under Section 25102(i) of the Corporate Securities
Law of 1968
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and Rules 260.102.10 and 260.105.14 of the California Blue Sky Regulations, (iv)
if such Holder is a resident of the Commonwealth of Pennsylvania, it falls under
the self-executing institutional investor exemption set forth under Sections
203(c), 102(d) and (k) of the Pennsylvania Securities Act of 1972, Section
102.111 of the Pennsylvania Blue Sky Regulations and an interpretive opinion
dated November 16, 1985, (v) such Holder acknowledges and agrees that any person
who is a broker-dealer registered under the Exchange Act or is participating in
the Exchange Offer for the purposes of distributing the Exchange Notes must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction of the Exchange
Notes acquired by such person and cannot rely on the position of the staff of
the Commission set forth in certain no-action letters, (vi) such Holder
understands that a secondary resale transaction described in clause (v) above
and any resales of Exchange Notes obtained by such Holder in exchange for
Private Notes acquired by such Holder directly from the Company should be
covered by an effective registration statement containing the selling
securityholder information required by Item 507 or Item 508, as applicable, of
Regulation S-K of the Commission and (vii) such Holder is not an "affiliate," as
defined in Rule 405 under the Securities Act, of the Company. If the Holder is a
broker-dealer that will receive Exchange Notes for such Holder's own account in
exchange for Private Notes that were acquired as a result of market-making
activities or other trading activities, such Holder will be required to
acknowledge in the Letter of Transmittal that such Holder will deliver a
prospectus in connection with any resale of such Exchange Notes; however, by so
acknowledging and by delivering a prospectus, such Holder will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
RETURN OF PRIVATE NOTES
If any tendered Private Notes are not accepted for any reason set forth in
the terms and conditions of the Exchange Offer or if Private Notes are withdrawn
or are submitted for a greater principal amount than the Holders desire to
exchange, such unaccepted, withdrawn or non-exchanged Private Notes will be
returned without expense to the tendering Holder thereof (or, in the case of
Private Notes tendered by book-entry transfer into the Exchange Agent's account
at the Depositary pursuant to the book-entry transfer procedures described
below, such Private Notes will be credited to an account maintained with the
Depositary) as promptly as practicable.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Private Notes at the Depositary for purposes of the Exchange Offer within
two business days after the date of this Prospectus, and any financial
institution that is a participant in the Depositary's systems may make book-
entry delivery of Private Notes by causing the Depositary to transfer such
Private Notes into the Exchange Agent's account at the Depositary in accordance
with the Depositary's procedures for transfer. However, although delivery of
Private Notes may be effected through book-entry transfer at the Depositary, the
Letter of Transmittal or facsimile thereof, with any required signature
guarantees and any other required documents, must, in any case, be transmitted
to and received by the Exchange Agent at the address set forth below under "--
Exchange Agent" on or prior to the Expiration Date or pursuant to the guaranteed
delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Private Notes and (i) whose Private Notes
are not immediately available or (ii) who cannot deliver their Private Notes,
the Letter of Transmittal or any other required documents to the Exchange Agent
prior to the Expiration Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
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(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery) setting forth the name and
address of the Holder, the certificate number(s) of such Private Notes, if
any, and the principal amount of Private Notes tendered, stating that the
tender is being made thereby and guaranteeing that, within five New York
Stock Exchange trading days after the Expiration Date, the Letter of
Transmittal (or a facsimile thereof), together with the certificate(s)
representing the Private Notes in proper form for transfer or a Book-Entry
Confirmation, as the case may be, and any other documents required by the
Letter of Transmittal, will be deposited by the Eligible Institution with
the Exchange Agent; and
(c) Such properly executed Letter of Transmittal (or facsimile thereof),
as well as the certificate(s) representing all tendered Private Notes in
proper form for transfer or a Book-Entry Confirmation, as the case may be,
and all other documents required by the Letter of Transmittal are received
by the Exchange Agent within five New York Stock Exchange trading days after
the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Private Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Private Notes may be
withdrawn at any time prior to 5:00 P.M., New York City time, on the Expiration
Date.
To withdraw a tender of Private Notes in the Exchange Offer, a telegram,
telex, facsimile transmission or letter of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to the Expiration Date. Any
such notice of withdrawal must (i) specify the name of the person having
deposited the Private Notes to be withdrawn (the "Depositor"), (ii) identify the
Private Notes to be withdrawn (including the certificate number or numbers on a
Book-Entry Confirmation, as the case may be, and principal amount of such
Private Notes) and (iii) be signed by the Holder in the same manner as the
original signature on the Letter of Transmittal by which such Private Notes were
tendered (including any required signature guarantees). All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company in its sole discretion, whose determination shall
be final and binding on all parties. Any Private Notes so withdrawn will be
deemed not to have been validly tendered for purposes of the Exchange Offer, and
no Exchange Notes will be issued with respect thereto unless the Private Notes
so withdrawn are validly retendered. Properly withdrawn Private Notes may be
retendered by following one of the procedures described above under "The
Exchange Offer -- Procedures for Tendering" at any time prior to the Expiration
Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange the Exchange Notes for, any
Private Notes, and may terminate the Exchange Offer as provided herein before
the acceptance of such Private Notes, if the Exchange Offer violates applicable
law, rules or regulations or an applicable interpretation of the staff of the
Commission.
If the Company determines in its reasonable discretion that any of these
conditions are not satisfied, the Company may (i) refuse to accept any Private
Notes and return all tendered Private Notes to the tendering Holders, (ii)
extend the Exchange Offer and retain all Private Notes tendered prior to the
Expiration Date, subject, however, to the rights of Holders to withdraw such
Private Notes (see "-- Withdrawal of Tenders") or (iii) waive such unsatisfied
conditions with respect to the Exchange Offer and accept all properly tendered
Private Notes that have not been withdrawn. If such waiver constitutes a
material change to the Exchange Offer, the Company will promptly disclose such
waiver by means of a prospectus supplement that will be distributed to the
registered Holders of the Private Notes, and the
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<PAGE>
Company will, if requested by law, extend the Exchange Offer for a period of
five to ten business days, depending upon the significance of the waiver and the
manner of disclosure to the registered Holders, if the Exchange Offer would
otherwise expire during such five to ten business day period.
Holders have certain rights and remedies against the Company under the
Registration Rights Agreement with respect to the Exchange Offer. In the event
that (a) the Registration Statement has not been filed with the Commission on or
prior to the 120th calendar day following January 21, 1998 (the "Issuance
Date"), (b) the Registration Statement is not declared effective on or prior to
the 200th calendar day following the Issuance Date, or (c) the Exchange Offer is
not consummated on or prior to the 230th calendar day following the Issuance
Date, the interest rate borne by the Notes shall be increased by one-quarter of
one percent per annum following such 120-day period in the case of clause (a)
above, following such 200-day period in the case of clause (b) above, or
following such 230-day period in the case of clause (c) above which rate will be
increased by an additional one-quarter of one percent per annum for each 90-day
period that any additional interest continues to accrue; PROVIDED that the
aggregate increase in such annual interest rate may in no event exceed one
percent. Upon (x) the filing of the Registration Statement after the 120-day
period described in clause (a) above, (y) the effectiveness of the Registration
Statement after the 200-day period described in clause (b) above, or (z) the
consummation of the Exchange Offer after the 230-day period described in clause
(c) above, the interest rate borne by the Notes from the date of such
effectiveness, consummation or that the Registration Statement again becomes
effective will be reduced to the original interest rate if the Company is
otherwise in compliance with this paragraph; PROVIDED, HOWEVER, that if, after
any such reduction in interest rate, a different event specified in clause (a),
(b) or (c) above occurs, the interest rate may again be increased and thereafter
decreased pursuant to the foregoing provisions.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirely by, all of the provisions of the Registration Rights Agreement.
TERMINATION OF CERTAIN RIGHTS
All rights under the Registration Rights Agreement (including registration
rights) of Holders of the Private Notes eligible to participate in the Exchange
Offer will terminate upon consummation of the Exchange Offer except with respect
to the Company's continuing obligations (i) to indemnify such Holders (including
any broker-dealers) and certain parties related to such Holders against certain
liabilities (including liabilities under the Securities Act), (ii) to provide,
upon the request of any Holder of a transfer-restricted Private Note, the
information required by Rule 144A(d)(4) under the Securities Act in order to
permit resales of such Private Notes pursuant to Rule 144A, and (iii) to use its
best efforts to keep the Registration Statement effective to the extent
necessary to ensure that it is available for resales of transfer-restricted
Private Notes by broker-dealers for a period of up to 90 days from the
Expiration Date and (iv) to provide copies of the latest version of the
Prospectus to broker-dealers upon their request for a period up to 90 days after
the Expiration Date.
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EXCHANGE AGENT
U.S.Trust Company of California, N.A. has been appointed as Exchange Agent
of the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
<TABLE>
<CAPTION>
BY REGISTERED OR CERTIFIED MAIL: BY HAND DELIVERY:
<S> <C>
U.S. Trust Company of California, N.A. U.S. Trust Company of California, N.A.
c/o United States Trust Company of New York c/o United States Trust Company of New York
P.O. Box 841 Peter Cooper Station 111 Broadway, Lower Level
New York, New York 10276-0841 New York, New York 10006
Attn: Corporate Trust and Attn: Corporate Trust and
Agency Services Agency Services
</TABLE>
<TABLE>
<CAPTION>
BY OVERNIGHT DELIVERY: BY FACSIMILE:
<S> <C>
U.S. Trust Company of California, N.A. 212-420-6155
c/o United States Trust Company of New York
770 Broadway, 13th Floor CONFIRM BY TELEPHONE
New York, New York 10003 800-255-2398
Attn: Corporate Trust and
Agency Services
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$300,000. Such expenses include registration fees, fees and expenses of the
Exchange Agent and the Trustee, accounting and legal fees and printing costs,
among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Private Notes pursuant to the Exchange Offer. If, however, a transfer tax is
imposed for any reason other than the exchange of the Private Notes pursuant to
the Exchange Offer, then the amount of any such transfer taxes (whether imposed
on the registered Holder or any other persons) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering Holder.
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CONSEQUENCE OF FAILURES TO EXCHANGE
Participation in the Exchange Offer is voluntary. Holders of the Private
Notes are urged to consult their financial and tax advisors in making their own
decisions on what action to take.
The Private Notes that are not exchanged for the Exchange Notes pursuant to
the Exchange Offer will remain restricted securities. Accordingly, such Private
Notes may be resold only (i) to a person whom the seller reasonably believes is
a QIB in a transaction meeting the requirements of Rule 144A, (ii) in a
transaction meeting the requirements of Rule 144 under the Securities Act, (iii)
outside the United States to a foreign person in a transaction meeting the
requirements of Rule 904 under the Securities Act, (iv) in accordance with
another exemption from the registration requirements of the Securities Act (and
based upon an opinion of counsel if the Company so requests), (v) to the Company
or (vi) pursuant to an effective registration statement and, in each case, in
accordance with any applicable securities laws of any state of the United States
or any other applicable jurisdiction.
ACCOUNTING TREATMENT
The carrying value of the Private Notes is expected to become the carrying
value of the Exchange Notes at the time of the Exchange Offer. Accordingly, the
Company will recognize no gain or loss as a result of the Exchange Offer. The
expenses of the Exchange Offer will be amortized over the term of the Exchange
Notes.
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THE RECAPITALIZATION
THE SUBSCRIPTION AGREEMENT
On November 17, 1997, the Company entered into the Subscription Agreement
with Phelps Dodge and Hubcap Acquisition pursuant to which Hubcap Acquisition
acquired control of the Company. Pursuant to the Subscription Agreement, Hubcap
Acquisition paid $108.0 million as consideration for the Company's issuance to
Hubcap Acquisition of 90 shares of Common Stock. The Company used the proceeds
from the Equity Investment, together with approximately $380.0 million of
aggregate proceeds from the Financings to (i) redeem 90 shares of Common Stock
and obtain a noncompetition agreement from Phelps Dodge for aggregate
consideration of $468.0 million and (ii) pay an estimated $20.0 million in
transaction fees and expenses. The Redemption price of $468.0 million was
adjusted for changes in working capital and the difference between actual and
projected capital expenditures, in each case through December 31, 1997. The
adjustment resulted in a reduction in the Redemption price, and that the
reduction was used to reduce borrowings under the Revolver.
Immediately after the Closing, Hubcap Acquisition owned 90% of the Common
Stock and Phelps Dodge owned 10% of the Common Stock. Shortly after the
Recapitalization, the Company sold additional shares of Common Stock and granted
options to purchase Common Stock to senior management of the Company
representing, in the aggregate, approximately 10% of the fully diluted equity of
the Company.
Pursuant to the Subscription Agreement, Phelps Dodge has agreed to indemnify
Hubcap Acquisition, the Company and others for certain damages relating to (i)
breaches of the representations, warranties, covenants and agreements contained
in the Subscription Agreement, (ii) certain environmental liabilities, (iii)
certain self-insured risks, (iv) certain employee benefits owed to employees of
the Company which benefit obligations are to be retained by Phelps Dodge, and
(v) income taxes relating to the operations of the Company prior to the Closing.
However, with respect to representations and warranties, Phelps Dodge will be
required to indemnify Hubcap Acquisition and the Company only to the extent that
a claim with respect to breaches of a representation and warranty is made within
twelve months of the Closing and only if damages for any such breaches exceeds
$8.5 million in the aggregate, and Phelps Dodge's maximum obligation with
respect to damages relating to clause (i) above will be 50% of the amount paid
to Phelps Dodge in the Recapitalization.
In connection with the consummation of the Recapitalization, the Company
paid the fees and expenses incurred by Hubcap Acquisition in connection with the
Subscription Agreement and the transactions contemplated thereby, including a
fee to KKR or its designee of $6.0 million for negotiating the Recapitalization
and arranging the financing therefor.
OTHER AGREEMENTS
As part of the Recapitalization, Hubcap Acquisition, the Company and Phelps
Dodge entered into the following agreements:
STOCKHOLDERS AGREEMENT. Phelps Dodge, the Company and Hubcap Acquisition
entered into a Stockholders Agreement that places restrictions on Phelps Dodge's
ability to transfer its shares of Common Stock, including a right of first
refusal in favor of the Company and Hubcap Acquisition. Under the Stockholders
Agreement, Phelps Dodge has the right to participate pro rata in certain sales
of Common Stock by Hubcap Acquisition or its affiliates (the "Tag Along") and
Hubcap Acquisition or its affiliates has the right to require Phelps Dodge to
participate pro rata in certain sales by Hubcap Acquisition or its affiliates
(the "Drag Along"). The Stockholders Agreement also grants certain demand
(subsequent to an initial public offering of the Common Stock) and piggyback
registration rights to Phelps Dodge.
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HUBCAP REGISTRATION RIGHTS AGREEMENT. Hubcap Acquisition and the Company
entered into a registration rights agreement (the "Hubcap Registration Rights
Agreement") granting Hubcap Acquisition certain demand and piggyback
registration rights. See "Certain Relationships and Related Transactions."
TRANSITION SERVICES AGREEMENT. The Company and Phelps Dodge entered into a
transition services agreement (the "Transition Services Agreement") that
provides the Company with transition services in employee benefits, payroll and
certain information technology support for up to six months after the Closing.
The Company generally will reimburse Phelps Dodge for the full costs and
expenses related to the services provided under the agreement on a basis
consistent with past practices.
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
Exchange Notes hereby. In consideration for issuing the Exchange Notes as
contemplated in this Prospectus, the Company will receive in exchange the
Private Notes in like principal amount, the terms of which are the same as the
Exchange Notes except that (i) the exchange will have been registered under the
Securities Act and, therefore, the Exchange Notes will not bear legends
restricting the transfer thereof and (ii) Holders of the Exchange Notes will not
be entitled to certain rights of Holders of the Private Notes under the
Registration Rights Agreement, which rights will terminate upon consummation of
the Exchange Offer. The Private Notes surrendered in exchange for the Exchange
Notes will not result in any increase in the indebtedness of the Company.
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CAPITALIZATION
The following table sets forth as of December 31, 1997 the (i) audited
historical consolidated cash and cash equivalents and capitalization of the
Company and (ii) unaudited pro forma consolidated cash and cash equivalents and
capitalization of the Company, as adjusted to give effect to the
Recapitalization, including the sale of the Private Notes. This table should be
read in conjunction with the "Pro Forma Consolidated Condensed Financial
Statements" and the notes thereto and the historical consolidated financial
statements of the Company and its subsidiaries and the related notes thereto
included elsewhere in this Offering Memorandum.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
-----------------------
<S> <C> <C>
HISTORICAL PRO FORMA
---------- -----------
<CAPTION>
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C>
Cash and cash equivalents.............................................................. $ 7,418 $ 7,418
---------- -----------
---------- -----------
Debt (including current portion):
Credit Facility (a).................................................................. $ -- $ 180,000
Notes................................................................................ 16,040 216,040
---------- -----------
Total debt......................................................................... 16,040 396,040
Stockholders' equity (deficit) (b)..................................................... 256,055 (93,945)
---------- -----------
Total capitalization............................................................... $ 272,095 $ 302,095
---------- -----------
---------- -----------
</TABLE>
- ------------------------
(a) As of December 31, 1997, on a pro forma basis after giving effect to the
Recapitalization, the Company would have had availability of $95.0 million
under the Revolver. See "Description of the Credit Facility."
(b) The decrease in stockholders' equity (deficit) reflects the effect of the
Equity Investment offset by the Redemption and a portion of the estimated
transaction fees and expenses.
35
<PAGE>
PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following pro forma consolidated condensed financial statements have
been derived from the application of pro forma adjustments to the Company's
historical consolidated financial statements included elsewhere in this
Prospectus. The pro forma consolidated condensed statements of operations for
the year ended December 31, 1997 give effect to (i) the Recapitalization and
(ii) the acquisition of the interest in AKW as if such transactions had occurred
on January 1, 1997 and the pro forma consolidated condensed balance sheet gives
effect to the Recapitalization as if it had occurred on December 31, 1997. The
adjustments are described in the accompanying notes. The pro forma consolidated
condensed financial statements should not be considered indicative of actual
results that would have been achieved if the Recapitalization and the
acquisition of the interest in AKW had been consummated on the date or for the
periods indicated and do not purport to indicate balance sheet data or results
of operations as of any future date or for any future period. The pro forma
consolidated condensed financial statements should be read in conjunction with
the Company's historical consolidated financial statements and the notes thereto
included in this Prospectus.
The historical basis of the Company's assets and liabilities will not be
impacted by the Recapitalization and the acquisition of the interest in AKW.
36
<PAGE>
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- -----------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents................................... $ 7,418 $ -- (a) $ 7,418
Customer and other receivables, net......................... 48,845 -- 48,845
Inventories, net............................................ 29,107 -- 29,107
Supplies and prepaid expenses............................... 6,601 -- 6,601
---------- ----------- -----------
Total current assets...................................... 91,971 -- 91,971
Property, plant and equipment, net............................ 133,997 -- 133,997
Other assets:
Goodwill, net............................................... 86,171 -- 86,171
Investment in affiliates.................................... 24,765 -- 24,765
Deferred financing costs.................................... -- 10,000(b) 10,000
Deferred income taxes and other assets...................... 10,543 2,396(c) 12,939
---------- ----------- -----------
Total other assets........................................ 121,479 12,396 133,875
---------- ----------- -----------
Total assets................................................ $ 347,447 $ 12,396 $ 359,843
---------- ----------- -----------
---------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................ $ 19,237 $ -- $ 19,237
Accrued payroll and compensation............................ 8,015 -- 8,015
Current portion of long-term debt........................... 16,040 1,350(a) 17,390
Deferred income taxes....................................... 1,481 (1,481) --
Tooling deposit............................................. 5,261 5,261
Accrued and other liabilities............................... 7,103 -- 7,103
---------- ----------- -----------
Total current liabilities................................. 57,137 (131) 57,006
Long-term debt, less current portion.......................... 378,650(a) 378,650
Deferred income taxes......................................... 16,123 (16,123)(c) --
Other liabilities............................................. 13,253 -- 13,253
---------- ----------- -----------
Total liabilities......................................... 86,513 362,396 448,909
Minority Interest............................................. 4,879 -- 4,879
Stockholders' equity (deficit)................................ 256,055 (350,000)(d) (93,945)
---------- ----------- -----------
Total liabilities and stockholders'
equity.................................................. $ 347,447 $ 12,396 $ 359,843
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
See Notes to Pro Forma Consolidated Condensed Balance Sheet.
37
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1997
The pro forma consolidated condensed balance sheet reflects pro forma
adjustments for the Recapitalization to the Company's unaudited historical
consolidated financial statements as of December 31, 1997. Accordingly, the
Recapitalization has not impacted the historical basis of the Company's assets
and liabilities.
(a) The net sources and uses of cash reflect the following:
<TABLE>
<S> <C>
(DOLLARS IN THOUSANDS)
Sources:
Revolver................................................................ $ 45,000
Term Loans.............................................................. 135,000
Notes................................................................... 200,000
Equity Investment....................................................... 108,000
---------
Total Sources......................................................... $ 488,000
---------
---------
Uses:
Redemption.............................................................. $ 468,000
Estimated transaction fees and expenses................................. 20,000
---------
Total Uses............................................................ $ 488,000
---------
---------
</TABLE>
The Redemption price of $468.0 million was adjusted for changes in
working capital and the difference between actual and projected capital
expenditures. The adjustment resulted in a reduction in the Redemption
price, and that the reduction was used to reduce borrowings under the
Revolver. A reduction of $5.0 million in the Revolver would result in a
decrease in pro forma interest expense of approximately $0.4 million for
an annual period.
Subsequent to the consummation of the Recapitalization, management of
the Company purchased Common Stock and were granted options to purchase
Common Stock, which is not reflected in the pro forma financial
statements.
(b) Represents the anticipated portion of transaction fees that will be recorded
as deferred financing costs and will be amortized over the life of the debt
to be issued.
(c) Represents net deferred taxes of $20.0 million on the estimated increase in
tax basis of fixed assets.
(d) Represents the aggregate net change as a result of the Recapitalization:
<TABLE>
<S> <C>
(DOLLARS IN THOUSANDS)
Redemption............................................................... $(468,000)
Issuance of Common Stock................................................. 108,000
Net deferred tax asset for tax basis step-up............................. 20,000
Estimated transaction fees and expenses (1).............................. (10,000)
---------
Total.................................................................. $(350,000)
---------
---------
</TABLE>
---------------------------
(1) Represents the portion of the total $20.0 million of estimated
transaction fees and expenses, which will be recorded either as an expense
or as a component of the cost of the Redemption. Estimated transaction
fees and expenses are anticipated to consist of: (i) legal, accounting and
investment banking fees, certain taxes and other expenses, and (ii)
miscellaneous fees and expenses such as printing and filing fees.
38
<PAGE>
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, 1997
---------------------------------------------------
<S> <C> <C> <C> <C>
PRO FORMA ADJUSTMENTS
--------------------------------------
<CAPTION>
(DOLLARS IN THOUSANDS) HISTORICAL AKW (A) RECAPITALIZATION PRO FORMA
---------- -------- ---------------- ---------
<S> <C> <C> <C> <C>
Net sales................................................... $332,966 $(19,055) $ -- $313,911
Cost of goods sold.......................................... 266,972 (17,920) -- 249,052
---------- -------- ---------------- ---------
Gross profit................................................ 65,994 (1,135) -- 64,859
Selling, general and administrative......................... 21,316 -- 500(b) 21,816
---------- -------- ---------------- ---------
Income from operations...................................... 44,678 (1,135) (500) 43,043
Other income (expense):
Interest income (expense), net............................ 385 -- (34,690)(c) (34,305)
Equity in earnings of affiliates.......................... 4,384 1,135 -- 5,519
Other income (expense), net (d)........................... 548 -- -- 548
---------- -------- ---------------- ---------
Income before income taxes.................................. 49,995 -- (35,190) 14,805
Income tax provision........................................ (22,158) 15,259(e) (6,899)
---------- -------- ---------------- ---------
Net income.................................................. $ 27,837 $ -- $ (19,931) $ 7,906
---------- -------- ---------------- ---------
---------- -------- ---------------- ---------
OTHER DATA:
EBITDA (as defined) (f)................................... $ 76,888 $ 76,388
EBITDA Margin (as defined) (g)............................ 21.8% 22.6%
Cash interest expense (h)................................. 145 33,635
Depreciation and amortization............................. 20,726 20,726
Capital expenditures...................................... 24,032 24,032
Ratio of earnings to fixed charges (i).................... 100.4x 1.37x
</TABLE>
See Notes to Pro Forma Consolidated Condensed Statements of Operations.
39
<PAGE>
- ------------------------
(a) Prior to May 1997, the Company sold aluminum Wheels purchased from Kaiser.
See "Business--Strategic Alliances." In May 1997, the Company and Kaiser
formed a joint venture, AKW, and the Company ceased recognizing net sales
and cost of goods sold and began to record only its share of the net
earnings of AKW. Pro forma net sales, costs of goods sold and depreciation
before May 1997 have been decreased and equity in earnings of affiliates has
been increased by a corresponding net amount as though the interest in AKW
was acquired as of January 1, 1997. The pro forma equity in earnings of AKW
before May 1997 should not be considered indicative of actual results that
would have been achieved if the formation of AKW had been consummated on
January 1, 1997.
(b) Reflects the estimated incremental selling, general and administrative
expense associated with the Company operating as an independent entity. The
incremental selling, general and administrative expense consists principally
of: (i) increases in salaries and benefits for corporate employees
(principally tax, treasury, legal and employee benefits) and (ii) additional
expenses for external auditing, periodic filings with the Commission and
compensation and benefits for non-employee directors.
(c) The pro forma adjustment to interest expense assumes a weighted average
interest rate of 8.8% per annum on $180.0 million of indebtedness under the
Credit Facility and $200.0 million in aggregate principal amount of Private
Notes.
A 0.125% increase or decrease in the weighted average interest rate would
change the pro forma interest expense by $0.5 million for the fiscal year
ended December 31, 1997. Each $5.0 million increase or decrease in
borrowings under the Revolver would change pro forma interest expense by
$0.4 million for the fiscal year ended December 31, 1997.
In addition to the effect of the Recapitalization, pro forma interest expense
reflects (from the date incurred) ADM's $14.7 million of indebtedness
outstanding as of December 31, 1997.
(d) Other income (expense), net consists of currency hedging and foreign
exchange gains and losses related to the Company's Canadian operations.
(e) Reflects the tax effects of the pro forma adjustments at a 47% effective
income tax rate for the fiscal year ended December 31, 1997.
(f) EBITDA (as defined) represents income from operations plus depreciation and
amortization plus equity in earnings of affiliates, plus $7.1 million
representing the impact of the strike at the Ontario Facility incurred
during the first quarter of 1997. EBITDA (as defined) is not intended to
represent cash flows from operations as defined by GAAP and should not be
considered as an alternative to net income as an indicator of the Company's
operating performance or to cash flows as a measure of liquidity. EBITDA (as
defined) is included in this Prospectus as it is a basis upon which the
Company assesses its financial performance and certain covenants in the
Company's borrowing arrangements are tied to similar measures.
(g) EBITDA Margin (as defined) represents EBITDA (as defined) before equity in
earnings of affiliates as a percentage of net sales.
(h) Cash interest expense represents accrued interest expense exclusive of
amortization of deferred financing costs. For the fiscal year ended December
31, 1997, pro forma amortization of deferred financing costs was $1.2
million.
(i) For purposes of these computations, earnings consist of income before income
taxes plus fixed charges (exclusive of capitalized interest) less
undistributed earnings in unconsolidated joint ventures. Fixed charges
consist of interest expense (including capitalized interest), amortization
of deferred financing costs and one-third of rental expenses (the portion
deemed representative of the interest factor).
40
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
The following table sets forth selected historical consolidated financial
and other data for the Company. The selected historical consolidated financial
data for each of fiscal years 1995, 1996, and 1997 have been derived from, and
should be read in conjunction with, the audited consolidated financial
statements of the Company for each such period and the related notes thereto
included elsewhere in this Prospectus. The unaudited selected historical
consolidated financial data for the years ended December 31, 1993 and December
31, 1994 have been derived from the Company's unaudited consolidated financial
statements. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included in the unaudited consolidated
financial statements of the Company. See "Pro Forma Consolidated Condensed
Financial Statements," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the historical consolidated financial
statements and notes thereto included elsewhere in this Prospectus.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993 1994 1995 1996 1997(A)
----------- ----------- --------- --------- ---------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales.................................................. $ 281,851 $ 333,556 $ 357,802 $ 307,830 $ 332,966
Gross profit............................................... 40,625 59,020 64,549 61,723 65,994(b)
Selling, general and administrative........................ 15,627 16,938 16,869 17,941 21,316
Income (loss) from operations.............................. 24,998 42,082 47,680 43,782 44,678(b)
Interest income (expense), net............................. (314) 701 717 400 385
Equity in earnings (loss) of affiliates.................... (176) 308 300 115 4,384
Other income (expense), net (c)............................ 320 (1,684) (1,375) (381) 548
Net income (loss).......................................... 14,734 24,301 26,592 26,466 27,837
OTHER DATA:
EBITDA (as defined) (d).................................... $ 45,133 $ 62,928 $ 70,101 $ 64,023 $ 76,888
EBITDA Margin (as defined) (e)............................. 16.1% 18.8% 19.5% 20.8% 21.8%
Net cash provided by (used in):
Operating activities..................................... 40,467 44,600 50,012 43,678 38,219
Investing activities..................................... (9,266) (6,342) (6,766) (9,370) (47,065)
Financing activities..................................... (31,276) (14,900) (57,718) (37,463) 9,953
Cash interest expense (f).................................. 614 90 35 33 145
Depreciation and amortization.............................. 20,311 20,538 21,121 20,126 20,726
Capital expenditures....................................... 10,866 6,535 6,960 9,584 24,032
Ratio of earnings to fixed charges (g)..................... 13.3x 68.5x 89.3x 118.4x 100.4x
BALANCE SHEET DATA (END OF PERIOD):
Cash and cash equivalents.................................. $ 580 $ 23,938 $ 9,466 $ 6,311 $ 7,418
Working capital............................................ 33,122 33,385 34,785 38,608 27,416
Total assets............................................... 323,778 341,014 298,900 288,703 347,447
Total debt................................................. 6,000 -- -- -- 16,040
Stockholder's equity....................................... 255,404 271,262 239,081 228,451 256,055
</TABLE>
41
<PAGE>
NOTES TO SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
(a) Results of operations for the year ended December 31, 1997 does not reflect
net sales and gross profit for aluminum Wheels subsequent to May 1997 due to
the formation of the AKW joint venture. Net sales and gross profit for
aluminum Wheels were $32.1 million and $2.5 million, respectively, for the
period beginning on May 1, 1996 and ending on December 31, 1996. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Overview" and "Pro Forma Consolidated Condensed Financial
Statements."
(b) Gross profit and income (loss) from operations for the year ended December
31, 1997 reflects $7.1 million of costs incurred in connection with the
strike in early 1997 at the Ontario Facility.
(c) Other income (expense), net consists of currency hedging and foreign
exchange gains and losses related to the Company's Canadian operations.
(d) EBITDA (as defined) represents operating income plus depreciation and
amortization plus equity in earnings of affiliates, plus (i) $7.1 million
representing the impact of the strike at the Ontario Facility incurred
during the first quarter of 1997 and (ii) $1.0 million restructuring charges
incurred in 1995. EBITDA (as defined) is not intended to represent cash
flows from operations as defined by GAAP and should not be considered as an
alternative to net income as an indicator of the Company's operating
performance or to cash flows as a measure of liquidity. EBITDA (as defined)
is included in this Prospectus as it is a basis upon which the Company
assesses its financial performance and certain covenants in the Company's
borrowing arrangements are tied to similar measures.
(e) EBITDA Margin (as defined) represents EBITDA (as defined) before equity in
earnings of affiliates as a percentage of net sales.
(f) Cash interest expense represents accrued interest expense exclusive of
amortization of deferred financing costs. For all periods presented, there
was no amortization of deferred financing costs.
(g) For purposes of these computations, earnings consist of income before income
taxes plus fixed charges (exclusive of capitalized interest) less
undistributed earnings in unconsolidated joint ventures. Fixed charges
consist of net interest expense (including capitalized interest),
amortization of deferred financing costs and one-third of rental expense
(the portion deemed representative of the interest factor).
42
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The following discussion and analysis of the results of operations of the
Company covers periods before completion of the Recapitalization. Accordingly,
the discussion and analysis of such periods do not reflect the significant
impact that the Recapitalization will have on the Company. See "Risk Factors,"
"Pro Forma Consolidated Condensed Financial Statements" and the discussion below
under "--Liquidity and Capital Resources" for further discussions relating to
the impact that the Recapitalization may have on the Company.
GENERAL
NET SALES. The Company derives a substantial portion of its net sales from
the sale of steel Wheels to North American Heavy/Medium Truck, Trailer and Light
Truck OEMs. The Company also supplies aluminum Heavy/Medium Wheels to North
American Heavy/Medium Truck and Trailer OEMs. In addition, the Company supplies
the aftermarket with replacement products. Revenues are recognized upon shipment
to customers from the Company's production facilities.
Prior to May 1997, the Company participated in the aluminum Wheel segment
through a buy-and-resell agreement with Kaiser. Under that agreement, aluminum
Wheels were engineered and designed by the Company, manufactured by Kaiser and
sold through the Company's distribution channels under the Accuride name.
Therefore, the Company's results of operations reflected revenues received from
the sale of aluminum Wheels and the cost of acquiring the Wheels from Kaiser.
However, under that arrangement, the Company often could not satisfy customer
demand for aluminum Heavy/Medium Wheels because of Kaiser's capacity
constraints. In May 1997, the Company invested $20.8 million for a 50% interest
in AKW, a joint venture with Kaiser. AKW acquired Kaiser's Wheel operations in
Erie, Pennsylvania and Cuyahoga Falls, Ohio. Since its inception, AKW has
increased its capacity by over one-third. Despite this recent expansion, AKW
continues to operate at or near capacity and is in the process of increasing
capacity further to meet customer demand. The Company's participation in AKW's
earnings has been recorded on an equity basis since the establishment of the
joint venture. Accordingly, the Company's financial results are not directly
comparable to periods prior to May 1997.
In addition, the Company recently established ADM, a 51%-owned venture with
IaSa, Mexico's only commercial vehicle Wheel manufacturer. Historically, the
Company supplied OEMs in Mexico from its Henderson Facility and its Ontario
Facility. The Company will use ADM as a platform to supply the growing Latin
American assembly operations of many of the Company's top customers, including
Ford, Freightliner, General Motors, Navistar, Paccar and Volvo. ADM is building
a new facility in Monterrey, Mexico (the "Monterrey Facility"), which is
scheduled to begin production in mid-1999. Until such time, IaSa has agreed to
contract manufacture ADM's Wheel requirements from IaSa's existing Wheel
operations. IaSa has entered into a noncompetition agreement with ADM and no
longer participates in the Wheel business other than through its interest in
ADM.
Furthermore, in order to expand its presence in the growing Light Truck
Wheel segment, the Company is developing the Tennessee Facility, which is
scheduled to begin production of Chrome Tech Wheels for Ford's Expedition,
Navigator and F-series trucks in mid-1998. The Company believes that growth
opportunities in this segment include value-added steel Wheel products, such as
the Chrome Tech Wheel, as well as capturing the potential outsourcing by
automotive OEMs of their internal Wheel manufacturing operations. This facility
will cost approximately $19 million, of which the Company had spent
approximately $9 million as of December 31, 1997. See "--Liquidity and Capital
Resources." If there is sufficient demand, the Company plans to increase the
capacity of the Tennessee Facility in 1999.
43
<PAGE>
The Company competes in a cyclical industry that historically has
experienced significant fluctuations in demand as a result of factors such as
general economic conditions, interest rates, governmental regulations and
consumer confidence. The Company's results of operations for 1995 benefited from
strong market conditions, with 1995 representing a peak according to most
industry indicators. Although demand declined in 1996, backlogs that had built
up during 1995 kept sales in line with 1995 levels through the first quarter of
1996. However, by the end of the second quarter of 1996, backlogs had declined,
and sales fell significantly. The Company's steel Wheel net sales volume for the
third quarter of 1996 was 15% lower than such net sales volume for the second
quarter of 1996 and 18% lower than such net sales volume for the comparable
period in 1995, with net sales for the year ended December 31, 1996
substantially lower than net sales for 1995. By the second quarter of 1997,
steel Wheel net sales volume was generally comparable to such net sales volume
for the same period in 1995, and steel Wheel net sales volume for the third
quarter of 1997 exceeded such net sales volume for the comparable period in 1995
by approximately 11%. Steel Wheel sales volume for the fiscal year ended 1997
exceeded 1996 levels by 22% and was substantially equivalent to the 1995 levels,
excluding sales generated by ADM. See "Risk Factors--Cyclical Nature of
Industry."
GROSS PROFIT. The Company believes that it is the low-cost North American
supplier of steel Heavy/ Medium Wheels and that it operates the most modern
steel Heavy/Medium Wheel plants in North America. The Company continuously
strives to improve productivity, increase quality and lower costs. Since 1991,
the Company has invested over $50 million to modernize, upgrade and automate its
manufacturing plants. As a result of these expenditures and management's
continuous improvement philosophy, operating costs were reduced by approximately
$18 million in 1997 compared to 1994. As a result of these efforts, the
Company's gross profit as a percentage of net sales has increased to 19.8% in
1997 from 17.7% in 1994. Management has budgeted approximately $13 million in
1998 for Productivity initiatives (in addition to normal maintenance) and
believes that the Company's emphasis on low-cost manufacturing will continue to
yield significant operational improvements. See "--Liquidity and Capital
Resources."
Steel costs have been relatively constant, reflecting both overall stability
in the steel market as well as the Company's efforts to improve its material
efficiency and supply sources. Historically, steel product customers generally
have accepted fundamental price increases. Although standard steel Wheel pricing
has been relatively constant, the Company was able to achieve a modest price
increase on standard steel products in early 1996. The aluminum product market
is less mature and, therefore, changes in aluminum prices are generally borne by
the Wheel producer. The Company has entered into hedging and fixed price supply
arrangements to better manage its aluminum costs.
The Company believes that the experience of its labor force is a significant
element in maintaining low-cost production. However, in the first quarter of
1997, the Company experienced a 53-day strike at the Ontario Facility. The
Company estimates that the strike negatively impacted gross profit by $7.1
million in 1997.
The Company's current contract with the UAW covering employees at the
Henderson Facility expired in February 1998. The Company was not able to
negotiate a mutually acceptable agreement with the UAW. Therefore, a strike
occurred at the Henderson Facility on February 20, 1998. The Company is
continuing to operate with its salaried employees and contractors. On March 31,
1998, the members of the UAW rejected the Company's final offer for a new
contract. Effective as of March 31, 1998, the Company began an indefinite
lockout which was prompted by continuing reports to management that some
individuals planned to re-enter the plant and harass employees and damage
equipment and machinery. Currently, there is, and the Company believes that
there will be, no supply disruption to the Company's customer base; however,
there can be no assurance to that effect. A supply disruption to the Company's
customer base could have a material adverse effect on the Company. See "Risk
Factors--Labor Relations."
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
("SG&A") is comprised of corporate overhead, such as marketing and sales,
research and development, finance, human resources,
44
<PAGE>
information systems and administrative as well as related professional
consulting fees. In an effort to support its growth initiatives, the Company has
invested in additional professional and administrative resources, primarily in
sales and marketing. These resource additions resulted in increased SG&A for the
years ended December 31, 1996 and December 31, 1997.
Historically, a portion of the Company's administrative functions were
provided by Phelps Dodge. The Company was charged for the out-of-pocket costs of
services performed by third parties and recorded an allocated portion of the
SG&A of Phelps Dodge. As a result of the Recapitalization (and subject to a six-
month transition period from the consummation of the Recapitalization), the
Company will perform all of its own administrative functions. See "The
Recapitalization-Transition Services Agreement." The Company has estimated that
the performance of these functions will cost the Company an additional $0.5
million annually. However, there can be no assurance that actual costs will not
exceed this estimate. See "Risk Factors--Difficulty in Achieving Growth
Strategies" and "Pro Forma Consolidated Condensed Financial Statements."
EQUITY IN EARNINGS OF AFFILIATES. Equity in earnings of affiliates includes
the Company's income from (i) AKW, subsequent to its inception in May 1997, and
(ii) AOT, Inc. ("AOT"), a 50%-owned joint venture with Goodyear Tire and Rubber
Company ("Goodyear") to provide Navistar with Wheel/tire assembly services.
Income from AKW and AOT is reported on the equity method and represents the
Company's share of such joint ventures' net income. In 1997, AOT had less than
$7.0 million in net sales. See "Business--Strategic Alliances."
EBITDA (AS DEFINED). EBITDA (as defined) represents income from operations
plus depreciation and amortization plus equity in earnings of affiliates, plus
(i) $7.1 million representing the impact of the strike at the Ontario Facility
incurred during the first quarter of 1997 and (ii) $1.0 million of restructuring
charges incurred in 1995.
YEAR 2000 COMPLIANCE
The Company utilizes a significant number of computer software programs and
operating systems across its entire organization, including applications used in
sales, shipping, financial business systems and various administrative
functions. To the extent that the Company's software applications contain source
code that is unable to appropriately interpret the upcoming calendar year "2000"
and beyond, some level of modification or replacement of such applications will
be necessary. The Company is working to identify its applications that are not
"Year 2000" compliant and plans to modify or replace such applications, as
necessary. The Company also has begun to address whether significant customers
and suppliers may have Year 2000 compliance issues which will affect their
interaction with the Company. Given information known at this time about the
Company's systems that are non-compliant, coupled with the Company's ongoing,
normal course-of-business efforts to upgrade or replace critical systems, as
necessary, management does not expect Year 2000 compliance costs to have any
material adverse impact on the Company. No assurance can be given, however, that
all of the Company's systems, and those of significant customers and suppliers,
will be Year 2000 compliant or the failure to achieve substantial Year 2000
compliance will not have a material adverse effect on the Company.
45
<PAGE>
RESULTS OF OPERATIONS
COMPARISON OF FISCAL YEARS 1996 AND 1997
The following table sets forth certain income statement information of the
Company for the fiscal years ended December 31, 1996 and December 31, 1997:
<TABLE>
<CAPTION>
FISCAL 1996 FISCAL 1997
---------------------- ----------------------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Net sales............................. $ 307,830 100.0% $ 332,966 100.0%
Gross profit.......................... 61,723 20.1 65,994 19.8
Selling, general and administrative... 17,941 5.8 21,316 6.4
Income from operations................ 43,782 14.2 44,678 13.4
Equity in earnings of affiliates...... 115 0.0 4,384 1.3
Net income............................ 26,466 8.6 27,837 8.4
EBITDA (as defined)................... $ 64,023 20.8%(a) $ 76,888 21.8%(a)
</TABLE>
- ------------------------
(a) Represents EBITDA Margin (as defined).
NET SALES. Net sales increased by $25.2 million, or 8.2%, to $333.0 million
in 1997 from $307.8 million in 1996. Net sales in 1997 do not reflect sales of
aluminum Wheels subsequent to the commencement of the operations of AKW in May
1997. Excluding net sales of aluminum products, net sales increased by $56.8
million, or 22.1%, to $313.9 million in 1997 from $257.1 million in 1996. The
significant increase in steel product net sales resulted from improved
Heavy/Medium Truck and Trailer builds driven by high freight demand and the
consolidation of ADM sales in November and December. The Company also increased
its market share at several major Trailer OEMs.
GROSS PROFIT. Gross profit increased by $4.3 million, or 6.9%, to $66.0
million in 1997 from $61.7 million in 1996. Gross profit as a percentage of net
sales decreased to 19.8% in 1997 from 20.1% in 1996. Excluding the gross profit
relating to aluminum products, gross profit increased by $7.0 million, or 12.0%,
to $64.9 million in 1997 from $57.9 million in 1996, and gross profit as a
percentage of net sales decreased to 20.7% in 1997 from 22.5% in 1996. The
Company has historically realized lower margins on sales of aluminum products
than on sales of steel products. Production costs increased due to the increase
in steel product sales volume and the impact of the strike at the Ontario
Facility in the first quarter of 1997. These increases were partially offset by
lower manufacturing costs for steel products and additional cost improvements
from the Company's Cost Reduction and Productivity Program. Excluding the gross
profit relating to aluminum products and the impact of the strike at the Ontario
Facility in the first quarter of 1997, gross profit increased by $14.1 million,
or 24.3%, and gross profit as a percentage of net sales increased to 22.9% in
1997 from 22.5% in 1996.
SELLING, GENERAL AND ADMINISTRATIVE. SG&A increased by $3.4 million, or
18.8%, to $21.3 million in 1997 from $17.9 million in 1996. As a percentage of
net sales, SG&A increased to 6.4% in 1997 from 5.8% in 1996. This increase was
due to additional advertising and marketing expenses related to new product
initiatives including premium steel, cast aluminum and forged aluminum Wheels.
SG&A also included costs related to the formation of AKW and ADM. The increase
in SG&A as a percentage of net sales also reflects the reduction in net sales
subsequent to May 1997 due to the formation of AKW. Excluding aluminum Wheel net
sales, SG&A as a percentage of net sales decreased to 6.8% in 1997 from 7.0% in
1996.
EQUITY IN EARNINGS OF AFFILIATES. Equity in earnings of affiliates
increased by $4.3 million to $4.4 million in 1997 from $.1 million in 1996,
primarily due to the Company's interest in the earnings of AKW since May 1997.
46
<PAGE>
EBITDA (AS DEFINED). EBITDA (as defined) increased by $12.9 million, or
20.1%, to $76.9 million in 1997 from $64.0 million in 1996 due to higher steel
sales volumes and increased earnings from aluminum Wheel sales. In determining
EBITDA (as defined) in 1997, income from operations has been increased by $7.1
million to reflect the impact of the strike at the Ontario Facility in the first
quarter of 1997. EBITDA (as defined) growth was limited by the effect of
relatively low volumes in the first quarter of 1997. EBITDA Margin (as defined)
increased to 21.8% in 1997 from 20.8% in 1996. On a pro forma basis after giving
effect to the acquisition of the interest in AKW, EBITDA Margin (as defined)
declined to 22.6% in 1997 from 23.1% in 1996.
NET INCOME. Net income increased by $1.3 million, or 5.1%, to $27.8 million
in 1997 from $26.5 million in 1996 due to the higher pretax earnings which were
offset in part by a higher effective tax rate. The provision for income taxes
increased by $4.7 million, or 27.0%, to $22.2 million in 1997 from $17.5 million
in 1996, primarily due to the effects of higher pretax earnings and a higher
effective tax rate.
COMPARISON OF FISCAL YEARS 1995 AND 1996
The following table sets forth certain income statement information of the
Company for the fiscal years ended December 31, 1995 and December 31, 1996:
<TABLE>
<CAPTION>
FISCAL 1995
--------------------- FISCAL 1996
---------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales......................................................... $ 357,802 100.0% $ 307,830 100.0%
Gross profit...................................................... 64,549 18.0 61,723 20.1
Selling, general and administrative............................... 16,869 4.7 17,941 5.8
Income from operations............................................ 47,680 13.3 43,782 14.2
Equity in earnings of affiliates.................................. 300 0.1 115 0.0
Net income........................................................ 26,592 7.4 26,466 8.6
EBITDA (as defined)............................................... $ 70,101 19.5%(a) $ 64,023 20.8%(a)
</TABLE>
- ------------------------
(a) Represents EBITDA Margin (as defined).
NET SALES. Net sales decreased by $50.0 million, or 14.0%, to $307.8
million in 1996 from $357.8 million in 1995 due to a 15.0% decrease in steel
Wheel net sales as the industry experienced a general decrease in volume. Steel
Wheel sales declines were encountered at major customers and included both
Heavy/ Medium Truck OEMs and Trailer OEMs. This decrease was partially offset by
a 3.0% average price increase that was instituted for steel products in early
1996. Net sales of aluminum products were relatively less affected due to
increased penetration of aluminum Wheels.
GROSS PROFIT. Gross profit decreased by $2.8 million, or 4.4%, to $61.7
million in 1996 from $64.5 million in 1995. This decrease was due primarily to
reduced steel product sales volume offset in part by significant benefits
derived from the Company's Cost Reduction and Productivity Program instituted in
1994 and improved average pricing. Gross profit as a percentage of net sales
increased to 20.1% in 1996 from 18.0% in 1995.
SELLING, GENERAL AND ADMINISTRATIVE. SG&A increased by $1.1 million, or
6.4%, to $17.9 million in 1996 from $16.9 million in 1995. As a percentage of
net sales, SG&A increased to 5.8% in 1996 from 4.7% in 1995. This increase was
due to the investment in additional marketing resources to support new product
initiatives, including the cost associated with the formation of the Company's
Light Wheels Group.
EBITDA (AS DEFINED). EBITDA (as defined) decreased by $6.1 million, or
8.7%, to $64.0 million in 1996 from $70.1 million in 1995 on significantly lower
steel sales volume. EBITDA Margin (as defined) increased to 20.8% in 1996 from
19.5% in 1995. Earnings were bolstered by major reductions in cost as a result
of the Cost Reduction and Productivity Program instituted in 1994. In
determining EBITDA (as
47
<PAGE>
defined) for 1995, income from operations has been increased by certain
restructuring charges aggregating approximately $1.0 million.
NET INCOME. Net income decreased by $0.1 million, or 0.5%, to $26.5 million
in 1996 from $26.6 million in 1995 due to lower pretax earnings which were
offset in part by a lower effective tax rate. The provision for income taxes
decreased $3.3 million, or 15.8%, to $17.5 million in 1996 from $20.7 million in
1995 due to lower pretax earnings and a lower effective tax rate.
LIQUIDITY AND CAPITAL RESOURCES
HISTORICAL
Historically, the Company has funded its cash needs with cash generated from
operations. Phelps Dodge has made capital contributions to support the Company's
major capital expenditures, including the plant modernization and automation and
cost reduction programs, and the acquisition of the Company's interests in AKW
and ADM. In prior periods, the Company utilized its operating cash flow to
support working capital and ongoing capital expenditures, with any excess cash
flow distributed to Phelps Dodge.
Cash flow from operations decreased by $5.5 million, or 12.6%, to $38.2
million in 1997 from $43.7 million in 1996. The decrease in cash flow from
operations in 1997 was primarily due to increased sales volume combined with a
relatively constant collection rate. Net cash provided by operating activities
was $50.0 million in 1995.
Net cash used in investing activities increased by $37.7 million, or 402%,
to $47.1 million in 1997 from $9.4 million in 1996. The Company's investing
activities in 1997 included the investment in AKW of approximately $20.8 million
and increased capital spending of $14.4 million to $24.0 million in 1997 from
$9.6 million in 1996. Capital expenditures in 1997 includes $9.7 million for the
Tennessee Facility and $1.7 million for the ADM expansion. Net cash used in
investing activities was $6.8 million in 1995.
Net cash provided by financing activities increased by $47.4 million to $9.9
million in 1997 from $37.5 million net cash used in financing activities in
1996. Net cash used in financing activities was $57.7 million in 1995. The funds
in 1997 were provided by Phelps Dodge and through borrowings by ADM and the
funds in 1996 and 1995 were provided by the Company to Phelps Dodge. The Company
had no borrowings from 1995 through 1996 and had $16.0 million outstanding in
borrowings as of December 31, 1997, primarily representing borrowings by ADM.
AFTER THE RECAPITALIZATION
The Company's primary sources of liquidity will be cash flow from operations
and borrowings under the Revolver. The Company's primary uses of cash will be to
fund working capital, capital expenditures and the Company's expansion plans and
to service debt.
The Company incurred substantial indebtedness in connection with the
Recapitalization. On a pro forma basis after giving effect to the
Recapitalization, the Company would have had $396.0 million of indebtedness
outstanding as of December 31, 1997, as compared to historical indebtedness
outstanding of $16.0 as of December 31, 1997. In addition, on the same pro forma
basis, the Company would have had a stockholders' deficit of $93.9 million as of
December 31, 1997, as compared to a historical stockholders' equity of $256.1
million as of December 31, 1997. The Company's significant debt service
obligations could, under certain circumstances, have material consequences to
securityholders of the Company, including the Holders. See "Risk
Factors--Significant Indebtedness."
Concurrently with the Recapitalization, the Company issued the Private Notes
and entered into the Term Loans and the Revolver. The Term Loans are for the
aggregate principal amount of $135.0 million. The Revolver will provide
revolving loans in an aggregate amount of up to $140.0 million. As of March 31,
1998, the Company had outstanding approximately $29.8 million under the
Revolver. The remaining
48
<PAGE>
amount available under the Revolver will be available to fund the working
capital requirements of the Company, including capital expenditures and
expansion plans. To provide additional financing to fund the Recapitalization,
the Company received approximately $108.0 million in gross proceeds from the
Equity Investment through the sale to Hubcap Acquisition of Common Stock upon
completion of the Recapitalization.
The proceeds of the Private Offering, the Equity Investment and the initial
borrowings under the Credit Facility were used to finance the Redemption and to
pay fees and expenses of approximately $20.0 million incurred in connection with
the Recapitalization, certain of which will be reflected either as an expense or
as a component of the cost of the Redemption in the period in which the
Recapitalization is completed. The Redemption price of $468.0 million was
adjusted for changes in working capital and the difference between actual and
projected capital expenditures, in each case through December 31, 1997. The
adjustment resulted in a reduction in the Redemption price, and that reduction
was used to reduce borrowings under the Revolver. See "Pro Forma Consolidated
Condensed Financial Statements."
Borrowings under the Credit Facility will bear interest at a rate per annum
equal (at the Company's option) to a margin over either a base rate or LIBOR.
The commitment under the Revolver will decline to $100.0 million on the date
that is five years after the Closing, and the final maturity date of the
Revolver is the date that is six years after the Closing. The Term Loans are
amortized over an 8-year period with nominal amortization required in the first
six years (approximately 1.0% per year). The Company's obligations under the
Credit Facility are guaranteed by certain of its subsidiaries. The Credit
Facility contains customary covenants and events of default, including
substantial restrictions on the Company's ability to make dividends or
distributions. See "Description of the Credit Facility."
The Company's capital expenditures (excluding capital expenditures by ADM,
if applicable) in fiscal years 1997, 1996 and 1995 totalled $22.3 million, $9.6
million and $7.0 million, respectively. The Company expects its capital
expenditures (excluding capital expenditures by ADM) to increase to
approximately $35 million in 1998. It is anticipated that these expenditures
will fund (i) approximately $10 million to develop the Tennessee Facility, (ii)
investments in productivity improvements in 1998 to its steel Wheel business,
which the Company estimates will require an investment of approximately $13
million during 1998 and (iii) maintenance expenditures of approximately $10
million in 1998. Investments in productivity improvements are expected to be
focused on additional automation, shop floor and engineering systems, and
improved coating capabilities. If there is sufficient demand, the Company is
contemplating expanding the capacity of the Tennessee Facility in 1999. See
"Risk Factors--Difficulty in Achieving Growth Strategies."
In addition, the Company anticipates that ADM will require capital
expenditures of approximately $18 million in 1998 to construct and equip the
Monterrey Facility. The Monterrey Facility is expected to be operational in
mid-1999 at a total cost through 1999 of approximately $27 million, of which
approximately $2 million was spent as of December 31, 1997. The Company is in
the process of negotiating a credit facility for ADM and anticipates that it
will be negotiated by early May 1998; however, there can be no assurance to that
effect. The Company anticipates that such facility will place significant
restrictions on the ability of ADM to distribute cash to the Company.
Management believes that cash flow from operations and availability under
the Revolver will provide adequate funds for the Company's foreseeable working
capital needs, planned capital expenditures and expansion plans and debt service
obligations. Any future acquisitions, joint ventures or other similar
transactions will likely require additional capital, and there can be no
assurance that any such capital will be available to the Company on acceptable
terms or at all. The Company's ability to fund its working capital needs,
planned capital expenditures and scheduled debt payments, to implement its
expansion plans, to refinance indebtedness and to comply with all of the
financial covenants under its debt agreements, depends on its future operating
performance and cash flow, which in turn, are subject to prevailing economic
conditions and to financial, business and other factors, some of which are
beyond the Company's control. See "Risk Factors."
49
<PAGE>
BUSINESS
GENERAL
Accuride is North America's largest manufacturer and supplier of Wheels for
Heavy/Medium Trucks and Trailers. The Company estimates that it has a 68% share
in the North American Wheel market segment for Heavy/Medium Trucks and Trailers.
The Company offers the broadest product line in the North American Heavy/Medium
Wheel industry and is the only North American manufacturer and supplier of both
steel and aluminum Heavy/Medium Wheels. For the year ended December 31, 1997, on
an unaudited pro forma basis after giving effect to the Recapitalization and the
acquisition of the interest in AKW, Accuride's net sales and EBITDA (as defined)
would have been $313.9 million and $76.4 million, respectively. See "Prospectus
Summary--Summary Pro Forma Consolidated Financial Data."
The Company sells its Wheels primarily to Heavy/Medium Truck, Trailer and
Light Truck OEMs. Major customers include Ford, Freightliner, General Motors,
Mack, Navistar and Paccar. For over 10 years, the Company's steel Wheels have
been standard equipment at all North American Heavy/ Medium Truck OEMs and at a
majority of North American Trailer OEMs. In addition, the Company's steel Wheels
are standard equipment at 82 of North America's 100 largest trucking fleets,
such as J.B. Hunt, Ryder and Schneider. The Company believes that its leadership
position results from its customers and its ability to consistently deliver a
broad range of high-quality Wheels cost-effectively.
By leveraging its customer relationships and leading position in the North
American Heavy/Medium Wheel segment, the Company has implemented a number of
growth initiatives to strengthen its position in the worldwide Wheel industry.
In May 1997, the Company and Kaiser established AKW, a joint venture that
manufacturers and supplies aluminum Heavy/Medium Wheels. The 50%-owned AKW joint
venture replaced a twenty-five-year buy-and-resell relationship with Kaiser and
has significantly improved the Company's ability to meet the growing aluminum
Heavy/Medium Wheel needs of its customers. In addition, in order to serve more
effectively its customers in Mexico and other Latin American countries, the
Company recently established ADM, a 51%-owned venture with IaSa, Mexico's only
commercial vehicle Wheel manufacturer. Furthermore, in order to expand its
presence in the growing segment for Light Truck Wheels, the Company is
developing the Tennessee Facility, which is scheduled to begin production in
mid-1998.
The North American commercial vehicle industry may be divided into three
segments: (i) Heavy/ Medium Trucks, (ii) Trailers and (iii) Light Trucks.
According to industry sources, new builds in the North American Heavy/Medium
Truck and Trailer segments have grown to 640,000 units in 1997 from 455,000
units in 1992. Over that same period, new builds in the North American Light
Truck market have grown to 6.9 million units from 4.2 million units. Management
believes that the growth in the North American Heavy/Medium Truck and Trailer
segments has been driven by the sustained economic growth in North America and
shorter fleet trade-in cycles, while the growth in the North American Light
Truck market has been driven by the increase in the popularity of sport utility
vehicles and pick-up trucks, coupled with sustained economic growth.
COMPETITIVE STRENGTHS
LEADING MARKET POSITION. The Company is the leading North American
manufacturer and supplier of steel and aluminum Wheels to the Heavy/Medium Truck
and Trailer segments with a 77% share in the steel Heavy/Medium Wheel segment
and a combined 68% share in the steel and aluminum Heavy/ Medium Wheel segment.
The Company believes that its market position is due, in large part, to its
long-standing customer relationships; broad, high-quality product line; and
low-cost manufacturing capabilities.
LONG-STANDING CUSTOMER RELATIONSHIPS. The Company believes that its
long-standing customer relationships provide it with a distinct competitive
advantage. The Company has a proven track record of customer service marked by a
consistent product supply through multiple manufacturing/distributing locations,
short production lead times, 99% on-time delivery and low defect rates. For over
10 years, the Company has been the only Wheel manufacturer whose steel Wheels
are standard equipment at all North American Heavy/Medium Truck OEMs. In
addition, the Company's steel Wheels are standard equipment
50
<PAGE>
at a majority of the North American Trailer OEMs and at 82 of North America's
100 largest trucking fleets.
BROAD, HIGH-QUALITY PRODUCT LINE. The Company believes that it has the
broadest product line in the North American Heavy/Medium Wheel industry. Its
products are recognized by the industry and customers for their quality.
Accuride is the only North American manufacturer and supplier of both steel and
aluminum Heavy/Medium Wheels. In addition, the Company manufactures and supplies
single and dual steel Light Truck Wheels. The Company intends to enhance its
Light Truck Wheel product line and meet more fully its customers' Wheel needs by
establishing the Tennessee Facility, which is scheduled to begin production in
mid-1998.
LOW-COST MANUFACTURING. The Company believes that it is the low-cost North
American supplier of steel Heavy/Medium Wheels and that it operates the most
modern steel Heavy/Medium Wheel plants in North America. The Company
continuously strives to improve productivity, increase quality and lower costs.
Since 1991, the Company has invested over $50 million to modernize, upgrade and
automate its manufacturing plants. Operating costs have been reduced by
approximately $18 million in 1997 compared to 1994, and the Company believes
that significant additional savings were achieved in 1997. In addition,
Productivity at the Company's two primary manufacturing facilities has improved
38% and Controllable Costs have improved 15%. Management has budgeted
approximately $13 million in 1998 for Productivity initiatives and believes that
its emphasis on low-cost manufacturing will continue to yield significant
operational improvements. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
GROWTH STRATEGIES
The Company plans to capitalize on its leading position in the North
American Wheel industry to broaden its product line further and to expand its
business globally by focusing on the following growth strategies:
EXPAND ALUMINUM SHARE. The Company believes that it can leverage its AKW
joint venture to increase its 24% share of the growing aluminum Heavy/Medium
Wheel segment and to expand its customer base. Historically, the Company often
could not satisfy customer demand for aluminum Heavy/Medium Wheels because of
Kaiser's capacity constraints. Since its inception, however, AKW has increased
its capacity by over one-third. Despite this recent expansion, AKW continues to
operate at or near capacity and is in the process of increasing capacity further
to satisfy customer demand.
INCREASE LIGHT TRUCK WHEEL SHARE. The Company plans to aggressively pursue
opportunities in the North American Light Truck Wheel segment by leveraging its
existing OEM relationships through the application of technology to create
value-added products. The Company, in conjunction with a leading automotive trim
supplier, recently introduced the Chrome Tech Wheel, which management believes
has the potential to penetrate the Wheel segments for Light Trucks and passenger
cars. The Chrome Tech Wheel combines the aesthetics of aluminum with the cost
advantages of steel. The Tennessee Facility will begin producing Chrome Tech
Wheels for Ford's Expedition, Navigator and F-series trucks in mid-1998.
EXPAND LATIN AMERICAN POSITION. As OEMs expand their manufacturing
operations into Mexico and other Latin American countries, they are looking to
their suppliers to support them at a local level. The ADM venture will serve as
a platform to supply the growing Latin American assembly operations of many of
the Company's top customers, including Ford, Freightliner, General Motors,
Navistar, Paccar and Volvo.
ESTABLISH GLOBAL PRESENCE. Accuride believes that it will be able to build
on its long-standing customer relationships and extensive product offering to
become a global, single source Wheel manufacturer and supplier. Currently, the
Company has the ability to supply its customers from manufacturing locations in
the U.S., Canada and Latin America. Management believes that opportunities exist
to develop global manufacturing capabilities through joint ventures, alliances
and business combinations with leading Wheel manufacturers in Europe, South
America and Asia.
51
<PAGE>
INDUSTRY OVERVIEW
The size of the steel and aluminum commercial vehicle Wheel industry in
North America is approximately $1.5 billion. Wheels are produced for (i)
Heavy/Medium Trucks, which are over-the-road vehicles designed to carry over
10,000 pounds such as large multi-axle rigs, buses and moving trucks; (ii)
Trailers, which includes trailers and chassis; and (iii) Light Trucks, which are
vehicles designed to carry under 10,000 pounds such as pick-up trucks, walk-in
delivery vans and sport utility vehicles. Wheels produced for Heavy/Medium
Trucks and Trailers are larger and heavier dual Wheels. Wheels produced for
Light Trucks are smaller and lighter single or dual Wheels.
The North American commercial vehicle industry may be divided into three
segments: (i) by vehicle category--Heavy/Medium Wheels and Light Truck Wheels,
(ii) by production material--steel and aluminum Wheels, and (iii) by vehicle
application--dual and single Wheels. The following table sets forth the size of
each market segment in 1996.
1996 NORTH AMERICAN HEAVY/MEDIUM WHEEL
AND LIGHT TRUCK WHEEL SEGMENTS
<TABLE>
<CAPTION>
SINGLE
(DOLLARS IN MILLIONS) DUAL WHEELS WHEELS TOTAL
----------- ----------- -----------
<S> <C> <C> <C>
HEAVY/MEDIUM WHEELS
Steel................................................... $ 217 $ -- $ 217
Aluminum................................................ 204 -- 204
----------- ----------- -----------
Total Heavy/Medium Wheels............................. 421 -- 421
LIGHT TRUCK WHEELS
Steel................................................... 41 218 259
Aluminum................................................ 10 810 820
----------- ----------- -----------
Total Light Truck Wheels.............................. 51 1,028 1,079
----------- ----------- -----------
TOTAL..................................................... $ 472 $ 1,028 $ 1,500
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
HEAVY/MEDIUM WHEELS AND LIGHT TRUCK WHEELS. Heavy/Medium Wheels range in
diameter from 19.5" to 24.5". Purchasers of Heavy/Medium Wheels consist
primarily of Heavy/Medium Truck OEMs such as Freightliner, Mack and Navistar,
and Heavy/Medium Trailer OEMs such as Great Dane Trailers, Inc. ("Great Dane"),
Utility Trailer Manufacturing Company ("Utility") and Wabash, Inc. ("Wabash").
The Heavy/Medium Wheel segment is driven by the volume of Heavy/Medium Truck and
Trailer manufacturing, which is tied to macroeconomic trends such as economic
growth and fuel prices. In 1996, industry sales of Heavy/Medium Wheels in North
America were approximately $421.0 million. According to industry sources, new
builds in the North American Heavy/Medium Truck and Trailer markets have grown
to 640,000 units in 1997 from 455,000 units in 1992. Management believes that
the growth in the North American Heavy/Medium Truck and Trailer markets has been
driven by the sustained economic growth in North America and shorter fleet
trade-in cycles.
Light Truck Wheels range in diameter from 14.0" to 19.5". Purchasers of
Light Truck Wheels consist primarily of Light Truck OEMs such as Ford and
General Motors. The Light Truck Wheel segment is driven by the volume of
production of Light Trucks as well as the trend toward the use of larger
diameter Light Truck Wheels in smaller Light Trucks such as sport utility
vehicles to improve styling and performance. In 1996, industry sales of Light
Truck Wheels in North America were approximately $1.1 billion. According to
industry sources, new builds in the North American Light Truck market have grown
to 6.9 million units in 1997 from 4.2 million units in 1992. Recent growth can
be attributed to the increase in the popularity of sport utility vehicles and
pick-up trucks, coupled with sustained economic growth.
STEEL AND ALUMINUM WHEELS. Steel Wheels are more resistant to damage and
hold a substantial price advantage over aluminum Wheels. Aluminum Wheels are
generally lighter in weight, more readily stylized and approximately four times
more expensive than steel Wheels. The growth of aluminum Heavy/Medium
52
<PAGE>
Wheel and Light Truck Wheel sales is driven by the increasing importance of the
aesthetic aspect of Wheels, particularly in the Light Truck Wheel segment, and,
to a lesser extent, reduced vehicle weight.
DUAL AND SINGLE WHEELS. Dual Wheels, which carry higher load ratings, are
used on Heavy/Medium Trucks, Trailers and Light Trucks. Dual Wheels may be
mounted in tandem (i.e., side-by-side, two wheels on each end of an axle) or
individually. Single Wheels are used on Light Trucks and passenger cars. The
Company is the only producer of both dual and single Light Truck Wheels in North
America.
PRODUCTS AND SERVICES
GENERAL. The Company has the broadest product line in the North American
Heavy/Medium Wheel industry. The Company also competes in the Light Truck Wheel
segment for larger (with diameters of 16.0" and over) steel Wheels for Light
Trucks. The Company offers low-cost steel and aluminum Wheels for Heavy/Medium
Trucks and Trailers, heavy-duty Wheels for the construction industry and
stylized steel and aluminum Wheels for Light Trucks. Other than through ADM, the
Company does not produce smaller Wheels (with diameters under 16.0") or Wheels
with diameters in excess of 24.5". ADM produces a wide range of Wheels, from
smaller passenger car Wheels and motorcycle Wheels to large agricultural vehicle
Wheels with diameters in excess of 24.5".
The following table shows the size of each segment in 1996 and the Company's
market share of each such segment.
ACCURIDE'S SHARE OF THE
1996 NORTH AMERICAN HEAVY/MEDIUM WHEEL
AND LIGHT TRUCK WHEEL SEGMENTS
<TABLE>
<CAPTION>
DUAL WHEELS SINGLE WHEELS TOTAL
-------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS) SIZE SHARE SIZE SHARE SIZE SHARE
--------- --------- --------- --------- --------- ---------
HEAVY/MEDIUM WHEELS
Steel................................................ $ 217 77% $ -- --% $ 217 77%
Aluminum............................................. 204 24 -- -- 204 24
<CAPTION>
--------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total Heavy/Medium Wheels.......................... 421 68 -- -- 421 68
LIGHT TRUCK WHEELS
Steel................................................ 41 88 218 8 259 14
Aluminum............................................. 10 -- 810 -- 820 --
<CAPTION>
--------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total Light Truck Wheels........................... 51 69 1,028 1 1,079 2
--------- --------- ---------
TOTAL.................................................. $ 472 $ 1,028 $ 1,500
--------- --------- ---------
--------- --------- ---------
</TABLE>
HEAVY/MEDIUM WHEELS. The Company has a 68% share in the North America
Heavy/Medium Wheel segment. The Company has the most extensive line of
Heavy/Medium Wheels in the North American Heavy/Medium Wheel industry. The
Company's leading share is the result of the Company's emphasis on customer
service, consistent product quality and production efficiency. The Company
enjoys established relationships with nearly all of the major OEM producers in
this segment. The Company's steel Wheels are offered as standard equipment by
all major Heavy/Medium Truck OEMs, including Ford, Freightliner, General Motors,
Mack, Navistar, Paccar and Volvo. In addition, the Company is the standard steel
Wheel supplier to a majority of North American Trailer OEMs, including Dorsey
Trailers, Inc., Great Dane, Lufkin Motors, Inc., Manac Coachworks, Monon
Corporation, Stoughton Trailers Inc., Trail King Industries Inc., Transcraft
Corporation, Utility and Wabash. By providing a full range of high-quality
products, the Company has been awarded exclusive contracts with many leading
Heavy/Medium Truck OEMs, including Navistar, Paccar and Volvo. These contracts
are typically for 3 years, and give assurance of supply and price stability in
return for standard sourcing. The Company also provides Navistar with sequenced
Wheel and tire assemblies through its AOT joint venture with Goodyear. See
"--Strategic Alliances."
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<PAGE>
The Company believes that its customers have come to rely on it as a
high-quality manufacturer with a broad product line and a dependable supply
source. In addition, the Company has leveraged its leading position in the North
American steel Heavy/Medium Wheel market to develop a strong and growing
presence in aluminum Wheels. With its broad product line, the Company believes
it is positioned to meet the expanding demands of the major OEMs.
LIGHT TRUCK WHEELS. In addition to its market leadership in the
Heavy/Medium Wheel segment, the Company has built a strong niche position in the
steel Light Truck Wheel market segment. While this segment broadly includes a
number of different sizes and types of Wheels, the Company currently competes
only in the commercial 16.0" through 19.5" diameter steel Wheel segment. The
Company offers a broad line of steel Light Truck Wheels and is the only North
American source for both single and dual steel Light Truck Wheels. The Company
believes that as OEMs move toward single sourcing, the Company's ability to
supply both single and dual Wheels will be a significant competitive advantage.
The Company's principal Light Truck Wheel customers are Ford and General Motors.
The Company's Light Truck Wheel competitors have traditionally produced smaller
diameter (14.0" to 16.0") Light Truck Wheels. The Company believes it has a
significant advantage in larger diameter Light Truck Wheels over its
competitors, since there are technical and manufacturing prerequisites for
producing larger Light Truck Wheels that the Company believes pose significant
barriers to its competitors.
As the trend toward larger-diameter Wheels for passenger cars and Light
Trucks continues, the Company is leveraging both its manufacturing competencies
and adding capacity to exploit this opportunity. The Company has contracted, on
a non-exclusive basis with Lacks, a leading automotive trim supplier, to provide
the Chrome Tech Wheel to Ford for use on its Expedition, Navigator and F-series
trucks. The Company believes that the technology used in the Chrome Tech Wheel
has broader applicability and plans to extend its agreement with Lacks to permit
the Company to participate in the segment for Chrome Tech Wheels commencing in
1998. However, there can be no assurance that the Company will be able to enter
into an agreement with Lacks with respect to the application of the technology
to any particular platform. The Company is developing the Tennessee Facility,
which will produce Light Truck Wheels, including the Chrome Tech Wheel,
beginning in mid-1998. This facility will cost approximately $19 million, of
which the Company had spent approximately $9 million as of December 31, 1997. If
there is sufficient demand, the Company has plans to increase the capacity of
the Tennessee Facility in 1999. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."
In addition, the Company is developing other low-cost, high-quality styled steel
Wheel options to expand the steel Wheel segment.
CUSTOMERS
The Company's customers fall into four general categories: (i) Heavy/Medium
Truck OEMs (which represented approximately 52% of the Company's 1997 net
sales); (ii) Trailer OEMs (which represented approximately 17% of the Company's
1997 net sales); (iii) Light Truck OEMs (which represented approximately 15% of
the Company's 1997 net sales); and (iv) aftermarket distributors and others
(which represented approximately 16% of the Company's 1997 net sales). Major
customers include Freightliner, Mack, Navistar and Paccar, which are
Heavy/Medium Truck OEMs; Great Dane, Utility and Wabash, which are Trailer OEMs;
and Ford and General Motors, which are Light Truck OEMs. The Company serves the
aftermarket through a broad network of distributors.
The Company has long-standing relationships with its customers based on its
proven track record of customer service, which is marked by a consistent supply
of products through multiple manufacturing/ distributing locations, short
production lead times, 99% on-time delivery and low defect rates. The Company
believes that its customer relationships provide it with a distinct competitive
advantage. The Company is the only standard source of Wheels at all North
American Heavy/Medium Truck OEMs. In addition, the Company's steel Wheels are
currently standard equipment at a majority of North American Trailer OEMs and at
82 of North America's 100 largest trucking fleets.
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<PAGE>
The Company's design engineers work closely with its customers to support
the vehicle system design. Established contacts with OEM engineers enable the
Company to track industry trends, including new features and styles, and to
ensure that new products meet changing requirements for new vehicle systems. For
example, over the last few years, the Company has responded to and worked with
customers to complete significant new development programs in the areas of
full-contoured styled steel Wheels, forged aluminum Wheels, cast aluminum Wheels
for Heavy/Medium Truck applications in North America, and Wheels for Light Truck
applications.
In the Heavy/Medium Wheel segment, Wheels are designated as standard
equipment by the OEM, although other Wheels may be selected by fleet managers as
component parts for their fleets. Generally, OEMs will have one standard Wheel
manufacturer for any given vehicle model. Because the Company is the only
standard Wheel manufacturer at all North American Heavy/Medium Truck OEMs, each
Heavy/ Medium Truck produced in North America will have Accuride Wheels unless
the end-purchaser of a particular Heavy/Medium Truck (or fleet of Heavy/Medium
Trucks) specifically requests a Wheel produced by another company. Light Truck
OEMs will ordinarily designate more than one Wheel option as standard for any
particular vehicle model and one Wheel supplier to supply each option.
Consequently, for any particular vehicle model, more than one supplier may have
its Wheels designated as standard equipment. OEMs determine which of the
standard Wheels to use on any one vehicle depending on factors such as
marketing, consumer preference and cost. In some cases, an OEM will allow an
end-consumer to select a Wheel option from the set of Wheels designated as
standard. The process of being designated as a standard supplier of a particular
Wheel can take more than two years from the time of initial design to first
delivery. A potential supplier must first develop a Wheel design based on
styling and engineering specifications provided by the OEM. After a
comprehensive engineering and feasibility review, the OEM designates a specific
supplier for a particular Wheel. The duration of the designation is dependent
upon the life cycle of the vehicle model. A supplier that designs, engineers,
manufactures and conducts quality control testing is generally referred to as a
"Tier I" supplier. The Company is a Tier I supplier for both Ford and General
Motors and believes that its early involvement with the engineers from its
customers affords it a competitive advantage.
STRATEGIC ALLIANCES
The Company has implemented a number of growth initiatives to strengthen its
position in the worldwide Wheel industry. These initiatives include the
Company's (i) AKW joint venture with Kaiser to produce aluminum Wheels, (ii) ADM
venture with IaSa to produce steel Wheels in Mexico, and (iii) AOT joint venture
with Goodyear to assemble Wheels and tires for Navistar.
ACCURIDE/KAISER WHEELS. Prior to the formation of AKW, the Company
participated in the aluminum Wheel segment through a buy-and-resell agreement
with Kaiser. Historically, the Company often could not satisfy customer demand
for aluminum Heavy/Medium Wheels because of Kaiser's capacity constraints. In
response to the growing demand for its aluminum Wheels and a desire to increase
its market share and further its single source capabilities, the Company
invested $20.8 million in May 1997 for a 50% interest in AKW. The Company
believes it can leverage the recent establishment of AKW to increase its 24%
share of the growing aluminum Heavy/Medium Wheel segment and to expand its
customer base. Since its inception, AKW has increased its aluminum Heavy/Medium
Wheel capacity by over one-third. Despite this recent expansion, AKW continues
to operate at or near capacity and is in the process of increasing capacity
further to satisfy customer demand. See "Risk Factors--Competition."
ACCURIDE DE MEXICO. Most of the Company's Heavy/Medium Truck and Light
Truck customers either already produce vehicles in Mexico or plan to do so in
the near future. These customers have indicated that they will require local
sourcing as they expand their operations in Mexico. Historically, the Company
supplied OEMs in Mexico from its Henderson Facility and its Ontario Facility. On
November 5, 1997, the Company invested $4.9 million for a 51% interest in ADM, a
venture with IaSa, Mexico's only commercial vehicle Wheel manufacturer. The
Company will use ADM as a platform to supply the growing Latin
55
<PAGE>
American assembly operations of many of its top customers, including Ford,
Freightliner, General Motors, Navistar, Paccar and Volvo. The Company believes
that the ADM venture will provide a platform for building a position in Latin
America. ADM is building a new facility in Monterrey, Mexico, which is scheduled
to begin production in mid-1999. Until such time, IaSa has agreed to contract
manufacture ADM's Wheel requirements from IaSa's existing Wheel operations. IaSa
has entered into a noncompetition agreement with ADM and no longer participates
in the Wheel business other than through its interest in ADM. Under the ADM
venture agreement, to the extent the Company pursues opportunities in Mexico and
other Latin American countries, the Company is required to offer the right of
first refusal to ADM. Since the facility will be tooled to make some of the
products currently manufactured at the Henderson Facility and the Ontario
Facility, the Company will obtain additional operational flexibility by having
another manufacturing site.
ASSEMBLIES ON TIME. The Company and Goodyear formed the AOT joint venture
in June 1991 in order to assemble Wheels and tires for Navistar near Navistar's
truck assembly operation in Springfield, Ohio. The Company and Goodyear each own
50% of AOT. The Company considers AOT to be a value-added service and is
actively considering the expansion of AOT. The Company believes that similar
assembly services from OEMs may become more common in the future. See
"Properties" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."
MANUFACTURING
CONTINUOUS PRODUCTIVITY IMPROVEMENT. The Company believes that it is the
low-cost North American supplier of steel Heavy/Medium Wheels and that it
operates the most modern steel Heavy/Medium Wheel plants in North America. The
Company has developed and implemented a Cost Reduction and Productivity Program
to continuously improve its operations and to modernize, upgrade and automate
its manufacturing plants. Since 1991, the Company invested over $50 million to
improve its facilities, which included selected use of robotics and other
automation, connection of the automated component lines to the assembly lines,
and improvement in product quality through upgrading of key processes. The
success of this program is reflected in improvements in operating results,
cost-reduction, capacity, product quality and plant safety. The Company's Cost
Reduction and Productivity Program has contributed to the reduction of operating
costs by approximately $18 million in 1997 compared to 1994. The Cost Reduction
and Productivity Program also contributed to an increase in the Company's gross
profit as a percentage of net sales to 21.8% in 1997 from 17.7% in 1994. The
Company has budgeted approximately $13 million in 1998 (in addition to normal
maintenance) for continued implementation of these Productivity enhancement
programs. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources." Management believes
that its emphasis on low-cost manufacturing will continue to yield significant
operational improvements. The Monterrey Facility and the Tennessee Facility will
be automated, modern facilities designed to help the Company service its
customers that are expanding their operations in Mexico and other Latin America
countries and to help the Company increase its share of the Light Wheel segment
through the manufacture of the Chrome Tech Wheel and other Light Truck Wheels.
MANUFACTURING PROCESS. The Company's Wheels are made using seven primary
manufacturing processes: stamping, spin forming, roll forming, welding,
coating/finishing, forging and machining. The Company's steel Wheel products are
produced by spin forming or stamping of the disc, roll forming of the rim,
welding, and coating and finishing. The Company's forged aluminum Wheels are
produced by AKW using forging, heat treating, spinning, machining and polishing
processes. The following describes the major processes the Company uses to
produce Wheels:
STAMPING. The Company makes discs for single Light Truck Wheels using
stamping, which is the most cost-effective way to produce single steel discs
because it requires the lowest cycle time per part
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<PAGE>
of any available process. Stamping allows for thinner gauge steels to be
used to reduce weight without sacrificing strength.
SPIN FORMING. The Company makes discs for dual Wheels by using spin
forming, which produces discs with variable wall thicknesses, thus reducing
weight and enhancing the strength-to-weight ratio of the Wheel. Spin forming
also provides a high-quality product with low raw material usage and waste.
The Company believes that it is a leader in this spinning technique due to
its years of experience with, and investment in, this technology.
ROLL FORMING. The Company makes Light and Heavy/Medium steel rims using
roll forming (feeding coiled steel through equipment that forms it into a
cylinder, welds it, then feeds it through rim rollers to shape the rim). The
Company has developed an extensive roll forming expertise in the 40-plus
years that it has used this process, and believes that it has one of the
industry's highest quality yields for rim rolling.
COATING/FINISHING. The Company pre-treats all steel Wheels in zinc
phosphate, then applies an electro-disposition coating ("E-coat"), which is
an acrylic, cathodic, gray or white base coating that provides resistance to
corrosion. Subsequently, some customers may choose to have the Company add a
topcoat over the E-coat for further protection.
FORGING. The Company makes Heavy/Medium aluminum Wheels in the AKW joint
venture by using forging, in which an aluminum billet is compressed into a
basic Wheel shape using high amounts of pressure and energy. Forgings are
formed into their final shape using spinning (in the rim area), and by
machining the entire contour to create final mounting dimensions and
appearance. The Company believes that forging results in structural
integrity that is unsurpassed by any other aluminum metalworking process.
Forgings can offer decisive cost advantages, especially in high-volume
production runs.
SUPPLIER RELATIONSHIPS
STEEL SUPPLIERS. The Company has secured favorable pricing from a number of
different suppliers, by negotiating high-volume contracts with terms ranging
from 1 to 3 years. While the Company believes that its supply contracts can be
renewed on acceptable terms, there can be no assurance that such agreements can
be renewed on such terms or at all. However, the Company believes that it is not
dependent on long-term supply contracts for its steel requirements and has
alternative sources available to it.
ALUMINUM SUPPLIERS. Prior to the formation of AKW, the Company participated
in the aluminum Wheel market through a twenty-five-year buy-and-resell agreement
with Kaiser. The Company now participates in the aluminum Wheel market segment
through AKW, which obtains aluminum through various third-party suppliers. The
Company believes that aluminum is readily available from a variety of sources.
See "Risk Factors--Dependence on Raw Materials."
SALES AND MARKETING
The Company has built its brand franchise with a targeted sales and
marketing effort aimed at Heavy/ Medium Truck OEMs, Trailer OEMs, Light Truck
OEMs and independent distributors. The Company actively markets to major end
users, including trucking fleets and dealers. The Company positions its sales
managers near major customers such as Ford and General Motors in Detroit and
Freightliner in Portland. Additional field sales personnel are geographically
located throughout North America to service other OEMs, independent distributors
and trucking fleets. New emphasis is being placed on targeting end-users as the
Company commercializes premium products and expands its aluminum product line.
The majority of the Company's core customers source their requirements either on
annual contracts or standard sourcing contracts. Light Truck Wheels are
typically sourced for the life of the part.
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<PAGE>
The Company has appointed independent distributors in every major market
area. These distributors are mostly members of the National Wheel and Rim
Association and serve aftermarket needs and small OEMs not serviced directly by
the Company. The Company ships an average of 75 truckloads of Wheels per day to
its customers, and all shipments are made FOB shipping point. As a service to
its independent distributors, the Company also provides order consolidation
services from its warehouse in Taylor, Michigan.
COMPETITION
The Company competes on the basis of price, delivery, quality, product line
breadth and service. As a large portion of the Company's business consists of
sales to Ford, Navistar and Freightliner (representing approximately 19%, 17%
and 15% of 1997 sales, respectively), the loss of a significant portion of the
Company's sales to any of these OEMs could have a material adverse effect on the
Company.
Due to the breadth of the Company's product line, the Company competes with
different companies in different market segments. The Company's principal
competitor in the dual steel Heavy/Medium Wheel and single steel Light Truck
Wheel segments is Hayes Wheels. Recently, Hayes Wheels has been consolidating
the operations of smaller participants in the dual steel Heavy/Medium Wheel
segment. In addition, Hayes Wheels has established a significant global presence
through its acquisition of European wheel producer Lemmerz. Hayes Wheels is the
market leader in the single Light Truck Wheel segment and in the passenger car
Wheel segment, which are more diversified segments than the other segments in
which the Company competes. The Company has only recently begun to compete in
the single Light Truck Wheel segment. In the dual steel Light Truck Wheel
segment, the Company's principal competitor is Meritor, which has a 12% share.
Meritor and the Company are the only suppliers of steel dual Light Truck Wheels
in North America. All of the dual Wheels sold by Meritor in North America are
produced in Brazil. In the dual aluminum Heavy/Medium Wheel segment, the
Company's principal competitor is Alcoa, which has the leading share in that
segment. Alcoa does not produce steel Wheels. See "Risk Factors--Competition."
PROPERTIES
The Company operates six facilities in North America. The Company owns
manufacturing facilities in Henderson, Kentucky and London, Ontario, Canada,
leases a distribution warehouse in Michigan and has a sales office in the
greater Detroit area. The Company also operates facilities in Ohio and
Pennsylvania through its joint ventures with Goodyear and Kaiser, respectively.
The Company believes that its plants are adequate and suitable for the
manufacturing of products for the markets in which it sells. The Henderson
Facility, Ontario Facility and all three joint venture facilities are operating
at or near capacity. The Company is in the process of establishing the Monterrey
Facility and the Tennessee Facility, which the Company believes will, together
with its existing facilities, provide production capacity to meet expected
demand for its products. See "--Manufacturing--Continuous Productivity
Improvement."
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The Company's manufacturing and research facilities are as follows:
<TABLE>
<CAPTION>
SQUARE OWNED/
LOCATION FEET USE LEASED
- -------------------------- --------- ------------------------------------ -----------------
<S> <C> <C> <C>
London, Ontario, Canada 439,425 Heavy/Medium Wheels; steel Light Owned
Truck Wheels
Henderson, Kentucky (a) 364,365 Headquarters; R&D; steel Heavy/ Owned/Leased
Medium Wheels
Taylor, Michigan 7,500 Warehouse Leased
Springfield, Ohio (b) 136,000 Wheel and tire assemblies for Owned
Navistar
Erie, Pennsylvania (c) 126,000 Aluminum Wheels forging Owned/Leased
Cuyahoga Falls, Ohio (d) 130,500 Aluminum Wheels machining Owned/Leased
Columbia, Tennessee (e) 340,000 Steel Light Truck Wheels Owned
Monterrey, Mexico (f) N/A Steel Wheels N/A
</TABLE>
- ------------------------
(a) The land on which this facility is located is leased pursuant to an
industrial revenue financing arrangement. Upon expiration of the arrangement
in 1999, the Company has the right to repurchase the land for $1.00.
(b) Owned by AOT, the joint venture with Goodyear. See "--Products and
Services--Heavy/Medium Truck Wheels" and "--Strategic Alliances--Assemblies
on Time."
(c) The equipment is owned by AKW and the building is leased by AKW from Kaiser.
See "--Strategic Alliances-- Accuride/Kaiser Wheels."
(d) The equipment is owned by AKW and the building is leased by AKW from Kaiser.
See "--Strategic Alliances-- Accuride/Kaiser Wheels."
(e) The facility is under development and is scheduled to begin production in
mid-1998. See "--Products and Services--Light Truck Wheels."
(f) This facility is scheduled to begin production by mid-1999. See "--Strategic
Alliances--Accuride de Mexico."
The address of the Company's principal executive office is 2315 Adams Lane,
P.O. Box 40, Henderson, Kentucky 42420 and the Company's phone number is (502)
826-5000.
EMPLOYEES
As of December 31, 1997, the Company had 1,429 employees. Both the Ontario
Facility and the Henderson Facility are currently unionized. Workers in the
Ontario Facility are represented by CAW Local #27. The existing contract was
implemented in March 1997, following a 53-day strike in which there was no
disruption to the customer base. The strike occurred as a result of the CAW's
demand for a contract that had similar terms and conditions to the contracts
that had been negotiated three months earlier among the CAW and Ford, General
Motors and Chrysler. The Company was not willing to agree to many of these
terms, which included limitations on existing management rights and significant
increases in benefits and wages. Ultimately, the Company achieved a reduction in
the CAW's original demands.
Workers at the Henderson Facility are represented by UAW Local #2036. The
Company's current contract with the UAW covering employees at the Henderson
Facility expired in February 1998. The Company was not able to negotiate a
mutually acceptable agreement with the UAW. Therefore, a strike occurred at the
Henderson Facility on February 20, 1998. The Company is continuing to operate
with its salaried employees and contractors. On March 31, 1998, the members of
the UAW rejected the Company's final offer for a new contract. Effective as of
March 31, 1998, the Company began an indefinite lockout which was prompted by
continuing reports to management that some individuals planned to re-enter the
plant and harass employees and damage equipment and machinery. Currently, there
is, and the Company believes that there will be, no supply disruption to the
Company's customer base; however, there can be no
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<PAGE>
assurance to that effect. A supply disruption to the Company's customer base
could have a material adverse effect on the Company. See "Risk Factors--Labor
Relations."
In addition, the Company's ADM, AKW and AOT ventures have 51, 146 and 61
employees, respectively. The AKW employees at the Erie, Pennsylvania plant are
represented by UAW Local #1186 pursuant to a collective bargaining agreement
that expires in May 1999.
ENVIRONMENTAL MATTERS
The Company's operations are subject to various Environmental Laws. Under
certain Environmental Laws, a current or previous owner or operator of property
may be liable for the costs of removal or remediation of certain hazardous
substances or petroleum products on, under or in such property, without regard
to whether the owner or operator knew of, or caused, the presence of the
contaminants, and regardless of whether the practices that resulted in the
contamination were legal at the time they occurred. The presence of, or failure
to remediate properly such substances, may adversely affect the ability to sell
or rent such property or to borrow using such property as collateral. Persons
who generate, arrange for the disposal or treatment of, or dispose of hazardous
substances may be liable for the costs of investigation, remediation or removal
of such hazardous substances at or from the disposal or treatment facility,
regardless of whether such facility is owned or operated by such person.
Additionally, the owner of a site may be subject to common law claims by third
parties based on damages and costs resulting from environmental contamination
emanating from a site. Compliance with Environmental Laws, stricter
interpretations of or amendments to any such laws, or more vigorous enforcement
policies by regulatory agencies with respect to any of them may require material
expenditures by the Company. The nature of the Company's current and former
operations and the history of industrial uses at its facilities expose the
Company to the risk of liabilities or claims with respect to environmental and
worker health and safety matters that could have a material adverse effect on
the Company. Phelps Dodge has indemnified the Company with respect to
environmental liabilities at the Henderson Facility and the Ontario Facility,
subject to certain limitations, and Kaiser has indemnified the Company with
respect to environmental liabilities at the AKW facilities, subject to certain
limitations. See "The Recapitalization."
LEGAL PROCEEDINGS
The Company does not believe that there are any pending or threatened legal
proceedings that, if adversely determined, could have a material adverse effect
on the Company.
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<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company, and their ages as of
April 8, 1998, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------- --- ------------------------------------------------------------------
<S> <C> <C>
William P. Greubel..................... 46 Director, President and Chief Executive Officer
Birum G. Campbell...................... 50 Vice President--Light Wheel Business
Robert J. Fagerlin..................... 51 Vice President and General Manager, Mexico
Elizabeth I. Hamme..................... 47 Vice President--Human Resources and Continuous Improvement
Terrence J. Keating.................... 48 Vice President--Operations
John R. Murphy......................... 47 Vice President--Finance and Chief Financial Officer
William D. Noll........................ 49 Vice President--Product Development & Technology
Bradford C. Schultz.................... 55 Senior Vice President--Sales
Henry L. Taylor........................ 43 Vice President--Marketing and International Sales
Henry R. Kravis........................ 53 Director
George R. Roberts...................... 54 Director
James H. Greene, Jr.................... 47 Director
Todd A. Fisher......................... 32 Director
</TABLE>
WILLIAM P. GREUBEL. Mr. Greubel has been a director and the Chief Executive
Officer of the Company since January 21, 1998. Mr Greubel has been president of
the Company since 1994. He is also a director of AOT, AKW and ADM. Prior to
joining the Company, from 1974 to 1994, Mr. Greubel held positions at
AlliedSignal Corporation in sales, marketing and operations. His last two
positions were Vice President and General Manager for the Environmental
Catalysts and Engineering Plastics businesses. Mr. Greubel holds a B.A. in
Economics and an M.B.A. from Rutgers University.
BIRUM G. CAMPBELL. Mr. Campbell joined the Company in his present position
in August 1996. Prior to joining the Company, Mr. Campbell spent over 26 years
with Hayes Wheels (formerly Kelsey-Hayes) in a variety of functions, including
sales account management, materials management, general management aftermarket,
strategic and product directors positions and, finally, as Director/Sales and
Marketing for its aluminum Wheels business unit. Mr. Campbell holds a B.S. in
Industrial Economics from Purdue University.
ROBERT J. FAGERLIN. Mr. Fagerlin has been with Accuride/Firestone since
1976 and holds the newly created position of General Manager of ADM. Prior to
this, he served as Vice President of Business Development. Mr. Fagerlin serves
as the Board Chairman of AOT and is designated a board member and President of
ADM. Mr. Fagerlin holds a B.S. in Industrial Management from the University of
Akron.
ELIZABETH I. HAMME. Ms. Hamme joined the Company, in her present position
in February 1995. Prior to joining the Company, Ms. Hamme served as an
independent consultant to the manufacturing and financial services sectors for
several years. Ms. Hamme has held positions in the Human Resources Divisions of
such companies as FMC Corporation, SunTrust Banks Inc., American Bankers
Association and General Motors. Ms. Hamme holds a B.A. in Political Science and
an M.A. in Adult Education from the George Washington University.
TERRENCE J. KEATING. Mr. Keating has been in his current position since
December 1996. Mr. Keating has a background as a supplier to major automotive
accounts, and Heavy/Medium Truck OEMs, resulting from his operations positions
with the Company, Navistar and Schwitzer, Inc. Mr. Keating holds a B.S. in
Mechanical Engineering Technology from Purdue University and an M.B.A. in
Operations from Indiana University. He is certified by the American Production
and Inventory Control Society (APICS) as an inventory management professional.
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<PAGE>
JOHN R. MURPHY. Mr. Murphy joined the Company in April, 1998 Prior to
joining the Company, Mr. Murphy was the President and Chief Executive Officer of
Falconite, Inc., a privately held rental equipment company. From 1994 to 1997,
Mr. Murphy was Executive Vice President-Administration, Chief Financial Officer
and Corporate Secretary of North American Stainless, Inc. Mr. Murphy also held
the position of Vice President of Finance and Strategic Planning for Armco
Advanced Materials Company, a stainless and electrical specialty steel
manufacturing company. Mr. Murphy holds a B.S. in Accounting from the
Pennsylvania State University and an M.B.A. from the University of Colorado.
WILLIAM D. NOLL. Mr. Noll joined the Company in 1971. He worked as a design
engineer in product development and was subsequently promoted to Manager,
Product Engineering, in 1979. In 1983, Mr. Noll became Manager/Product Quality.
In 1991, Mr. Noll was promoted to his current position. He is currently a member
and company representative for SAE on the Truck/Bus Council, a member and
company representative for The Maintenance Council of the American Trucking
Association, a member and past president of the Tire and Rim Association, the
ISO Representative for the United States for Truck Wheels and a member of ASME.
Mr. Noll holds a B.S. in Mechanical Engineering from the University of Detroit
and an M.B.A. and a M.S. in Engineering Management, both from the University of
Evansville.
BRADFORD C. SCHULTZ. Mr. Schultz joined Firestone Tire and Rubber Company
(the prior owner of the Company) in 1964 as a college class trainee. He assumed
his current position in 1991. Mr. Schultz is also a director of AOT and serves
as the Company's representative for the Truck Trailer Manufacturers Association.
Mr. Schultz holds a B.A. from Muskingum College, New Concord, Ohio.
HENRY L. TAYLOR. Mr. Taylor joined the Company, in his present position, in
April 1996. From 1988 to 1996, he worked at Rockwell Automotive, in product
management, marketing, international business and business development. From
1980 to 1988, Mr. Taylor was employed by AlliedSignal's Bendix Heavy Vehicle
Systems Group, where he held positions in operations management, field sales,
product management and business development. Mr. Taylor holds a B.S. in
Marketing and Management from the University of Nevada, Reno ("UNR") and has
completed graduate courses in business at UNR, St. Louis University and Case
Western University.
HENRY R. KRAVIS. Mr. Kravis is a director of the Company. He is a managing
member of KKR & Co., L.L.C., the limited liability company which serves as the
general partner of KKR. He is also a director of Amphenol Corporation, Borden,
Inc., Bruno's, Inc., Evenflo & Spalding Holdings Corporation, The Gillette
Company, IDEX Corporation, KinderCare Learning Centers, Inc., KSL Recreation
Group, Inc., Newsquest Capital plc, Owens-Illinois, Inc., Owens-Illinois Group,
Inc., PRIMEDIA, Inc., Randall's Food Markets, Inc., RELTEC Corporation, Safeway
Inc., Sotheby's Holdings Inc., Union Texas Petroleum Holdings, Inc. and World
Color Press, Inc.
GEORGE R. ROBERTS. Mr. Roberts is a director of the Company. He is a
managing member of KKR & Co., L.L.C., the limited liability company which serves
as the general partner of KKR. He is also a director of Amphenol Corporation,
Borden, Inc., Bruno's, Inc., Evenflo & Spalding Holdings Corporation, IDEX
Corporation, KinderCare Learning Centers, Inc., KSL Recreation Group, Inc.,
Owens-Illinois, Inc., Owens-Illinois Group, Inc., PRIMEDIA, Inc., Randall's Food
Markets, Inc., RELTEC Corporation Safeway Inc., Union Texas Petroleum Holdings,
Inc. and World Color Press, Inc.
Messrs. Kravis and Roberts are first cousins.
JAMES H. GREENE, JR. Mr. Greene is a director of the Company. He is a
member of KKR & Co., L.L.C., the limited liability company which serves as the
general partner to KKR. He is also a director of Bruno's, Inc., Owens-Illinois,
Inc., Owens-Illinois Group, Inc., Randall's Food Markets, Inc., RELTEC
Corporation Safeway Inc., and Union Texas Petroleum Holdings, Inc.
TODD A. FISHER. Mr. Fisher is a director of the Company. He has been an
executive of KKR since 1993. From July 1992 to June 1993, Mr. Fisher was an
associate at Goldman, Sachs & Co. Mr. Fisher serves as a director of Layne
Christensen Company.
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
paid by the Company for services rendered during the year ended December 31,
1997 to the Chief Executive Officer and to each of the four other most highly
compensated executive officers of the Company (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------------------
ANNUAL COMPENSATION AWARDS
------------------------------------ --------------------------------
(A) (B) SECURITIES PAYOUTS
OTHER ANNUAL RESTRICTED UNDERLYING -------------
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION STOCK AWARD(S) OPTIONS/ SARS LTIP PAYOUTS
- ------------------------------------------ ---------- --------- ------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
William P. Greubel
(President)............................. $ 200,000 $ 78,900 $ 38,222 -- -- --
Bradford C. Schultz
(Senior Vice President, Sales).......... 144,900 41,900 7,899 -- -- --
Terrence Keating
(Vice President, Operations)............ 135,000 12,701 1,339 -- -- --
William D. Noll
(Vice President, Product Development and
Technology)............................. 117,300 35,300 815 -- -- --
J. Greg Szabo (d)
(Vice President, Finance and Chief
Financial Officer)...................... 97,620 -- 744 -- -- --
<CAPTION>
(C)
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION
- ------------------------------------------ -------------
<S> <C>
William P. Greubel
(President)............................. $ 24,434
Bradford C. Schultz
(Senior Vice President, Sales).......... 16,194
Terrence Keating
(Vice President, Operations)............ 22,793
William D. Noll
(Vice President, Product Development and
Technology)............................. 13,907
J. Greg Szabo (d)
(Vice President, Finance and Chief
Financial Officer)...................... 36,338
</TABLE>
- ------------------------
(a) Compensation may include medical reimbursements, restricted stock dividends,
safety awards, financial planning service fees, spousal travel, imputed
income, and gross-ups on financial planning, and qualified and non-qualified
plan vested liabilities.
(b) Consists of awards of common stock of Phelps Dodge. No restricted stock
grants were made during 1997. As of December 22, 1997, Mr. Greubel held
5,000 shares of Phelps Dodge restricted stock valued at $305,469. Dividends
are payable on a quarterly basis. The reported value is based on the market
value of unrestricted shares of Phelps Dodge's stock, as of December 22,
1997, and as such does not reflect any discount attributable to the
restrictions on transferability and risk of forfeiture inherent in the
restricted stock.
(c) Compensation may include relocation, vacation sold, and contributions made
by Phelps Dodge to the employees' qualified or non-qualified savings plan
(company match and/or profit sharing), or the Executive Life Insurance
Plan--which provides employees with a bonus to pay for a universal life
insurance policy that is fully owned by the employee.
(d) Mr. Szabo became employed by the Company on February 25, 1997. His
annualized salary from January 1, 1997 would have been $115,020. Effective
as of April 8, 1998, Mr. Szabo has resigned as the Company's Vice
President-Finance and Chief Financial Officer. John R. Murphy has been
elected by the Company's Board of Directors as the new Vice
President-Finance and Chief Financial Officer.
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<PAGE>
The following table sets forth certain information concerning the number of
options to purchase Phelps Dodge common shares held by the Named Executive
Officers as of December 31, 1997, and the value of in-the-money options
outstanding as of such date.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
NUMBER OF OPTIONS/SARS AT FISCAL OPTIONS/SARS AT FISCAL
SHARES YEAR-END YEAR-END
ACQUIRED ON (A) -------------------------- ------------------------------
NAME EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- ------------- ---------------- ----------- ------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
William P. Greubel................ 14,066 $ 187,922 13,600 13,134 $ 14,378 $ 0
Bradford C. Schultz............... -- -- 19,133 4,167 163,376 0
Terrence Keating.................. -- -- 1,166 2,334 0 0
William D. Noll................... -- -- 13,400 3,934 77,925 0
J. Greg Szabo..................... -- -- -- -- -- --
</TABLE>
- ------------------------
(a) The value was based on the high and low stock price of Phelps Dodge common
shares on the Consolidated Trading Tape on the date of exercise.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
AVERAGE ----------------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$125,000................................ $ 31,552 $ 42,070 $ 52,587 $ 63,104 $ 73,622 $ 81,747
150,000................................ 38,302 51,070 63,837 76,604 89,372 99,122
175,000................................ 45,052 60,070 75,087 90,104 105,122 116,497
200,000................................ 51,802 69,070 86,337 103,604 120,872 133,872
225,000................................ 58,552 78,070 97,587 117,104 136,622 151,247
250,000................................ 65,302 87,070 108,837 130,604 152,372 168,622
300,000................................ 78,802 105,070 131,337 157,604 183,872 203,372
400,000................................ 105,802 141,070 176,337 211,604 246,872 272,872
450,000................................ 119,302 159,070 198,837 238,604 278,372 307,622
500,000................................ 132,802 177,070 221,337 265,604 309,872 342,372
</TABLE>
The above table details estimated annual benefits for Accuride salaried
employees retiring December 31, 1997 at age 65. Benefits include benefits
payable from a predecessor plan.
The Phelps Dodge Corporation Retirement Plan for salaried employees (the
"Retirement Plan") provides a member upon retirement at age 65 with a pension
for life with five years of payments guaranteed. Under the Retirement Plan,
average compensation means the monthly average of a participant's compensation
for the period on and after January 1, 1985. For plan years prior to November 1,
1987, compensation excluded bonus payments. Beginning November 1, 1987, the plan
was amended to include bonus payments up to a maximum amount of 4.5% of base
salary. For plan years beginning on or after November 1, 1988, total
compensation includes the full bonus amount.
Benefit service includes all periods of employment with Phelps Dodge.
Benefits under the Retirement Plan are subject to certain limitations under the
Internal Revenue Code of 1986, as amended, and to the extent the result of such
limitations would be a benefit less than would otherwise be paid under such
Plan, the difference is provided under the supplementary retirement provisions
of the Phelps Dodge Corporation Supplemental Retirement Plan (the "Supplemental
Plan"). The formula for determining benefits
64
<PAGE>
payable under the Retirement Plan is based on covered compensation for an
employee reaching age 65 in 1997.
The expected credited years of benefit service at normal retirement for the
President and each of the four other most highly compensated executive officers
as of December 31, 1997 are as follows: Mr. Greubel, 22 years; Mr. Schultz, 35
years; Mr. Keating, 18 years, Mr. Szabo, 28 years; and Mr. Noll, 40 years. The
years of service are based on normal retirement for all executive officers under
the Retirement Plan and the applicable provisions of the Supplemental Plan.
1998 STOCK PURCHASE AND OPTION PLAN
After the Closing, the Company adopted the 1998 Stock Purchase and Option
Plan for Key Employees of Accuride Corporation and Subsidiaries (the "1998
Plan").
The 1998 Plan provides for the issuance of shares of authorized but unissued
or reacquired shares of Common Stock, subject to adjustment to reflect certain
events such as stock dividends, stock splits, recapitalizations, mergers or
reorganizations of or by the Company. The 1998 Plan is intended to assist the
Company in attracting and retaining employees of outstanding ability and to
promote the identification of their interests with those of the stockholders of
the Company. The 1998 Plan permits the issuance of Common Stock (the "1998 Plan
Purchase Stock") and the grant of Non-Qualified Stock Options (the "1998 Plan
Options") to purchase shares of Common Stock (the issuance of 1998 Plan Purchase
Stock and the grant of 1998 Plan Options pursuant to the 1998 Plan being a "1998
Plan Grant"). Unless sooner terminated by the Company's Board of Directors, the
1998 Plan will expire ten years after adoption. Such termination will not affect
the validity of any 1998 Plan Grant outstanding on the date of the termination.
The Compensation Committee of the Board of Directors will administer the
1998 Plan, including, without limitation, the determination of the employees to
whom 1998 Plan Grants will be made, the number of shares of Common Stock subject
to each 1998 Plan Grant, and the various terms of 1998 Plan Grants. The
Compensation Committee of the Board of Directors may from time to time amend the
terms of any 1998 Plan Grant, but, except for adjustments made upon a change in
the Common Stock by reason of a stock split, spin-off, stock dividend, stock
combination or reclassification, recapitalization, reorganization,
consolidation, change of control, or similar event, such action shall not
adversely affect the rights of any participant under the 1998 Plan with respect
to the 1998 Plan Purchase Stock and the 1998 Plan Options without such
participant's consent. The Board of Directors retain the right to amend, suspend
or terminate the 1998 Plan.
SEVERANCE AGREEMENTS
After the Closing, the Company entered into severance agreements with senior
management employees, including the Named Executive Officers, pursuant to which
in the event of any such employee's termination "without cause" or "for good
reason" (as defined therein) the Company will pay such employee one year's base
salary less any other severance payments to which the employee is entitled from
the Company and less any payments received by the employee from Phelps Dodge in
the nature of severance or bonus payments.
EMPLOYEE EQUITY ARRANGEMENTS
After the Closing and pursuant to the 1998 Plan, the Company sold 1998 Plan
Purchase Stock and issued 1998 Plan Options to selected employees, including the
Named Executive Officers (excluding Mr. Szabo), which will represent, in the
aggregate, approximately 10% of the fully diluted Common Stock (of which the
Named Executive Officers will hold approximately 37%). In connection with such
arrangements, the Company and each such employee entered into an Employee
Stockholders' Agreement and a Stock Option Agreement. The Employee Stockholders'
Agreement (i) places restrictions on each such employee's ability to transfer
shares of 1998 Plan Purchase Stock and Common Stock acquired upon
65
<PAGE>
exercise of the 1998 Plan Options, including a right of first refusal in favor
of the Company, (ii) provides each such employee the right to participate pro
rata in certain sales of Common Stock by Hubcap Acquisition or its affiliates
and (iii) provides Hubcap Acquisition and its affiliates the right to require
each such employee to participate pro rata in certain sales of Common Stock by
Hubcap Acquisition or its affiliates. The Stockholders' Agreement also grants
(subsequent to an initial public offering of the Common Stock) piggyback
registration rights to each such employee pursuant to the Hubcap Registration
Rights Agreement. In addition, the Employee Stockholders' Agreement gives the
Company the right to purchase shares and options held by each such employee upon
termination of employment for any reason and permits each such employee to sell
stock and options in the event of death, disability or retirement after turning
65 years of age.
COMPENSATION COMMITTEE
Messrs. Greene and Fisher, with Mr. Greene as Chairman, are all of the
members of the compensation committee of the Board of Directors of the Company.
See "Certain Relationships and Related Transactions."
66
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of March 31, 1998, KKR 1996 GP L.L.C. beneficially owns approximately 87%
of the Company's outstanding shares of Common Stock. See "Principal
Stockholders." The managing members of KKR 1996 GP L.L.C. are Messrs. Henry R.
Kravis and George R. Roberts and the other members of which are Messrs. Paul E.
Raether, Michael W. Michelson, James H. Greene, Jr., Michael T. Tokarz, Clifton
S. Robbins, Edward A. Gihuly, Perry Golkin, Scott M. Stuart and Robert I.
MacDonnell. Messrs. Kravis, Roberts and Greene are also directors of the
Company, as is Todd A. Fisher, who is an executive of KKR & Co., L.L.C. Each of
the members of KKR 1996 GP L.L.C. is also a member of KKR & Co., L.L.C, which
serves as the general partner of KKR.
KKR, an affiliate of Hubcap Acquisition, received a fee of $6.0 million in
cash for negotiating the Recapitalization and arranging the financing therefor,
plus the reimbursement of its expenses in connection therewith, and from time to
time in the future, KKR may receive customary investment banking fees for
services rendered to the Company in connection with divestitures, acquisitions,
and certain other transactions. In addition, KKR has agreed to render
management, consulting and financial services to the Company for an annual fee
of $0.6 million. See "Management--Directors and Executive Officers" and
"Principal Stockholders."
Hubcap Acquisition has the right, under certain circumstances and subject to
certain conditions, to require the Company to register under the Securities Act
shares of Common Stock held by it pursuant to the Hubcap Registration Rights
Agreement and the Stockholders Agreement. Such registration rights are generally
available to Hubcap Acquisition until registration under the Securities Act is
no longer required to enable it to resell the Common Stock owned by it. The
Hubcap Registration Rights Agreement provides, among other things, that the
Company will pay all expenses in connection with the first six demand
registrations requested by Hubcap Acquisition and in connection with any
registration commenced by the Company as primary offering in which Hubcap
Acquisition participates through piggyback registration rights granted under
such agreement. Hubcap Acquisition's exercise of its registration rights under
the Hubcap Registration Rights Agreement is subject to the Tag Along and the
Drag Along rights of Phelps Dodge provided for in the Stockholders Agreement.
See "The Recapitalization--Other Agreements."
67
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth the ownership of the Common Stock as of March
31, 1998 by each person known to be the owner of 5% or more of the Common Stock,
by each person who is a director or Named Executive Officer of the Company and
by all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY
OWNED
--------------------------
NAME AND ADDRESS SHARES (A) PERCENT (A)
- ------------------------------------------------------------------------------------------ ----------- -------------
<S> <C> <C>
KKR 1996 GP L.L.C. (b)
c/o Kohlberg Kravis Roberts & Co. L.P.
9 West 57th Street
New York, New York 10019.................................................................. 21,600 87.5%
Henry R. Kravis (b)..................................................................... -- --
George R. Roberts (b)................................................................... -- --
James H. Greene, Jr. (b)................................................................ -- --
Phelps Dodge Corporation
2600 North Central Avenue
Phoenix, Arizona 85004.................................................................... 2,400 9.7%
William P. Greubel........................................................................ 150 *
Terrence J. Keating....................................................................... 40 *
William D. Noll........................................................................... 40 *
Bradford C. Schultz....................................................................... 40 *
J. Greg Szabo............................................................................. -- --
Todd A. Fisher (b)........................................................................ -- --
All executive officers and directors as a group....................................... 490 2.0%
</TABLE>
- ------------------------
* Less than one percent.
(a) The amounts and percentage of Common Stock beneficially owned are reported
on the basis of regulations of the Commission governing the determination of
beneficial ownership of securities. Under the rules of the Commission, a
person is deemed to be a "beneficial owner" of a security if that person has
or shares "voting power," which includes the power to vote or to direct the
voting of such security, or "investment power," which includes the power to
dispose of or to direct the disposition of such security. A person is also
deemed to be a beneficial owner of any securities of which that person has a
right to acquire beneficial ownership within 60 days. Under these rules,
more than one person may be deemed a beneficial owner of the same securities
and a person may be deemed to be a beneficial owner of securities as to
which he has no economic interest. The percentage of class outstanding is
based on 24,672 shares of Common Stock outstanding as of March 31, 1998. The
Company effected a 240 to 1 stock split immediately after the Closing.
(b) Shares of Common Stock shown as beneficially owned by KKR 1996 GP L.L.C. are
held by Hubcap Acquisition. KKR 1996 GP L.L.C. is the sole general partner
of KKR Associates 1996 L.P., which is the sole general partner of KKR 1996
Fund L.P. KKR 1996 Fund L.P. is one of two members of Hubcap Acquisition and
owns more than a 95% equity interest in Hubcap Acquisition. KKR 1996 GP
L.L.C. is a limited liability company, the managing members of which are
Messrs. Henry R. Kravis and George R. Roberts, and the other members of
which are Messrs. Paul E. Raether, Michael W. Michelson, James H. Greene,
Jr., Michael T. Tokarz, Clifton S. Robbins, Edward A. Gihuly, Perry Golkin,
Scott M. Stuart and Robert I. MacDonnell. Messrs. Kravis, Roberts and Greene
are directors of the Company. Each of such individuals may be deemed to
share beneficial ownership of any shares beneficially owned by KKR 1996 GP
L.L.C. Each of such individuals disclaims beneficial ownership. Mr. Todd A.
Fisher is a director of the Company and is also an executive of KKR and a
limited partner of KKR Associates 1996 L.P. Mr. Fisher disclaims that he is
the beneficial owner of any shares beneficially owned by KKR Associates 1996
L.P.
68
<PAGE>
DESCRIPTION OF THE CREDIT FACILITY
The Credit Facility was provided by a syndicate of banks and other financial
institutions (the "Lenders") led by Citicorp USA, Inc., as administrative agent
(the "Administrative Agent"), Citicorp Securities, Inc., as arranger, Bankers
Trust Company, as syndication agent, and Wells Fargo Bank, as documentation
agent. The Credit Facility provides for Term Loans of $135.0 million and the
$140.0 million Revolver. The Revolver includes a borrowing capacity of up to
$20.0 million for letters of credit, and up to $10.0 million for short-term
borrowings. The Term Loans are comprised of a $60.0 million loan that will
mature on January 21, 2005 ("Tranche A") and a $75.0 million loan that will
mature on January 21, 2006 ("Tranche B"). The Company's Canadian subsidiary is
the borrower under Tranche A, and the Company has guaranteed the repayment of
such borrowing under Tranche A and all other obligations of such Canadian
subsidiary under the Credit Facility. The Term Loans provide for nominal annual
amortization (approximately 1% per year). The commitment under the Revolver will
decline to $100.0 million on January 21, 2003 and final maturity of loans under
the Revolver will be January 21, 2004.
The interest rate under the Term Loans fluctuates based on leverage and
initially is expected to be, at the option of the Company, Eurodollar Rate (as
defined in the Credit Facility) plus 2.125% to 2.25% or Base Rate (as defined in
the Credit Facility) plus 1.125% to 1.25%. The interest rate under the Revolver
fluctuates based on leverage and initially is expected to be, at the option of
the Company, the Eurodollar Rate plus 2.0% or the Base Rate plus 1.0%. The
Company may elect interest periods of 1, 2, 3, 6 and, if available, 9 or 12
months for Eurodollar Rate borrowings. The Credit Facility defines "Base Rate"
as the highest of Citibank's base rate, the Federal Funds Rate plus 0.50% and
the CD Rate plus 0.50%. The Eurodollar Rate and the CD Rate will at all times
include statutory reserves (and, in the case of the CD Rate, FDIC assessment
rates).
The Company will pay a commitment fee at a rate of which will fluctuate
based on leverage and initially will equal 0.425% per annum on the undrawn
portion of the commitments in respect of the Credit Facility, commencing to
accrue with respect to each Lender's commitment upon the acceptance by the
Company of such Lenders' commitment, paid initially at Closing and quarterly in
arrears after the Closing.
The Company will pay a letter of credit fee equal to a rate per annum equal
to the margin for Eurodollar Rate loans under the Revolver, less 0.125% on the
aggregate face amount of outstanding letters of credit under the Revolver,
payable in arrears quarterly and upon the termination of the Revolver. In
addition, the Company shall pay to the Fronting Bank (as defined in the Credit
Facility), for its own account, (a) a fronting fee of 0.125% per annum on the
aggregate face amount of outstanding letters of credit, payable in arrears at
the end of each quarter or upon the termination of the Revolver, and (b)
customary issuance, amendment and administration fees.
The Credit Facility contains provisions under which commitment fees and
interest rates will be adjusted in increments based on the ratio (the "Leverage
Ratio") of consolidated total debt to consolidated adjusted EBITDA in effect
from time to time. For purposes of this summary, the term "EBITDA" is as defined
in the Credit Facility.
The Term Loans are subject to mandatory prepayment with (a) 100% of the net
cash proceeds of certain non-ordinary course asset sales or other dispositions
of property by the Company and its subsidiaries, except to the extent that such
proceeds are reinvested in the business of the Company and its subsidiaries
(subject to the line of business covenant) within a specified time period and
subject to certain other exceptions, and (b) 50% of excess cash flow (as defined
in the Credit Facility), if the Leverage Ratio exceeds 4.0:1, subject to the
right of each Lender of Term Loans to waive the mandatory prepayment as to
itself, in which case 50% of the waived prepayment will be applied as a
permanent reduction of the Revolver. Voluntary prepayments and Revolver
commitment reductions will be permitted in whole or in part at the option of the
Company, in minimum principal amounts, without premium or penalty, subject to
reimbursement of certain of the Lenders' costs under certain conditions.
69
<PAGE>
The Company's obligations under the Credit Facility are secured by a
perfected first priority pledge of and security interest in all the common stock
of each existing and subsequently acquired direct domestic subsidiary of the
Company and each direct foreign subsidiary that is not a corporation, and 66% of
the common stock of each existing and subsequently acquired direct foreign
subsidiary that is a corporation (except that, as security for the payment of
the Tranche A loan the Company will pledge and grant a security interest in the
remaining 34% of the common stock of the Company's Canadian subsidiary) and, in
certain circumstances, non-cash consideration received for certain sales of
assets, in each case subject to certain exceptions. In addition, indebtedness
under the Credit Facility are guaranteed by each existing, and will be
guaranteed by subsequently acquired, domestic subsidiary of the Company, subject
to certain exceptions. See "Risk Factors--Subordination" and "--Encumbrances on
Assets to Secure Credit Facility" and "Description of the Notes--Subordination."
The Credit Facility contains customary covenants and restrictions on the
Company's ability to, among other things, incur debt, grant liens, merge with
other persons, sell assets, pay dividends, make investments, prepay or redeem
the Notes, or incur capital expenditures. In addition, the Credit Facility
provides that the Company must meet or exceed ratios of consolidated EBITDA to
consolidated interest expense and consolidated EBITDA to consolidated fixed
charges (consisting of consolidated interest expense, capital expenditures
funded out of operations or borrowings under the Revolver and principal payments
on long-term indebtedness) and must not exceed a ratio of consolidated total
debt to consolidated EBITDA.
The Credit Facility includes customary events of default.
70
<PAGE>
DESCRIPTION OF THE NOTES
GENERAL
The Private Notes were issued pursuant to the Indenture (the "INDENTURE")
between the Company and U.S. Trust Company of California, N.A., as trustee (the
"TRUSTEE"). The Indenture is limited in aggregate principal amount to $300.0
million, of which $200.0 million were issued as Private Notes. Additional notes
may be issued in one or more series from time to time, subject to the
limitations set forth under "Certain Covenants--Limitations on Incurrence of
Indebtedness and Issuance of Disqualified Stock," which may vote as a class with
the Notes. The Indenture is subject to and governed by the Trust Indenture Act
of 1939, as amended (the "TRUST INDENTURE ACT"). The terms of the Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act. The following summary of the material provisions of
the Indenture does not purport to be complete and is qualified in its entirety
by reference to the provisions of the Indenture, including the definitions
therein of certain terms used below. The definitions of certain terms used in
the following summary are set forth below under "--Certain Definitions." For
purposes of this summary, the term "Company" refers only to Accuride Corporation
and not to any of its Subsidiaries.
The Notes will be general unsecured obligations of the Company and will be
subordinated in right of payment to all existing and future Senior Indebtedness
of the Company. As of December 31, 1997, on a pro forma basis giving effect to
Recapitalization, the aggregate amount of the Company's outstanding Senior
Indebtedness would have been approximately $196.0 million ($60.0 million of
which represents a guarantee of amounts borrowed directly by the Company's
Canadian subsidiary under the Credit Facility). The Indenture permits the
incurrence of additional Senior Indebtedness in the future. See "Risk Factors--
Significant Indebtedness."
Operations of the Company are conducted primarily through its Subsidiaries
and joint ventures and, therefore, the Company is dependent upon the cash flow
of its Subsidiaries to meet its obligations, including its obligations under the
Notes. The Notes will be effectively subordinated to all Indebtedness and other
liabilities and commitments (including trade payables and lease obligations) of
the Company's Subsidiaries and joint ventures. Any right of the Company to
receive assets of any of its Subsidiaries or joint ventures upon the latter's
liquidation or reorganization (and the consequent right of the Holders to
participate in those assets) will be effectively subordinated to the claims of
that Subsidiary's or joint venture's creditors, except to the extent that the
Company is itself recognized as a creditor of such Subsidiary or joint venture,
in which case the claims of the Company still would be subordinate to any
security in the assets of such Subsidiary or joint venture and any indebtedness
of such Subsidiary or joint venture senior to that held by the Company. As of
December 31, 1997, the Company's Subsidiaries would have had approximately $53.2
million of liabilities, excluding obligations under the Credit Facility
outstanding, after giving pro forma effect to the Recapitalization. See "Risk
Factors--Adverse Consequences of Holding Company Structure" and
"--Subordination."
As of the Issuance Date, all of the Company's Subsidiaries will be
Restricted Subsidiaries. However, under certain circumstances, the Company will
be able to designate current or future Subsidiaries as Unrestricted
Subsidiaries. Unrestricted Subsidiaries will not be subject to any of the
restrictive covenants set forth in the Indenture.
SUBORDINATION
The payment of the Subordinated Note Obligations will be subordinated in
right of payment, as set forth in the Indenture, to the prior payment in full in
cash equivalents of all Senior Indebtedness, whether outstanding on the date of
the Indenture or thereafter incurred. Upon any distribution to creditors of the
Company in a liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property, an assignment for the benefit of creditors or any
marshalling of the Company's assets and liabilities, the holders of Senior
Indebtedness will be entitled to receive payment in full in cash or cash
equivalents of such Senior Indebtedness and all
71
<PAGE>
outstanding Letter of Credit Obligaitons shall be fully cash collateralized
before the Holders will be entitled to receive any payment with respect to the
Subordinated Note Obligations, and until all Senior Indebtedness is paid in full
in cash equivalents, any distribution to which the Holders would be entitled
shall be made to the holders of Senior Indebtedness (except that Holders may
receive (i) shares of stock and any debt securities that are subordinated at
least to the same extent as the Notes to (a) Senior Indebtedness and (b) any
securities issued in exchange for Senior Indebtedness and (ii) payments made
from the trusts described under "--Legal Defeasance and Covenant Defeasance").
The Company also may not make any payment upon or in respect of the
Subordinated Note Obligations (except in such subordinated securities or from
the trust described under "--Legal Defeasance and Covenant Defeasance") if (i) a
default in the payment of the principal of, premium, if any, or interest on, or
of unreimbursed amounts under drawn letters of credit or in respect of bankers'
acceptances or fees relating to letters of credit or bankers' acceptances
constituting, Senior Indebtedness occurs and is continuing beyond any applicable
period of grace (a "PAYMENT DEFAULT") or (ii) any other default occurs and is
continuing with respect to Designated Senior Indebtedness that permits holders
of the Designated Senior Indebtedness as to which such default relates to
accelerate its maturity (a "NON-PAYMENT DEFAULT") and the Trustee receives a
notice of such default (a "PAYMENT BLOCKAGE NOTICE") from a representative of
holders of such Designated Senior Indebtedness. Payments on the Notes, including
any missed payments, may and shall be resumed (a) in the case of a payment
default, upon the date on which such default is cured or waived or shall have
ceased to exist or such Senior Indebtedness shall have been discharged or paid
in full in cash or cash equivalents and all outstanding Letter of Credit
Obligations shall be fully cash collateralized and (b) in case of a nonpayment
default, the earlier of (x) the date on which such nonpayment default is cured
or waived, (y) 179 days after the date on which the applicable Payment Blockage
Notice is received (each such period, the "PAYMENT BLOCKAGE PERIOD") or (z) the
date such Payment Blockage Period shall be terminated by written notice to the
Trustee from the requisite holders of such Designated Senior Indebtedness
necessary to terminate such period or from their representative. No new period
of payment blockage may be commenced unless and until 365 days have elapsed
since the effectiveness of the immediately preceding Payment Blockage Notice.
However, if any Payment Blockage Notice within such 365-day period is given by
or on behalf of any holders of Designated Senior Indebtedness (other than the
agent under the Senior Credit Facilities), the agent under the Senior Credit
Facilities may give another Payment Blockage Notice within such period. In no
event, however, may the total number of days during which any Payment Blockage
Period or Periods is in effect exceed 179 days in the aggregate during any 365
consecutive day period. No nonpayment default that existed or was continuing on
the date of delivery of any Payment Blockage Notice to the Trustee shall be, or
be made, the basis for a subsequent Payment Blockage Notice unless such default
shall have been cured or waived for a period of not less than 90 days.
If the Company fails to make any payment on the Notes when due or within any
applicable grace period, whether or not on account of the payment blockage
provision referred to above, such failure would constitute an Event of Default
under the Indenture and would enable the Holders to accelerate the maturity
thereof.
The Indenture requires that the Company promptly notify holders of Senior
Indebtedness if payment of the Notes is accelerated because of an Event of
Default.
As a result of the subordination provisions described above, in the event of
insolvency, bankruptcy, administration, reorganization, receivership or similar
proceedings relating to the Company, Holders may recover less ratably than
creditors of the Company who are holders of Senior Indebtedness. In addition,
the Notes will be structurally subordinated to the liabilities of Subsidiaries
of the Company. At December 31, 1997, on a pro forma basis after giving effect
to the Recapitalization, the aggregate amount of the Company's outstanding
Senior Indebtedness would have been approximately $196.0 million ($60.0 million
of which represents a guarantee of amounts borrowed directly by the Company's
Canadian subsidiary under the Credit Facility), the Company would have had no
senior subordinated indebtedness outstanding other than the Notes and the
Company's subsidiaries would have had total liabilities of $53.2 million,
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excluding obligations under the Senior Credit Facilities. The Indenture permits
the Company to incur additional indebtedness, including up to $145.0 million of
additional Senior Indebtedness under the Credit Facilities, and permits ADM to
incur additional indebtedness, that together with Existing Indebtedness, does
not exceed $30.0 million, subject to certain limitations. Although the Indenture
contains limitations on the amount of additional Indebtedness that the Company
and its Subsidiaries may incur, under certain circumstances the amount of such
Indebtedness could be substantial and, in any case, such Indebtedness may be
Senior Indebtedness. See "--Certain Covenants--Limitations on Incurrence of
Indebtedness and Issuance of Disqualified Stock."
"DESIGNATED SENIOR INDEBTEDNESS" means (i) Senior Indebtedness under the
Senior Credit Facilities and (ii) any other Senior Indebtedness permitted under
the Indenture the principal amount of which is $25.0 million or more and that
has been designated by the Company as Designated Senior Indebtedness.
"SENIOR INDEBTEDNESS" means (i) the Obligations under the Senior Credit
Facilities and (ii) any other Indebtedness permitted to be incurred by the
Company under the terms of the Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes, including, with respect to
clauses (i) and (ii), interest accruing subsequent to the filing of, or which
would have accrued but for the filing of, a petition for bankruptcy, in
accordance with and at the rate (including any rate applicable upon any default
or event of default, to the extent lawful) specified in the documents evidencing
or governing such Senior Indebtedness, whether or not such interest is an
allowable claim in such bankruptcy proceeding. Notwithstanding anything to the
contrary in the foregoing, Senior Indebtedness will not include (1) any
liability for federal, state, local or other taxes owed or owing by the Company,
(2) any obligation of the Company to any of its Subsidiaries, (3) any accounts
payable or trade liabilities arising in the ordinary course of business
(including instruments evidencing such liabilities) other than obligations in
respect of letters of credit under the Senior Credit Facilities, (4) any
Indebtedness that is incurred in violation of the Indenture, (5) Indebtedness
which, when incurred and without respect to any election under Section 1111(b)
of Title 11, United States Code, is without recourse to the Company, (6) any
Indebtedness, guarantee or obligation of the Company which is subordinate or
junior to any other Indebtedness, guarantee or obligation of the Company, (7)
Indebtedness evidenced by the Notes and (8) Capital Stock of the Company.
"SUBORDINATED NOTE OBLIGATIONS" means any principal of, premium, if any, and
interest on the Notes payable pursuant to the terms of the Notes or upon
acceleration, together with and including any amounts received upon the exercise
of rights of rescission or other rights of action (including claims for damages)
or otherwise, to the extent relating to the purchase price of the Notes or
amounts corresponding to such principal, premium, if any, or interest on the
Notes.
The Notes will rank senior in right of payment to all Subordinated
Indebtedness of the Company. At the Issuance Date the Company had no
Subordinated Indebtedness.
PRINCIPAL, MATURITY AND INTEREST
The Exchange Notes will be limited in aggregate principal amount to $200.0
million and will mature on February 1, 2008. Interest on the Notes will accrue
at the rate of 9 1/4% per annum and will be payable semi-annually in arrears on
February 1 and August 1, commencing on August 1, 1998, to Holders of record on
the immediately preceding January 15 and July 15. Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the Issuance Date. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months. Principal of,
premium, if any, and interest on the Notes will be payable at the office or
agency of the Company maintained for such purpose within the City and State of
New York or, at the option of the Company, payment of interest may be made by
check mailed to the Holders at their respective addresses set forth in the
register of Holders; PROVIDED that all payments of principal, premium, if any,
and interest with respect to Notes represented by one or more permanent global
Notes registered in the name of or held by The Depository Trust Company or its
nominee will be made by wire transfer of immediately available funds to the
accounts specified by the Holder or Holders thereof. Until otherwise designated
by the Company, the
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Company's office or agency in New York will be the office of the Trustee
maintained for such purpose. The Exchange Notes will be issued in denominations
of $1,000 and integral multiples thereof.
MANDATORY REDEMPTION
Except as set forth below under "--Repurchase at the Option of Holders," the
Company is not required to make mandatory redemption or sinking fund payments
with respect to the Notes.
OPTIONAL REDEMPTION
Except as described below, the Notes will not be redeemable at the Company's
option prior to February 1, 2003. From and after February 1, 2003, the Notes
will be subject to redemption at any time at the option of the Company, in whole
or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest thereon, if any, to the applicable
redemption date, if redeemed during the twelve-month period beginning on
February 1 of each of the years indicated below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ------------------------------------------------------------------------------------------------ ----------------
<S> <C>
2003............................................................................................ 104.625%
2004............................................................................................ 103.083
2005............................................................................................ 101.542
2006 and thereafter............................................................................. 100.000%
</TABLE>
In addition, at any time or from time to time, on or prior to February 1,
2002, the Company may, at its option, redeem up to 40% of the aggregate
principal amount of Notes originally issued under the Indenture on the Issuance
Date at a redemption price equal to 109.25% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the redemption
date, with the net proceeds of one or more Equity Offerings; PROVIDED that at
least 60% of the aggregate principal amount of Notes originally issued under the
Indenture on the Issuance Date remains outstanding immediately after the
occurrence of each such redemption; PROVIDED FURTHER that each such redemption
occurs within 60 days of the date of closing of each such Equity Offering. The
Trustee shall select the Notes to be purchased in the manner described under
"Repurchase at the Option of Holders--Selection and Notice."
At any time on or prior to February 1, 2003, the Notes may also be redeemed
as a whole at the option of the Company upon the occurrence of a Change of
Control, upon not less than 30 nor more than 60 days prior notice (but in no
event more than 90 days after the occurrence of such Change of Control or
transfer event) mailed by first-class mail to each Holder's registered address,
at a redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued and unpaid interest, if any, to, the date
of redemption (the "Redemption Date") (subject to the right of Holders of record
on the relevant record date to receive interest due on the relevant interest
payment date).
"APPLICABLE PREMIUM" means, with respect to a Note at any Redemption Date,
the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess
of (A) the present value at such time of (1) the redemption price of such Note
at February 1, 2003 (such redemption price being described under "-- Optional
Redemption") plus (2) all required interest payments due on such Note through
February 1, 2003, computed using a discount rate equal to the Treasury Rate plus
75 basis points, over (B) the principal amount of such Note.
"TREASURY RATE" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to February 1, 2003; PROVIDED, HOWEVER, that if
the period from the Redemption Date to February 1, 2003 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year)
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from the weekly average yields of United States Treasury securities for which
such yields are given, except that if the period from the Redemption Date to
February 1, 2003 is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of one
year shall be used.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL. The Indenture provides that, upon the occurrence of a
Change of Control, unless the Company has elected to redeem the Notes in
connection with such Change of Control, the Company will make an offer to
purchase all or any part (equal to $1,000 or an integral multiple thereof) of
the Notes pursuant to the offer described below (the "CHANGE OF CONTROL OFFER")
at a price in cash (the "CHANGE OF CONTROL PAYMENT") equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest, if any, to
the date of purchase. The Indenture provides that within 30 days following any
Change of Control, the Company will mail a notice to each Holder, with a copy to
the Trustee, with the following information: (1) a Change of Control Offer is
being made pursuant to the covenant entitled "Change of Control," and that all
Notes properly tendered pursuant to such Change of Control Offer will be
accepted for payment; (2) the purchase price and the purchase date, which will
be no earlier than 30 days nor later than 60 days from the date such notice is
mailed, except as may be otherwise required by applicable law (the "CHANGE OF
CONTROL PAYMENT DATE"); (3) any Note not properly tendered will remain
outstanding and continue to accrue interest; (4) unless the Company defaults in
the payment of the Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer will cease to accrue interest on the
Change of Control Payment Date; (5) Holders electing to have any Notes purchased
pursuant to a Change of Control Offer will be required to surrender the Notes,
with the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Notes completed, to the paying agent specified in the notice at the address
specified in the notice prior to the close of business on the third Business Day
preceding the Change of Control Payment Date; (6) Holders will be entitled to
withdraw their tendered Notes and their election to require the Company to
purchase such Notes, provided that the paying agent receives, not later than the
close of business on the last day of the Offer Period (as defined in the
Indenture), a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of Notes tendered for purchase, and
a statement that such Holder is withdrawing his tendered Notes and his election
to have such Notes purchased; and (7) that Holders whose Notes are being
purchased only in part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased portion must be
equal to $1,000 in principal amount or an integral multiple thereof.
The Indenture provides that, prior to complying with the provisions of this
covenant, but in any event within 30 days following a Change of Control, the
Company will either repay all outstanding Senior Indebtedness or obtain the
requisite consents, if any, under any outstanding Senior Indebtedness in each
case necessary to permit the repurchase of the Notes required by this covenant.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the Notes pursuant to a Change of Control Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
the Indenture, the Company will comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations described
in the Indenture by virtue thereof.
The Indenture provides that on the Change of Control Payment Date, the
Company will, to the extent permitted by law, (1) accept for payment all Notes
or portions thereof properly tendered pursuant to the Change of Control Offer,
(2) deposit with the paying agent an amount equal to the aggregate Change of
Control Payment in respect of all Notes or portions thereof so tendered and (3)
deliver, or cause to be delivered, to the Trustee for cancellation the Notes so
accepted together with an Officers' Certificate stating that such Notes or
portions thereof have been tendered to and purchased by the Company. The
Indenture provides that the paying agent will promptly mail to each Holder the
Change of Control
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Payment for such Notes, and the Trustee will promptly authenticate and mail to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any, PROVIDED, that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Senior Credit Facilities provides and future credit agreements or other
agreements relating to Senior Indebtedness to which the Company becomes a party
may, prohibit the Company from purchasing any Notes as a result of a Change of
Control and/or provide that certain change of control events with respect to the
Company would constitute a default thereunder. In the event a Change of Control
occurs at a time when the Company is prohibited from purchasing the Notes, the
Company could seek the consent of its lenders to the purchase of the Notes or
could attempt to refinance the borrowings that contain such prohibition. If the
Company does not obtain such a consent or repay such borrowings, the Company
will remain prohibited from purchasing the Notes. In such case, the Company's
failure to purchase tendered Notes would constitute an Event of Default under
the Indenture. If, as a result thereof, a default occurs with respect to any
Senior Indebtedness, the subordination provisions in the Indenture would likely
restrict payments to the Holders.
The existence of a Holder's right to require the Company to repurchase such
Holder's Notes upon the occurrence of a Change of Control may deter a third
party from seeking to acquire the Company in a transaction that would constitute
a Change of Control.
ASSET SALES. The Indenture provides that the Company will not, and will not
permit any of its Restricted Subsidiaries to, cause, make or suffer to exist an
Asset Sale, unless (x) the Company, or its Restricted Subsidiaries, as the case
may be, receives consideration at the time of such Asset Sale at least equal to
the fair market value (as determined in good faith by the Company) of the assets
sold or otherwise disposed of and (y) at least 75% of the consideration therefor
received by the Company, or such Restricted Subsidiary, as the case may be, is
in the form of cash or Cash Equivalents; PROVIDED that the amount of (a) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet or in the notes thereto) of the Company or any Restricted
Subsidiary (other than liabilities that are by their terms subordinated to the
Notes), that are assumed by the transferee of any such assets, (b) any
securities received by the Company or such Restricted Subsidiary from such
transferee that are converted by the Company or such Restricted Subsidiary into
cash (to the extent of the cash received) within 180 days following the closing
of such Asset Sale and (c) any Designated Noncash Consideration received by the
Company or any of its Restricted Subsidiaries in such Asset Sale having an
aggregate fair market value, taken together with all other Designated Noncash
Consideration received pursuant to this clause (c) that is at that time
outstanding, not to exceed the greater of (x) $50.0 million or (ii) 15% of Total
Assets at the time of the receipt of such Designated Noncash Consideration (with
the fair market value of each item of Designated Noncash Consideration being
measured at the time received and without giving effect to subsequent changes in
value), shall be deemed to be cash for purposes of this provision and for no
other purpose.
Within 365 days after the Company's or any Restricted Subsidiary's receipt
of the Net Proceeds of any Asset Sale, the Company or such Restricted
Subsidiary, at its option, may (i) apply the Net Proceeds from such Asset Sale
to permanently reduce (x) Obligations under the Senior Credit Facilities (and to
correspondingly reduce commitments with respect thereto), (y) other Senior
Indebtedness or Pari Passu Indebtedness (PROVIDED that if the Company shall so
reduce Obligations under Pari Passu Indebtedness, it will equally and ratably
reduce Obligations under the Notes if the Notes are then prepayable or, if the
Notes may not be then prepaid, the Company shall make an offer (in accordance
with the procedures set forth below for an Asset Sale Offer) to all Holders to
purchase at 100% of the principal amount thereof, plus the amount of accrued but
unpaid interest, if any, on the amount of Notes that would otherwise be prepaid)
or (z) Indebtedness of a Wholly Owned Restricted Subsidiary, (ii) apply the Net
Proceeds from such Asset Sale to an investment in any one or more businesses,
capital expenditures or acquisitions of other assets in each case, used or
useful in a Similar Business and/or (iii) apply the Net Proceeds from such
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Asset Sale to an investment in properties or assets that replace the properties
and assets that are the subject of such Asset Sale. Pending the final
application of any such Net Proceeds, the Company or such Restricted Subsidiary
may temporarily reduce Indebtedness under a revolving credit facility, if any,
or otherwise invest such Net Proceeds in Cash Equivalents or Investment Grade
Securities. The Indenture provides that any Net Proceeds from the Asset Sale
that are not invested or applied as provided and within the time period set
forth in the first sentence of this paragraph will be deemed to constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $15.0
million, the Company shall make an offer to all Holders (an "Asset Sale Offer")
to purchase the maximum principal amount of Notes, that is an integral multiple
of $1,000, that may be purchased out of the Excess Proceeds at an offer price in
cash in an amount equal to 100% of the principal amount thereof, plus accrued
and unpaid interest, if any, to the date fixed for the closing of such offer, in
accordance with the procedures set forth in the Indenture. The Company will
commence an Asset Sale Offer with respect to Excess Proceeds within ten Business
Days after the date that Excess Proceeds exceeds $15.0 million by mailing the
notice required pursuant to the terms of the Indenture, with a copy to the
Trustee. To the extent that the aggregate amount of Notes tendered pursuant to
an Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased in the
manner described under the caption "Selection and Notice" below. Upon completion
of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at
zero.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws or regulations are applicable in connection with the repurchase
of the Notes pursuant to an Asset Sale Offer. To the extent that the provisions
of any securities laws or regulations conflict with the provisions of the
Indenture, the Company will comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations described
in the Indenture by virtue thereof.
The Senior Credit Facilities and future credit agreements or other
agreements relating to Senior Indebtedness to which the Company becomes a party
may prohibit the Company from purchasing any Notes pursuant to this Asset Sales
covenant. In the event the Company is prohibited from purchasing the Notes, the
Company could seek the consent of its lenders to the purchase of the Notes or
could attempt to refinance the borrowings that contain such prohibition. If the
Company does not obtain such a consent or repay such borrowings, the Company
will remain prohibited from purchasing the Notes. In such case, the Company's
failure to purchase tendered Notes would constitute an Event of Default under
the Indenture. If, as a result thereof, a default occurs with respect to any
Senior Indebtedness, the subordination provisions in the Indenture would likely
restrict payments to the Holders.
SELECTION AND NOTICE. If less than all of the Notes are to be redeemed at
any time or if more Notes are tendered pursuant to an Asset Sale Offer than the
Company is required to purchase, selection of such Notes for redemption or
purchase, as the case may be, will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
such Notes are listed, or, if such Notes are not so listed, on a pro rata basis,
by lot or by such other method as the Trustee shall deem fair and appropriate
(and in such manner as complies with applicable legal requirements); provided
that no Notes of $1,000 or less shall be purchased or redeemed in part.
Notices of purchase or redemption shall be mailed by first class mail,
postage prepaid, at least 30 but not more than 60 days before the purchase or
redemption date to each Holder of Notes to be purchased or redeemed at such
Holder's registered address. If any Note is to be purchased or redeemed in part
only, any notice of purchase or redemption that relates to such Note shall state
the portion of the principal amount thereof that has been or is to be purchased
or redeemed.
A new Note in principal amount equal to the unpurchased or unredeemed
portion of any Note purchased or redeemed in part will be issued in the name of
the Holder thereof upon cancellation of the original Note. On and after the
purchase or redemption date unless the Company defaults in payment of
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the purchase or redemption price, interest shall cease to accrue on Notes or
portions thereof purchased or called for redemption.
CERTAIN COVENANTS
LIMITATION ON RESTRICTED PAYMENTS. The Indenture provides that the Company
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly: (i) declare or pay any dividend or make any distribution on account
of the Company's or any of its Restricted Subsidiaries' Equity Interests,
including any dividend or distribution payable in connection with any merger or
consolidation (other than (A) dividends or distributions by the Company payable
in Equity Interests (other than Disqualified Stock) of the Company or (B)
dividends or distributions by a Restricted Subsidiary so long as, in the case of
any dividend or distribution payable on or in respect of any class or series of
securities issued by a Subsidiary other than a Wholly Owned Subsidiary, the
Company or a Restricted Subsidiary receives at least its pro rata share of such
dividend or distribution in accordance with its Equity Interests in such class
or series of securities); (ii) purchase, redeem, defease or otherwise acquire or
retire for value any Equity Interests of the Company or any direct or indirect
parent of the Company; (iii) make any principal payment on, or redeem,
repurchase, defease or otherwise acquire or retire for value in each case, prior
to any scheduled repayment, or maturity, any Subordinated Indebtedness (other
than Indebtedness permitted under clauses (g) and (h) of the covenant described
under "--Limitations on Incurrence of Indebtedness and Issuance of Disqualified
Stock"); or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments"), unless, at the time of such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
(b) immediately before and immediately after giving effect to such
transaction on a pro forma basis, the Company could incur $1.00 of
additional Indebtedness under the provisions of the first paragraph of
"--Limitations on Incurrence of Indebtedness and Issuance of Disqualified
Stock"; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issuance Date (including Restricted Payments
permitted by clauses (i), (ii) (with respect to the payment of dividends on
Refunding Capital Stock pursuant to clause (b) thereof), (iv) (only to the
extent that amounts paid pursuant to such clause are greater than amounts
that would have been paid pursuant to such clause if $5.0 million and $10.0
million were substituted in such clause for $10.0 million and $20.0 million,
respectively), (v), (viii) and (ix) of the next succeeding paragraph, but
excluding all other Restricted Payments permitted by the next succeeding
paragraph), is less than the sum of (i) 50% of the Consolidated Net Income
of the Company for the period (taken as one accounting period) from the
fiscal quarter that first begins after the Issuance Date to the end of the
Company's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, in the
case such Consolidated Net Income for such period is a deficit, minus 100%
of such deficit), PLUS (ii) 100% of the aggregate net cash proceeds and the
fair market value, as determined in good faith by the Board of Directors, of
marketable securities and Qualified Proceeds received by the Company since
immediately after the closing of the Recapitalization from the issue or sale
of Equity Interests of the Company (including Retired Capital Stock (as
defined below), but excluding cash proceeds, marketable securities and
Qualified Proceeds received from the sale of (A) Equity Interests to members
of management, directors or consultants of the Company and its Subsidiaries
after the Issuance Date to the extent such amounts have been applied to
Restricted Payments in accordance with clause (iv) of the next succeeding
paragraph and (B) Designated Preferred Stock) or debt securities of the
Company that have been converted into such Equity Interests of the Company
(other than Refunding Capital Stock (as defined below) or Equity Interests
or convertible debt securities of the Company sold to a Restricted
Subsidiary of the Company and other than Disqualified Stock or debt
securities that have been converted into Disqualified Stock),
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PLUS (iii) 100% of the aggregate amount of cash, marketable securities and
Qualified Proceeds contributed to the capital of the Company following the
Issuance Date, PLUS (iv) 100% of the aggregate amount received in cash, the
fair market value of marketable securities and Qualified Proceeds (other
than Restricted Investments) received by means of (A) the sale or other
disposition (other than to the Company or a Restricted Subsidiary) of
Restricted Investments made by the Company and its Restricted Subsidiaries
and repurchases and redemptions of such Restricted Investments from the
Company and its Restricted Subsidiaries by such Person and repayments of
loans or advances which constitute Restricted Investments by the Company and
its Restricted Subsidiaries or (B) the sale (other than to the Company or a
Restricted Subsidiary) of the stock of an Unrestricted Subsidiary or a
distribution from an Unrestricted Subsidiary (other than in each case an
Unrestricted Subsidiary to the extent the Investment in such Unrestricted
Subsidiary was made by the Company or a Restricted Subsidiary pursuant to
clauses (vi) or (x) below or to the extent such Investment constituted a
Permitted Investment) or a dividend from an Unrestricted Subsidiary plus (v)
in the case of the redesignation of an Unrestricted Subsidiary as a
Restricted Subsidiary, the fair market value, as determined by the Board of
Directors in good faith or if such fair market value may exceed $25 million,
in writing by an independent investment banking firm of nationally
recognized standing, at the time of the redesignation of such Unrestricted
Subsidiary as a Restricted Subsidiary (other than an Unrestricted Subsidiary
to the extent the Investment in such Unrestricted Subsidiary was made by the
Company or a Restricted Subsidiary pursuant to clauses (vi) or (x) below or
to the extent such Investment constituted a Permitted Investment).
The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at the date of declaration such payment would have
complied with the provisions of the Indenture;
(ii) (a) the redemption, repurchase, retirement or other acquisition of
any Equity Interests ("RETIRED CAPITAL STOCK") or Subordinated Indebtedness
of the Company in exchange for, or out of the proceeds of the substantially
concurrent sale (other than to a Restricted Subsidiary) of, Equity Interests
of the Company (other than any Disqualified Stock) ("REFUNDING CAPITAL
STOCK") and (b) the declaration and payment of dividends on the Refunding
Capital Stock in an aggregate amount per year no greater than the aggregate
amount of dividends per annum that was declarable and payable on such
Retired Capital Stock immediately prior to such retirement; PROVIDED,
HOWEVER, that at the time of the declaration of any such dividends, no
Default or Event of Default shall have occurred and be continuing or would
occur as a consequence thereof;
(iii) the redemption, repurchase or other acquisition or retirement of
Subordinated Indebtedness of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, new Indebtedness of the
Company so long as (A) the principal amount of such new Indebtedness does
not exceed the principal amount of the Subordinated Indebtedness being so
redeemed, repurchased, acquired or retired for value (PLUS the amount of any
premium required to be paid under the terms of the instrument governing the
Subordinated Indebtedness being so redeemed, repurchased, acquired or
retired), (B) such Indebtedness is subordinated to the Senior Indebtedness
and the Notes at least to the same extent as such Subordinated Indebtedness
so purchased, exchanged, redeemed, repurchased, acquired or retired for
value, (C) such Indebtedness has a final scheduled maturity date equal to or
later than the final scheduled maturity date of the Subordinated
Indebtedness being so redeemed, repurchased, acquired or retired and (D)
such Indebtedness has a Weighted Average Life to Maturity equal to or
greater than the remaining Weighted Average Life to Maturity of the
Subordinated Indebtedness being so redeemed, repurchased, acquired or
retired;
(iv) a Restricted Payment to pay for the repurchase, retirement or other
acquisition or retirement for value of common Equity Interests of the
Company held by any future, present or former employee, director or
consultant of the Company or any Subsidiary pursuant to any management
equity plan or stock option plan or any other management or employee benefit
plan or agreement;
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PROVIDED, HOWEVER, that the aggregate Restricted Payments made under this
clause (iv) does not exceed in any calendar year $10.0 million (with unused
amounts in any calendar year being carried over to succeeding calendar years
subject to a maximum (without giving effect to the following proviso) of
$20.0 million in any calendar year); PROVIDED FURTHER that such amount in
any calendar year may be increased by an amount not to exceed (A) the cash
proceeds from the sale of Equity Interests of the Company to members of
management, directors or consultants of the Company and its Subsidiaries
that occurs after the Issuance Date (to the extent the cash proceeds from
the sale of such Equity Interest have not otherwise been applied to the
payment of Restricted Payments by virtue of the preceding paragraph (c))
plus (B) the cash proceeds of key man life insurance policies received by
the Company and its Restricted Subsidiaries after the Issuance Date less (C)
the amount of any Restricted Payments previously made pursuant to clauses
(A) and (B) of this subparagraph (iv); and PROVIDED FURTHER that
cancellation of Indebtedness owing to the Company from members of management
of the Company or any of its Restricted Subsidiaries in connection with a
repurchase of Equity Interests of the Company will not be deemed to
constitute a Restricted Payment for purposes of this covenant or any other
provision of the Indenture;
(v) (A) the declaration and payment of dividends to holders of any class
or series of Designated Preferred Stock (other than Disqualified Stock)
issued after the Issuance Date or (B) the declaration and payment of
dividends on Refunding Capital Stock in excess of the dividends declarable
and payable thereon pursuant to clause (ii); PROVIDED, HOWEVER, in either
case, that for the most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date
of issuance of such Designated Preferred Stock or the declaration of such
dividends on Refunding Capital Stock, after giving effect to such issuance
or declaration on a pro forma basis, the Company and its Restricted
Subsidiaries would have had a Fixed Charge Coverage Ratio of at least 1.75
to 1.00;
(vi) Investments in Unrestricted Subsidiaries having an aggregate fair
market value, taken together with all other Investments made pursuant to
this clause (vi) that are at that time outstanding (without giving effect to
the sale of an Unrestricted Subsidiary to the extent the proceeds of such
sale do not consist of cash, marketable securities and/or Qualified Proceeds
or distributions made pursuant to clause (xiii) below), not to exceed $25.0
million at the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value);
(vii) repurchases of Equity Interests deemed to occur upon exercise of
stock options if such Equity Interests represent a portion of the exercise
price of such options;
(viii) the payment of dividends on the Company's Common Stock, following
the first public offering of the Company's Common Stock after the Issuance
Date, of up to 6% per annum of the net proceeds received by the Company in
such public offering, other than public offerings with respect to the
Company's Common Stock registered on Form S-8;
(ix) commencing on the six month anniversary of the Recapitalization, a
Restricted Payment to pay for the repurchase, retirement or other
acquisition or retirement for value of Equity Interests of the Company in
existence on the Issuance Date and which are not held by KKR or any of their
Affiliates on the Issuance Date (including any Equity Interests issued in
respect of such Equity Interests as a result of a stock split,
recapitalization, merger, combination, consolidation or otherwise, but
excluding any management equity plan or stock option plan or similar
agreement), PROVIDED that notwithstanding the foregoing proviso, the Company
and its Restricted Subsidiaries shall be permitted to make Restricted
Payments under this clause (ix) only if after giving effect thereto, the
Company would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
the first sentence of the covenant described under "--Limitations on
Incurrence of Indebtedness and Issuance of Disqualified Stock";
(x) Investments that are made with Excluded Contributions;
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(xi) other Restricted Payments in an aggregate amount not to exceed
$20.0 million;
(xii) distributions or payments of Receivables Fees; and
(xiii) the distribution, as a dividend or otherwise, of shares of Capital
Stock, or Indebtedness, of Unrestricted Subsidiaries (with the exception of
Investments in Unrestricted Subsidiaries acquired pursuant to clause (j) of
the definition of Permitted Investments).
PROVIDED HOWEVER, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (iii) through (ix) and clause (xi),
no Default or Event or Default shall have occurred and be continuing or would
occur as a consequence thereof.
To the extent the issuance of Equity Interests and the receipt of capital
contributions are applied to permit the issuance of Indebtedness pursuant to
clause (l) of "--Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock," the issuance of such Equity Interests and the receipt of
such capital contributions shall not be applied to permit payments under this
covenant or Permitted Investments (other than clauses (a) and (c) thereof).
As of the Issuance Date, all of the Company's Subsidiaries were Restricted
Subsidiaries. The Company will not permit any Unrestricted Subsidiary to become
a Restricted Subsidiary except pursuant to the second to last sentence of the
definition of "Unrestricted Subsidiary." For purposes of designating any
Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments
by the Company and its Restricted Subsidiaries (except to the extent repaid) in
the Subsidiary so designated will be deemed to be Restricted Payments in an
amount determined as set forth in the last sentence of the definition of
"Investments." Such designation will be permitted only if a Restricted Payment
in such amount would be permitted at such time (whether pursuant to the first
paragraph of this covenant or under clauses (vi) and (x) and (xi)) and if such
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
Unrestricted Subsidiaries will not be subject to any of the restrictive
covenants set forth in the Indenture.
LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED
STOCK. The Indenture provides that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "INCUR" and
collectively, an "INCURRENCE") any Indebtedness (including Acquired
Indebtedness) and that the Company will not issue any shares of Disqualified
Stock and will not permit any of its Restricted Subsidiaries to issue any shares
of preferred stock; PROVIDED, HOWEVER, that the Company may incur Indebtedness
(including Acquired Indebtedness) or issue shares of Disqualified Stock if the
Fixed Charge Coverage Ratio for the Company's and its Restricted Subsidiaries'
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 1.75 to 1.00, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock had been issued, as the case may
be, and the application of proceeds therefrom had occurred at the beginning of
such four-quarter period.
The foregoing limitations will not apply to:
(a) the incurrence by the Company or its Restricted Subsidiaries of
Indebtedness under Credit Facilities and the issuance and creation of
letters of credit and bankers' acceptances thereunder (with letters of
credit and bankers' acceptances being deemed to have a principal amount
equal to the face amount thereof) up to an aggregate principal amount of
$325.0 million outstanding at any one time; PROVIDED that Indebtedness
incurred by Restricted Subsidiaries pursuant to this clause (a) does not
exceed $80.0 million at any one time outstanding unless incurred under a
Receivables Facility.
(b) the incurrence by the Company of Indebtedness represented by the
Notes issued on the Issuance Date;
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(c) (x) the Existing Indebtedness (other than Indebtedness described in
clauses (a) and (b)) and (y) the incurrence by ADM of additional
Indebtedness that, together with the Existing Indebtedness of ADM, does not
exceed $30.0 million;
(d) Indebtedness (including Capitalized Lease Obligations) incurred by
the Company or any of its Restricted Subsidiaries, to finance the purchase,
lease or improvement of property (real or personal) or equipment (whether
through the direct purchase of assets or the Capital Stock of any Person
owning such assets) in an aggregate principal amount which, when aggregated
with the principal amount of all other Indebtedness then outstanding and
incurred pursuant to this clause (d) and including all Refinancing
Indebtedness incurred to refund, refinance or replace any other Indebtedness
incurred pursuant to this clause (d), does not exceed 20% of Total Assets;
(e) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including without
limitation letters of credit in respect of workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims; PROVIDED, HOWEVER, that
upon the drawing of such letters of credit or the incurrence of such
Indebtedness, such obligations are reimbursed within 30 days following such
drawing or incurrence;
(f) Indebtedness arising from agreements of the Company or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with
the disposition of any business, assets or a Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or a Subsidiary for the purpose of
financing such acquisition; PROVIDED, HOWEVER, that (i) such Indebtedness is
not reflected on the balance sheet of the Company or any Restricted
Subsidiary (contingent obligations referred to in a footnote to financial
statements and not otherwise reflected on the balance sheet will not be
deemed to be reflected on such balance sheet for purposes of this clause
(i)) and (ii) the maximum assumable liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds including noncash
proceeds (the fair market value of such noncash proceeds being measured at
the time received and without giving effect to any subsequent changes in
value) actually received by the Company and its Restricted Subsidiaries in
connection with such disposition;
(g) Indebtedness of the Company to a Restricted Subsidiary; PROVIDED
that any such Indebtedness is made pursuant to an intercompany note and is
subordinated in right of payment to the Notes; PROVIDED further that any
subsequent issuance or transfer of any Capital Stock or any other event
which results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any other subsequent transfer of any such Indebtedness (except
to the Company or another Restricted Subsidiary) shall be deemed, in each
case to be an incurrence of such Indebtedness;
(h) Indebtedness of a Restricted Subsidiary to the Company or another
Restricted Subsidiary; PROVIDED that (i) any such Indebtedness is made
pursuant to an intercompany note and (ii) if a Guarantor incurs such
Indebtedness from a Restricted Subsidiary that is not a Guarantor such
Indebtedness is subordinated in right of payment to the Guarantee of such
Guarantor; PROVIDED further that any subsequent transfer of any such
Indebtedness (except to the Company or another Restricted Subsidiary) shall
be deemed, in each case to be an incurrence of such Indebtedness;
(i) Hedging Obligations that are incurred in the ordinary course of
business (but in any event excluding Hedging Obligations entered into for
speculative purposes);
(j) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary
in the ordinary course of business;
(k) Indebtedness of any Guarantor in respect of such Guarantor's
Guarantee;
(l) Indebtedness of the Company and any of its Restricted Subsidiaries
not otherwise permitted hereunder in an aggregate principal amount, which
when aggregated with the principal amount of all
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other Indebtedness then outstanding and incurred pursuant to this clause
(l), does not at any one time outstanding exceed the sum of (x) $150.0
million and (y) 100% of the net cash proceeds received by the Company since
immediately after the Recapitalization from the issue or sale of Equity
Interests of the Company or net cash proceeds contributed to the capital of
the Company (in each case other than Disqualified Stock) as determined in
accordance with clauses (c)(ii) and (c)(iii) of the first paragraph of
"--Limitation on Restricted Payments" to the extent such net cash proceeds
have not been applied pursuant to such clauses to make Restricted Payments
or to make other payments or exchanges pursuant to the second paragraph of
"--Limitation on Restricted Payments" or to make Permitted Investments
(other than clauses (a) and (c) thereof) (it being understood that any
Indebtedness incurred under this clause (l) shall cease to be deemed
incurred or outstanding for purposes of this clause (l) but shall be deemed
to be incurred for purposes of the first paragraph of this covenant from and
after the first date on which the Company could have incurred such
Indebtedness under the first paragraph of this covenant without reliance
upon this clause (l));
(m) (i) any guarantee by the Company of Indebtedness or other
obligations of any of its Restricted Subsidiaries so long as the incurrence
of such Indebtedness incurred by such Restricted Subsidiary is permitted
under the terms of the Indenture and (ii) any guarantee by a Restricted
Subsidiary of Indebtedness of the Company, PROVIDED that such Guarantee is
incurred in accordance with the convenant described below under
"--Limitation on Guarantees of Indebtedness by Restricted Subsidiaries;"
(n) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness which serves to refund, refinance or restructure any
Indebtedness incurred as permitted under the first paragraph of this
covenant and clauses (b) and (c)(x) above, or any Indebtedness issued to so
refund, refinance or restructure such Indebtedness including additional
Indebtedness incurred to pay premiums and fees in connection therewith (the
"REFINANCING INDEBTEDNESS") prior to its respective maturity; PROVIDED,
HOWEVER, that such Refinancing Indebtedness (i) has a Weighted Average Life
to Maturity at the time such Refinancing Indebtedness is incurred which is
not less than the remaining Weighted Average Life to Maturity of
Indebtedness being refunded or refinanced, (ii) to the extent such
Refinancing Indebtedness refinances Indebtedness subordinated or PARI PASSU
to the Notes, such Refinancing Indebtedness is subordinated or PARI PASSU to
the Notes at least to the same extent as the Indebtedness being refinanced
or refunded and (iii) shall not include (x) Indebtedness of a Subsidiary
that refinances Indebtedness of the Company or (y) Indebtedness of the
Company or a Restricted Subsidiary that refinances Indebtedness of an
Unrestricted Subsidiary; and PROVIDED FURTHER that subclauses (i) and (ii)
of this clause (n) will not apply to any refunding or refinancing of any
Senior Indebtedness; and
(o) Indebtedness or Disqualified Stock of Persons that are acquired by
the Company or any of its Restricted Subsidiaries or merged into a
Restricted Subsidiary in accordance with the terms of the Indenture;
PROVIDED that such Indebtedness or Disqualified Stock is not incurred in
contemplation of such acquisition or merger; and PROVIDED FURTHER that after
giving effect to such acquisition or merger, either (i) the Company would be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first sentence of this
covenant or (ii) the Fixed Charge Coverage Ratio is greater than immediately
prior to such acquisition or merger.
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories of
permitted Indebtedness described in clauses (a) through (o) above or is entitled
to be incurred pursuant to the first paragraph of this covenant, the Company
shall, in its sole discretion, classify such item of Indebtedness in any manner
that complies with this covenant and such item of Indebtedness will be treated
as having been incurred pursuant to only one of such clauses or pursuant to the
first paragraph hereof except as otherwise set forth in clause (l). Accrual of
interest, the accretion of accreted value and the payment of interest in the
form of additional Indebtedness will not be deemed to be an incurrence of
Indebtedness for purposes of this covenant.
For purposes of determining compliance with any U.S. dollar-denominated
restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent
principal amount of indebtedness denominated in a
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foreign currency shall be calculated based on the relevant currency exchange
rate in effect on the date such Indebtedness was incurred, in the case of term
debt, or first committed, in the case of revolving credit debt; PROVIDED that
(x) the U.S. dollar-equivalent principal amount of any such Indebtedness
outstanding or committed on the Issuance Date shall be calculated based on the
relevant currency exchange rate in effect on December 31, 1997, and (y) if such
Indebtedness is incurred to refinance other Indebtedness denominated in a
foreign currency, and such refinancing would cause the applicable U.S.
dollar-denominated restriction to be exceeded if calculated at the relevant
currency exchange rate in effect on the date of such refinancing, such U.S.
dollar-denominated restriction shall be deemed not to have been exceeded so long
as the principal amount of such refinancing Indebtedness does not exceed the
principal amount of such Indebtedness being refinanced. The principal amount of
any Indebtedness incurred to refinance other Indebtedness, if incurred in a
different currency from the Indebtedness being refinanced, shall be calculated
based on the currency exchange rate applicable to the currencies in which such
respective Indebtedness is denominated that is in effect on the date of such
refinancing.
LIENS. The Indenture provides that the Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly create,
incur, assume or suffer to exist any Lien that secures obligations under any
Pari Passu Indebtedness or Subordinated Indebtedness on any asset or property of
the Company or such Restricted Subsidiary, or any income or profits therefrom,
or assign or convey any right to receive income therefrom, unless the Notes are
equally and ratably secured (or senior to, in the event the Lien relates to
Subordinated Indebtedness) with the obligations so secured or until such time as
such obligations are no longer secured by a Lien.
The Indenture provides that no Guarantor will directly or indirectly create,
incur, assume or suffer to exist any Lien that secures obligations under any
Pari Passu Indebtedness or Subordinated Indebtedness of such Guarantor on any
asset or property of such Guarantor or any income or profits therefrom, or
assign or convey any right to receive income therefrom, unless the Guarantee of
such Guarantor is equally and ratably secured (or senior to, in the event the
Lien relates to Subordinated Indebtedness) with the obligations so secured or
until such time as such obligations are no longer secured by a Lien.
MERGER, CONSOLIDATION, OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS. The
Indenture provides that the Company may not consolidate or merge with or into or
wind up into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to any Person
unless (i) the Company is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made is a corporation organized or existing under the laws of the
United States, any state thereof, the District of Columbia, or any territory
thereof (the Company or such Person, as the case may be, being herein called the
"SUCCESSOR COMPANY"); (ii) the Successor Company (if other than the Company)
expressly assumes all the obligations of the Company under the Indenture and the
Notes pursuant to a supplemental indenture or other documents or instruments in
form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; (iv) immediately after giving
pro forma effect to such transaction, as if such transaction had occurred at the
beginning of the applicable four-quarter period, (A) the Successor Company would
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first sentence of the covenant
described under "--Limitations on Incurrence of Indebtedness and Issuance of
Disqualified Stock" or (B) the Fixed Charge Coverage Ratio for the Successor
Company and its Restricted Subsidiaries would be greater than such Ratio for the
Company and its Restricted Subsidiaries immediately prior to such transaction;
(v) each Guarantor, if any, unless it is the other party to the transactions
described above, in which case clause (ii) shall apply, shall have by
supplemental indenture confirmed that its Guarantee shall apply to such Person's
obligations under the Indenture and the Notes; and (vi) the Company shall have
delivered to the Trustee an Officers' Certificate and an opinion of counsel,
each stating that such consolidation, merger or transfer and such supplemental
indenture (if any) comply with the Indenture. The Successor Company will succeed
to, and be substituted for, the Company under the Indenture and the
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Notes. Notwithstanding the foregoing clause (iv), (a) any Restricted Subsidiary
may consolidate with, merge into or transfer all or part of its properties and
assets to the Company and (b) the Company may merge with an Affiliate
incorporated solely for the purpose of reincorporating the Company in another
State of the United States so long as the amount of Indebtedness of the Company
and its Restricted Subsidiaries is not increased thereby.
Each Guarantor, if any, shall not, and the Company will not permit a
Guarantor to, consolidate or merge with or into or wind up into (whether or not
such Guarantor is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions to, any Person unless (i) such
Guarantor is the surviving corporation or the Person formed by or surviving any
such consolidation or merger (if other than such Guarantor) or to which such
sale, assignment, transfer, lease, conveyance or other disposition will have
been made is a corporation organized or existing under the laws of the United
States, any state thereof, the District of Columbia, or any territory thereof
(such Guarantor or such Person, as the case may be, being herein called the
"SUCCESSOR GUARANTOR"); (ii) the Successor Guarantor (if other than such
Guarantor) expressly assumes all the obligations of such Guarantor under the
Indenture and such Guarantor's Guarantee pursuant to a supplemental indenture or
other documents or instruments in form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of Default exists;
and (iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture (if any) comply with the
Indenture. The Successor Guarantor will succeed to, and be substituted for, such
Guarantor under the Indenture and such Guarantor's Guarantee.
TRANSACTIONS WITH AFFILIATES. The Indenture provides that the Company will
not, and will not permit any of its Restricted Subsidiaries to, make any payment
to, or sell, lease, transfer or otherwise dispose of any of its properties or
assets to, or purchase any property or assets from, or enter into or make or
amend any transaction, contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an
"AFFILIATE TRANSACTION") involving aggregate payments or consideration in excess
of $5.0 million, unless (a) such Affiliate Transaction is on terms that are not
materially less favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with an unrelated Person and (b) the
Company delivers to the Trustee with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $10.0 million, a resolution adopted by the majority of the Board of
Directors approving such Affiliate Transaction and set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (a)
above.
The foregoing provisions will not apply to the following: (i) transactions
between or among the Company and/or any of its Restricted Subsidiaries; (ii)
Restricted Payments permitted by the provisions of the Indenture described above
under the covenant "--Limitation on Restricted Payments"; (iii) the payment of
customary annual management, consulting and advisory fees and related expenses
to KKR and its Affiliates; (iv) the payment of reasonable and customary fees
paid to, and indemnity provided on behalf of, officers, directors, employees or
consultants of the Company or any Restricted Subsidiary; (v) payments by the
Company or any of its Restricted Subsidiaries to KKR and its Affiliates made for
any financial advisory, financing, underwriting or placement services or in
respect of other investment banking activities, including, without limitation,
in connection with acquisitions or divestitures which payments are approved by a
majority of the Board of Directors of the Company in good faith; (vi)
transactions in which the Company or any of its Restricted Subsidiaries, as the
case may be, delivers to the Trustee a letter from an Independent Financial
Advisor stating that such transaction is fair to the Company or such Restricted
Subsidiary from a financial point of view or meets the requirements of clause
(a) of the preceding paragraph; (vii) payments or loans to employees or
consultants which are approved by a majority of the Board of Directors of the
Company in good faith; (viii) any agreement as in effect as of the Issuance Date
or any amendment thereto (so long as any such amendment is not disadvantageous
to the Holders in any material respect) or any transaction contemplated thereby;
(ix) the existence of, or the performance by the Company or any of its
Restricted Subsidiaries of its obligations under the terms of, any stockholders
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agreement (including any registration rights agreement or purchase agreement
related thereto) to which it is a party as of the Issuance Date and any similar
agreements which it may enter into thereafter; PROVIDED, HOWEVER, that the
existence of, or the performance by the Company or any of its Restricted
Subsidiaries of obligations under any future amendment to any such existing
agreement or under any similar agreement entered into after the Issuance Date
shall only be permitted by this clause (ix) to the extent that the terms of any
such amendment or new agreement are not otherwise disadvantageous to the Holders
in any material respect; (x) the Recapitalization and the payment of all fees
and expenses related to the Recapitalization; (xi) transactions with customers,
clients, suppliers, or purchasers or sellers of goods or services, in each case
in the ordinary course of business and otherwise in compliance with the terms of
the Indenture which are fair to the Company or its Restricted Subsidiaries, in
the reasonable determination of the Board of Directors of the Company or the
senior management thereof, or are on terms at least as favorable as might
reasonably have been obtained at such time from an unaffiliated party; and (xii)
sales of accounts receivable, or participations therein, in connection with any
Receivables Facility.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. The
Indenture provides that the Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or consensual
restriction on the ability of any Restricted Subsidiary to:
(a) (i) pay dividends or make any other distributions to the Company or
any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with
respect to any other interest or participation in, or measured by, its
profits, or (ii) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries;
(b) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(c) sell, lease or transfer any of its properties or assets to the
Company or any of its Restricted Subsidiaries, except (in each case) for
such encumbrances or restrictions existing under or by reason of:
(1) contractual encumbrances or restrictions in effect on the
Issuance Date, including, without limitation, pursuant to Existing
Indebtedness or the Senior Credit Facilities and their related
documentation;
(2) the Indenture and the Notes;
(3) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature discussed in
clause (c) above on the property so acquired;
(4) applicable law or any applicable rule, regulation or order;
(5) any agreement or other instrument of a Person acquired by the
Company or any Restricted Subsidiary in existence at the time of such
acquisition (but not created in contemplation thereof), which encumbrance
or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of
the Person, so acquired;
(6) contracts for the sale of assets, including, without limitation
customary restrictions with respect to a Subsidiary pursuant to an
agreement that has been entered into for the sale or disposition of all
or substantially all of the Capital Stock or assets of such Subsidiary;
(7) secured Indebtedness otherwise permitted to be incurred pursuant
to the covenants described under "--Limitations on Incurrence of
Indebtedness and Issuance of Disqualified Stock" and "--Liens" that limit
the right of the debtor to dispose of the assets securing such
Indebtedness;
(8) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business;
(9) other Indebtedness of Restricted Subsidiaries permitted to be
incurred subsequent to the Issuance Date pursuant to the provisions of
the covenant described under "--Limitations on Incurrence of Indebtedness
and Issuance of Disqualified Stock";
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(10) customary provisions in joint venture agreements and other
similar agreements entered into in the ordinary course of business;
(11) customary provisions contained in leases and other agreements
entered into in the ordinary course of business;
(12) any encumbrances or restrictions of the type referred to in
clauses (a), (b) and (c) above imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements
or refinancings of the contracts, instruments or obligations referred to
in clauses (1) through (11) above, PROVIDED that such amendments,
modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are, in the good faith judgment
of the Company's Board of Directors, no more restrictive with respect to
such dividend and other payment restrictions than those contained in the
dividend or other payment restrictions prior to such amendment,
modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing; or
(13) restrictions created in connection with any Receivables Facility
that, in the good faith determination of the Board of Directors of the
Company, are necessary or advisable to effect such Receivables Facility.
LIMITATION ON GUARANTEES OF INDEBTEDNESS BY RESTRICTED SUBSIDIARIES. (a)
The Indenture provides that the Company will not permit any Restricted
Subsidiary to guarantee the payment of any Indebtedness of the Company unless
(i) such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to the Indenture providing for a Guarantee of payment of
the Notes by such Restricted Subsidiary except that with respect to a guarantee
of Indebtedness of the Company (A) if the Notes are subordinated in right of
payment to such Indebtedness, the Guarantee under the supplemental indenture
shall be subordinated to such Restricted Subsidiary's guarantee with respect to
such Indebtedness substantially to the same extent as the Notes are subordinated
to such Indebtedness under the Indenture and (B) if such Indebtedness is by its
express terms subordinated in right of payment to the Notes, any such guarantee
of such Restricted Subsidiary with respect to such Indebtedness shall be
subordinated in right of payment to such Restricted Subsidiary's Guarantee with
respect to the Notes substantially to the same extent as such Indebtedness is
subordinated to the Notes; (ii) such Restricted Subsidiary waives and will not
in any manner whatsoever claim or take the benefit or advantage of, any rights
of reimbursement, indemnity or subrogation or any other rights against the
Company or any other Restricted Subsidiary as a result of any payment by such
Restricted Subsidiary under its Guarantee; and (iii) such Restricted Subsidiary
shall deliver to the Trustee an opinion of counsel to the effect that (A) such
Guarantee of the Notes has been duly executed and authorized and (B) such
Guarantee of the Notes constitutes a valid, binding and enforceable obligation
of such Restricted Subsidiary, except insofar as enforcement thereof may be
limited by bankruptcy, insolvency or similar laws (including, without
limitation, all laws relating to fraudulent transfers) and except insofar as
enforcement thereof is subject to general principles of equity; PROVIDED that
this paragraph (a) shall not be applicable to any guarantee of any Restricted
Subsidiary (x) that (A) existed at the time such Person became a Restricted
Subsidiary of the Company and (B) was not incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary of the Company or
(y) that guarantees the payment of Obligations of the Company or any Restricted
Subsidiary under the Senior Credit Facilities or any other Senior Indebtedness
and any refunding, refinancing or replacement thereof, in whole or in part,
PROVIDED that such refunding, refinancing or replacement thereof constitutes
Senior Indebtedness and PROVIDED FURTHER that any such Senior Indebtedness and
any refunding, refinancing or replacement thereof is not incurred pursuant to a
registered offering of securities under the Securities Act or a private
placement of securities (including under Rule 144A) pursuant to an exemption
from the registration requirements of the Securities Act, which private
placement provides for registration rights under the Securities Act.
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(b) Notwithstanding the foregoing and the other provisions of the Indenture,
any Guarantee by a Restricted Subsidiary of the Notes shall provide by its terms
that it shall be automatically and unconditionally released and discharged upon
(i) any sale, exchange or transfer, to any Person not an Affiliate of the
Company, of all of the Company's Capital Stock in, or all or substantially all
the assets of, such Restricted Subsidiary (which sale, exchange or transfer is
not prohibited by the Indenture) or (ii) the release or discharge of the
guarantee which resulted in the creation of such Guarantee, except a discharge
or release by or as a result of payment under such guarantee.
LIMITATION ON OTHER SENIOR SUBORDINATED INDEBTEDNESS. The Indenture
provides that the Company will not, and will not permit any Guarantor to,
directly or indirectly, incur any Indebtedness (including Acquired Indebtedness)
that is subordinate in right of payment to any Indebtedness of the Company or
any Indebtedness of any Guarantor, as the case may be, unless such Indebtedness
is either (a) PARI PASSU in right of payment with the Notes or such Guarantor's
Guarantee, as the case may be or (b) subordinate in right of payment to the
Notes, or such Guarantor's Guarantee, as the case may be.
REPORTS AND OTHER INFORMATION. Notwithstanding that the Company may not be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act
or otherwise report on an annual and quarterly basis on forms provided for such
annual and quarterly reporting pursuant to rules and regulations promulgated by
the Securities and Exchange Commission (the "COMMISSION"), the Indenture
requires the Company to file with the Commission (and provide the Trustee and
Holders with copies thereof (without exhibits), without cost to each Holder,
within 15 days after it files them with the Commission), (a) within 90 days
after the end of each fiscal year, annual reports on Form 10-K (or any successor
or comparable form) containing the information required to be contained therein
(or required in such successor or comparable form); (b) within 45 days after the
end of each of the first three fiscal quarters of each fiscal year, reports on
Form 10-Q (or any successor or comparable form); (c) promptly from time to time
after the occurrence of an event required to be therein reported, such other
reports on Form 8-K (or any successor or comparable form); and (d) any other
information, documents and other reports which the Company would be required to
file with the Commission if it were subject to Section 13 or 15(d) of the
Exchange Act; PROVIDED, HOWEVER, the Company shall not be so obligated to file
such reports with the Commission if the Commission does not permit such filing,
in which event the Company will make available such information to prospective
purchasers of Notes, in addition to providing such information to the Trustee
and the Holders, in each case within 15 days after the time the Company would be
required to file such information with the Commission, if it were subject to
Sections 13 or 15(d) of the Exchange Act.
EVENTS OF DEFAULT AND REMEDIES
The following events constitute Events of Default under the Indenture:
(i) default in payment when due and payable, upon redemption,
acceleration or otherwise, of principal of, or premium on, if any, the Notes
whether or not such payment shall be prohibited by the subordination
provisions relating to the Notes;
(ii) default for 30 days or more in the payment when due of interest on
or with respect to the Notes whether or not such payment shall be prohibited
by the subordination provisions relating to the Notes;
(iii) failure by the Company or any Guarantor for 30 days after receipt
of written notice given by the Trustee or the holders of at least 30% in
principal amount of the Notes then outstanding to comply with any of its
other agreements in the Indenture or the Notes;
(iv) default under any mortgage, indenture or instrument under which
there is issued or by which there is secured or evidenced any Indebtedness
for money borrowed by the Company or any of its Restricted Subsidiaries or
the payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries (other than Indebtedness owed to the Company or a Restricted
Subsidiary), whether such
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Indebtedness or guarantee now exists or is created after the Issuance Date,
if both (A) such default either (1) results from the failure to pay any such
Indebtedness at its stated final maturity (after giving effect to any
applicable grace periods) or (2) relates to an obligation other than the
obligation to pay principal of any such Indebtedness at its stated final
maturity and results in the holder or holders of such Indebtedness causing
such Indebtedness to become due prior to its stated maturity and (B) the
principal amount of such Indebtedness, together with the principal amount of
any other such Indebtedness in default for failure to pay principal at
stated final maturity (after giving effect to any applicable grace periods),
or the maturity of which has been so accelerated, aggregate $20.0 million or
more at any one time outstanding;
(v) failure by the Company or any of its Significant Subsidiaries to pay
final judgments aggregating in excess of $20.0 million, which final
judgments remain unpaid, undischarged and unstayed for a period of more than
60 days after such judgment becomes final, and in the event such judgment is
covered by insurance, an enforcement proceeding has been commenced by any
creditor upon such judgment or decree which is not promptly stayed;
(vi) certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries; or
(vii) the Guarantee of any Significant Subsidiary shall for any reason
cease to be in full force and effect or be declared null and void or any
responsible officer of the Company or any Guarantor that is a Significant
Subsidiary denies that it has any further liability under its Guarantee or
gives notice to such effect (other than by reason of the termination of the
Indenture or the release of any such Guarantee in accordance with the
Indenture).
If any Event of Default (other than of a type specified in clause (vi)
above) occurs and is continuing under the Indenture, the Trustee or the Holders
of at least 30% in principal amount of the then outstanding Notes may declare
the principal, premium, if any, interest and any other monetary obligations on
all the then outstanding Notes to be due and payable immediately; PROVIDED,
HOWEVER, that, so long as any Indebtedness permitted to be incurred under the
Indenture as part of the Senior Credit Facilities shall be outstanding, no such
acceleration shall be effective until the earlier of (i) acceleration of any
such Indebtedness under the Senior Credit Facilities or (ii) five business days
after the giving of written notice to the Company and the administrative agent
under the Senior Credit Facilities of such acceleration. Upon the effectiveness
of such declaration, such principal and interest will be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising under clause (vi) of the first paragraph of this section, all
outstanding Notes will become due and payable without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Indenture provides that the Trustee may withhold from
Holders notice of any continuing Default or Event of Default (except a Default
or Event of Default relating to the payment of principal, premium, if any, or
interest) if it determines that withholding notice is in their interest. In
addition, the Trustee shall have no obligation to accelerate the Notes if in the
best judgment of the Trustee acceleration is not in the best interest of the
Holders of such Notes.
The Indenture provides that the Holders of a majority in aggregate principal
amount of the then outstanding Notes issued thereunder by notice to the Trustee
may on behalf of the Holders of all of such Notes waive any existing Default or
Event of Default and its consequences under the Indenture except a continuing
Default or Event of Default in the payment of interest on, premium, if any, or
the principal of any such Note held by a non-consenting Holder. In the event of
any Event of Default specified in clause (iv) above, such Event of Default and
all consequences thereof (including without limitation any acceleration or
resulting payment default) shall be annulled, waived and rescinded,
automatically and without any action by the Trustee or the Holders, if within 20
days after such Event of Default arose (x) the Indebtedness or guarantee that is
the basis for such Event of Default has been discharged, or (y) the
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holders thereof have rescinded or waived the acceleration, notice or action (as
the case may be) giving rise to such Event of Default, or (z) if the default
that is the basis for such Event of Default has been cured.
The Indenture provides that the Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required, within five Business Days, upon becoming aware of any
Default or Event of Default or any default under any document, instrument or
agreement representing Indebtedness of the Company or any Guarantor, to deliver
to the Trustee a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any Guarantor, shall have any liability for any obligations of the Company or
the Guarantors under the Notes, the Guarantees or the Indenture or for any claim
based on, in respect of, or by reason of such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The obligations of the Company and the Guarantors, if any, under the
Indenture will terminate (other than certain obligations) and will be released
upon payment in full of all of the Notes. The Company may, at its option and at
any time, elect to have all of its obligations discharged with respect to the
outstanding Notes and have each Guarantor's obligation discharged with respect
to its Guarantee ("LEGAL DEFEASANCE") and cure all then existing Events of
Default except for (i) the rights of Holders of outstanding Notes to receive
payments in respect of the principal of, premium, if any, and interest on such
Notes when such payments are due solely out of the trust created pursuant to the
Indenture, (ii) the Company's obligations with respect to Notes concerning
issuing temporary Notes, registration of such Notes, mutilated, destroyed, lost
or stolen Notes and the maintenance of an office or agency for payment and money
for security payments held in trust, (iii) the rights, powers, trusts, duties
and immunities of the Trustee, and the Company's obligations in connection
therewith and (iv) the Legal Defeasance provisions of the Indenture. In
addition, the Company may, at its option and at any time, elect to have the
obligations of the Company and each Guarantor released with respect to certain
covenants that are described in the Indenture ("COVENANT DEFEASANCE") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment on other
indebtedness, bankruptcy, receivership, rehabilitation and insolvency events)
described under "Events of Default" will no longer constitute an Event of
Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance with
respect to the Notes:
(i) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient,
in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest due on
the outstanding Notes on the stated maturity date or on the applicable
redemption date, as the case may be, of such principal, premium, if any, or
interest on the outstanding Notes;
(ii) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that, subject to customary assumptions
and exclusions, (A) the Company has received from, or there has been
published by, the United States Internal Revenue Service a ruling or (B)
since the Issuance Date, there has been a change in the applicable U.S.
federal income tax law, in either case to the effect that, and based thereon
such opinion of counsel in the United States shall confirm that, subject to
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customary assumptions and exclusions, the Holders will not recognize income,
gain or loss for U.S. federal income tax purposes as a result of such Legal
Defeasance and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, the Holders will not recognize income, gain or
loss for U.S. federal income tax purposes as a result of such Covenant
Defeasance and will be subject to such tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be
continuing with on the date of such deposit or, with respect to certain
bankruptcy or insolvency Events of Default, on the 91st day after such date
of deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, the Senior Credit
Facilities or any other material agreement or instrument (other than the
Indenture) to which, the Company or any Guarantor is a party or by which the
Company or any Guarantor is bound;
(vi) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that, as of the date of such opinion and subject to
customary assumptions and exclusions following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally under
any applicable U.S. federal or state law, and that the Trustee has a
perfected security interest in such trust funds for the ratable benefit of
the Holders;
(vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of defeating, hindering, delaying or defrauding any creditors of the
Company or any Guarantor or others; and
(viii) the Company shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel in the United States (which opinion of
counsel may be subject to customary assumptions and exclusions) each stating
that all conditions precedent provided for or relating to the Legal
Defeasance or the Covenant Defeasance, as the case may be, have been
complied with.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect as
to all Notes issued thereunder, when either (a) all such Notes theretofore
authenticated and delivered (except lost, stolen or destroyed Notes which have
been replaced or paid and Notes for whose payment money has theretofore been
deposited in trust) have been delivered to the Trustee for cancellation; or (b)
(i) all such Notes not theretofore delivered to such Trustee for cancellation
have become due and payable by reason of the making of a notice of redemption or
otherwise or will become due and payable within one year and the Company or any
Guarantor has irrevocably deposited or caused to be deposited with such Trustee
as trust funds in trust solely for the benefit of the Holders, cash in U.S.
dollars, non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient without consideration of any reinvestment of
interest to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation for principal, premium, if
any, and accrued interest to the date of maturity or redemption; (ii) no Default
or Event of Default with respect to the Indenture or the Notes shall have
occurred and be continuing on the date of such deposit or shall occur as a
result of such deposit and such deposit will not result in a breach or violation
of, or constitute a default under, any other instrument to which the Company or
any Guarantor is a party or by which the Company or any Guarantor
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is bound; (iii) the Company or any Guarantor has paid or caused to be paid all
sums payable by it under such Indenture; and (iv) the Company has delivered
irrevocable instructions to the Trustee under such Indenture to apply the
deposited money toward the payment of such Notes at maturity or the redemption
date, as the case may be. In addition, the Company must deliver an Officers'
Certificate and an opinion of counsel to the Trustee stating that all conditions
precedent to satisfaction and discharge have been satisfied.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder will be treated as the owner of it for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture, any
Guarantee and the Notes issued thereunder may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
Notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes),
and any existing default or compliance with any provision of the Indenture or
the Notes may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes (including consents obtained in
connection with a purchase of or tender offer or exchange offer for Notes).
The Indenture provides that without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Notes held by a non-consenting
Holder): (i) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any such Note or alter or waive the provisions with respect to
the redemption of the Notes (other than provisions relating to the covenants
described above under the caption "-- Repurchase at the Option of Holders"),
(iii) reduce the rate of or change the time for payment of interest on any Note,
(iv) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of such Notes and a waiver of the payment default that resulted from such
acceleration), or in respect of a covenant or provision contained in the
Indenture or any Guarantee which cannot be amended or modified without the
consent of all Holders, (v) make any Note payable in money other than that
stated in such Notes, (vi) make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of Holders to receive
payments of principal of or premium, if any, or interest on the Notes, (vii)
make any change in the foregoing amendment and waiver provisions, (viii) impair
the right of any Holder to receive payment of principal of, or interest on such
Holder's Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder's Notes or (ix)
make any change in the subordination provisions of the Indenture that would
adversely affect the Holders.
The Indenture provides that, notwithstanding the foregoing, without the
consent of any Holder, the Company, any Guarantor (with respect to a Guarantee
or the Indenture to which it is a party) and the Trustee may amend or supplement
the Indenture, any Guarantee or the Notes (i) to cure any ambiguity, defect or
inconsistency, (ii) to provide for uncertificated Notes in addition to or in
place of certificated Notes, (iii) to comply with the covenant relating to
mergers, consolidations and sales of assets, (iv) to provide for the assumption
of the Company's or any Guarantor's obligations to Holders, (v) to make any
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change that would provide any additional rights or benefits to the Holders or
that does not adversely affect the legal rights under the Indenture of any such
Holder, (vi) to add covenants for the benefit of the Holders or to surrender any
right or power conferred upon the Company, (vii) to comply with requirements of
the Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act, (viii) to evidence and provide for the acceptance
and appointment under the Indenture of a successor Trustee pursuant to the
requirements thereof, or (ix) to add a Guarantor under the Indenture.
The consent of the Holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Indenture provides that the Holders of a majority in principal amount of
the outstanding Notes issued thereunder will have the right to direct the time,
method and place of conducting any proceeding for exercising any remedy
available to the Trustee, subject to certain exceptions. The Indenture provides
that in case an Event of Default shall occur (which shall not be cured), the
Trustee will be required, in the exercise of its power, to use the degree of
care of a prudent person in the conduct of his own affairs. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any Holder of such Notes,
unless such Holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
GOVERNING LAW
The Indenture, the Notes and the Guarantees, if any, will be, subject to
certain exceptions, governed by and construed in accordance with the internal
laws of the State of New York, without regard to the choice of law rules
thereof.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided. For
purposes of the Indenture, unless otherwise specifically indicated, the term
"consolidated" with respect to any Person refers to such Person consolidated
with its Restricted Subsidiaries, and excludes from such consolidation any
Unrestricted Subsidiary as if such Unrestricted Subsidiary were not an Affiliate
of such Person.
"ACQUIRED INDEBTEDNESS" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"ADM" means Accuride de Mexico, S.A. de C.V., a corporation organized and
existing under the laws of the United Mexican States.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and
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"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED, HOWEVER,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"ASSET SALE" means (i) the sale, conveyance, transfer or other disposition
(whether in a single transaction or a series of related transactions) of
property or assets (including by way of a sale and leaseback) of the Company or
any Restricted Subsidiary (each referred to in this definition as a
"DISPOSITION") or (ii) the issuance or sale of Equity Interests of any
Restricted Subsidiary (whether in a single transaction or a series of related
transactions), in each case, other than:
(a) a disposition of Cash Equivalents or Investment Grade Securities or
obsolete equipment in the ordinary course of business or inventory or goods
held for sale in the ordinary course of business;
(b) the disposition of all or substantially all of the assets of the
Company in a manner permitted pursuant to the provisions described above
under "--Merger, Consolidation or Sale of All or Substantially All Assets"
or any disposition that constitutes a Change of Control pursuant to the
Indenture;
(c) the making of any Restricted Payment or Permitted Investment that is
permitted to be made, and is made, under the covenant described above under
"--Limitation on Restricted Payments";
(d) any disposition of assets with an aggregate fair market value of
less than $1.0 million;
(e) any disposition of property or assets or issuance of securities by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Restricted Subsidiary or any sale, disposition
or transfer of equipment from a Restricted Subsidiary to another Restricted
Subsidiary;
(f) any exchange of like property pursuant to Section 1031 of the
Internal Revenue Code of 1986, as amended, for use in a Similar Business;
(g) the lease, assignment or a lease or sub-lease of any real or
personal property in the ordinary course of business;
(h) any financing transaction with respect to property built or acquired
by the Company or any Restricted Subsidiary after the Issuance Date,
including, without limitation, sale-leasebacks and asset securitizations;
(i) foreclosures on assets;
(j) any sale of Equity Interests in, or Indebtedness or other securities
of, an Unrestricted Subsidiary (with the exception of Investments in
Unrestricted Subsidiaries acquired pursuant to clause (j) of the definition
of Permitted Investments); and
(k) sales of accounts receivable, or participations therein, in
connection with any Receivables Facility.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"CAPITALIZED LEASE OBLIGATION" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized and reflected as a liability on
a balance sheet (excluding the footnotes thereto) in accordance with GAAP.
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"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof, (iii) certificates of deposit, time
deposits and eurodollar time deposits with maturities of one year or less from
the date of acquisition, bankers' acceptances with maturities not exceeding one
year and overnight bank deposits, in each case with any commercial bank having
capital and surplus in excess of $500.0 million, (iv) repurchase obligations for
underlying securities of the types described in clauses (ii) and (iii) entered
into with any financial institution meeting the qualifications specified in
clause (iii) above, (v) commercial paper rated A-1 or the equivalent thereof by
Moody's or S&P and in each case maturing within one year after the date of
acquisition, (vi) investment funds investing 95% of their assets in securities
of the types described in clauses (i)-(v) above, (vii) readily marketable direct
obligations issued by any state of the United States of America or any political
subdivision thereof having one of the two highest rating categories obtainable
from either Moody's or S&P and (viii) Indebtedness or preferred stock issued by
Persons with a rating of "A" or higher from S&P or "A2" or higher from Moody's.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(i) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of the assets of the Company and
its Subsidiaries, taken as a whole; or
(ii) the Company becomes aware of (by way of a report or any other
filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written
notice or otherwise) the acquisition by any Person or group (within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any
successor provision), including any group acting for the purpose of
acquiring, holding or disposing of securities (within the meaning of Rule
13d-5(b)(1) under the Exchange Act), other than the Permitted Holders and
their Related Parties, in a single transaction or in a related series of
transactions, by way of merger, consolidation or other business combination
or purchase of beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act, or any successor provision) of 50% or more of the total
Voting Stock of the Company.
"CONSOLIDATED DEPRECIATION AND AMORTIZATION EXPENSE" means with respect to
any Person for any period, the total amount of depreciation and amortization
expense and other noncash charges (excluding any noncash item that represents an
accrual, reserve or amortization of a cash expenditure for a future period) of
such Person and its Restricted Subsidiaries for such period on a consolidated
basis and otherwise determined in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any period, the sum,
without duplication, of: (a) consolidated interest expense of such Person and
its Restricted Subsidiaries for such period (including amortization of original
issue discount, non-cash interest payments, the interest component of
Capitalized Lease Obligations, and net payments (if any) pursuant to Hedging
Obligations, excluding amortization of deferred financing fees) and (b)
consolidated capitalized interest of such Person and its Restricted Subsidiaries
for such period, whether paid or accrued; PROVIDED, HOWEVER, that Receivables
Fees shall be deemed not to constitute Consolidated Interest Expense; and
PROVIDED FURTHER that the consolidated interest expense of any Restricted
Subsidiary that is party to any agreement that has not been legally waived that
restricts the declaration or payment of dividends or similiar distributions
shall be included only to the extent (and in the same proportion) that the Net
Income of such Restricted Subsidiary was included in calculating Consolidated
Net Income (without giving effect to clause (vii) of the definition thereof) for
so long as such Restricted Subsidiary is party to any agreement that has not
been legally waived that restricts the declaration or payment of dividends or
similar distributions.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income, of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, and otherwise determined in accordance
with GAAP; PROVIDED, HOWEVER, that (i) any net after-tax extraordinary gains or
losses (less all fees and expenses relating thereto) shall be excluded, (ii) the
Net Income for such period shall not include the cumulative effect of a change
in accounting principles during such period,
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(iii) any net after-tax income (loss) from discontinued operations and any net
after-tax gains or losses on disposal of discontinued operations shall be
excluded, (iv) any net after-tax gains or losses (less all fees and expenses
relating thereto) attributable to asset dispositions other than in the ordinary
course of business (as determined in good faith by the Board of Directors of the
Company) shall be excluded, (v) the Net Income for such period of any Person
that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted
for by the equity method of accounting, shall be excluded; PROVIDED that
Consolidated Net Income of the Company shall be increased by the amount of
dividends or distributions or other payments paid in cash (or to the extent
converted into cash) (without duplication in the case of calculating Restricted
Payments or Permitted Investments) to the referent Person or a Restricted
Subsidiary thereof in respect of such period, (vi) the Net Income of any Person
acquired in a pooling of interests transaction shall not be included for any
period prior to the date of such acquisition and (vii) the Net Income for such
period of any Restricted Subsidiary shall be excluded if the declaration or
payment of dividends or similar distributions by that Restricted Subsidiary of
its Net Income is not at the date of determination wholly permitted without any
prior governmental approval (which has not been obtained) or, directly or
indirectly, by the operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule, or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, unless such
restriction with respect to the payment of dividends or in similar distributions
has been legally waived; PROVIDED that Consolidated Net Income of the Company
shall be increased by the amount of dividends or other distributions or other
payments paid in cash (or to the extent converted into cash) (without
duplication in the case of calculating Restricted Payments or Permitted
Investments) to the referent Person or a Restricted Subsidiary thereof in
respect of such period.
"CONTINGENT OBLIGATIONS" means, with respect to any Person, any obligation
of such Person guaranteeing any leases, dividends or other obligations that do
not constitute Indebtedness ("PRIMARY OBLIGATIONS") of any other Person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (A) for the
purchase or payment of any such primary obligation or (B) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, or (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation against loss in respect thereof.
"CREDIT FACILITIES" means, with respect to the Company, one or more debt
facilities (including, without limitation, the Senior Credit Facilities) or
commercial paper facilities with banks or other institutional lenders or
indentures providing for revolving credit loans, term loans, receivables
financing (including through the sale of receivables to such lenders or to
special purpose entities formed to borrow from such lenders against
receivables), letters of credit or other long-term indebtedness, in each case,
as amended, restated, modified, renewed, refunded, replaced or refinanced in
whole or in part from time to time.
"DEFAULT" means any event that is, or with the passage of time or the giving
of notice or both would be, an Event of Default.
"DESIGNATED NONCASH CONSIDERATION" means the fair market value of noncash
consideration received by the Company or one of its Restricted Subsidiaries in
connection with an Asset Sale that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate, setting forth the basis of
such valuation, executed by the principal executive officer and the principal
financial officer of the Company, less the amount of cash or Cash Equivalents
received in connection with a sale of such Designated Noncash Consideration.
"DESIGNATED PREFERRED STOCK" means preferred stock of the Company (other
than Disqualified Stock) that is issued for cash (other than to a Restricted
Subsidiary) and is so designated as Designated Preferred Stock, pursuant to an
Officers' Certificate executed by the principal executive officer and the
principal
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financial officer of the Company, on the issuance date thereof, the cash
proceeds of which are excluded from the calculation set forth in paragraph (c)
of the "--Limitation on Restricted Payments" covenant.
"DISQUALIFIED STOCK" means, with respect to any Person, any Capital Stock of
such Person which, by its terms (or by the terms of any security into which it
is convertible or for which it is putable or exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable (other than as a
result of a Change of Control or Asset Sale), pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder thereof
(other than as a result of a Change of Control or Asset Sale), in whole or in
part, in each case prior to the date 91 days after the maturity date of the
Notes; PROVIDED, HOWEVER, that if such Capital Stock is issued to any plan for
the benefit of employees of the Company or its Subsidiaries or by any such plan
to such employees, such Capital Stock shall not constitute Disqualified Stock
solely because it may be required to be repurchased by the Company in order to
satisfy applicable statutory or regulatory obligations.
"EBITDA" means, with respect to any Person for any period, the Consolidated
Net Income (without giving effect to clause (vii) of the definition thereof) of
such Person for such period plus (a) provision for taxes based on income or
profits of such Person for such period deducted in computing Consolidated Net
Income, plus (b) Consolidated Interest Expense of such Person for such period
and any Receivables Fees paid by such Person or any of its Restricted
Subsidiaries during such period, in each case to the extent the same was
deducted in calculating such Consolidated Net Income, plus (c) Consolidated
Depreciation and Amortization Expense of such Person for such period to the
extent such depreciation and amortization were deducted in computing
Consolidated Net Income, plus (d) any expenses or charges related to any Equity
Offering, Permitted Investment or Indebtedness permitted to be incurred by the
Indenture (including such expenses or charges related to the Recapitalization)
and deducted in such period in computing Consolidated Net Income, plus (e) the
amount of any restructuring charge deducted in such period in computing
Consolidated Net Income, plus (f) without duplication, any other non-cash
charges reducing Consolidated Net Income for such period (excluding any such
charge which requires an accrual of a cash reserve for anticipated cash charges
for any future period), plus (g) the amount of any minority interest expense
deducted in calculating Consolidated Net Income (other than minority interest
expense relating to any Restricted Subsidiary that is party to any agreement
that has not been legally waived that restricts the declaration or payment of
dividends or similar distributions), less, without duplication (h) non-cash
items increasing Consolidated Net Income of such Person for such period
(excluding any items which represent the reversal of any accrual of, or cash
reserve for, anticipated cash charges in any prior period). Notwithstanding the
foregoing, the amounts described in clause (a), clauses (c) through (f) and
clause (h) relating to any Restricted Subsidiary that is party to any agreement
that has not been legally waived that restricts the declaration or payment of
dividends or similar distributions shall be included in EBITDA only to the
extent (and in the same proportion) that the Net Income of such Restricted
Subsidiary was included in calculating Consolidated Net Income (without giving
effect to clause (vii) of the definition thereof) for so long as such Restricted
Subsidiary is party to any agreement that has not been legally waived that
restricts the declaration or payment of dividends or similar distributions.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EQUITY OFFERING" means any public or private sale of common stock or
preferred stock of the Company (excluding Disqualified Stock), other than (i)
public offerings with respect to the Company's Common Stock registered on Form
S-8 and (ii) any such public or private sale that constitutes an Excluded
Contribution.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"EXCLUDED CONTRIBUTION" means net cash proceeds, marketable securities or
Qualified Proceeds, in each case, received by the Company from (a) contributions
to its common equity capital and (b) the sale
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(other than to a Subsidiary or to any Company or Subsidiary management equity
plan or stock option plan or any other management or employee benefit plan or
agreement) of Capital Stock (other than Disqualified Stock) of the Company, in
each case designated as Excluded Contributions pursuant to an Officers'
Certificate executed by the principal executive officer and the principal
financial officer of the Company on the date such capital contributions are made
or the date such Equity Interests are sold, as the case may be, which are
excluded from the calculation set forth in paragraph (c) under "--Limitation on
Restricted Payments."
"EXISTING INDEBTEDNESS" means Indebtedness of the Company or its Restricted
Subsidiaries in existence on the Issuance Date, plus interest accruing thereon,
after application of the net proceeds of the sale of the Notes as described in
this Prospectus.
"FIXED CHARGE COVERAGE RATIO" means, with respect to any Person for any
period, the ratio of EBITDA of such Person for such period to the Fixed Charges
of such Person for such period. In the event that the Company or any of its
Restricted Subsidiaries incurs, assumes, guarantees or redeems any Indebtedness
or issues or redeems Disqualified Stock or preferred stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the "CALCULATION DATE"), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee or redemption of Indebtedness, or such issuance or
redemption of Disqualified Stock or preferred stock, as if the same had occurred
at the beginning of the applicable four-quarter period. For purposes of making
the computation referred to above, Investments, acquisitions, dispositions,
mergers, consolidations and discontinued operations (as determined in accordance
with GAAP) that have been made by the Company or any of its Restricted
Subsidiaries during the four-quarter reference period or subsequent to such
reference period and on or prior to or simultaneously with the Calculation Date
shall be calculated on a pro forma basis assuming that all such Investments,
acquisitions, dispositions, mergers, consolidations and discontinued operations
(and the reduction of any associated fixed charge obligations and the change in
EBITDA resulting therefrom) had occurred on the first day of the four-quarter
reference period. If since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period) shall
have made any Investment, acquisition, disposition, merger, consolidation or
discontinued operation that would have required adjustment pursuant to this
definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro
forma effect thereto for such period as if such Investment, acquisition,
disposition, merger, consolidation or discontinued operation had occurred at the
beginning of the applicable four-quarter period. For purposes of this
definition, whenever pro forma effect is to be given to a transaction, the pro
forma calculations shall be made in good faith by a responsible financial or
accounting officer of the Company. If any Indebtedness bears a floating rate of
interest and is being given pro forma effect, the interest on such Indebtedness
shall be calculated as if the rate in effect on the Calculation Date had been
the applicable rate for the entire period (taking into account any Hedging
Obligations applicable to such Indebtedness). Interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
by a responsible financial or accounting officer of the Company to be the rate
of interest implicit in such Capitalized Lease Obligation in accordance with
GAAP. For purposes of making the computation referred to above, interest on any
Indebtedness under a revolving credit facility computed on a pro forma basis
shall be computed based upon the average daily balance of such Indebtedness
during the applicable period. Interest on Indebtedness that may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rate, shall be deemed to have been
based upon the rate actually chosen, or, if none, then based upon such optional
rate chosen as the Company may designate.
"FIXED CHARGES" means, with respect to any Person for any period, the sum of
(a) Consolidated Interest Expense of such Person for such period and (b) all
cash dividend payments (excluding items eliminated in consolidation) on any
series of preferred stock of such Person.
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"FOREIGN SUBSIDIARY" means a Restricted Subsidiary not organized or existing
under the laws of the United States, any State thereof, the District of
Columbia, or any territory thereof.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issuance Date. For the purposes of the
Indenture, the term "consolidated" with respect to any Person shall mean such
Person consolidated with its Restricted Subsidiaries, and shall not include any
Unrestricted Subsidiary.
"GOVERNMENT SECURITIES" means securities that are (a) direct obligations of
the United States of America for the timely payment of which its full faith and
credit is pledged or (b) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act), as custodian with respect to any such Government Securities
or a specific payment of principal of or interest on any such Government
Securities held by such custodian for the account of the holder of such
depository receipt; PROVIDED that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Securities or the specific payment of principal of or interest on
the Government Securities evidenced by such depository receipt.
"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness or other obligations.
"GUARANTEE" means any guarantee of the obligations of the Company under the
Indenture and the Notes by any Person in accordance with the provisions of the
Indenture. When used as a verb, "Guarantee" shall have a corresponding meaning.
No Guarantees were issued in connection with the initial offering and sale of
the Private Notes.
"GUARANTOR" means any Person that incurs a Guarantee; PROVIDED that upon the
release and discharge of such Person from its Guarantee in accordance with the
Indenture, such Person shall cease to be a Guarantor. No Guarantees were issued
in connection with the initial offering and sale of the Private Notes.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under (i) currency exchange, interest rate or commodity swap
agreements, currency exchange, interest rate or commodity cap agreements and
currency exchange, interest rate or commodity collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in currency exchange, interest rates or commodity prices.
"HOLDER" means a holder of the Notes.
"INDEBTEDNESS" means, with respect to any Person, (a) any indebtedness of
such Person, whether or not contingent (i) in respect of borrowed money, (ii)
evidenced by bonds, notes, debentures or similar instruments or letters of
credit or bankers' acceptances (or, without double counting, reimbursement
agreements in respect thereof), (iii) representing the balance deferred and
unpaid of the purchase price of any property (including Capitalized Lease
Obligations), except any such balance that constitutes a trade payable or
similar obligation to a trade creditor, in each case accrued in the ordinary
course of business or (iv) representing any Hedging Obligations, if and to the
extent of any of the foregoing Indebtedness (other than letters of credit and
Hedging Obligations) that would appear as a liability upon a balance sheet
(excluding the footnotes thereto) of such Person prepared in accordance with
GAAP, (b) to the extent not
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otherwise included, any obligation by such Person to be liable for, or to pay,
as obligor, guarantor or otherwise, on the Indebtedness of another Person (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business) and (c) to the extent not otherwise included, Indebtedness
of another Person secured by a Lien on any asset owned by such Person (whether
or not such Indebtedness is assumed by such Person); PROVIDED, HOWEVER, that
Contingent Obligations incurred in the ordinary course of business shall be
deemed not to constitute Indebtedness, and obligations under or in respect of
Receivables Facilities shall not be deemed to constitute Indebtedness of a
Person.
In addition, "Indebtedness" of any Person shall include Indebtedness
described in the foregoing paragraph that would not appear as a liability on the
balance sheet of such Person if (1) such Indebtedness is the obligation of a
partnership or joint venture that is not a Restricted Subsidiary (a "Joint
Venture"), (2) such Person or a Restricted Subsidiary is a general partner of
the Joint Venture (a "General Partner") and (3) there is recourse, by contract
or operation of law, with respect to the payment of such Indebtedness to
property or assets of such Person or a Restricted Subsidiary; and such
Indebtedness shall be included in an amount not to exceed (x) the greater of (A)
the net assets of the General Partner and (B) the amount of such obligations to
the extent that there is recourse, by contract or operation of law, to the
property or assets of such Person or a Restricted Subsidiary (other than the
General Partner) or (y) if less than the amount determined pursuant to clause
(x) immediately above, the actual amount of such Indebtedness that is recourse
to such Person, if the Indebtedness is evidenced by a writing and is for a
determinable amount and the related interest expense shall be included in
Consolidated Interest Expense to the extent paid by the Company or its
Restricted Subsidiaries.
"INDEPENDENT FINANCIAL ADVISOR" means an accounting, appraisal, investment
banking firm or consultant to Persons engaged in Similar Businesses of
nationally recognized standing that is, in the judgment of the Company's Board
of Directors, qualified to perform the task for which it has been engaged.
"INVESTMENT GRADE SECURITIES" means (i) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents), (ii) debt securities or
debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such rating by such rating organization, or, if no
rating of S&P or Moody's then exists, the equivalent of such rating by any other
nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among the Company and
its Subsidiaries, and (iii) investments in any fund that invests exclusively in
investments of the type described in clauses (i) and (ii) which fund may also
hold immaterial amounts of cash pending investment and/or distribution.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of loans (including
guarantees), advances or capital contributions (excluding advances to customers,
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities issued by any other Person
and investments that are required by GAAP to be classified on the balance sheet
of the Company in the same manner as the other investments included in this
definition to the extent such transactions involve the transfer of cash or other
property. For purposes of the definition of "Unrestricted Subsidiary" and the
covenant described under "--Certain Covenants--Limitation on Restricted
Payments," (i) "Investments" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of a Subsidiary of the Company at the time that such Subsidiary is
designated an Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary in an amount (if positive) equal to (x) the Company's "Investment" in
such Subsidiary at the time of such redesignation less (y) the portion
(proportionate to the Company's equity interest in such Subsidiary) of the fair
market value of the net assets of such Subsidiary at the time of such
redesignation; and (ii) any
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property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Board of Directors.
"ISSUANCE DATE" means the closing date for the sale and original issuance of
the Private Notes under the Indenture.
"LETTER OF CREDIT OBLIGATIONS" means all Obligations in respect of
Indebtedness of the Company with respect to letters of credit issued pursuant to
the Senior Credit Facilities which Indebtedness shall be deemed to consist of
(a) the aggregate maximum amount available to be drawn under all such letters of
credit (the determination of such aggregate maximum amount to assume compliance
with all conditions for drawing) and (b) the aggregate amount that has been paid
by, and not reimbursed to, the issuers under such letters of credit.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction); PROVIDED that in
no event shall an operating lease be deemed to constitute a Lien.
"MOODY'S" means Moody's Investors Service, Inc.
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends.
"NET PROCEEDS" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
Designated Noncash Consideration received in any Asset Sale), net of the direct
costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and brokerage and sales commissions),
any relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of principal, premium (if any) and interest on Indebtedness
required (other than required by clause (i) of the second paragraph of "--
Repurchase at the Option of Holders--Asset Sales") to be paid as a result of
such transaction and any deduction of appropriate amounts to be provided by the
Company as a reserve in accordance with GAAP against any liabilities associated
with the asset disposed of in such transaction and retained by the Company after
such sale or other disposition thereof, including, without limitation, pension
and other post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations associated with
such transaction.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements (including, without limitation, reimbursement
obligations with respect to letters of credit and banker's acceptances), damages
and other liabilities, and guarantees of payment of such principal, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities, payable under the documentation governing any Indebtedness.
"OFFICER" means the Chairman of the Board, the President, any Executive Vice
President, Senior Vice President or Vice President, the Treasurer or the
Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the Company
by two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company that meets the requirements set forth in the
Indenture.
"PARI PASSU INDEBTEDNESS" means (a) with respect to the Notes, Indebtedness
which ranks PARI PASSU in right of payment to the Notes and (b) with respect to
any Guarantee, Indebtedness which ranks PARI PASSU in right of payment to such
Guarantee.
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"PERMITTED HOLDERS" means KKR and any of its Affiliates.
"PERMITTED INVESTMENTS" means (a) any Investment in the Company or any
Restricted Subsidiary; (b) any Investment in cash and Cash Equivalents or
Investment Grade Securities; (c) any Investment by the Company or any Restricted
Subsidiary of the Company in a Person that is engaged in a Similar Business if
as a result of such Investment (i) such Person becomes a Restricted Subsidiary
or (ii) such Person, in one transaction or a series of related transactions, is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary; (d) any Investment in securities or other assets not
constituting cash or Cash Equivalents and received in connection with an Asset
Sale made pursuant to the provisions of "--Repurchase at the Option of
Holders--Asset Sales" or any other disposition of assets not constituting an
Asset Sale; (e) any Investment existing on the Issuance Date; (f) advances to
employees not in excess of $10.0 million outstanding at any one time, in the
aggregate; (g) any Investment acquired by the Company or any of its Restricted
Subsidiaries (i) in exchange for any other Investment or accounts receivable
held by the Company or any such Restricted Subsidiary in connection with or as a
result of a bankruptcy, workout, reorganization or recapitalization of the
issuer of such other Investment or accounts receivable or (ii) as a result of a
foreclosure by the Company or any of its Restricted Subsidiaries with respect to
any secured Investment or other transfer of title with respect to any secured
Investment in default; (h) Hedging Obligations permitted under clause (i) of the
"Limitation of Incurrence of Indebtedness and Issuance of Disqualified Stock"
covenant; (i) loans and advances to officers, directors and employees for
business-related travel expenses, moving expenses and other similar expenses, in
each case incurred in the ordinary course of business; (j) any Investment in a
Similar Business having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (j) that are at that time
outstanding (without giving effect to the sale of an Unrestricted Subsidiary to
the extent the proceeds of such sale do not consist of cash, marketable
securities and/or Qualified Proceeds), not to exceed the greater of (x) $75.0
million or (y) 15% of Total Assets at the time of such Investment (with the fair
market value of each Investment being measured at the time made and without
giving effect to subsequent changes in value); (k) Investments the payment for
which consists of Equity Interests of the Company (exclusive of Disqualified
Stock); PROVIDED, HOWEVER, that such Equity Interests will not increase the
amount available for Restricted Payments under clause (c) of the "Limitation on
Restricted Payments" covenant; (l) additional Investments having an aggregate
fair market value, taken together with all other Investments made pursuant to
this clause (l) that are at that time outstanding (without giving effect to the
sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do
not consist of cash, marketable securities and/or Qualified Proceeds or
distributions made pursuant to clause (xiii) of the second paragraph of "--
Limitation on Restricted Payments"), not to exceed the greater of (x) $30.0
million or (y) 5% of Total Assets at the time of such Investment (with the fair
market value of each Investment being measured at the time made and without
giving effect to subsequent changes in value); (m) Investments in a Similar
Business having an aggregate fair market value, taken together with all other
Investments made pursuant to this clause (m) that are at that time outstanding
(without giving effect to the sale of an Unrestricted Subsidiary to the extent
the proceeds of such sale do not consist of cash, marketable securities and/or
Qualified Proceeds or distributions made pursuant to clause (xiii) of the second
paragraph of "-- Limitation on Restricted Payments"), not to exceed $75.0
million at the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value); PROVIDED that at the time of such Investment the
Company would be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence
of the covenant described under "--Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock;" (n) Investments relating to any special purpose
Wholly-Owned Subsidiary of the Company organized in connection with a
Receivables Facility that, in the good faith determination of the Board of
Directors of the Company, are necessary or advisable to effect such Receivables
Facility; (o) guarantees (including Guarantees) of Indebtedness permitted under
the covenant "--Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock;" and (p) any transaction
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to the extent it constitutes an investment that is permitted and made in
accordance with the provisions of the second paragraph of the covenant described
under "Certain Covenants--Transactions with Affiliates" (except transactions
described in clauses (ii), (vi), (vii) and (xi) of such paragraph).
"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"preferred stock" means any Equity Interest with preferential rights of
payment of dividends or upon liquidation, dissolution, or winding up.
"RECEIVABLES FACILITY" means one or more receivables financing facilities,
as amended from time to time, pursuant to which the Company and/or any of its
Restricted Subsidiaries sells its accounts receivable to a Person that is not a
Restricted Subsidiary.
"RECEIVABLES FEES" means distributions or payments made directly or by means
of discounts with respect to any participation interest issued or sold in
connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any Receivables Facility.
"QUALIFIED PROCEEDS" means assets that are used or useful in, or Capital
Stock of any Person engaged in, a Similar Business; PROVIDED that the fair
market value of any such assets or Capital Stock shall be determined by the
Board of Directors in good faith, except that in the event the value of any such
assets or Capital Stock may exceed $25.0 million or more, the fair value shall
be determined in writing by an independent investment banking firm of nationally
recognized standing.
"RELATED PARTIES" means any Person controlled by a Permitted Holder,
including any partnership or limited liability company of which a Permitted
Holder or its Affiliates is the general partner or managing member, as the case
may be.
"REPURCHASE OFFER" means an offer made by the Company to purchase all or any
portion of a Holder's Notes pursuant to the provisions described under the
covenants entitled "--Repurchase at the Option of Holders-Change of Control" or
"--Repurchase at the Option of Holders--Asset Sales."
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" means, at any time, any direct or indirect
Subsidiary of the Company that is not then an Unrestricted Subsidiary; PROVIDED,
HOWEVER, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an
Unrestricted Subsidiary, such Subsidiary shall be included in the definition of
"Restricted Subsidiary."
"S&P" means Standard and Poor's Ratings Group.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"SENIOR CREDIT FACILITIES" means that certain Credit Agreement dated as of
January 21, 1998 among the Company, Accuride Canada, Inc., the Lenders, Issuing
Bank and Swing Line Bank (each as defined therein) from time to time party
thereto, the Bank Agent, Citicorp Securities, Inc. as Arranger, Bankers Trust
Company as Syndication Agent and Wells Fargo Bank N.A. as Documentation Agent,
including any collateral documents, instruments and agreements executed in
connection therewith, and any amendments, supplements, modifications,
extensions, renewals, restatements or refundings thereof and any indentures or
credit facilities or commercial paper facilities with banks or other
institutional lenders that replace, refund or refinance any part of the loans,
notes, other credit facilities or commitments thereunder,
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including any such replacement, refunding or refinancing facility or indenture
that increases the amount borrowable thereunder or alters the maturity thereof,
PROVIDED, HOWEVER, that in connection with any facilities which refund, replace
or refinance such Credit Agreement there shall not be more than one facility at
any one time that is identified as the Senior Credit Facilities and, if at any
time there is more than one facility which would constitute the Senior Credit
Facilities, the Company will designate to the Trustee which one of such
facilities will be the Senior Credit Facilities for purposes of the Indenture.
"SIMILAR BUSINESS" means the vehicular wheel and rim business and any
activity or business incidental, directly related or similar thereto, or any
line of business engaged in by the Company or its Subsidiaries on the Issuance
Date or any business activity that is a reasonable extension, development or
expansion thereof or ancillary thereto.
"SUBORDINATED INDEBTEDNESS" means (a) with respect to the Notes, any
Indebtedness of the Company which is by its terms subordinated in right of
payment to the Notes and (b) with respect to any Guarantee, any Indebtedness of
the applicable Guarantor which is by its terms subordinated in right of payment
to such Guarantee.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association, or other business entity (other than a partnership, joint venture
or limited liability company) of which more than 50% of the total voting power
of shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time of determination owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person or a
combination thereof and (ii) any partnership, joint venture, limited liability
company or similar entity of which (x) more than 50% of the capital accounts,
distribution rights, total equity and voting interests or general or limited
partnership interests, as applicable, are owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person or a combination thereof whether in the form of membership, general,
special or limited partnership or otherwise and (y) such Person or any Wholly
Owned Restricted Subsidiary of such Person is a controlling general partner or
otherwise controls such entity.
"TOTAL ASSETS" means the total consolidated assets of the Company and its
Restricted Subsidiaries, as shown on the most recent balance sheet of the
Company.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of the Company which at
the time of determination is an Unrestricted Subsidiary (as designated by the
Board of Directors of the Company, as provided below) and (ii) any Subsidiary of
an Unrestricted Subsidiary. The Board of Directors of the Company may designate
any Subsidiary of the Company (including any existing Subsidiary and any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary or any of its Subsidiaries owns any Equity Interests of, or
owns, or holds any Lien on, any property of, the Company or any Subsidiary of
the Company (other than any Subsidiary of the Subsidiary to be so designated),
PROVIDED that (a) any Unrestricted Subsidiary must be an entity of which shares
of the capital stock or other equity interests (including partnership interests)
entitled to cast at least a majority of the votes that may be cast by all shares
or equity interests having ordinary voting power for the election of directors
or other governing body are owned, directly or indirectly, by the Company, (b)
the Company certifies that such designation complies with the covenants
described under "--Certain Covenants--Limitation on Restricted Payments" and (c)
each of (I) the Subsidiary to be so designated and (II) its Subsidiaries has not
at the time of designation, and does not thereafter, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with respect
to any Indebtedness pursuant to which the lender has recourse to any of the
assets of the Company or any of its Restricted Subsidiaries. The Board of
Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; PROVIDED that, immediately after giving effect to such designation,
(i) the Company could incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test described under "--Certain
Covenants--Limitations on Incurrence of Indebtedness and Issuance of
Disqualified Stock" or (ii) the Fixed Charge Coverage Ratio for the Company and
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its Restricted Subsidiaries would be greater than such ratio for the Company and
its Restricted Subsidiaries immediately prior to such designation, in each case
on a pro forma basis taking into account such designation. Any such designation
by the Board of Directors shall be notified by the Company to the Trustee by
promptly filing with the Trustee a copy of the board resolution giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"VOTING STOCK" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
or Disqualified Stock, as the case may be, at any date, the quotient obtained by
dividing (i) the sum of the products of the number of years from the date of
determination to the date of each successive scheduled principal payment of such
Indebtedness or redemption or similar payment with respect to such Disqualified
Stock multiplied by the amount of such payment, by (ii) the sum of all such
payments.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" is any Wholly Owned Subsidiary that is
a Restricted Subsidiary.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such Person
100% of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person and one or
more Wholly Owned Subsidiaries of such Person.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of Latham & Watkins, counsel to the Company, the following
discussion describes the material federal income tax consequences expected to
result to Holders whose Private Notes are exchanged for Exchange Notes in the
Exchange Offer. Such opinion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, judicial
authority and administrative rulings and practice. There can be no assurance
that the Internal Revenue Service (the "Service") will not take a contrary view,
and no ruling from the Service has been or will be sought with respect to the
Exchange Offer. Legislative, judicial or administrative changes or
interpretations may be forthcoming that could alter or modify the statements and
conclusions set forth herein. Any such changes or interpretations may or may not
be retroactive and could affect the tax consequences to Holders. Certain Holders
(including insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, foreign corporations, and persons who are not
citizens or residents of the United States) may be subject to special rules not
discussed below. EACH HOLDER OF PRIVATE NOTES SHOULD CONSULT ITS OWN TAX ADVISOR
AS TO THE PARTICULAR TAX CONSEQUENCES OF EXCHANGING PRIVATE NOTES FOR EXCHANGE
NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN
LAWS.
The exchange of Private Notes for Exchange Notes will be treated as a
"non-event" for federal income tax purposes. As a result, no material federal
income tax consequences will result to Holders exchanging Private Notes for
Exchange Notes.
BOOK ENTRY; DELIVERY AND FORM
Except as set forth below, the Notes will be issued in registered, global
form in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof. The Notes initially will be represented by one or more Notes in
registered, global form without interest coupons (collectively, the "Global
Notes"). The Global Notes will be deposited upon issuance with the Trustee as
custodian for The Depository Trust Company ("DTC"), in New York, New York, and
registered in the name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Notes may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for Notes
in certificated form except in the limited circumstances described below. See
"--Exchange of Book-Entry Notes for Certificated Notes." In addition, transfers
of beneficial interests in the Global Notes will be subject to the applicable
rules and procedures of DTC and its direct or indirect participants (including,
if applicable, those of Euroclear and Cedel), which may change from time to
time.
Initially, the Trustee will act as Paying Agent and Registrar. The Notes may
be presented for registration of transfer and exchange at the offices of the
Registrar.
DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC, Euroclear
and Cedel are provided solely as a matter of convenience. These operations and
procedures are solely within the control of the respective settlement systems
and are subject to changes by them from time to time. The Company takes no
responsibility for these operations and procedures and urges investors to
contact the system or their participants directly to discuss these matters.
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants though electronic book-entry changes in
accounts of its Participants. The Participants include securities brokers and
dealers (including the Initial Purchasers), banks, trust companies, clearing
corporations and certain other organizations. Access to
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DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interests in, and transfers of ownership interests
in each security held by or on behalf of DTC are recorded on the records of the
Participants and Indirect Participants.
DTC has also advised the Company that, pursuant to procedures established by
it, (i) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the Initial Purchasers with portions of the principal
amount of the Global Notes and (ii) ownership of such interest in the Global
Notes will be shown on, and the transfer of ownership thereof will be effected
only though, records maintained by DTC (with respect to the Participants) or by
the Participants and the Indirect Participants (with respect to other owners of
beneficial interest in the Global Notes).
Investors in the Global Notes may hold their interests therein directly
through DTC, if they are Participants in such system, or indirectly through
organizations (including Euroclear and Cedel) which are Participants in such
system. Euroclear and Cedel will hold interest in the Global Notes on behalf of
their participants through customers' securities accounts in their respective
names on the books of their respective depositories, which are Morgan Guaranty
Trust Company of New York, Brussels office, as operator and depositary of
Euroclear and Citibank, N.A. as the operator and depositary of Cedel. All
interests in a Global Note, including those held through Euroclear or Cedel, may
be subject to the procedures and requirements of DTC. Those interests held
through Euroclear or Cedel may also be subject to the procedures and
requirements of such systems. The laws of some states require that certain
persons take physical delivery in definitive form of securities that they own.
Consequently, the ability to transfer beneficial interest in a Global Note to
such persons will be limited to that extent. Because DTC can act only on behalf
of Participants, which in turn act on behalf of Indirect Participants, the
ability of a person having beneficial interests in a Global Note to pledge such
interests to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the lack
of a physical certificate evidencing such interests. For certain other
restrictions on the transferability of the Notes, see "--Exchange of Book-Entry
Notes for Certificated Notes."
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTEREST IN THE GLOBAL NOTES WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
"HOLDERS" THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of, and premium, if any, interest and
additional interest in a Global Note registered in the name of DTC or its
nominee will be payable to DTC in its capacity as the registered Holder under
the Indenture. Under the terms of the Indenture, the Company and the Trustee
will treat the persons in whose names the Notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither the Company,
the Trustee nor any agent of the Company or the Trustee has or will have any
responsibility or liability for (i) any aspect of DTC's records or any
Participant's or Indirect Participant's records relating to or payments made on
account of beneficial ownership interests in the Global Notes, or for
maintaining, supervising or reviewing any of DTC's records or any Participant's
or Indirect Participant's records relating to the beneficial ownership interests
in the Global Notes or (ii) any other matter relating to the actions and
practices of DTC or any of its Participants or Indirect Participants. DTC has
advised the Company that its current practice upon receipt of any payment in
respect of securities such as the Notes (including principal and interest), is
to credit the accounts of the relevant Participants with the payment on the
payment date, in amounts proportionate to their respective holdings in the
principal amount of beneficial interest in the relevant security as shown on the
records of DTC unless DTC has reason to believe it will not receive payment on
such payment date. Payments by the Participants and the Indirect Participants to
the beneficial owners of Notes will be governed by standing instructions and
customary practices and will be the responsibility of the Participants or the
Indirect
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Participants and will not be the responsibility of DTC, the Trustee or the
Company. Neither the Company nor the Trustee will be liable for any delay by DTC
or any of its Participants in identifying the beneficial owners of the Notes,
and the Company and the Trustee may conclusively rely on and will be protected
in relying on instructions from DTC or its nominee for all purposes.
Except for trades involving only Euroclear and Cedel participants, interest
in the Global Notes are expected to be eligible to trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will,
therefore, settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its Participants. See "--Same Day Settlement and
Payment."
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same day funds, and transfers between
participants in Euroclear and Cedel will be effected in the ordinary way in
accordance with respective rules and operating procedures.
Cross-market transfers between the Participants in DTC, on the one hand, and
Euroclear or Cedel participants, on the other hand, will be effected through DTC
in accordance with DTC's rules on behalf of Euroclear or Cedel, as the case may
be, by its respective depositary; however, such cross-market transactions will
require delivery of instructions to Euroclear or Cedel, as the case may be, by
the counterparty in such system in accordance with the rules and procedures and
within the established deadlines (Brussels time for Euroclear and United Kingdom
time for Cedel) of such system. Euroclear or Cedel, as the case may be, will, if
the transaction meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Global Note in DTC, and making
or receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear participants and Cedel participants may
not deliver instructions directly to the depositories for Euroclear or Cedel.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder of Notes only at the direction of one or more Participants to
whose account DTC has credited the interests in the Global Notes and only in
respect of such portion of the aggregate principal amount of the Notes as to
which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the Notes, DTC reserves the right
to exchange the Global Notes for legended Notes in certificated form, and to
distribute such Notes to its Participants.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures to
facilitate transfers of interest in the Global Notes among Participants in DTC,
Euroclear and Cedel, they are under no obligation to perform or to continue to
perform such procedures, and such procedures may be discontinued at any time.
Neither the Company nor the Trustee nor any of their respective agents will have
any responsibility for the performance by DTC, Euroclear or Cedel or their
respective participants or indirect participants of their respective obligations
under the rules and procedures governing their operations.
EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive Notes in registered
certificated form ("Certificated Notes") if (i) DTC (x) notifies the Company
that it is unwilling or unable to continue as depositary for the Global Notes
and the Company thereupon fails to appoint a successor depositary or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii) the
Company, at its option, notifies the Trustee in writing that it elects to cause
the issuance of the Certificated Notes or (iii) there shall have occurred and be
continuing a Default or Event of Default with respect to the Notes. In addition,
beneficial interests in a Global Note may be exchanged for Certificated Notes
upon request but only upon prior written notice given to the Trustee by or on
behalf of DTC in accordance with the Indenture. In all cases, Certificated Notes
delivered in exchange for any Global Note or beneficial interests therein will
be registered in the names, and issued in any approved denominations, requested
by or on behalf of the depositary (in accordance with its customary procedures)
and will bear the applicable restrictive legend referred to in "Notice to
Investors," unless the Company determines otherwise in compliance with
applicable law.
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SAME DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Notes represented by
the Global Notes (including principal, premium, if any, interest and Liquidated
Damages, if any) be made by wire transfer of immediately available funds to the
accounts specified by the Global Note Holder. With respect to Notes in
certificated form, the Company will make all payments of principal, premium, if
any, interest and additional interest, if any, by wire transfer of immediately
available funds to the accounts specified by the Holders thereof or, if no such
account is specified, by mailing a check to each such holder's registered
address. The Notes represented by the Global Notes are expected to trade in the
PORTAL market and to trade in the Depositary's Same-Day Funds Settlement System
and any permitted secondary market trading activity in such Notes will,
therefore, be required by the Depositary to be settled in immediately available
funds. The Company expects that secondary trading in any certificated Notes will
also be settled in immediately available funds.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Global Note from a Participant in
DTC will be credited, and any such crediting will be reported to the relevant
Euroclear or Cedel participant, during the securities settlement processing day
(which must be a business day for Euroclear and Cedel) immediately following the
settlement date of DTC. DTC has advised the Company that cash received in
Euroclear or Cedel as a result of sales of interests in a Global Note by or
through a Euroclear or Cedel participant to a Participant in DTC will be
received with a value on the settlement date of DTC but will be available in the
relevant Euroclear or Cedel cash account only as of the business day for
Euroclear or Cedel following DTC's settlement date.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with the resale of Exchange Notes received in exchange for Private
Notes where such Private Notes were acquired as a result of market-making
activities or other trading activities. A broker-dealer may not participate in
the Exchange Offer with respect to the Private Notes acquired other than as a
result of market-making activities or other trading activities. The Company has
indicated that for a period of 90 after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer that
requests such document in the Letter of Transmittal for use in connection with
any such resale.
The Company will not receive any proceeds from any sale of Exchange Notes by
broker-dealers or any other persons. Exchange Notes received by broker-dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Notes. Any broker-dealer that resells Exchange Notes that were received
by it for its own account pursuant to the Exchange Offer and any broker or
dealer that participates in a distribution of such Exchange Notes may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
on any such resale of Exchange Notes and any commissions or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The Company has agreed to pay all expenses incident to the Company's
performance of, or compliance with, the Registration Rights Agreement and will
indemnify the Holders of Private Notes
109
<PAGE>
(including any broker-dealers), and certain parties related to such Holders,
against certain liabilities, including liabilities under the Securities Act.
By its acceptance of the Exchange Offer, any broker-dealer that receives
Exchange Notes pursuant to the Exchange Offer hereby agrees to notify the
Company prior to using the Prospectus in connection with the sale or transfer of
Exchange Notes, and acknowledges and agrees that, upon receipt of notice from
the Company of the happening of any event which makes any statement in the
Prospectus untrue in any material respect or which requires the making of any
changes in the Prospectus in order to make the statements therein not misleading
or which may impose upon the Company disclosure obligations that may have a
material adverse effect on the Company (which notice the Company agrees to
deliver promptly to such broker-dealer), such broker-dealer will suspend use of
the Prospectus until the Company has notified such broker-dealer that delivery
of the Prospectus may resume and has furnished copies of any amendment or
supplement to the Prospectus to such broker-dealer.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Latham &
Watkins, New York, New York. Certain partners of Latham & Watkins, members of
their families, related persons and others, have an indirect interest, through
limited partnerships, through KKR 1996 Fund L.P., in less than 1% of the Common
Stock.
EXPERTS
The consolidated financial statements as of December 31, 1997 and 1996 and
for each of the three years in the period ended December 31, 1997 included in
this Prospectus and in the Registration Statement have been audited by Deloitte
& Touche LLP, independent auditors, as stated in their report appearing herein,
and has been so included in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company is not currently subject to the periodic reporting and other
information requirements of the Exchange Act. The Company will become subject to
such requirements upon the effectiveness of the Registration Statement. Pursuant
to the Indenture, the Company has agreed that, for so long as any of the Notes
remain outstanding, it will furnish to the Holders, (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if the Company were required to file such
Forms, including for each such Form, (ii) all reports that would be required to
be filed with the Commission on Form 8-K if the Company were required to file
such reports and (iii) any other information, documents and other reports that
the Company would be required to file with the Commission if it were subject to
Section 13 or 15(d) of the Exchange Act. In addition, whether or not required by
the rules and regulations of the Commission, the Company will also agree to file
a copy of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request.
This Prospectus constitutes part of a registration statement on Form S-4
(the "Registration Statement") filed with the under the Securities Act with
respect to the Exchange Notes offered hereby. As permitted by the rules and
regulations of the Commission, this Prospectus omits certain information,
exhibits and undertakings contained in the Registration Statement. For further
information with respect to the Company and the Exchange Notes offered hereby,
reference is made to the Registration Statement, including the exhibits thereto
and the financial statements, notes and schedules filed as a part thereof. The
Registration Statement (and the exhibits and schedules thereto), as well as the
periodic reports and other information filed by the Company with the Commission,
may be inspected and copied at the Public Reference Section of the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
110
<PAGE>
D.C. 20549 and at the regional offices of the Commission located at Room 1400,
75 Park Place, New York, New York 10007 and Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661-2511. Copies of such
materials may be obtained from the Public Reference Section of the Commission,
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
its public reference facilities in New York, New York and Chicago, Illinois at
the prescribed rates. Additionally, the Commission maintains a Web site that
contains reports, proxy and information statements regarding registrants that
file electronically with the Commission and the address of this site is
http://www.sec.gov. Statements contained in this Prospectus as to the contents
of any contract or other document are not necessarily complete, and in each
instance reference is made to the copy of such contract or document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference.
111
<PAGE>
GLOSSARY
The following is a description of certain terms used in this Prospectus.
ADM--Accuride de Mexico S.A. de C.V., the Company's 51%-owned venture with
IaSa that manufactures and supplies steel Wheels. ADM was formed to enable the
Company to serve more effectively its customers in Mexico and other Latin
American countries.
AKW--AKW, L.P., the Company's 50%-owned joint venture with Kaiser that
manufactures and supplies aluminum Wheels. AKW was established in May 1997 and
replaced the Company's twenty-five-year buy-and-resell relationship with Kaiser.
AOT--AOT, Inc., a 50%-owned joint venture with Goodyear to provide Navistar
with Wheel/tire assembly services.
CAW--Canadian Auto Workers Union.
CHROME TECH WHEEL--A chrome-plated plastic, cladded single steel Wheel
marketed under the name Chrome Tech-Registered Trademark-.
CONTROLLABLE COSTS--Costs that are considered to be within the direct and
immediate control of a facility's management, consisting generally of
manufacturing costs less the cost of raw materials (which includes steel, paint
and weldwire), depreciation, taxes and insurance.
DUAL WHEELS--Heavy/Medium Wheels or Light Truck Wheels that are designed to
be mounted in tandem (i.e., side-by-side such that there are two wheels on each
end of an axle) or individually. Heavy/ Medium Wheels includes Wheels made for
Heavy/Medium Trucks and Wheels made for Trailers.
HEAVY/MEDIUM TRUCKS--Heavy and medium over-the-road vehicles designed to
carry over 10,000 pounds such as large multi-axle rigs, buses and moving trucks.
HEAVY/MEDIUM WHEELS--Steel and aluminum Wheels for Heavy/Medium Trucks and
Trailers.
HENDERSON FACILITY--The Company's headquarters and one of its manufacturing
facilities in North America. The Company manufactures steel Heavy/Medium Wheels
at this facility.
IASA--Industria Automotriz S.A. de C.V., Mexico's only commercial vehicle
Wheel manufacturer and a minority owner of the ADM venture.
KAISER--Kaiser Aluminum and Chemical Corporation, a 50% owner of the AKW
joint venture.
LIGHT TRUCKS--Commercial trucks, pick-up trucks, sports utility vehicles and
vans and other vehicles (excluding passenger cars) with gross weights below
10,000 pounds.
LIGHT TRUCK WHEELS--Steel and aluminum Wheels for Light Trucks.
MONTERREY FACILITY--ADM's greenfield facility in Monterrey, Mexico that is
scheduled to begin producing steel Wheels in mid-1999.
OEMS--Original equipment manufacturers.
ONTARIO FACILITY--The Company's facility in London, Ontario, Canada that
manufactures steel Heavy/ Medium Wheels and Light Truck Wheels.
PRODUCTIVITY--Pounds of finished goods produced per employee work hour.
G-1
<PAGE>
TENNESSEE FACILITY--The Company's new Light Truck Wheel facility that is
being developed in Columbia, Tennessee and will begin producing Chrome Tech
Wheels for Ford's Expedition, Navigator and F-series trucks in mid-1998.
TIER I SUPPLIER--A supplier that designs, engineers, manufactures and
conducts quality control testing is generally referred to as a "Tier I"
supplier.
TRAILERS--Trailers such as trailers and semitrailers used by
tractor-trailers and other large trucks.
UAW--United Auto Workers Union.
WHEELS--Wheels and rims.
G-2
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Independent Auditors' Report.......................................................... F-2
<S> <C>
Consolidated Balance Sheets as of December 31, 1996 and 1997.......................... F-3
Consolidated Statements of Income for each of the three years in the period ended
December 31, 1997.................................................................... F-4
Consolidated Statements of Stockholder's Equity for each of the three years in the
period ended December 31, 1997....................................................... F-5
Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 1997.................................................................... F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder of Accuride Corporation:
We have audited the accompanying consolidated balance sheets of Accuride
Corporation and subsidiaries as of December 31, 1996 and 1997, and the related
consolidated statements of income, stockholder's equity, and cash flows for each
of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Accuride Corporation and
subsidiaries as of December 31, 1996 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Indianapolis, Indiana
January 28, 1998
F-2
<PAGE>
ACCURIDE CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
ASSETS 1996 1997
- ------------------------------------------------------------------------------------------ ---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............................................................... $ 6,311 $ 7,418
Customer receivables, net of allowance for doubtful accounts of $1,595 and $967......... 29,677 37,077
Other receivables....................................................................... 1,720 11,768
Inventories, net........................................................................ 27,379 29,107
Supplies................................................................................ 6,240 6,458
Deferred income taxes................................................................... 2,509
Prepaid expenses........................................................................ 686 143
---------- ----------
Total current assets................................................................ 74,522 91,971
PROPERTY, PLANT AND EQUIPMENT, NET........................................................ 113,780 133,997
OTHER ASSETS:
Goodwill, net of accumulated amortization of $25,232 and $28,089........................ 89,027 86,171
Investment in affiliates................................................................ 2,013 24,765
Other................................................................................... 9,361 10,543
---------- ----------
TOTAL..................................................................................... $ 288,703 $ 347,447
---------- ----------
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable........................................................................ $ 17,557 $ 19,237
Short-term notes payable................................................................ 16,040
Accrued payroll and compensation........................................................ 6,651 8,015
Accrued taxes payable................................................................... 1,334 1,939
Customer deposits on containers......................................................... 1,033 1,098
Deferred income taxes................................................................... 1,481
Tooling deposit......................................................................... 5,261
Accrued and other liabilities........................................................... 3,028 4,066
---------- ----------
Total current liabilities........................................................... 29,603 57,137
DEFERRED INCOME TAXES..................................................................... 16,231 16,123
OTHER LIABILITIES......................................................................... 14,418 13,253
MINORITY INTEREST......................................................................... 4,879
COMMITMENTS AND CONTINGENCIES (Notes 10 and 11)
STOCKHOLDER'S EQUITY
Preferred stock, $.01 par value; 5,000 shares authorized and unissued
Common stock and additional paid-in capital, $.01 par value; 45,000 shares authorized,
24,000 shares issued and outstanding 180,168 178,931
Minimum pension liability............................................................... (1,004)
Retained earnings....................................................................... 49,287 77,124
---------- ----------
Total stockholder's equity.......................................................... 228,451 256,055
---------- ----------
TOTAL..................................................................................... $ 288,703 $ 347,447
---------- ----------
---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
ACCURIDE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
NET SALES.................................................................... $ 357,802 $ 307,830 $ 332,966
COST OF GOODS SOLD........................................................... 293,253 246,107 266,972
---------- ---------- ----------
GROSS PROFIT................................................................. 64,549 61,723 65,994
SELLING, GENERAL AND ADMINISTRATIVE.......................................... 16,869 17,941 21,316
---------- ---------- ----------
INCOME FROM OPERATIONS....................................................... 47,680 43,782 44,678
OTHER INCOME (EXPENSE):
Interest income............................................................ 752 433 530
Interest (expense)......................................................... (35) (33) (145)
Equity in earnings of affiliates........................................... 300 115 4,384
Other income (expense), net................................................ (1,375) (381) 548
---------- ---------- ----------
INCOME BEFORE INCOME TAXES................................................... 47,322 43,916 49,995
---------- ---------- ----------
INCOME TAX PROVISION......................................................... 20,730 17,450 22,158
---------- ---------- ----------
NET INCOME................................................................... $ 26,592 $ 26,466 $ 27,837
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
ACCURIDE CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
AND
ADDITIONAL MINIMUM TOTAL
PAID-IN PENSION RETAINED STOCKHOLDER'S
CAPITAL LIABILITY EARNINGS EQUITY
-------------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1995................................. $ 222,349 $ (316) $ 49,229 $ 271,262
Net income................................................. 26,592 26,592
Net cash (to) from parent.................................. (57,718) (57,718)
Minimum pension liability.................................. (1,055) (1,055)
-------------- ---------- ---------- -------------
BALANCE AT DECEMBER 31, 1995............................... 164,631 (1,371) 75,821 239,081
Net income................................................. 26,466 26,466
Net cash (to) from parent.................................. 15,537 15,537
Minimum pension liability.................................. 367 367
Dividends to parent........................................ (53,000) (53,000)
-------------- ---------- ---------- -------------
BALANCE AT DECEMBER 31, 1996............................... 180,168 (1,004) 49,287 228,451
Net income................................................. 27,837 27,837
Net cash (to) from parent.................................. (1,237) (1,237)
Minimum pension liability.................................. 1,004 1,004
-------------- ---------- ---------- -------------
BALANCE AT DECEMBER 31, 1997............................... $ 178,931 $ -- $ 77,124 $ 256,055
-------------- ---------- ---------- -------------
-------------- ---------- ---------- -------------
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
ACCURIDE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................................. $ 26,592 $ 26,466 $ 27,837
Adjustments to reconcile net income to net cash provided in operating
activities:
Depreciation.............................................................. 18,265 17,270 17,870
Amortization.............................................................. 2,856 2,856 2,856
Losses on asset dispositions.............................................. 2,828 1,242 801
Deferred income taxes..................................................... (4,622) (1,538) 3,212
Equity in earnings of affiliated companies................................ (300) (115) (4,384)
Minority interest......................................................... 171
Changes in certain assets and liabilities:
Receivables............................................................. 8,781 4,723 (17,448)
Inventories and supplies................................................ 4,252 (5,749) (646)
Prepaid expenses and other assets....................................... (2,254) (1,581) (1,670)
Accounts payable........................................................ (1,727) 2,592 680
Customer deposits on containers......................................... (2,101) 101 65
Tooling deposit......................................................... 5,261
Accrued and other liabilities........................................... (2,558) (2,589) 3,614
---------- ---------- ----------
Net cash provided by operating activities............................. 50,012 43,678 38,219
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment.................................. (6,960) (9,584) (24,032)
Investment in ADM........................................................... (4,899)
Investment in AKW L.P....................................................... (20,849)
Net cash distribution from AKW L.P.......................................... 2,482
Other....................................................................... 194 214 233
---------- ---------- ----------
Net cash used in investing activities................................. (6,766) (9,370) (47,065)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of short-term notes payable.......................... 16,040
Principal payments on short-term notes payable.............................. (4,850)
Net cash (to) from parent................................................... (57,718) (37,463) (1,237)
---------- ---------- ----------
Net cash provided by (used in) financing activities................... (57,718) (37,463) 9,953
---------- ---------- ----------
Increase (decrease) in cash and cash equivalents.............................. (14,472) (3,155) 1,107
Cash and cash equivalents, beginning of year.................................. 23,938 9,466 6,311
---------- ---------- ----------
Cash and cash equivalents, end of year........................................ $ 9,466 $ 6,311 $ 7,418
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
ACCURIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION--The accompanying consolidated financial statements
include the accounts of Accuride Corporation (the "Company") and its majority
owned subsidiaries, including Accuride Canada, Inc. ("Accuride Canada"), a
wholly-owned subsidiary, and Accuride de Mexico, S.A. de C.V. ("ADM"), a 51%
owned joint venture with Industria Automotriz, S.A. de C.V. ("IaSa"), a Mexican
corporation formed November 5, 1997. The consolidated balance sheet at December
31, 1997 includes 100 percent of the assets and liabilities of ADM and the
ownership interest of IaSa is recorded as "Minority interest". The consolidated
statement of income for the year ended December 31, 1997 includes 100% of the
revenues and expenses of ADM from the date of formation. The minority interest
in net earnings of ADM was not material in 1997 and is included in "Other income
(expense), net." All significant intercompany transactions have been eliminated.
Investments in affiliated companies in which the Company does not have a
controlling interest are accounted for using the equity method.
The Company is a wholly-owned subsidiary of Phelps Dodge Corporation
("PDC"). As a wholly-owned subsidiary of PDC, certain administrative functions
are performed by PDC on behalf of the Company. Such functions include, but are
not limited to, accounting, legal, treasury, tax, risk management, and certain
employee benefit related functions. Applicable common expenses incurred by PDC
have been allocated to the Company and included in the accompanying consolidated
financial statements.
BUSINESS OF THE COMPANY--The Company is engaged primarily in the design,
manufacture and distribution of steel wheels and rims for trucks, trailers and
certain military and construction vehicles. The Company sells its products
primarily within North America, Mexico, and Latin America to original equipment
manufacturers and to the aftermarket. Prior to the formation of AKW L.P. ("AKW")
on May 1, 1997 (see Note 5), the Company also participated in similar segments
of the aluminum wheel market whereby the Company designed and distributed
aluminum wheels through a buy and resell agreement with Kaiser Aluminum &
Chemical Corporation ("Kaiser"). On November 5, 1997, the Company entered into
an agreement with IaSa for the formation of ADM. ADM participates in the steel
wheel market throughout Mexico and Latin America. The cost associated with the
Company's initial investment in ADM totaled $4,899. The Company's primary
manufacturing facilities are located in Henderson, Kentucky, London, Ontario and
Monterrey, Mexico. AKW's aluminum wheel facilities are located in Erie,
Pennsylvania and Cuyahoga Falls, Ohio. During 1997, the Company purchased land
located in Columbia, Tennessee and is currently in the process of building a
facility for the production of light truck wheels. The facility is expected to
cost approximately $19,000 and production is expected to begin in mid-1998.
MANAGEMENT'S ESTIMATES AND ASSUMPTIONS--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 disclosures 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.
REVENUE RECOGNITION--The Company records sales upon shipment and provides an
allowance for estimated discounts associated with customer rebates. Prior to the
formation of AKW, the Company reported sales and the associated cost of sales of
aluminum wheels at their respective gross amounts pursuant to the buy and resell
agreement with Kaiser. Subsequent to the formation of AKW, the
F-7
<PAGE>
ACCURIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Company's proportional share of income associated with AKW is reported as
"Equity in earnings of affiliates" under the equity method.
INVENTORIES--Inventories are stated at the lower of cost or market. Cost for
substantially all inventories is determined by the last-in, first-out method
(LIFO).
SUPPLIES--Supplies are stated at the lower of cost or market. Cost for
substantially all supplies is determined by a moving-average method. The Company
performs periodic evaluations of supplies and provides an allowance for obsolete
items.
PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are carried at
cost. Cost of significant assets includes capitalized interest incurred during
the construction and development period. Expenditures for replacements and
betterments are capitalized; maintenance and repair expenditures are charged to
operations as incurred.
Buildings, machinery and equipment are depreciated using the straight-line
method over estimated lives of 5 to 40 years. Tooling is generally depreciated
over a 3 year life.
GOODWILL--Goodwill consists of costs in excess of the net assets acquired in
connection with the PDC acquisition of the Company in March, 1988. Goodwill is
being amortized on the straight-line method over 40 years.
LONG-LIVED ASSETS--Statement of Financial Accounting Standards ("SFAS") No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of, among other things, requires entities to evaluate
long-lived assets for impairment whenever events or changes in circumstances
indicate that their carrying value may not be recoverable. Long-lived assets to
be disposed of are carried at the lower of cost or fair value less the costs of
disposal. Adoption of this standard in 1996 had no effect on the Company's
financial position, results of operations or cash flows.
PENSION PLANS--The Company has trusteed, non-contributory pension plans
covering substantially all U.S. and Canadian employees. For certain plans, the
benefits are based on career average salary and years of service and, for other
plans, a fixed amount for each year of service. The Company's funding policy
provides that payments to the pension trusts shall be at least equal to the
minimum funding requirements of the Employee Retirement Income Security Act of
1974, as amended, for U.S. plans or, in the case of Accuride Canada or ADM, the
minimum legal requirements in each particular country. Additional payments may
also be provided by the Company from time to time.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS--The Company has postretirement
health care and life insurance benefit plans covering substantially all U.S.
non-bargained and Canadian employees. The Company accounts for these benefits on
the accrual basis pursuant to SFAS No. 106, EMPLOYERS' ACCOUNTING FOR
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS. One of the principal requirements
of this method is that the expected cost of providing such postretirement
benefits be accrued during the years employees render the necessary service. The
Company's funding policy provides that payments shall be at least equal to its
cash basis obligation, plus additional amounts that may be approved by the
Company from time to time.
POSTEMPLOYMENT BENEFITS--The Company has certain postemployment benefit
plans covering certain of its U.S. and Canadian employees. The benefit plans may
provide severance, disability, supplemental health
F-8
<PAGE>
ACCURIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
care, life insurance or other welfare benefits. The Company accounts for these
benefits on the accrual basis. The Company's funding policy provides that
payments shall be at least equal to its cash basis obligation, plus additional
amounts that may be approved by the Company from time to time. Liabilities
associated with these benefits at the date of the Company's recapitalization
(see Note 14) will be retained by PDC.
ENVIRONMENTAL COSTS--Environmental costs are recorded when it is probable
that obligations have been incurred and the costs can be reasonably estimated
upon currently available facts, existing technology, and presently enacted laws
and regulations.
INCOME TAXES--Deferred tax assets and liabilities are computed based on
differences between financial statement and income tax bases of assets and
liabilities using enacted income tax rates. Deferred income tax expense or
benefit is based on the change in deferred tax assets and liabilities from
period to period, subject to an ongoing assessment of realization of deferred
tax assets.
STOCKHOLDER'S EQUITY--The Company accounts for amounts due to/from PDC as
adjustments to additional paid-in capital since the companies have a common
treasury function.
RESEARCH AND DEVELOPMENT COSTS--Expenditures relating to the development of
new products and processes, including significant improvements and refinements
to existing products, are expensed as incurred. The amounts charged against
income in 1995, 1996 and 1997 totaled $3,776, $3,689 and $3,732, respectively.
FOREIGN CURRENCY--The assets and liabilities of Accuride Canada and ADM that
are receivable or payable in cash are converted at current exchange rates, and
inventories and other non-monetary assets and liabilities are converted at
historical rates. Revenues and expenses are converted at average rates in effect
for the period. Accuride Canada's functional currency has been determined to be
the US dollar and the Mexican economy has been determined to be highly
inflationary. Accordingly, gains and losses resulting from conversion of such
amounts, as well as gains and losses on foreign currency transactions, are
included in operating results.
CONCENTRATIONS OF CREDIT RISK--Financial instruments that potentially
subject the Company to significant concentrations of credit risk consist
principally of cash, cash equivalents and customer receivables. The Company
places its cash with high quality financial institutions and limits the amount
of credit exposure from any one institution. Generally, the Company does not
require collateral or other security to support customer receivables.
DERIVATIVE FINANCIAL INSTRUMENTS--The Company has only limited involvement
with derivative financial instruments and does not use them for trading
purposes. The Company does periodically enter into forward exchange and currency
option contracts to hedge foreign currency risks associated with certain
recorded transactions, firm commitments, and other anticipated transactions
denominated in foreign currencies. All such hedging strategies are coordinated
and managed by PDC. Gains and losses on option contracts that qualify as hedges
are recognized in income at the time of the underlying hedged transaction or
when a previously anticipated transaction is no longer expected to occur.
Changes in market value of forward exchange contracts and certain option
contracts protecting anticipated transactions are recognized in the period
incurred. The effects of such transactions have been allocated to the Company by
PDC and
F-9
<PAGE>
ACCURIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
are included in the accompanying consolidated financial statements as "other
income or expense". The total notional amount of such derivative instruments
open at December 31, 1996 and 1997 was not significant.
NEW ACCOUNTING PRONOUNCEMENTS--In June, 1997, SFAS No. 130, Reporting
Comprehensive Income, was issued. SFAS No. 130 requires that changes in the
amounts of certain items, including foreign currency translation adjustments and
gains and losses on certain securities be shown in the financial statements.
SFAS No. 130 does not require a specific format for the financial statement in
which comprehensive income is reported, but does require that an amount
representing total comprehensive income be reported in that statement. SFAS No.
130 becomes effective for the fiscal year ended December 31, 1998 and requires
reclassification of earlier financial statements for comparative purposes.
Management has not yet determined the effect, if any, of SFAS No. 130 on the
Company's consolidated financial statements.
Also in June, 1997, SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION, was issued and becomes effective for the
fiscal year ended December 31, 1998. This statement will change the way public
companies report information about segments of their business in their annual
financial statements and requires them to report selected segment information in
their quarterly financial reports. It also requires entity-wide disclosures
about the products and services an entity provides, countries in which it holds
material assets and reports material revenues, and its major customers.
Management has not yet determined the effect, if any, of SFAS No. 131 on the
Company's consolidated financial statements.
In February 1998, SFAS No. 132, EMPLOYERS DISCLOSURES ABOUT PENSIONS AND
OTHER POSTRETIREMENT BENEFITS was issued and becomes effective for the fiscal
year ended December 31, 1998. This statement revises employers disclosures about
pension and other postretirement benefit plans. It does not change the
measurement or recognition of those plans. It standardizes the disclosure
requirements for pensions and other postretirement benefits to the extent
practicable, requires additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate financial
analysis and eliminates certain disclosures. Management has not yet determined
the effect, if any, of SFAS No. 132 on the Company's consolidated financial
statements.
RECLASSIFICATIONS--Certain prior year amounts have been reclassified to
conform with the current year presentation.
2. CONSOLIDATED STATEMENTS OF CASH FLOWS
For the purpose of preparing the Consolidated Statements of Cash Flows, the
Company considers all highly liquid investments with a maturity of three months
or less when purchased to be cash equivalents. Net cash amounts due to/from PDC
are accounted for as capital distributions or contributions and current income
taxes are cleared through the PDC intercompany account. No significant interest
amounts were paid during 1995, 1996 or 1997. In 1995, the Company reclassified
$6,455 of assets from property, plant and equipment to supplies.
F-10
<PAGE>
ACCURIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
2. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
The following supplemental cash flow information is provided for non-cash
transactions that resulted in connection with the formation of ADM on November
5, 1997:
<TABLE>
<S> <C>
Inventory acquired.................................................. $ 1,300
Property acquired................................................... 14,856
Current liabilities assumed......................................... 1,700
Short-term notes payable assumed.................................... 4,850
</TABLE>
3. INVENTORIES
Inventories at December 31 were as follows:
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Raw materials........................................................... $ 1,586 $ 3,882
Work in process......................................................... 6,017 5,438
Finished manufactured goods............................................. 18,652 18,992
LIFO adjustment......................................................... 1,742 1,742
Other valuation reserves................................................ (618) (947)
--------- ---------
Inventories, net...................................................... $ 27,379 $ 29,107
--------- ---------
--------- ---------
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31 consist of the following:
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Land and land improvements............................................ $ 4,447 $ 6,052
Buildings............................................................. 30,212 45,920
Machinery and equipment............................................... 217,938 233,926
---------- ----------
252,597 285,898
Less accumulated depreciation......................................... 138,817 151,901
---------- ----------
Property, plant and equipment, net.................................. $ 113,780 $ 133,997
---------- ----------
---------- ----------
</TABLE>
5. INVESTMENTS IN AFFILIATES
Included in the Company's "Equity in earnings of affiliates" in 1995, 1996
and 1997 are a 50% equity interest in AOT, Inc. ("AOT") and beginning May 1,
1997 a 50% equity interest in AKW. The following summarizes the Company's
investments in affiliates.
AOT--AOT is a joint venture between the Company and The Goodyear Tire &
Rubber Company formed to provide sequenced wheel and tire assemblies for
Navistar International Transportation Corporation. The Company's investment in
AOT at December 31, 1996 and 1997 totaled $2,013 and $2,202, respectively.
F-11
<PAGE>
ACCURIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
5. INVESTMENTS IN AFFILIATES (CONTINUED)
At December 31, 1996 and 1997, the Company had two outstanding notes
receivable from AOT included in "Other assets" in the amount of $1,769 and
$1,535, respectively, with interest rates ranging from 8.25% to 9.25%. Interest
income earned on these notes receivable for 1995, 1996 and 1997 totaled $243,
$207 and $180, respectively.
The Company also performs certain administrative services for AOT pursuant
to a service agreement between the two companies. Services performed include
accounting and cash management, engineering and technical, environmental
consulting and compliance, health, safety and risk management, quality assurance
and other general and administrative services. Service fees associated with this
agreement totaled $400, $360, and $360 for 1995, 1996 and 1997, respectively,
and are reported as a reduction in "Selling, general and administrative
expenses".
AKW L.P.--On May 1, 1997, the Company entered into a limited partnership
joint venture with Kaiser for the formation of AKW pursuant to a contribution
agreement and other associated agreements (collectively, the "AKW formation
agreements"). AKW manufactures and distributes aluminum wheels. Under terms of
the AKW formation agreements, the Company owns a 50% interest in AKW, and
accordingly, accounts for the investment using the equity method. The Company's
investment in AKW at December 31, 1997 totaled $22,563.
Pursuant to the AKW formation agreements, the Company performs all billing
and collection functions for AKW as a means of providing customer convenience.
"Other receivables" at December 31, 1997 include $3,350 which represent amounts
due from AKW associated with such transactions.
Summarized financial information of AOT and AKW for the years ended December
31, is as follows:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Condensed Statements of Income:
Net sales..................................................... $ 6,478 $ 5,785 $ 59,261
Net earnings.................................................. 600 230 8,769
Condensed Balanced Sheets:
Current assets................................................ $ 1,689 $ 1,941 $ 21,678
Non-current assets............................................ 7,079 6,786 42,217
--------- --------- ---------
Total....................................................... $ 8,768 $ 8,727 $ 63,895
--------- --------- ---------
--------- --------- ---------
Current liabilities............................................. $ 805 $ 963 $ 7,734
Non-current liabilities......................................... 4,166 3,737 6,631
Shareholders' equity............................................ 3,797 4,027 49,530
--------- --------- ---------
Total....................................................... $ 8,768 $ 8,727 $ 63,895
--------- --------- ---------
--------- --------- ---------
</TABLE>
6. SHORT-TERM NOTES PAYABLE
ACCURIDE CANADA--The Company, through Accuride Canada, maintains a $25,000
revolving credit facility with a Canadian financial institution. The facility is
scheduled to terminate at the earlier of June 28, 1998 or a change in control.
Interest on any outstanding amounts is charged at LIBOR plus 0.5% per
F-12
<PAGE>
ACCURIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
6. SHORT-TERM NOTES PAYABLE (CONTINUED)
annum (9.00% at December 31, 1997). No amounts were borrowed against the
facility during 1995 or 1996. At December 31, 1997 $1,340 was outstanding.
Standby commitment fees are charged on the available facility at 0.5% for 1995
and 0.125% for 1996 and 1997, respectively, and amounted to $131, $33 and $32,
during 1995, 1996 and 1997 respectively.
ADM--At December 31, 1997, the Company, through ADM, maintained a $30,000
revolving credit facility with a Mexican financial institution of which $14,700
was outstanding. Interest on any outstanding amounts is charged at LIBOR plus
125 basis points per annum, with rates ranging from 7.0% to 7.25% at December
31, 1997. The facility terminated on January 21, 1998, in connection with the
recapitalization of the Company (see Note 14), at which time the oustanding
borrowings were converted into a promissory note due May 4, 1998.
7. PENSION PLANS
The Company, either stand-alone or through PDC, sponsors non-contributory
employee defined benefit pension plans covering substantially all U.S. and
Canadian employees (the "plans"). Employees covered under the U.S. salaried plan
are eligible to participate upon the completion of one year of service and
benefits are based upon career average salary from 1985 and years of service.
Employees covered under the Canadian salaried plan are eligible to participate
upon the completion of two years of service and benefits are based upon career
average salary and years of service. Employees covered under the hourly plans
are generally eligible to participate at the time of employment and benefits are
generally based on a fixed amount for each year of service. U.S. hourly
employees are vested in the plans after five years of service; Canadian hourly
employees are vested after two years of service.
For certain of the plans, the plan assets exceed the accumulated benefit
obligations (overfunded plans) and in the remainder of the plans, the
accumulated benefit obligations exceed the plan assets (underfunded plans).
The status of employee pension benefit plans at December 31, is summarized
below:
<TABLE>
<CAPTION>
OVERFUNDED PLANS UNDERFUNDED PLANS
-------------------- --------------------
<S> <C> <C> <C> <C>
1996 1997 1996 1997
--------- --------- --------- ---------
Actuarial present value of projected benefit obligation, based on
employment service to date and current salary levels.
Vested employees..................................................... $ 16,588 $ 23,956 $ 9,850 $ 7,564
Non-vested employees................................................. 2,029 5,113 2,421 551
--------- --------- --------- ---------
Accumulated benefit obligation......................................... 18,617 29,069 12,271 8,115
Additional amounts related to projected salary increases............... 1,687 871 879 1,844
--------- --------- --------- ---------
Total projected benefit obligation..................................... 20,304 29,940 13,150 9,959
Plan assets at fair value.............................................. 19,753 29,516 11,866 8,048
--------- --------- --------- ---------
</TABLE>
F-13
<PAGE>
ACCURIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
7. PENSION PLANS (CONTINUED)
<TABLE>
<CAPTION>
OVERFUNDED PLANS UNDERFUNDED PLANS
-------------------- --------------------
<S> <C> <C> <C> <C>
1996 1997 1996 1997
--------- --------- --------- ---------
Projected pension benefit obligation in excess of (less than) plan
assets............................................................... 551 424 1,284 1,911
Additional minimum liability........................................... 2,472
Unamortized net transition asset (obligation).......................... 321 (394) 57 645
Unrecognized prior service cost........................................ (1,642) (1,676) (797) (536)
Unrecognized net gain (loss) from actuarial experience................. (1,866) (5,452) (2,610) (623)
--------- --------- --------- ---------
Accrued (prepaid) pension cost, net................................ $ (2,636) $ (7,098) $ 406 $ 1,397
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
The plans were valued between December 1 and December 31 for both 1996 and
1997. The obligations were projected to and the assets were valued as of the end
of 1996 and 1997. The majority of plan assets are invested in a diversified
portfolio of stocks, bonds and cash or cash equivalents. A small portion of the
plan assets is invested in pooled real estate and other private corporate
investment funds. Plan assets associated with the U.S. salaried pension plan are
included in the master trust of the PDC retirement plan and are allocated to the
Company's plan based on a proportional allocation method.
The components of net periodic pension cost for the years ended December 31,
were as follows:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Benefits earned during the year.................................. $ 1,060 $ 1,222 $ 1,336
Interest accrued on projected benefit obligation................. 2,003 2,300 2,489
Return on plan assets............................................ (2,164) (2,479) (3,054)
Net amortization................................................. 101 193 165
Other............................................................ (136) 197 0
--------- --------- ---------
Net periodic pension cost...................................... $ 864 $ 1,433 $ 936
--------- --------- ---------
--------- --------- ---------
</TABLE>
Assumptions used to develop the net periodic pension cost and to value
pension obligations for each of the three years in the period ended December 31,
1997 were as follows:
<TABLE>
<S> <C>
Discount rate......................................................... 7.25%
Rate of increase in future compensation levels........................ 4.00%
Expected long-term rate of return on assets........................... 9.50%
</TABLE>
The Company intends to fund at least the minimum amount required under the
Employee Retirement Income Security Act of 1974, as amended, for U.S. plans, or
in the case of Accuride Canada, the minimum legal requirements in Canada. The
Company recognizes an additional minimum liability in its consolidated financial
statements for its underfunded plans. "Other liabilities" at December 31, 1996
included $2,472 relating to the additional pension liability. This amount is
offset by intangible assets of $797, reductions of stockholder's equity of
$1,004 and deferred tax assets of $671 at December 31, 1996.
F-14
<PAGE>
ACCURIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
7. PENSION PLANS (CONTINUED)
The Company also sponsors certain defined contribution plans for
substantially all U.S. salaried employees. Expense associated with these plans
for 1995, 1996 and 1997 totaled $873, $841 and $1,062, respectively.
8. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Substantially all of the Company's U.S. non-bargained and Canadian employees
who retire from active service on or after normal retirement age of 65 are
eligible for life insurance benefits. The costs of such benefits are paid
through an insurance contract. Health care insurance benefits also are provided
for many employees retiring from active service. The coverage is provided on a
non-contributory basis for certain groups of employees and on a contributory
basis for other groups. The majority of these benefits are paid by the Company.
The status of employee postretirement benefit plans at December 31, is
summarized below:
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.............................................................. $ 4,603 $ 4,699
Fully eligible active plan participants............................... 533 562
Other active plan participants........................................ 3,947 4,303
--------- ---------
Total accumulated postretirement benefit obligation..................... 9,083 9,564
Unrecognized prior service cost......................................... 2,356 2,153
Unrecognized net gain (loss) from actuarial experience.................. (744) (589)
--------- ---------
Accrued postretirement benefit cost................................... $ 10,695 $ 11,128
--------- ---------
--------- ---------
</TABLE>
The components of net periodic postretirement benefit cost for the years
ended December 31, were as follows:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Benefits attributed to service during the year........................ $ 281 $ 271 $ 283
Interest cost on accumulated postretirement benefits obligation....... 591 688 656
Net amortization...................................................... (225) (190) (200)
--------- --------- ---------
Net periodic postretirement benefit cost............................ $ 647 $ 769 $ 739
--------- --------- ---------
--------- --------- ---------
</TABLE>
For 1997 measurement purposes, annual rates of increase in the per capita
cost of covered health care benefits were assumed to average 7.0% for 1998
decreasing gradually to 5.3% by 2008 and remaining at that level thereafter. The
health care cost trend rate assumption has a significant effect on the amounts
reported. To illustrate, increasing the assumed health care cost trend rates by
1.0% in each year would increase the accumulated postretirement benefit
obligation as of December 31, 1997, by approximately $670 and the aggregate of
the service and interest cost components of net periodic postretirement benefit
cost for the year then ended by approximately $45.
F-15
<PAGE>
ACCURIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
8. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
Assumptions used to develop net periodic postretirement benefit cost for
each of the three years in the period ended December 31, 1997 were as follows:
<TABLE>
<S> <C>
Discount rate......................................................... 7.25%
Rate of increase in future compensation levels........................ 4.00%
</TABLE>
9. INCOME TAXES
The Company is included in the PDC consolidated tax returns; PDC allocates
income taxes as if the Company filed on a separate company basis. The Company
clears income taxes with PDC through the intercompany account.
The provisions for income taxes for the years ended December 31, were as
follows:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Current:
Federal.................................................... $ 13,161 $ 7,421 $ 7,760
State...................................................... 1,880 1,060 1,109
Foreign.................................................... 10,310 10,508 10,077
--------- --------- ---------
25,351 18,989 18,946
--------- --------- ---------
Deferred:
Federal.................................................... (2,430) (672) 3,319
State...................................................... (347) (96) 474
Foreign.................................................... (1,844) (771) (581)
--------- --------- ---------
(4,621) (1,539) 3,212
--------- --------- ---------
Total.................................................... $ 20,730 $ 17,450 $ 22,158
--------- --------- ---------
--------- --------- ---------
</TABLE>
A reconciliation of the U.S. statutory tax rate to the Company's effective
tax rate for the years ended December 31, is as follows:
<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Statutory tax rate.................................................. 35.0% 35.0% 35.0%
Withholding tax on dividend of foreign subsidiary................... 6.0
State and local income taxes........................................ 1.5 1.5 1.4
Incremental international tax....................................... 5.4 1.2 0.2
Goodwill............................................................ 1.9 2.0 1.8
Other items, net.................................................... 0.1 (0.1)
--- --- ---
Effective tax rate.................................................. 43.8% 39.8% 44.3%
--- --- ---
--- --- ---
</TABLE>
F-16
<PAGE>
ACCURIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
9. INCOME TAXES (CONTINUED)
Deferred income tax assets and liabilities comprised the following at
December 31:
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Deferred tax assets:
Postretirement and postemployment benefits............................ $ 4,566 $ 4,475
Accruals.............................................................. 320 320
Inventories........................................................... 319 310
Other................................................................. 3,383 2,302
Foreign tax credit.................................................... 920
Valuation allowance-foreign tax credit................................ (920)
--------- ---------
Total deferred tax assets........................................... 8,588 7,407
--------- ---------
Deferred tax liabilities:
Depreciation.......................................................... 20,104 18,025
Withholding tax on dividend of foreign subsidiary..................... 3,000
Pension costs......................................................... 1,828 2,106
Other................................................................. 378 1,880
--------- ---------
Total deferred tax liabilities...................................... 22,310 25,011
--------- ---------
Net deferred tax liabilities............................................ 13,722 17,604
Current deferred tax asset............................................ 2,509
Current deferred tax liability........................................ (1,481)
--------- ---------
Long-term deferred income tax liability-net............................. $ 16,231 $ 16,123
--------- ---------
--------- ---------
</TABLE>
During 1997 the Company determined that it would no longer reinvest the
undistributed earnings of Accuride Canada and accordingly, has recorded a
provision for the applicable income taxes for the year ended December 31, 1997.
10. COMMITMENTS
Rent expense for the years ended December 31, 1995, 1996 and 1997 was
$1,209, $1,022 and $1,566, respectively. Future minimum lease payments for all
noncancelable operating leases having a remaining term in excess of one year at
December 31, 1997 are as follows:
<TABLE>
<S> <C>
1998................................................................ $ 696
1999................................................................ 512
2000................................................................ 105
2001................................................................ 88
2002................................................................ 71
---------
Total............................................................... $ 1,472
---------
---------
</TABLE>
F-17
<PAGE>
ACCURIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
11. CONTINGENCIES
The Company is from time to time involved in various legal proceedings of a
character normally incident to its past and present businesses. Management does
not believe that the outcome of these proceedings will have a material adverse
effect on the consolidated financial condition or results of operations of the
Company.
The Company's operations are subject to federal, state and local
environmental laws, rules and regulations. Pursuant to the recapitalization of
the Company (see Note 14), the Company will be indemnified by PDC with respect
to environmental liabilities at its Henderson and London facilities, subject to
certain limitations. Pursuant to the AKW formation agreements (see Note 5), the
Company has been indemnified by Kaiser with respect to facilities owned by AKW
that were contributed by Kaiser. Management does not believe that the outcome of
any environmental proceedings will have a material adverse effect on the
consolidated financial condition or results of operations of the Company.
F-18
<PAGE>
ACCURIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
12. SEGMENT REPORTING
The Company operates in one business segment: the design, manufacture and
distribution of steel wheels and rims for trucks, trailers, and other vehicles.
GEOGRAPHIC SEGMENTS--The Company has foreign operations in Canada and Mexico
which are summarized below. Sales and revenues between geographic areas are made
at negotiated selling prices.
<TABLE>
<CAPTION>
UNITED
1995 STATES CANADA ELIMINATIONS COMBINED
- --------------------------------------------------------------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Net sales and revenues:
Sales to unaffiliated customers.............................. $ 203,382 $ 154,420 $ 357,802
Sales among geographic areas................................. 4,076 34,871 $ (38,947)
---------- ---------- ------------ ----------
Total...................................................... $ 207,458 $ 189,291 $ (38,947) $ 357,802
---------- ---------- ------------ ----------
---------- ---------- ------------ ----------
Income from operations......................................... $ 25,021 $ 25,209 $ (2,550) $ 47,680
Identifiable assets............................................ $ 176,424 $ 155,669 $ (33,193) $ 298,900
</TABLE>
<TABLE>
<CAPTION>
UNITED
1996 STATES CANADA ELIMINATIONS COMBINED
- --------------------------------------------------------------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Net sales and revenues:
Sales to unaffiliated customers.............................. $ 169,569 $ 138,261 $ 307,830
Sales among geographic areas................................. 4,444 30,693 $ (35,137)
---------- ---------- ------------ ----------
Total...................................................... $ 174,013 $ 168,954 $ (35,137) $ 307,830
---------- ---------- ------------ ----------
---------- ---------- ------------ ----------
Income from operations......................................... $ 20,802 $ 25,556 $ (2,576) $ 43,782
Identifiable assets............................................ $ 151,527 $ 152,386 $ (15,210) $ 288,703
</TABLE>
<TABLE>
<CAPTION>
UNITED
1997 STATES CANADA MEXICO ELIMINATIONS COMBINED
- ---------------------------------------------------- ---------- ---------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net sales and revenues:
Sales to unaffiliated customers................... $ 176,723 $ 151,132 $ 5,111 $ 332,966
Sales among geographic areas...................... 6,157 31,309 $ (37,466)
---------- ---------- --------- ------------ ----------
Total........................................... $ 182,880 $ 182,441 $ 5,111 $ (37,466) $ 332,966
---------- ---------- --------- ------------ ----------
---------- ---------- --------- ------------ ----------
Income from operations.............................. $ 23,763 $ 23,152 $ 292 $ (2,529) $ 44,678
Identifiable assets................................. $ 193,572 $ 143,197 $ 29,406 $ (18,728) $ 347,447
</TABLE>
F-19
<PAGE>
ACCURIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
12. SEGMENT REPORTING (CONTINUED)
Sales to three customers exceed 10% of total net sales for the years ended
December 31, as follows:
<TABLE>
<CAPTION>
1995 1996 1997
----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
% OF % OF % OF
AMOUNT SALES AMOUNT SALES AMOUNT SALES
---------- ----- ---------- ----- ---------- -----
Customer one.................. $ 65,481 18.3% $ 55,887 18.2% $ 62,838 18.9%
Customer two.................. 54,968 15.4% 45,698 14.8% 55,231 16.6%
Customer three................ 45,428 12.7% 45,309 14.7% 50,699 15.2%
---------- --- ---------- --- ---------- ---
$ 165,877 46.4% $ 146,894 47.7% $ 168,768 50.7%
---------- --- ---------- --- ---------- ---
---------- --- ---------- --- ---------- ---
</TABLE>
13. FINANCIAL INSTRUMENTS
The carrying amounts of financial instruments including cash and cash
equivalents, customer receivables and accounts payable approximated fair value
as of December 31, 1996 and 1997, because of the relatively short maturity of
these instruments. The difference between the carrying amount and fair value is
insignificant for notes receivable from AOT. The carrying amount of short-term
notes payable approximate fair value because of at or near market interest rate
pricing provisions.
14. SUBSEQUENT EVENTS
RECAPITALIZATION OF ACCURIDE CORPORATION--The Company entered into a stock
subscription and redemption agreement dated November 17, 1997 (the "Agreement")
with PDC and Hubcap Acquisition L.L.C. ("Hubcap Acquisition"), which is a
Delaware limited liability company formed at the direction of KKR 1996 Fund
L.P., a Delaware limited partnership affiliated with Kohlberg Kravis Roberts &
Co., L. P.
Pursuant to the Agreement, effective January 21, 1998, Hubcap Acquisition
acquired 90% of the common stock of the Company for an aggregate redemption
price of $468,000 subject to adjustment for changes in working capital and the
difference between actual and projected capital expenditures. In connection with
the recapitalization, Hubcap Acquisition made an equity investment in the
Company of $108,000, and the Company issued $200,000 of 9.25% senior
subordinated notes at 99.48% due 2008 and obtained $162,000 in bank borrowings,
including $135,000 of borrowings under senior secured term loans due 2005 and
2006 with variable interest rates and $27,000 of borrowings under a $140,000
senior secured revolving line of credit expiring 2004 with a variable interest
rate.
STOCK SPLIT--Effective January 21, 1998, the Company declared a 240-for-1
stock split. All per share information has been restated to give effect to the
stock split.
AUTHORIZED SHARES--Effective January 21, 1998, the Company increased its
authorized shares of common stock to 45,000 shares and authorized 5,000 shares
of preferred stock each with a par value of one cent ($.01) per share. All per
share information has been restated to give effect to the increase in authorized
shares.
1998 STOCK PURCHASE AND OPTION PLAN--Effective January 21, 1998, the Company
adopted the 1998 Stock Purchase and Option Plan for key employees of Accuride
Corporation and subsidiaries (the "1998 Plan").
F-20
<PAGE>
ACCURIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
14. SUBSEQUENT EVENTS (CONTINUED)
The 1998 Plan provides for the issuance of shares of authorized but unissued
or reacquired shares of common stock subject to adjustment to reflect certain
events such as stock dividends, stock splits, recapitalizations, mergers or
reorganizations of or by the Company. The 1998 Plan is intended to assist the
Company in attracting and retaining employees of outstanding ability and to
promote the identification of their interests with those of the stockholders of
the Company. The 1998 Plan permits the issuance of common stock (the "1998 Plan
Purchase Stock") and the grant of non-qualified stock options (the "1998 Plan
Options") to purchase shares of common stock (the issuance of 1998 Plan Purchase
Stock and the grant of the 1998 Plan Options pursuant to the 1998 Plan being a
"1998 Plan Grant"). Unless sooner terminated by the Company's Board of
Directors, the 1998 Plan will expire ten years after adoption. Such termination
will not affect the validity of any 1998 Plan Grant outstanding on the date of
the termination.
Pursuant to the 1998 Plan, 2,598 shares of common stock of the Company are
reserved for issuance under such plan.
LABOR RELATIONS (UNAUDITED)--The Company's current contract with the UAW
covering employees at the Henderson Facility expired in February 1998. The
Company was not able to negotiate a mutually acceptable agreement with the UAW.
Therefore, a strike occurred at the Henderson Facility on February 20, 1998. The
Company is continuing to operate with its salaried employees and contractors. On
March 31, 1998, the members of the UAW rejected the Company's final offer for a
new contract. Effective as of March 31, 1998, the Company began an indefinite
lockout, which was prompted by continuing reports to management that some
individuals planned to re-enter the plant and harass employees and damage
equipment and machinery. Currently, there is, and the Company believes that
there will be, no supply disruption to the Company's customer base; however,
there can be no assurance to that effect. A supply disruption to the Company's
customer base could have a material adverse effect on the Company.
F-21
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY INITIAL
PURCHASERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY TO ANY SECURITY OTHER THAN THOSE TO WHICH IT
RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHICH IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................... 1
Risk Factors..................................... 15
The Exchange Offer............................... 24
The Recapitalization............................. 33
Use of Proceeds.................................. 34
Capitalization................................... 35
Pro Forma Consolidated Condensed Financial
Statements..................................... 36
Selected Historical Consolidated Financial and
Other Data..................................... 41
Management's Discussion and Analysis of Financial
Condition and Results of Operations............ 43
Business......................................... 50
Management....................................... 61
Certain Relationships and Related Transactions... 67
Principal Stockholders........................... 68
Description of the Credit Facility............... 69
Description of the Notes......................... 71
Certain Federal Income Tax Considerations........ 106
Book-Entry; Delivery and Form.................... 106
Plan of Distribution............................. 109
Legal Matters.................................... 110
Experts.......................................... 110
Available Information............................ 110
Glossary......................................... G-1
Index to Financial Statements.................... F-1
</TABLE>
UNTIL , 1998, ALL DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE
NOTES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER
A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENT OR SUBSCRIPTIONS.
--------------
PROSPECTUS
--------------
[LOGO]
ACCURIDE CORPORATION
OFFER TO EXCHANGE ITS
9 1/4% SENIOR SUBORDINATED
NOTES DUE 2008
WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF
1933, AS AMENDED, FOR ITS
OUTSTANDING 9 1/4%
SENIOR SUBORDINATED NOTES
DUE 2008
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Delaware corporation. Subsection (b)(7) of Section 102 of
the Delaware General Corporation Law (the "DGCL"), enables a corporation in its
original certificate of incorporation or an amendment thereto to eliminate or
limit the personal liability of a director to the corporation or its
stockholders for monetary damages for violations of the director's fiduciary
duty, except (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the DGCL (providing for liability of directors for
unlawful payment of dividends or unlawful stock purchases or redemptions) or
(iv) for any transaction from which a director derived an improper personal
benefit.
Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation),
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with such action,
suit or proceeding provided that such director or officer acted in good faith in
a manner reasonably believed to be in, or not opposed to, the best interests of
the corporation, and, with respect to any criminal action or proceeding,
provided further that such director or officer had no reasonable cause to
believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
director or officer, or former director or officer, who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person acted in any of the capacities set forth
above, against expenses (including attorneys' fees) actually and reasonably
incurred in connection with the defense or settlement of such action or suit
provided that such director or officer acted in good faith and in a manner
reasonably believed to be in, or not opposed to, the best interests of the
corporation, except that no indemnification may be made in respect to any claim,
issue or matter as to which such director or officer shall have been adjudged to
be liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
of the circumstances of the case, such director or officer is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsections (a) and (b) or in the defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys
fees) actually and reasonably incurred by him in connection therewith; that
indemnification and advancement of expenses provided for, by, or granted
pursuant to Section 145 shall not be deemed exclusive of any other rights to
which the indemnified party may be entitled; and empowers the corporation to
purchase and maintain insurance on behalf of a director or officer of the
corporation against any liability asserted against him or incurred by him in any
such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 145.
Paragraph 7 of the Restated Certificate of Incorporation (filed as Exhibit
3.1 to the Registration Statement) of the Company provides for the elimination
of liability of directors to the extent permitted by the DGCL. Article V,
Section 1 of the By-Laws of the Company (filed as Exhibit 3.2 to the
Registration
II-1
<PAGE>
Statement) provides for indemnification of the officers and directors of the
Company to the extent permitted by the DGCL.
The Company has in effect directors' and officers' liability insurance
policies in the amount of $25 million covering all of its directors and
officers.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Stock Subscription and Redemption Agreement, dated as of November 17, 1997, among the Company, Hubcap
Acquisition L.L.C. and Phelps Dodge Corporation
3.1 Certificate of Incorporation, as amended, of Accuride Corporation.
3.2 By-Laws of Accuride Corporation.
4.1 Indenture, dated as of January 21, 1998, between Accuride Corporation and U.S. Trust Company of
California, N.A., as trustee, relating to $200,000,000 aggregate principal amount of 9 1/4% Senior
Subordinated Notes due 2008.
4.2 Registration Rights Agreement, dated as of January 21, 1998, between Accuride Corporation, and BT Alex.
Brown Incorporation, Citicorp Securities, Inc., and J.P. Morgan Securities Inc.
4.3 Specimen Certificate of 9 1/4% Senior Subordinated Notes due 2008, Series A (the "Private Notes")
(included in Exhibit 4.1 hereto).
4.4 Specimen Certificate of 9 1/4% Senior Subordinated Notes due 2008, Series B (the "Exchange Notes")
(included in Exhibit 4.1 hereto).
*5.1 Opinion of Latham & Watkins regarding the validity of the Exchange Notes.
8.1 Opinion of Latham & Watkins regarding the material United States Federal income tax consequences to
holders of the Exchange Notes.
10.1 Stockholders' Agreement by and among Accuride Corporation, Phelps Dodge Corporation and Hubcap
Acquisition L.L.C.
10.2 Registration Rights Agreement by and between Accuride Corporation and Hubcap Acquisition L.L.C.
10.3 1998 Stock Purchase and Option Plan for Employees of Accuride Corporation and Subsidiaries.
10.4 Form of Non-qualified Stock Option Agreement by and between Accuride Corporation and certain employees.
10.5 Form of Repayment and Stock Pledge Agreement by and between Accuride and certain employees.
10.6 Form of Secured Promissory Note in favor of Accuride Corporation.
10.7 Form of Stockholders' Agreement by and among Accuride Corporation, certain employees and Hubcap
Acquisition L.L.C.
10.8 Form of Severance Agreement by and between Accuride Corporation and certain executives.
10.9 Contribution Agreement, dated as of May 1, 1997, among Accuride Corporation, Kaiser Aluminum & Chemical
Corporation ("Kaiser"), AKW General Partner L.L.C. and AKW L.P.
10.10 Limited Partnership Agreement of AKW L.P., dated as of May 1, 1997, among AKW General Partner L.L.C.,
Accuride Ventures, Inc., Accuride Corporation and Kaiser.
10.11 Limited Liability Company Agreement of AKW General Partner L.L.C., dated as of May 1, 1997, among
Accuride Ventures, Inc., Accuride Corporation and Kaiser.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
10.12 Lease Agreement, dated as of May 1, 1997, between Kaiser and AKW L.P.
10.13 Lease Agreement dated November 1, 1988, by and between Kaiser and The Bell Company regarding the property
in Cuyahoga Falls, Ohio, as amended and extended.
10.14 Lease Agreement, dated as of February 1, 1974, by and between Henderson County and The Firestone Tire &
Rubber Company ("Firestone").
10.15 Lease Amendment, dated as of December 19, 1986, by and between Henderson County and Firestone.
10.16 Joint Venture Agreement, dated November 5, 1997, by and among the Company, Industria Automotriz, S.A. de
C.V., Grupo Industrial Ramirez, S.A. and Accuride de Mexico, S.A. de C.V. ("ADM").
10.17 By-laws of ADM.
10.18 Purchase and Sale Agreement, dated as of October 21, 1997, by and between Accuride Corporation and
General Electric Company regarding property located in Columbia, Tennessee.
10.19 Purchase Supply and Assembly Agreement, dated as of January 15, 1998, between Accuride Corporation and
Lacks Industries, Inc.
10.20 Credit Agreement, dated as of January 21, 1998, between Accuride Corporation and Citicorp USA, Inc.,
Citicorp Securities, Inc., Bankers Trust Company and Wells Fargo Bank.
10.21 Purchase Agreement, dated as of January 15, 1998, between Accuride Corporation and BT Alex. Brown
Incorporation, Citicorp Securities, Inc., and J.P. Morgan Securities Inc.
12.1 Statement of Computation of Ratio of Earnings to Fixed Charges.
21.1 Subsidiaries of Accuride Corporation.
23.1 Consent of Latham & Watkins (included in its opinions filed as Exhibits 5.1 and 8.1).
23.2 Consent of Deliotte & Touche LLP.
24.1 Power of Attorney of Accuride Corporation (included on signature page to this Registration Statement on
Form S-4).
25.1 Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939 of U.S. Trust
Company of California (bound separately).
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal and related documents to be used in conjunction with the Exchange Offer.
99.2 Form of Notices of Guaranteed Delivery.
</TABLE>
- ------------------------
* To be filed by amendment
(b) Financial Statement Schedules:
None.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertake that insofar as
indemnification for liabilities arising under the Securities Act of 1933, as
amended (the "Act"), may be permitted to directors, officers and controlling
persons of the Registrants pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim of
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or the registrant in the successful defense of
any action, suit paid by a director, officer or controlling person of
II-3
<PAGE>
the registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(b) The undersigned registrant hereby undertake to respond to requests for
information that is incorporated by reference into this Prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(d)(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement; (i) to include any
prospectus required by Section 10(a)(3) of the Act; (ii) to reflect in the
Prospectus any facts or events arising after the effective date of the
Registration Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement;
(2) That, for purposes of determining any liability under the Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Henderson, State of
Kentucky on April 15, 1998.
ACCURIDE CORPORATION
BY: /S/ WILLIAM P. GREUBEL
-----------------------------------------
William P. Greubel
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William P. Greubel and John R. Murphy and each or
any of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign a registration statement on form S-4 and any and
all amendments thereto) 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 perform each and every act and thing
necessary to be done in and about the premises, 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, or their or his
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in their
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
President and Chief
/s/ WILLIAM P. GREUBEL Executive Officer
- ------------------------------ (Principal Executive April 15, 1998
William P. Greubel Officer)
Chief Financial Officer,
/s/ JOHN R. MURPHY Secretary and Treasurer
- ------------------------------ (Principal Financial and April 15, 1998
John R. Murphy Accounting Officer)
/s/ HENRY R. KRAVIS Director
- ------------------------------ April 15, 1998
Henry R. Kravis
/s/ GEORGE R. ROBERTS Director
- ------------------------------ April 15, 1998
George R. Roberts
/s/ JAMES H. GREENE, JR. Director
- ------------------------------ April 15, 1998
James H. Greene, Jr.
/s/ TODD A. FISHER Director
- ------------------------------ April 15, 1998
Todd A. Fisher
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Stock Subscription and Redemption Agreement, dated as of November 17, 1997, among the Company, Hubcap
Acquisition L.L.C. and Phelps Dodge Corporation
3.1 Certificate of Incorporation, as amended, of Accuride Corporation.
3.2 By-Laws of Accuride Corporation.
4.1 Indenture, dated as of January 21, 1998, between Accuride Corporation and U.S. Trust Company of
California, N.A., as trustee, relating to $200,000,000 aggregate principal amount of 9 1/4% Senior
Subordinated Notes due 2008.
4.2 Registration Rights Agreement, dated as of January 21, 1998, between Accuride Corporation, and BT Alex.
Brown Incorporation, Citicorp Securities, Inc., and J.P. Morgan Securities Inc.
4.3 Specimen Certificate of 9 1/4% Senior Subordinated Notes due 2008, Series A (the "Private Notes")
(included in Exhibit 4.1 hereto).
4.4 Specimen Certificate of 9 1/4% Senior Subordinated Notes due 2008, Series B (the "Exchange Notes")
(included in Exhibit 4.1 hereto).
*5.1 Opinion of Latham & Watkins regarding the validity of the Exchange Notes.
8.1 Opinion of Latham & Watkins regarding the material United States Federal income tax consequences to
holders of the Exchange Notes.
10.1 Stockholders' Agreement by and among Accuride Corporation, Phelps Dodge Corporation and Hubcap
Acquisition L.L.C.
10.2 Registration Rights Agreement by and between Accuride Corporation and Hubcap Acquisition L.L.C.
10.3 1998 Stock Purchase and Option Plan for Employees of Accuride Corporation and Subsidiaries.
10.4 Form of Non-qualified Stock Option Agreement by and between Accuride Corporation and certain employees.
10.5 Form of Repayment and Stock Pledge Agreement by and between Accuride and certain employees.
10.6 Form of Secured Promissory Note in favor of Accuride Corporation.
10.7 Form of Stockholders' Agreement by and among Accuride Corporation, certain employees and Hubcap
Acquisition L.L.C.
10.8 Form of Severance Agreement by and between Accuride Corporation and certain executives.
10.9 Contribution Agreement, dated as of May 1, 1997, among Accuride Corporation, Kaiser Aluminum & Chemical
Corporation ("Kaiser"), AKW General Partner L.L.C. and AKW L.P.
10.10 Limited Partnership Agreement of AKW L.P., dated as of May 1, 1997, among AKW General Partner L.L.C.,
Accuride Ventures, Inc., Accuride Corporation and Kaiser.
10.11 Limited Liability Company Agreement of AKW General Partner L.L.C., dated as of May 1, 1997, among
Accuride Ventures, Inc., Accuride Corporation and Kaiser.
10.12 Lease Agreement, dated as of May 1, 1997, between Kaiser and AKW L.P.
10.13 Lease Agreement dated November 1, 1988, by and between Kaiser and The Bell Company regarding the property
in Cuyahoga Falls, Ohio, as amended and extended.
10.14 Lease Agreement, dated as of February 1, 1974, by and between Henderson County and The Firestone Tire &
Rubber Company ("Firestone").
10.15 Lease Amendment, dated as of December 19, 1986, by and between Henderson County and Firestone.
10.16 Joint Venture Agreement, dated November 5, 1997, by and among the Company, Industria Automotriz, S.A. de
C.V., Grupo Industrial Ramirez, S.A. and Accuride de Mexico, S.A. de C.V. ("ADM").
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
10.17 By-laws of ADM.
10.18 Purchase and Sale Agreement, dated as of October 21, 1997, by and between Accuride Corporation and
General Electric Company regarding property located in Columbia, Tennessee.
10.19 Purchase Supply and Assembly Agreement, dated as of January 15, 1998, between Accuride Corporation and
Lacks Industries, Inc.
10.20 Credit Agreement, dated as of January 21, 1998, between Accuride Corporation and Citicorp USA, Inc.,
Citicorp Securities, Inc., Bankers Trust Company and Wells Fargo Bank.
10.21 Purchase Agreement, dated as of January 15, 1998, between Accuride Corporation and BT Alex. Brown
Incorporation, Citicorp Securities, Inc., and J.P. Morgan Securities Inc.
12.1 Statement of Computation of Ratio of Earnings to Fixed Charges.
21.1 Subsidiaries of Accuride Corporation.
23.1 Consent of Latham & Watkins (included in its opinions filed as Exhibits 5.1 and 8.1).
23.2 Consent of Deliotte & Touche LLP.
24.1 Power of Attorney of Accuride Corporation (included on signature page to this Registration Statement on
Form S-4).
25.1 Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939 of U.S. Trust
Company of California (bound separately).
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal and related documents to be used in conjunction with the Exchange Offer.
99.2 Form of Notices of Guaranteed Delivery.
</TABLE>
- ------------------------
* To be filed by amendment
<PAGE>
EXHIBIT 2.1
CONFORM COPY
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
ACCURIDE CORPORATION
-------------------------------------------
STOCK SUBSCRIPTION AND REDEMPTION AGREEMENT
-------------------------------------------
Dated as of November 17, 1997
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Sale and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.1 Sale of the Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.2 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.3 Redemption of the Redeemed Shares . . . . . . . . . . . . . . . . . . . . . . .2
1.4 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
1.5 Purchase Price Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2. Representations and Warranties of the Shareholder. . . . . . . . . . . . . . . . . 19
2.1 Corporate Status and Authority. . . . . . . . . . . . . . . . . . . . . . . . 19
2.2 No Conflicts, Consents and Approvals, etc.. . . . . . . . . . . . . . . . . . 21
2.3 Corporate Status of the Company . . . . . . . . . . . . . . . . . . . . . . . 24
2.4 Capital Stock of the Company. . . . . . . . . . . . . . . . . . . . . . . . . 25
2.5 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.6 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.7 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . 28
2.8 Assets, Properties, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.9 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.10 Employment Agreements and Benefits, etc.. . . . . . . . . . . . . . . . . . . 35
2.10.1 Employment Agreements and Plans . . . . . . . . . . . . . . . . . . 35
2.10.2 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.10.3 Tax Qualification . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.10.4 Terminations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.10.5 Deductibility of Payments . . . . . . . . . . . . . . . . . . . . . 42
2.11 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
2.12 Governmental Authorizations; Compliance with Law. . . . . . . . . . . . . . . 46
2.13 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
2.15 Absence of Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
2.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
2.17 Environmental Compliance and Conditions . . . . . . . . . . . . . . . . . . . 55
2.18 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
2.19 Affiliate Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
2.20 Suppliers; Raw Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
2.21 Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
2.22 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
2.23 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
2.24 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
3. Representations and Warranties of the Purchaser. . . . . . . . . . . . . . . . . . 62
3.1 Corporate Status and Authority. . . . . . . . . . . . . . . . . . . . . . . . 62
3.2 No Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
3.3 Financial Ability to Perform. . . . . . . . . . . . . . . . . . . . . . . . . 65
3.4 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
3.5 Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
i
<PAGE>
3.6 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4. Certain Covenants . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 67
4.1 Consents; Obligations of the Parties. . . . . . . . . . . . . . . . . . . . . 67
4.2 Obligations of the Shareholder. . . . . . . . . . . . . . . . . . . . . . . . 71
4.2.1 Conduct of Business, etc. . . . . . . . . . . . . . . . . . . . . . 71
4.2.2 Access and Information . . . . . . . . . . . . . . . . . . . . . . 76
4.3 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
4.4 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
4.5 Contact with Customers and Suppliers. . . . . . . . . . . . . . . . . . . . . 96
4.6 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
4.7 Non-Solicitation of Employees . . . . . . . . . . . . . . . . . . . . . . . . 97
4.8 Transition Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
4.9 Non-Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100
4.10 Use of Business Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . .102
4.11 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103
4.12 Confidentiality Agreements. . . . . . . . . . . . . . . . . . . . . . . . . .104
4.13 Interim Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . .105
4.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105
4.15 Certain Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106
5. Employees and Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . .107
5.1 Compensation and Benefits of Company Employees. . . . . . . . . . . . . . . .107
5.2 Establishment of Accuride Plans . . . . . . . . . . . . . . . . . . . . . . .113
5.3 Employee Benefits Administration Services . . . . . . . . . . . . . . . . . .119
6. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .119
6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .119
6.2 Conditions to Obligations of All Parties. . . . . . . . . . . . . . . . . . .120
6.2.1 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120
6.2.2 No Injunction, etc. . . . . . . . . . . . . . . . . . . . . . . . .120
6.2.3 Governmental Consents . . . . . . . . . . . . . . . . . . . . . . .121
6.2.4 Shareholder Board Ratification. . . . . . . . . . . . . . . . . . .121
6.3 Conditions to Obligations of the Shareholder and the Company. . . . . . . . .121
6.3.1 Representations and Warranties of the Purchaser . . . . . . . . . .121
6.3.2 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . .122
6.3.3 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . . . .122
6.3.4 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .122
6.4 Conditions to Obligations of the Purchaser. . . . . . . . . . . . . . . . . .123
6.4.1 Representations and Warranties of the Shareholder . . . . . . . . .123
6.4.2 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . .123
6.4.3 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . . . .124
6.4.4 Resignations. . . . . . . . . . . . . . . . . . . . . . . . . . . .124
6.4.5 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .124
6.4.6 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125
6.4.7 No Material Adverse Effect. . . . . . . . . . . . . . . . . . . . .125
ii
<PAGE>
6.4.8 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125
6.4.9 Audited Financial Statements. . . . . . . . . . . . . . . . . . . .125
6.4.10 Management Subscription Agreements. . . . . . . . . . . . . . . . .126
6.4.11 Lacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126
7. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .127
7.1 Survival of Representations and Warranties and Covenants. . . . . . . . . . .127
7.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .128
7.2.1 By the Shareholder. . . . . . . . . . . . . . . . . . . . . . . . .128
7.2.2 By the Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . .134
7.2.3 Indemnification Procedures. . . . . . . . . . . . . . . . . . . . .138
7.2.4 Mitigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . .141
8. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .142
9. General Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .158
9.1 Modification; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . .158
9.2 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .158
9.3 Exclusivity of Representations and Warranties and Indemnification
Provision; Relationship Between the Parties . . . . . . . . . . . . . . . . .159
9.4 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .161
9.5 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .162
9.6 Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .162
9.7 Post-Closing Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . .162
9.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .167
9.9 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .168
9.10 No Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . .169
9.11 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .169
9.12 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .169
9.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .170
9.14 Consent to Jurisdiction, etc. . . . . . . . . . . . . . . . . . . . . . . . .170
9.15 Waiver of Punitive and Other Damages and Jury Trial . . . . . . . . . . . . .172
9.16 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .173
9.17 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . .173
</TABLE>
Exhibits
- --------
Exhibit 1 - Term Sheet for the Transitional Services Agreement
Schedules
- ---------
Schedule 1 - List of Documents
iii
<PAGE>
STOCK SUBSCRIPTION AND REDEMPTION AGREEMENT, dated as of November
17, 1997, among Phelps Dodge Corporation, a New York corporation (the
"Shareholder"), Accuride Corporation, a Delaware corporation and a
wholly-owned subsidiary of the Shareholder (the "Company"), and Hubcap
Acquisition L.L.C., a Delaware limited liability company (the "Purchaser").
WHEREAS, the Shareholder owns all of the outstanding capital stock
of the Company; and
WHEREAS, the Company, together with its Subsidiaries, are in the
business of manufacturing wheels and rims for commercial vehicles; and
WHEREAS, on the terms and subject to the conditions contained
herein, the Purchaser desires to subscribe for and purchase from the Company,
and the Company and the Shareholder desire that the Company issue and sell to
the Purchaser, 90 newly issued shares (the "Shares") of Common Stock, par
value $0.01 per share (the "Common Stock"), of the Company as set forth
herein; and
WHEREAS, simultaneously with the acquisition by the Purchaser of
the Shares, the Shareholder will sell to the Company, and the Company will
purchase from the Shareholder, on the terms and subject to the conditions
contained herein, the Redeemed Shares (as defined below) (the "Redemption").
<PAGE>
NOW, THEREFORE, the parties hereto agree as follows:
1. Sale and Purchase.
1.1 Sale of the Shares. Subject to the terms and conditions of
this Agreement, at the Closing (as defined in Section 1.4), the Company will
issue and sell, and the Purchaser will purchase, the Shares, free and clear
of all Liens (other than restrictions on transfer arising under applicable
federal and state securities laws). The Company hereby agrees that it will
duly authorize the issuance and sale of the Shares and upon the consummation
of the transactions contemplated hereby, the Shares will be validly issued,
fully paid and non-assessable.
1.2 Purchase Price. The purchase price for the Shares shall be
$108,000,000 (the "Purchase Price").
1.3 Redemption of the Redeemed Shares. (a) Subject to the terms
and conditions of this Agreement, at the Closing, the Shareholder shall sell
to the Company, and the Company shall redeem and purchase from the
Shareholder, 90 shares of Common Stock (the "Redeemed Shares"). The Redeemed
Shares to be delivered to the Company at the Closing shall be free and clear
of all Liens.
(b) The redemption price to be paid by the Company for the
Redeemed Shares and the covenant set forth in Section 4.9 shall be
$468,000,000 (the "Redemption
2
<PAGE>
Price") (as such may be adjusted in Section 1.5). On or prior to the Closing
Date, the parties shall agree on the amount of consideration (as described
above) being paid by the Company to the Shareholder in respect of the
Shareholder's covenant in Section 4.9. At the Closing, the Company shall pay
the Shareholder by wire transfer of immediately available funds to previously
designated accounts of the Shareholder the Redemption Price, plus or minus an
estimate, prepared by the Company and delivered to the Shareholder, of any
adjustment to the Redemption Price under Section 1.5 (the Redemption Price
plus or minus such estimate of any adjustment under Section 1.5 being
hereafter called the "Closing Date Amount").
1.4 Closing. The closing of the purchase of the Shares and the
Redemption (the "Closing") will take place at the offices of Debevoise &
Plimpton, 875 Third Avenue, New York, New York 10022 at 10:00 A.M., New York
time, on such date and time as the parties shall have agreed to in writing
(the "Closing Date"). At the Closing:
(a) (i) the Company will deliver, or cause to be delivered, to the
Purchaser stock certificates representing the Shares, (ii) the Company will
furnish the Purchaser with a certificate from the Secretary of the Company
attaching a copy of (a) the resolutions of the Boards of Directors of the
Shareholder and the Company
3
<PAGE>
authorizing the execution, delivery and performance by the Shareholder
and the Company of each of the Documents (as defined below) to which it
is a party, (b) resolutions of the Shareholder, as the sole stockholder
of the Company, approving the execution, delivery and performance by the
Company of each of the Documents to which the Company is a party, and
(c) the charter documents and bylaws of the Company and its
Subsidiaries, and (iii) the Shareholder will deliver fully executed
assignment agreements to assign the confidentiality agreements, to the
extent such agreements are assignable, as provided in Section 4.12;
(b) the Purchaser will deliver, or cause to be delivered, (i) to
the Company by wire transfer of immediately available funds to
previously designated accounts of the Company the Purchase Price and
(ii) a certificate from the Secretary of the Purchaser attaching a copy
of the resolutions of the Purchaser's members authorizing the execution,
delivery and performance by the Purchaser of each of the Documents to
which the Purchaser is a party;
(c) (i) the Company will deliver the Closing Date Amount to the
Shareholder by wire transfer of immediately available funds to
previously designated accounts of the Shareholder and (ii) the
Shareholder will
4
<PAGE>
deliver to the Company stock certificates representing the Redeemed
Shares, duly endorsed or accompanied by a duly executed stock power
transferring the Redeemed Shares to the Company; and
(d) the Shareholder, the Company and the Purchaser shall deliver
all documents required to be delivered pursuant to Sections 6.3 and 6.4
and all other instruments as shall be reasonably requested by the
parties hereto to effect the transactions contemplated by each of the
Documents.
1.5 Purchase Price Adjustment. (a) Within 75 days after the
Closing Date, the Company and the Purchaser shall prepare and deliver to
the Shareholder a statement (the "Statement") setting forth (i) Working
Capital (as defined below) as of the close of business on December 31,
1997 ("Year End Working Capital"), and (ii) the aggregate Capital
Expenditures (as defined below) incurred by the Company and its
Subsidiaries during the period commencing July 1, 1997 and ending
December 31, 1997 (the "Actual Capital Expenditures"), together with a
special report of Deloitte & Touche, L.L.P., which will be designated as
the Company's independent auditors, that the Statement has been prepared
in compliance with the requirements of this Section 1.5.
5
<PAGE>
The Shareholder acknowledges that the Company shall have the
primary responsibility and authority for preparing the Statement.
At the Company's, the Shareholder's or the Purchaser's option, a
physical inventory of all or certain categories of inventory shall be
conducted by the Company and its Subsidiaries consistent with past practice
on or before December 31, 1997 for the purpose of preparing the Statement,
and each of the Shareholder, the Purchaser and the Company and their
respective independent auditors shall have the right to observe the taking of
such physical inventory. Any costs or expenses incurred by the Company and
its Subsidiaries in connection with the conduct of such physical inventory
shall be borne by the party requesting such physical inventory.
During the 30-day period following the Shareholder's receipt of the
Statement, the Shareholder and its independent auditors shall at the
Shareholder's expense have on-site access at all reasonable times to the
personnel, properties, books, records, schedules and analyses of the Company
and its Subsidiaries and to the working papers of the Company and its
independent auditors relating to the preparation of the Statement to the
extent reasonably required to complete their review of the Statement. The
Statement shall become final and binding upon the parties on
6
<PAGE>
the thirtieth day following delivery thereof, unless the Shareholder gives
written notice of its disagreement with the Statement ("Notice of
Disagreement") to the Company prior to such date. Any Notice of Disagreement
shall (i) specify in reasonable detail the nature of any disagreement so
asserted, and include all supporting schedules, analyses, working papers and
other documentation, (ii) only include disagreements based on mathematical
errors or based on Year End Working Capital or Actual Capital Expenditures
not being calculated in accordance with this Section 1.5 and (iii) be
accompanied by a special report of the Shareholder's independent auditors
that they concur with each of the positions taken by the Shareholder in the
Notice of Disagreement. If a Notice of Disagreement complying with the
preceding sentence is received by the Company in a timely manner, then the
Statement (as revised in accordance with clause (x) or (y) below) shall
become final and binding upon the parties on the earlier of (x) the date the
Shareholder and the Company resolve in writing any differences they have with
respect to the matters specified in the Notice of Disagreement or (y) the
date any disputed matters are finally resolved in writing by the Accounting
Firm (as defined below).
During the 30-day period following the delivery of a Notice of
Disagreement that complies with the preceding
7
<PAGE>
sentence, the Shareholder and the Company shall seek in good faith to resolve
in writing any differences which they may have with respect to the matters
specified in the Notice of Disagreement. During such period the Company and
its independent auditors shall have access at all reasonable times to the
personnel, books, records, schedules and analyses of the Shareholder and to
the working papers of the Shareholder and its independent auditors relating
to the preparation of the Notice of Disagreement to the extent reasonably
required to complete their review of such Notice. If, at the end of such
30-day period, the Shareholder and the Company have not so resolved such
differences, the Shareholder and the Company shall submit to an independent
accounting firm (the "Accounting Firm") for review and resolution any and all
matters which remain in dispute and which were properly included in the
Notice of Disagreement. The Accounting Firm shall be a mutually acceptable
internationally recognized independent public accounting firm agreed upon by
the parties hereto in writing. The Shareholder and the Company shall use
reasonable efforts to cause the Accounting Firm to render a decision
resolving the matters in dispute within 30 days following the submission of
such matters to the Accounting Firm. The Shareholder and the Company agree
that judgment may be entered upon the determination of the Accounting Firm in
any court having jurisdiction over the
8
<PAGE>
party against which such determination is to be enforced. Except as
specified in the following sentence, the cost of any arbitration (including
the fees and expenses of the Accounting Firm and reasonable fees and expenses
of legal counsel of the parties) pursuant to this Section 1.5 shall be borne
by the Shareholder and the Company in inverse proportion as they may prevail
on matters resolved by the Accounting Firm, which proportionate allocations
shall also be determined by the Accounting Firm at the time the determination
of the Accounting Firm is rendered on the merits of the matters submitted.
Subject to the third paragraph of this Section 1.5(a), the fees and expenses
of the Company's independent auditors incurred in connection with the
issuance of their special report relating to the Statement and review of any
Notice of Disagreement shall be borne by the Company, and the fees and
expenses of the Shareholder's independent auditors incurred in connection
with their review of the Statement and the issuance of their special report
relating to the Notice of Disagreement shall be borne by the Shareholder.
(b) If the Redemption Price Adjustment (as defined below) is
greater than zero, the Redemption Price shall be increased by the Redemption
Price Adjustment. If the Redemption Price Adjustment is less than zero, the
Redemption Price shall be decreased as follows: (i) if the
9
<PAGE>
absolute value of the Redemption Price Adjustment is less than or equal to
$10,000,000, the Redemption Price shall be decreased by the product of (x) .5
and (y) the absolute value of the Redemption Price Adjustment, and (ii) if
the absolute value of the Redemption Price Adjustment is greater than
$10,000,000, the Redemption Price shall be decreased by the sum of (x)
$5,000,000 and (y) the amount by which the absolute value of the Redemption
Price Adjustment is greater than $10,000,000. As an example, if the
Redemption Price Adjustment is negative $14,000,000, the Redemption Price
would be decreased by $9,000,000 ($5,000,000 + $(14,000,000 - 10,000,000)).
"Redemption Price Adjustment" shall mean an amount, positive or
negative, equal to the sum of (i) the difference, positive or negative,
between Year End Working Capital and $57,296,000 (the "Working Capital
Amount"), and (ii) the difference, positive or negative, between Actual
Capital Expenditures and $24,985,000. The Redemption Price as so increased
or decreased shall hereinafter be referred to as the "Adjusted Redemption
Price." If the Closing Date Amount is less than the Adjusted Redemption
Price, the Company shall, and if the Closing Date Amount is greater than the
Adjusted Redemption Price, the Shareholder shall, within 10 business days
after the Statement becomes final and binding upon the parties, make payment
to the other
10
<PAGE>
party by wire transfer in immediately available funds of the amount of such
difference, together with interest thereon from the Closing Date to the date
of actual payment at a variable rate equal to the rate publicly announced
from time to time by J.P. Morgan & Co. at its principal office in New York,
New York, as its "base" rate, compounded annually.
(c) The term "Working Capital" shall mean Current Assets minus
Current Liabilities (in each case as defined below). The Working Capital
Amount equals Working Capital on June 30, 1997, as set forth in Section 1.5
of the Shareholder's Disclosure Schedule, and shall not be subject to change
regardless of whether the items included therein were in accordance with
United States generally accepted accounting principles. The terms "Current
Assets" and "Current Liabilities" shall mean the Company's consolidated
current assets and consolidated current liabilities (other than (i) amounts
attributable to deferred income tax assets and deferred income tax
liabilities, or (ii) any current assets or current liabilities of Accuride de
Mexico, S.A. de C.V. ("Accuride Mexico") or its Subsidiaries, including
Servicios AISA), respectively, of the Company and its Subsidiaries (excluding
AKW), calculated in the same way, using the same methodologies and accounting
practices (including with respect to determining estimates and allowances),
as the line items comprising Working Capital used in
11
<PAGE>
determining the Working Capital Amount. Notwithstanding the foregoing, in
connection with the determination of Year End Working Capital, the parties
agree that (i) the Company shall be entitled to make normal year-end
adjustments, consistent with past practices, (ii) the Current Liabilities
included in the Year End Working Capital shall not include the $2.0 million
restructuring reserve which was included in Current Liabilities in the
Working Capital Amount, and which was reversed during the period commencing
July 1, 1997 and ending December 31, 1997, (iii) an amount equal to the
aggregate amount of Current Assets contributed by the Company (which
contribution shall have been consented to by the Purchaser) to (a) Accuride
Mexico or its Subsidiaries, including Servicios AISA, (b) AKW or (c) AOT,
Inc. during the period commencing on the date hereof, and ending on December
31, 1997, shall be added back to the Year End Working Capital, (iv) an amount
equal to the aggregate amount of Current Liabilities contributed by the
Company (which contribution shall have been consented to by the Purchaser) to
(a) Accuride Mexico or its Subsidiaries, including Servicios AISA, (b) AKW or
(c) AOT, Inc. during the period commencing on the date hereof, and ending on
December 31, 1997, shall be subtracted from the Year End Working Capital and
(v) no transfer or sale of non-Current Assets of the Company or its
Subsidiaries to (a) Accuride
12
<PAGE>
Mexico or its Subsidiaries, including Servicios AISA, (b) AKW or
(c) AOT, Inc. in return for Current Assets or for a reduction of Current
Liabilities during the period commencing on the date hereof and ending on
December 31, 1997 shall be given effect for purposes of calculating Year End
Working Capital. Without limiting the generality of the foregoing, Year End
Working Capital is to be calculated in the same way, using the same
methodologies and accounting practices (including with respect to determining
estimates and allowances), as the line items comprising Working Capital used
in determining the Working Capital Amount whether or not doing so is in
accordance with United States generally accepted accounting principles. The
parties agree that the adjustment contemplated by this Section 1.5
attributable to Working Capital is intended to show the change in Working
Capital from June 30, 1997 to December 31, 1997, subject to the exceptions
set forth in this Section 1.5, and that such change may only be measured if
the calculation is done in the same way, using the same methodologies and
accounting practices (including with respect to determining estimates and
allowances), at both dates. The scope of the disputes to be resolved by the
Accounting Firm is limited to whether Year End Working Capital was calculated
in the same way, using the same methodologies and accounting practices
(including with respect to determining estimates and allowances),
13
<PAGE>
whether Actual Capital Expenditures were calculated in accordance with
Section 1.5(f), and whether there were mathematical errors in the Statement,
and the Accounting Firm is not to make any other determination, including any
determination as to whether United States generally accepted accounting
principles were followed for the Financial Statements as of June 30, 1997,
the Statement, or in the determination of Actual Capital Expenditures or as
to whether the Working Capital Amount is correct. Any items on or omissions
from the Financial Statements as of June 30, 1997 or Working Capital Amount
that are based upon errors of fact or mathematical errors or that are not in
accordance with United States generally accepted accounting principles shall
be consistently applied and taken into account for purposes of calculating
Year End Working Capital.
(d) Solely in connection with the preparation of the Statement, the
Purchaser agrees that it shall not take any actions with respect to the
accounting books and records of the Company and its Subsidiaries on which the
Statement is to be based that are not consistent with the Company and its
Subsidiaries' past practices. Without limiting the generality of the foregoing,
for the purpose of preparing the Statement, no changes shall be made in any
reserve or other account existing as of June 30, 1997 except as a result of
events occurring after such date and, in such
14
<PAGE>
event, only in a manner consistent with past practices. Notwithstanding the
foregoing, the parties agree that the Company and its Subsidiaries shall be
free to make changes with respect to its accounting books and records and
accounting practices, policies and estimates for periods prior to the
Closing, provided that such changes shall not be given any effect in
connection with the preparation of Year End Working Capital, Actual Capital
Expenditures or the Statement.
(e) During the period of time from and after the Closing Date
through the resolution of any adjustment to the Redemption Price contemplated
by this Section 1.5, the Purchaser shall cause the Company and its
Subsidiaries to afford to the Shareholder and any accountants, counsel or
financial advisers retained by the Shareholder in connection with any
adjustment to the Redemption Price contemplated by this Section 1.5
reasonable on-site access during normal business hours to all the Company's
and its Subsidiaries' personnel, properties, books, contracts, records,
schedules and analyses and to the working papers of the Company and its
independent auditors relating to the preparation of the Statement to the
extent reasonably required to complete the resolution of any adjustment to
the Redemption Price contemplated by this Section 1.5.
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(f) "Capital Expenditures" shall mean an expenditure which,
consistent with the Company's past practice, and using the same methodologies
and classification practices of the Company in effect at the time it prepared
its June 30, 1997 Consolidated Cash Flow Statement and using the same
methodologies and classification practices of the Company in preparing the
confidential Descriptive Memorandum, dated August 18, 1997, previously
furnished to the Purchaser (the "Descriptive Memorandum"), would be
classified as a "capital outlay" in the Company's Consolidated Cash Flow
Statement or a "capital expenditure" in the Descriptive Memorandum. A
Capital Expenditure shall be considered to be incurred only if it has
resulted in a decrease in Year End Working Capital, either through the
payment of cash or the recording of a Current Liability. Capital
Expenditures shall not include any expenditure related to (i) Accuride
Mexico, or its Subsidiaries, including Servicios AISA, (ii) AKW or (iii) AOT,
Inc.
2. Representations and Warranties of the Shareholder. The
Shareholder represents and warrants to the Purchaser as follows:
2.1 Corporate Status and Authority. The Shareholder is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of New York and has all corporate power and authority
to own the
16
<PAGE>
Redeemed Shares. Each of the Company and the Shareholder has all corporate
power and authority to execute and deliver this Agreement and the other
documents, instruments, certificates and agreements listed on Schedule 1
hereto (each, a "Document," collectively the "Documents") to which it is a
party and to perform its obligations hereunder and thereunder. On or prior
to the Closing, the execution, delivery and performance of the Documents to
which the Shareholder or the Company is or will be a party have been or will
have been, as applicable, duly authorized by the Board of Directors of the
Company or the Shareholder, as the case may be, and, in the case of Documents
to which the Company is or will be a party, have been or will have been, as
applicable, approved by the Shareholder, as the sole stockholder of the
Company, which authorizations and approvals constitute all necessary
corporate action on the part of the Shareholder and the Company. Each of the
Documents to which it is a party has been or will be prior to the Closing
duly executed and delivered by each of the Company and the Shareholder and
(assuming its due execution and delivery by the other parties thereto)
constitutes or will constitute, as applicable, the valid and binding
obligation of each of the Company and the Shareholder, except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium, receivership
17
<PAGE>
or similar laws affecting creditors' rights generally and by general
principles of equity (whether considered at law or in equity). The
Shareholder acquired the Redeemed Shares in one or more transactions exempt
from registration under the Securities Act of 1933, as amended, and in
compliance with state securities laws. Upon the Redemption, the Company will
acquire good, valid and marketable title to the Redeemed Shares, free and
clear of any and all Liens, other than Liens created by the Company in
connection with the transactions contemplated by the Documents, and except
for restrictions on transfer arising under federal or state securities laws.
2.2 No Conflicts, Consents and Approvals, etc. (a) Except as set
forth in Section 2.2 of the Shareholder's Disclosure Schedule, neither the
execution, delivery and performance by the Shareholder or the Company of any
of the Documents to which it is or will be a party nor the consummation of
the transactions contemplated hereby and thereby will result in (i) any
conflict with the charter documents or by-laws of the Shareholder, the
Company or any of its Subsidiaries, (ii) any breach or violation of or
Default under any Law or any Contract to which the Shareholder, the Company
or any of its Subsidiaries is a party or by which any of them or their
respective properties or assets are bound, except where such breaches,
violations or Defaults
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<PAGE>
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and would not, individually or in the aggregate,
reasonably be expected to materially impair the ability of the Shareholder or
the Company to perform their respective obligations under, or to consummate
the transactions contemplated by, the Documents, provided, however, that no
representation or warranty is made hereunder with respect to any federal or
state antitrust laws or similar foreign laws, or (iii) the creation or
imposition of any Lien upon or with respect to any of the assets, properties
or rights owned or used by the Company or its Subsidiaries, except for such
Liens which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect and would not, individually or in the
aggregate, reasonably be expected to materially impair the ability of the
Shareholder or the Company to perform their respective obligations under, or
to consummate the transactions contemplated by, the Documents.
(b) Except as set forth in Section 2.2 of the Shareholder's Disclosure
Schedule, no material consent, approval or authorization of or filing with any
Person is required on the part of the Shareholder, the Company or any of its
Subsidiaries in connection with the execution and delivery of each of the
Documents or the consummation of the transactions contemplated hereby and
thereby, except
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filings, consents or approvals (i) required with respect to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), (ii)
under Section 13(a) of the Securities Exchange Act, as amended (the "Exchange
Act"), (iii) set forth in Section 2.2 of the Shareholder's Disclosure
Schedule and (iv) with or from any Person other than a Governmental Authority
which, if not made or obtained, would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and would not,
individually or in the aggregate, reasonably be expected to materially impair
the ability of the Shareholder or the Company to perform their respective
obligations under, or to consummate the transactions contemplated by, the
Documents.
2.3 Corporate Status of the Company. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of
the State of Delaware. The Company has all requisite corporate power and
authority to conduct its business and to own or lease its properties, as now
conducted, owned or leased. The Company is duly qualified to do business in
each jurisdiction except where the failure to be so qualified would not
reasonably be expected to have a Material Adverse Effect. The Company has
delivered to the Purchaser a correct and complete copy of the Company's
charter documents and bylaws. The Company does not have, directly or
indirectly, any equity or other
20
<PAGE>
ownership (whether controlling or not) interest, advance (except for accounts
receivable incurred in the ordinary course of business in connection with the
sale of Inventory), loan or investment in any Person other than its
Subsidiaries, except as set forth in Section 2.3 of the Shareholder's
Disclosure Schedule.
2.4 Capital Stock of the Company. The authorized capital stock of
the Company consists of 1,000 shares of common stock, $.01 par value, 100 of
which shares are issued and outstanding and owned by the Shareholder, free
and clear of all Liens. The Redeemed Shares have been duly authorized and
validly issued and are fully paid and non-assessable and not subject to any
preemptive or similar rights. The Company has duly and validly authorized
the issuance and sale of the Shares and when issued and delivered pursuant to
this Agreement, the Shares will be validly issued, fully paid and
non-assessable and not subject to any preemptive or similar rights. Except
as set forth in this Section 2.4, there are no other shares of capital stock
or other voting securities of the Company authorized, issued or outstanding.
There are no outstanding options, warrants, conversion, exchange or other
rights or agreements of any kind (other than this Agreement) for the purchase
or acquisition from, or the sale or issuance by, the Shareholder or the
Company of any shares
21
<PAGE>
of stock of the Company, and no authorization therefor has been given.
2.5 Subsidiaries. (a) The Company has no Subsidiaries other than
the Subsidiaries listed in Section 2.5 of the Shareholder's Disclosure
Schedule.
(b) The authorized capital stock of each of the Company's
Subsidiaries and the number of issued and outstanding shares of each such
Subsidiary are set forth in Section 2.5 of the Shareholder's Disclosure
Schedule. All such issued and outstanding shares are owned, directly or
indirectly, by the Company, free and clear of all Liens and have been duly
authorized and validly issued and are fully paid and non-assessable. The
Company has delivered to the Purchaser a correct and complete copy of each of
its Subsidiaries' charter documents and bylaws. There are no outstanding
options, warrants, conversion, exchange or other rights or agreements of any
kind for the purchase or acquisition from, or the sale or issuance by, the
Company or any of its Subsidiaries of any shares of capital stock of any of
the Company's Subsidiaries, and no authorization therefor has been given.
(c) Each of the Company's Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, which jurisdiction is set forth in Section 2.5
of the
22
<PAGE>
Shareholder's Disclosure Schedule. Each of the Company's Subsidiaries
has all requisite corporate power and authority to conduct its business and
to own or lease its properties, as now conducted, owned or leased. Each of
the Company's Subsidiaries is duly qualified to do business in each
jurisdiction except where the failure to be so qualified would not reasonably
be expected to have a Material Adverse Effect.
2.6 Financial Statements. Section 2.6 of the Shareholder's Disclosure
Schedule includes the unaudited consolidated balance sheets of the Company and
its Subsidiaries as of December 31, 1996, 1995 and 1994 and September 30, 1997,
respectively, and the related unaudited consolidated statements of income,
consolidated statements of shareholders equity and consolidated statements of
cash flows (collectively, the "Financial Statements"). The Financial Statements
were derived from the books and records of the Company and its Subsidiaries, as
the case may be, and present fairly in all material respects the financial
condition of the Company and its Subsidiaries as of their respective dates and
the results of operations and the cash flows of the Company and its Subsidiaries
for the periods indicated, subject to, in the case of the Financial Statements
as of and for the period ended September 30, 1997, normal year-end adjustments
and have been prepared and presented,
23
<PAGE>
respectively, in accordance with United States generally accepted accounting
principles applied on a consistent basis, except as set forth in Section 2.6
of the Shareholder's Disclosure Schedule or as noted therein. As of the date
hereof, the Company and its wholly-owned Subsidiaries had no outstanding
indebtedness for borrowed money.
2.7 Absence of Undisclosed Liabilities. None of the Company or any
of its Subsidiaries has any material liabilities, whether absolute, accrued,
contingent or otherwise, of a nature required by United States generally
accepted accounting principles to be reflected on a consolidated balance
sheet of the Company and its Subsidiaries, except for (i) liabilities
reflected or reserved against in the Financial Statements, (ii) liabilities
incurred in the ordinary course of business, (iii) liabilities which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect, or (iv) liabilities reflected in Section 2.7 of the
Shareholder's Disclosure Schedule.
2.8 Assets, Properties, etc. Section 2.8 of the Shareholder's
Disclosure Schedule lists all items of real property owned by the Company and
its Subsidiaries (the "Owned Real Property"). Section 2.8 of the
Shareholder's Disclosure Schedule lists all material items of real
24
<PAGE>
property leased by the Company and its Subsidiaries (the "Leased Real
Property"). Except as set forth in Section 2.8 of the Shareholder's
Disclosure Schedule, the Company and each of its Subsidiaries has (a) legal
and beneficial ownership in fee of all of the Owned Real Property, (b) valid
and subsisting leasehold estates in the Leased Real Property and is in
undisturbed possession of all space that it is currently entitled to possess
under each such lease and neither the Company nor any of its Subsidiaries has
received written notice of rights adverse to the rights of the Company or any
of its Subsidiaries asserted by any Person, and has not received or delivered
any written notice of Default under any such leases, and (c) legal and
beneficial ownership of all of its tangible personal property included in the
Financial Statements dated as of September 30, 1997 (except for properties
disposed of since such date in the ordinary course of business), in each case
subject to no Lien, except (i) Liens reflected in the Financial Statements or
in Section 2.8 of the Shareholder's Disclosure Schedule, (ii) Liens for Taxes
(A) not due and payable or (B) which are being contested in good faith by
appropriate proceedings, (iii) Liens of warehousemen, mechanics and
materialmen and other similar statutory Liens incurred in the ordinary course
of business, and (iv) Liens which do not secure indebtedness and do not
materially interfere with the cur-
25
<PAGE>
rent use of the properties affected thereby ("Permitted Liens"). Except as
set forth in Section 2.8 of the Shareholder's Disclosure Schedule, the
Company and its Subsidiaries, as the case may be, enjoy peaceful and
undisturbed possession of all Owned Real Property. Except as set forth in
Section 2.8 of the Shareholder's Disclosure Schedule, there are no pending,
and neither the Shareholder, the Company nor any of its Subsidiaries has
received written notice that there is any threatened, condemnation
proceedings relating to the Owned Real Property or the Leased Real Property
or other actions which could reasonably be expected to result in the
imposition of any Lien on any property or interest of the Company or its
Subsidiaries, other than Permitted Liens. Except as set forth in Section 2.8
of the Shareholder's Disclosure Schedule, the improvements located on the
Owned Real Property comply in all material respects with all applicable
material Laws and all Liens applicable to such property and the Shareholder,
the Company and its Subsidiaries have received no written notices of
violation of same. Except as set forth in Section 2.8 of the Shareholder's
Disclosure Schedule, the Company and its Subsidiaries own or have the legal
right to use all of the material tangible assets and properties, real or
personal, which are required for the operation of the business of the Company
and its Subsidiaries as it is conducted on the date hereof.
26
<PAGE>
Company and its Subsidiaries as it is conducted on the date hereof.
2.9 Contracts. Section 2.9 of the Shareholder's Disclosure
Schedule lists all Material Contracts. For purposes of this Agreement,
"Material Contracts" means all Contracts of the following types to which the
Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries or any of their respective properties is bound as of the
date hereof and will be bound following the Closing, including real property
leases, labor or employment-related agreements, and Contracts relating to
intellectual property: (a) joint venture and limited or general partnership
agreements, shareholder agreements with respect to the Company's
Subsidiaries, joint ventures or partnerships or other Contracts involving
sharing of profits, losses, costs or liabilities, (b) mortgages, indentures,
loan or credit agreements, letters of credit, reimbursement agreements,
personal property leases, security agreements and other agreements and
instruments relating to the borrowing of money or extension of credit in any
case in excess of $500,000 in any one calendar year, (c) distribution and
marketing agreements involving in excess of $1,000,000 of product per year,
(d) other Contracts which are not cancelable by the Company or any of its
Subsidiaries on notice of 60 days or less and which require payment by
27
<PAGE>
the Company after the date hereof of more than $1,000,000 in any one calendar
year, (e) material license or royalty agreements, whether the Company or any
of its Subsidiaries is the licensor or licensee thereunder, other than
Company Licenses (as defined below), (f) confidentiality and non-disclosure
agreements (whether the Company or any of its Subsidiaries is the beneficiary
or the obligated party thereunder), other than such agreements entered into
with consultants to the Company and its Subsidiaries, (g) customer order or
sales Contracts under which the customer is to make a payment after the date
hereof of $1,000,000 or more in any one calendar year, (h) Contracts
containing covenants limiting the freedom of the Company or its Subsidiaries
or any of their respective officers to engage in any line of business or
compete with any Person that relates directly or indirectly to the Company's
business, (i) indemnification agreements with respect to any acquisition or
disposition of assets, securities or business, whether the Company and its
Subsidiaries is the indemnitor or indemnitee, other than Contracts relating
to sale of Inventory entered into in the ordinary course of business, (j)
Contracts with any Person known to be an Affiliate of the Shareholder (other
than the Company and its Subsidiaries), (k) supply or requirements Contracts
under which the Company or any of its Subsidiaries is to make a payment after
the date hereof of $1,000,000 or
28
<PAGE>
more in any one calendar year, and (l) any executory Contract relating to any
material acquisitions or dispositions of assets, securities or businesses by
the Company or its Subsidiaries, other than Contracts relating to the sale of
Inventory in the ordinary course of business. The Company and its
Subsidiaries have made available to the Purchaser a true and correct copy of
each Material Contract. Except as set forth in Section 2.9 of the
Shareholder's Disclosure Schedule, (a) the Company and its Subsidiaries are
in compliance in all material respects with their respective obligations
under the Material Contracts, (b) all of the Material Contracts are in full
force and effect, are valid and binding obligations of the Company and its
Subsidiaries and enforceable in all material respects by the Company and its
Subsidiaries in accordance with their terms except to the extent that such
enforceability may be limited by bankruptcy, reorganization, insolvency,
fraudulent conveyance, moratorium, receivership or similar laws affecting
creditors' rights generally and by general principles of equity (whether
considered at law or in equity) and except to the extent that any such
failure to be in full force and effect or valid and binding and enforceable
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, and (c) to the knowledge of
29
<PAGE>
the Shareholder, the other party to a Material Contract is in compliance with
its material obligations thereunder.
2.10 Employment Agreements and Benefits, etc.
2.10.1 Employment Agreements and Plans.
(a) Section 2.10 of the Shareholder's Disclosure Schedule lists
all (i) employment and consulting agreements (including severance and
retention agreements), whether oral or in writing, to which the Company or
any of its Subsidiaries is a party (collectively, the "Employment
Agreements"), (ii) collective bargaining agreements to which the Company or
any of its Subsidiaries is a party (collectively, the "Collective Bargaining
Agreements") and (iii) profit sharing, pension, retirement, bonus, incentive
compensation, stock option, deferred compensation, severance, post-retirement
or active insurance coverage (including any self-insured arrangements),
worker's compensation, vacation, or other oral or written employee benefit
plans, programs or policies (including, without limitation, any "employee
benefit plan" within the meaning of Section 3(3) of ERISA) for the benefit of
the employees or former employees of the Company or its Subsidiaries or their
beneficiaries, that is maintained or established by the Shareholder, the
Company or its Subsidiaries or to which the Shareholder, the Company or any
of its Subsidiaries contributes or is required to contribute (other than the
Comprehensive Executive Non-
30
<PAGE>
Qualified Retirement and Savings Plan of the Phelps Dodge Corporation, The
Phelps Dodge Corporation Stock Option Plan (and stock options or other awards
granted thereunder), and the employment or retention-type agreements between
the Shareholder and any Company Employee (as defined below) for which the
Shareholder shall retain all liabilities, obligations and responsibilities
under Section 5 of this Agreement) (the "Plans"). Notwithstanding any
provision in this Section 2, the representations and warranties made by the
Shareholder under Section 2 (other than the first sentence of Section 2.10.1
and the last sentence of Section 2.10.2) shall not be applicable to nor cover
any employment or retention-type agreement entered into between the
Shareholder and any Company Employee for which all liabilities, obligations
and responsibilities shall have been retained by the Shareholder pursuant to
Section 5 of this Agreement. Notwithstanding any other provision in this
Section 2.10, the representations and warranties made by the Shareholder
under this Section 2.10 shall not apply to the Accuride Plans to be
established pursuant to Section 5.2 of this Agreement.
(b) True and complete copies of each of the following documents
have been made available by the Shareholder or the Company to the Purchaser:
(i) each Employment
31
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Agreement, Collective Bargaining Agreement and Plan (and, if applicable,
related trust agreements) and all amendments thereto, all summary plan
descriptions or summaries of material modifications, all material written
interpretations thereof and material written descriptions thereof which have
been distributed to the employees of the Company or any of its Subsidiaries,
all annuity contracts or other funding instruments and a complete description
of any Employment Agreement, Collective Bargaining Agreement or Plan which is
not in writing; (ii) the most recent determination letter issued by the
Internal Revenue Service with respect to any Plan intended to be qualified
under Section 401(a) of the Code; (iii) the most recent Annual Report on Form
5500 Series filed with any governmental agency with respect to any Plan; (iv)
the most recent actuarial report prepared for each Plan; and (v) a
description setting forth the amount of any material liability of the Company
or any of its Subsidiaries as of the Closing for payments more than thirty
days past due with respect to each Employment Agreement, Collective
Bargaining Agreement or Plan.
2.10.2 ERISA. Except as otherwise disclosed in Section 2.10 of the
Shareholder's Disclosure Schedule, no Plan which is subject to Part 3 of
Subtitle B of Title I of ERISA or Section 412 of the Code has incurred any
"accumu-
32
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lated funding deficiency," whether or not waived, within the meaning of
Section 302 of ERISA or Section 412 of the Code, whichever may apply, and no
material liability (other than for annual premiums) to the Pension Benefit
Guaranty Corporation has been incurred by the Company or any of its
Subsidiaries with respect to any such Plan. No Plan is a "multiemployer
plan" as defined in Section 3(37) or 4001(a)(3) of ERISA or subject to
Section 4063 or 4064 of ERISA. Neither the Company nor any of its
Subsidiaries has incurred liability with respect to any Plan under Section
4062(e). Neither the Company nor any of its Subsidiaries has failed to pay
when due any "required installment," within the meaning of Section 412(m) of
the Code and Section 302(e) of ERISA, whichever may apply, with respect to
any Plan. Neither the Company nor any of its Subsidiaries is subject to any
lien imposed under Section 412(n) of the Code or Section 302(f) of ERISA,
whichever may apply, with respect to any Plan or is required to provide
security to a Plan under Section 401(a)(29) of the Code. None of the Company
or any of its Subsidiaries has any present or contingent liability,
obligation or responsibility under any "multiemployer plan," as defined in
section 3(37) or 4001(a)(3) of ERISA. Except as otherwise disclosed in
Section 2.10 of the Shareholder's Disclosure
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Schedule, all contributions required to have been made by the Company or any
of its Subsidiaries to any Plan under the terms of any such Plan or pursuant
to any applicable Collective Bargaining Agreement or applicable law
(including, without limitation, ERISA and the Code) have been made within the
time prescribed by any such Plan, Collective Bargaining Agreement or law.
Each Plan has been operated and administered in all material respects in
compliance with applicable law and its terms. Neither the Company nor any of
its Subsidiaries has incurred any liability for any tax or penalty imposed by
Section 4975 of the Code or Section 502(i) of ERISA relating to any Plan.
The transactions contemplated by this Agreement will not result in the
acceleration of any benefits under any Employment Agreement, Collective
Bargaining Agreement or Plan. Except with respect to the Employment
Agreements, Collective Bargaining Agreements and Plans, neither the Company
nor any of its Subsidiaries has any present or contingent liability or
obligation under any "employee benefit plan" within the meaning of Section
3(3) of ERISA or any employment, consulting, severance or other similar
contract, arrangement, plan or policy or any (written or oral) plan,
arrangement, program, agreement or commitment providing for insurance
coverage (including any self-insured arrangements), workers'
34
<PAGE>
compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, retirement benefits, life, health, disability or accident
benefits, deferred compensation, severance compensation, profit-sharing
bonuses, stock options, stock appreciation rights, stock compensation or
benefits.
2.10.3 Tax Qualification. Except as set forth in Section 2.10.3 of
the Shareholder's Disclosure Schedule, each Plan intended to be qualified
under section 401(a) of the Code, and the trust (if any) forming a part
thereof, has received a favorable determination letter from the IRS as to its
qualification under the Code and to the effect that each such trust is exempt
from taxation under section 501(a) of the Code, and, to the Shareholder's
knowledge, nothing has occurred since the date of such determination letter
(or if there is no such determination letter, the date of the inception of
the Plan) that will adversely affect such qualification or tax-exempt status.
2.10.4 Terminations. Since November 1991, no Plan listed on
Section 2.10 of the Shareholder's Disclosure Schedule has been terminated.
The Accuride Salaried Retiree Medical and Life Insurance Plan has been frozen.
2.10.5 Deductibility of Payments. There is no Employment
Agreement, Collective Bargaining Agreement or Plan, or other contract,
agreement, plan or arrangement
35
<PAGE>
covering any employee or former employee of the Company or any of its
Subsidiaries (or any other person who performed personal services for the
Company or any of its Subsidiaries) that, individually or collectively,
provides for the payment of any compensation, benefit or other payment by the
Company or any of its Subsidiaries in connection with such employment (or
performance of personal services) for which the deduction by the Company and
its Subsidiaries will be disallowed under Section 162(m) or 280G of the Code.
2.11 Intellectual Property. (a) Section 2.11 of the Shareholder's
Disclosure Schedule lists (i) all patents and applications therefor,
trademarks and service marks and registrations and applications therefor,
registered copyrights and applications therefor and trade names owned by the
Company and its Subsidiaries and material to the business of the Company and
its Subsidiaries taken as a whole which, together with the material trade
secrets and confidential business information owned by the Company and its
Subsidiaries constitutes the "Owned Intellectual Property," (ii) all
agreements granting rights in Intellectual Property ("Licenses") to the
Company and any of its Subsidiaries (other than Licenses (the "Company
Licenses") from the Company or any other Subsidiary), which rights are
material to the business of the Company and its Subsidiaries taken as a whole
("Intellectual Property Licenses"), and (iii)
36
<PAGE>
material software programs developed and owned by the Company and its
Subsidiaries (the "Internal Software"). Owned Intellectual Property,
Intellectual Property Licenses and Internal Software are collectively
referred to as "Company Intellectual Property."
(b) Except as set forth in Section 2.11 of the Shareholder's
Disclosure Schedule, (i) the Company and its Subsidiaries are the owners of,
or have the legal and valid right to use, the Company Intellectual Property
free and clear of all Liens, except for Permitted Liens and Liens which would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, (ii) there are no Licenses by the Company or any
Subsidiary granting to any third party (other than the Company or any other
of its Subsidiaries) rights in the Owned Intellectual Property or Internal
Software, (iii) the Company Intellectual Property constitutes all of the
material Intellectual Property used in or necessary for the conduct of the
business of the Company and its Subsidiaries as currently conducted and (iv)
none of the Company or any of its Subsidiaries has any obligation to pay any
royalties to any Person for the use of any of the Company Intellectual
Property other than in accordance with the Company Licenses and the
Intellectual Property Licenses.
37
<PAGE>
(c) None of the Company or any of its Subsidiaries has any
written, or to the knowledge of the Shareholder, oral, notice or claim that
it is infringing on or otherwise acting adversely to the rights of any Person
in respect of such Person's Intellectual Property and, to the knowledge of
the Shareholder, there has been no infringement by any Person of the Owned
Intellectual Property or the Internal Software, except as set forth in
Section 2.11 of the Shareholder's Disclosure Schedule.
(d) To the Shareholder's knowledge, the material registered
trademarks used by Accuride Canada, Inc., a Subsidiary of the Company
("Accuride Canada") pursuant to the Agreement dated as of December 1, 1986
between the Company and Accuride Canada (the "Technology Agreement") are not
owned as of record by Accuride Canada. To the Shareholder's knowledge, other
than payments made pursuant to the Technology Agreement and the Agreement
dated as of January 1, 1992 between the Company and Accuride Canada (the
"Marketing Agreement") no material cash payments have been made by Accuride
Canada to the Company in payment for the license granted to Accuride Canada
in the Technology Agreement to use the material registered trademarks and
material patents. To the Shareholder's knowledge, pursuant to the Marketing
Agreement, in connection with all sales of certain vehicle wheels, rims and
related products subject to
38
<PAGE>
the Marketing Agreement (the "Subject Products") to U.S. vehicle
manufacturers and certain Canadian subsidiaries of such U.S. vehicle
manufacturers (the "Subject Customers"), the Company has provided Accuride
Canada with the services set forth in the Marketing Agreement including: (i)
promoting the Subject Products at the wholesale and retail level in order to
establish their market potentials among the Subject Customers; (ii)
negotiating supply arrangements with the Subject Customers; (iii) soliciting
and procuring orders for the purchase of the Subject Products from the
Subject Customers; (iv) communicating information (known or available to the
Company) concerning the financial standing of the Subject Customers to
Accuride Canada; and (v) managing and overseeing relationships with the
Subject Customers.
2.12 Governmental Authorizations; Compliance with Law. Except as
otherwise set forth in Sections 2.12 or 2.17 of the Shareholder's Disclosure
Schedule, the Company and its Subsidiaries hold all material licenses,
permits, franchises, approvals, authorizations, consents or orders and other
governmental authorizations of any Governmental Authority, including
Environmental Permits (the "Permits"), necessary to conduct the business of
the Company and its Subsidiaries taken as a whole. All such Permits are
valid, binding and in full force and effect. No material loss or
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expiration of any such Permit is pending or, to the Shareholder's knowledge,
threatened (other than expiration upon the end of the term thereof). Except
as set forth in Sections 2.12 or 2.17 of the Shareholder's Disclosure
Schedule, the Company and its Subsidiaries are in compliance with the
material terms of such Permits and with all rules and regulations relating
thereto. Except as set forth in Sections 2.12 or 2.17 of the Shareholder's
Disclosure Schedule, the Company and each of its Subsidiaries are in material
compliance with all applicable Laws (including Environmental Laws), and none
of the Shareholder or the Company or any of its Subsidiaries has received any
written notice of any alleged material claim or threatened material claim,
violation of or liability under any such Law which has not heretofore been
cured or for which there is material remaining liability.
2.13 Litigation. Except as otherwise set forth in Section 2.13 of
the Shareholder's Disclosure Schedule, there are no Actions pending or, to
the knowledge of the Shareholder, threatened, against the Company or any of
its Subsidiaries, to the Shareholder's knowledge, any officers or directors
of the Company and its Subsidiaries as such or the Shareholder in the
Shareholder's capacity as a shareholder of the Company, whether at law or in
equity, whether civil or criminal in nature and whether before or by any
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Governmental Authority, (i) which have a stated damage claim greater than, or
which have had a demand made in excess of or which involve an amount in
controversy greater than, $1 million or, if no such damage claim is stated,
demand is made or the amount in controversy does not involve more than $1
million, would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect or would, individually or in the
aggregate, reasonably be expected to materially impair the ability of the
Shareholder or the Company to perform their respective obligations under, or
to consummate the transactions contemplated by, the Documents, or (ii) which
question the validity of this Agreement or any action taken or to be taken by
the Shareholder, the Company or any of the Subsidiaries in connection
herewith.
2.14 Taxes. Except as set forth in Section 2.14 of the
Shareholder's Disclosure Schedule, (a) the Shareholder, the Company and each
of its Subsidiaries have timely filed (or will have timely filed by the
Closing Date) all material Tax Returns required to be filed by or with
respect to the Company and each such Subsidiary on or prior to the Closing
Date, (b) to the knowledge of the Shareholder, all such Tax Returns were true
and correct in all material respects, (c) all Taxes shown as due on such Tax
Returns have been (or will be by the Closing Date) paid, (d) no
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written claim for assessment or collection of Taxes with respect to the
conduct of the business or the ownership of the assets of the Company and its
Subsidiaries is being asserted against the Shareholder, the Company or any of
its Subsidiaries, other than such claims that have been fully resolved or
settled and (e) there are no tax allocation, sharing, or indemnification
agreements between (i) the Company or any of its Subsidiaries, on the one
hand, and the Shareholder or any Affiliate of the Shareholder (other than the
Company or any of its Subsidiaries) (such Affiliate other than the Company
and its Subsidiaries, "Non-Company Affiliate"), on the other hand, or (ii)
between the Shareholder, the Company and its Subsidiaries, on the one hand,
and any other party, on the other hand, in either case that will be binding
on the Purchaser, the Company or any of its Subsidiaries after the Closing
Date.
2.15 Absence of Changes. Since June 30, 1997, except as otherwise set
forth in this Agreement or as otherwise reflected in the Shareholder's
Disclosure Schedule, the business of the Company and its Subsidiaries taken as a
whole has been conducted in the ordinary course consistent with past practice,
there has been no event or condition which, individually or in the aggregate,
has had or is reasonably expected to have a Material Adverse Effect, and none of
the Company or any of its Subsidiaries has:
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(a) purchased or redeemed any shares of its stock, or granted or
issued any option, warrant or other right to purchase or acquire any such
shares;
(b) incurred any material liabilities or obligations, except
liabilities and obligations incurred in the ordinary course of business and
advances from the Shareholder consistent with past practice;
(c) mortgaged, pledged or subjected to any Lien any of its properties
or assets, except for Permitted Liens incurred in the ordinary course of
business;
(d) increased the compensation of, or entered into severance
agreements with, any officer or employee, other than (i) consistent with
past practice or as required by any labor agreement in effect on the date
hereof or (ii) to comply with applicable law;
(e) sold, assigned, transferred or otherwise disposed of or agreed to
sell, assign, transfer or otherwise dispose of any material properties or
assets, other than Inventories in the ordinary course of business;
(f) canceled or forgiven any material debts, rights or claims;
(g) changed the accounting methods, principles or practices by the
Company or any of its Subsidiaries;
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(h) revalued any of its assets, including without limitation writing
down the value of Inventory or writing off notes or accounts receivable;
(i) incurred any damage, destruction or loss (whether or not covered
by insurance) materially adversely affecting the property, business or
assets of the Company and its Subsidiaries;
(j) declared, set aside, or paid dividends or distributions or
incurred any obligation to make any distribution in respect of the
securities of the Company or redeemed, purchased or otherwise acquired any
of the securities of the Company or its Subsidiaries;
(k) incurred any indebtedness for borrowed money, guaranteed the
obligations of others, or entered into indemnification agreements; or
(l) agreed to do any of the things described in the preceding clauses
(a) through (k) other than as expressly provided for herein.
2.16 Insurance. Section 2.16 of the Shareholder's Disclosure
Schedule sets forth a complete and correct list, as of the date hereof, of
the material policies of insurance maintained by the Shareholder, the Company
and its Subsidiaries with respect to the products, properties, assets,
operations and business of the Company and its
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Subsidiaries (excluding any policies of insurance maintained for purposes of
providing benefits under any Plan as defined in Section 2.10.1 and including
workers' compensation and employers' liability policies) since March 4, 1988
(the "Policies"). All insurance coverage applicable to the Company or its
Subsidiaries and their respective businesses or assets is in full force and
effect, insures the Company and its Subsidiaries in reasonably sufficient
amounts against all risks usually insured against by Persons operating
similar businesses or properties of similar size in the localities where such
businesses or properties are located, provides coverage as may be required by
applicable rules and regulations and by any and all Material Contracts to
which the Company or any of its Subsidiaries is a party and has been issued
by insurers of recognized responsibility. The Company is an insured party on
each Policy for pre-Closing events and occurrences falling within the
applicable periods covered by such Policy. All products liability, general
liability and workers' compensation Policies maintained by the Company and
its Subsidiaries and all such Policies maintained by the Shareholder with
respect to the products, properties, assets, operations and business of the
Company and its Subsidiaries have been occurrence policies and not claims
made policies. Except as set forth on Section 2.16 of Shareholder's
Disclosure Schedule there are
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no outstanding performance and other surety bonds covering or issued for the
benefit of the Company or its Subsidiaries. Except as set forth in Section
2.16 of the Shareholder's Disclosure Schedule, neither the Company nor any of
its Subsidiaries has any self insurance arrangement by or affecting the
Company nor any of its Subsidiaries, including any reserves established
therefor. All premiums due have been paid and no notice of cancellation or
termination or intent to cancel have been received by the Company or any of
its Subsidiaries with respect to such Policies. The Shareholder, the Company
and its Subsidiaries are not in material Default under any such Policies, and
there are no material unpaid claims under any such Policy or binder.
2.17 Environmental Compliance and Conditions. Except as set forth on
Section 2.17 of the Shareholder's Disclosure Schedule:
(a) To the knowledge of the Shareholder, there are no past or present
events, conditions or circumstances relating to any environmental matter,
including, without limitation, pending changes in any Environmental Law or
Permit, that are likely to interfere with or otherwise adversely affect the
business of the Company or the business of any of its Subsidiaries, in each
case, as currently or presently proposed to be conducted or which would
interfere with the compliance
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by the Company or any of its Subsidiaries with any Environmental Law or
Environmental Permit, except where such interference or adverse effect
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect;
(b) There are no present Environmental Conditions in any way relating
to the business of the Company, the business of any of its Subsidiaries or
at any Facility or Former Facility, except for Environmental Conditions
that would not, individually or in the aggregate, have a Material Adverse
Effect;
(c) Neither the Company nor any of its Subsidiaries has received, at
any time after November 14, 1994, any written notice of alleged, actual or
potential liability for, or any inquiry or investigation regarding, (i) any
Release or threatened Release of any Hazardous Substance at any location,
whether at property owned or leased by the Company or any of its
Subsidiaries or otherwise, or (ii) any alleged violation of or
non-compliance with the conditions of any Environmental Permit or the
provisions of any Environmental Law; and
(d) Neither the Company nor any of its Subsidiaries is a party,
whether as a direct signatory or, to the knowledge of the Shareholder, as
successor,
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assignee, third party beneficiary or otherwise, to any lease or
other contract (excluding insurance policies) under which, the Company or
any of its Subsidiaries is obligated by or entitled to the benefits of,
directly or indirectly, any representation, warranty, indemnification,
covenant, restriction or other undertaking concerning any Environmental
Condition.
2.18 Brokers. All negotiations relating to the Documents and the
transactions contemplated hereby and thereby have been carried out without the
intervention of any person acting on behalf of the Shareholder or the Company in
such manner as to give rise to any valid claim against the Purchaser, the
Shareholder or the Company for any brokerage or finder's commission, fee or
similar compensation, except for J.P. Morgan Securities Inc., whose fees in
respect hereof shall be paid by the Shareholder.
2.19 Affiliate Transactions. Section 2.19 of the Shareholder's
Disclosure Schedule contains a complete and correct list of all agreements,
contracts, transfers of assets or liabilities or other commitments or
transactions, whether or not entered into in the ordinary course of business,
to or by which the Company and its Subsidiaries, on the one hand, and the
Shareholder or any Affiliate (including any officer or director) of the
Company or its Subsidiaries (other than the Company or any of its
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Subsidiaries), on the other hand, are or have been a party or otherwise bound
or affected, and that (i) are currently pending or in effect or were in
effect since January 1, 1996 and in which the amount involved exceeds $60,000.
2.20 Suppliers; Raw Materials. Neither the Shareholder, the
Company nor any of its Subsidiaries has, since January 1, 1997, received any
notice, either written or, to the knowledge of the Shareholder, oral, that
there has been or will be any adverse change in the price or supply of the
raw materials, supplies, merchandise or other goods or services provided to
the Company or its Subsidiaries, or that any supplier listed in Section 2.20
of the Shareholder's Disclosure Schedule (which lists suppliers of the
Company who received payment from the Company of $1 million or more in 1996)
will not sell or will reduce its sale of raw materials, supplies, merchandise
and other goods to the Company or any of its Subsidiaries, as the case may
be, at any time after the Closing Date in amounts and on terms and conditions
substantially the same as those used in its current sales to the Company or
any of its Subsidiaries, as the case may be, except for general and customary
price increases or price increases resulting from changes in the market
prices of such raw materials, supplies, merchandise or other goods and except
for changes in price, supply or
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sales which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
2.21 Customers. Neither the Shareholder, the Company nor any of
its Subsidiaries has, since January 1, 1997, received any notice, either
written or, to the knowledge of the Shareholder, oral, that any customer
listed in Schedule 2.21 of the Shareholder's Disclosure Schedule (which lists
the ten largest (a) Truck/Bus OEM customers, (b) Trailer OEM customers and
(c) distributors) (i) has ceased, or will cease, to purchase the products of
the Company or any of its Subsidiaries, as the case may be, (ii) has reduced,
or will reduce, purchases of the products of the Company or any Subsidiary,
as the case may be, or (iii) has sought, or is seeking, to reduce the price
it will pay or to return products in amounts in excess of returns previously
made in the ordinary course of business for the products of the Company or
any of its Subsidiaries, as the case may be, which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
2.22 Accounts Receivable. The Shareholder has delivered or caused
to be delivered to the Purchaser a complete and accurate summary of all
accounts receivable of the Company and its Subsidiaries, as of June 30, 1997.
All accounts receivable reflected in the Financial Statements or on such
books have been generated in the ordinary course of
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business and reflect a bona fide obligation for the payment of goods or
services provided by the Company and its Subsidiaries. To the knowledge of
the Shareholder, all such receivables are fully collectible in the ordinary
course of business within three months except to the extent of an amount not
in excess of the reserve for doubtful accounts reflected on the Financial
Statements and additions to such reserves as reflected on the books and
records of the Company and its Subsidiaries.
2.23 Inventories. The value at which the Inventory is shown on
the Financial Statements has been determined in accordance with the normal
valuation policy of the Company and its Subsidiaries, consistently applied
and in accordance with United States generally accepted accounting
principles. All Inventories of the Company and its Subsidiaries are of good,
usable and merchantable quality in all material respects, and, except as set
forth in Section 2.23 of the Shareholder's Disclosure Schedule, do not
include a material amount of obsolete or discontinued items, all of which
have been written down to realizable market value or for which adequate
reserves have been provided. Except as set forth in Section 2.23 of the
Shareholder's Disclosure Schedule, all such Inventories are of such quality
as to meet in all material respects the quality
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control standards of the Company and any applicable governmental quality
control standards.
2.24 Labor Matters. Except as disclosed on Section 2.24 of the
Shareholder's Disclosure Schedule, (i) neither the Company nor any of the
Subsidiaries is the subject of any proceeding asserting that it or any
Subsidiary has committed an unfair labor practice or seeking to compel it to
bargain with any union or bargaining agent as to wages or conditions of
employment; (ii) there is no strike or work stoppage involving the Company or
any of its Subsidiaries pending or, to the knowledge of the Shareholder,
threatened and, since March 14, 1997, there has not been any such action;
(iii) no material grievance is pending or, to the knowledge of the
Shareholder, threatened against the Company or any of its Subsidiaries
relating to employment matters; (iv) neither the Company nor any of its
Subsidiaries is a party to, or otherwise bound by, any material consent
decree with, or citation by, or any other governmental order of, any
Governmental Authority (including the Equal Employment Opportunity
Commission) relating to employees or employment practices; and (v) the
employees of the Company and its Subsidiaries have been paid in full with
respect to all wages, salaries, commissions, bonuses, benefits and other
compensation due to such employees or other-
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wise arising under any Collective Bargaining Agreement, Employment Agreement,
Plan or Law.
3. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Shareholder as follows:
3.1 Corporate Status and Authority. The Purchaser is a limited
liability company duly organized and in good standing under the laws of the
State of Delaware and has the power and authority to execute and deliver the
Documents to which it is or will be a party and perform its obligations
hereunder and thereunder. On or prior to the Closing, the execution,
delivery and performance of the Documents to which it is or will be a party
have been or will have been, as applicable, duly authorized by the
Purchaser's members, which constitutes all necessary organizational action on
the part of the Purchaser for such authorization. Each of the Documents to
which it is a party has been or will be prior to the Closing duly executed
and delivered by the Purchaser and (assuming its due execution and delivery
by the other parties thereto) constitutes or will constitute, as applicable,
the valid and binding obligation of the Purchaser, except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium, receivership or similar laws
affecting creditors' rights generally and by
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general principles of equity (whether considered at law or in equity).
3.2 No Conflicts. (a) The execution, delivery and performance of
the Documents to which it is a party by the Purchaser will not result in (i)
any conflict with the charter documents or by-laws of the Purchaser, (ii) any
breach or violation of or Default under any material Law or any material
Contract to which the Purchaser is a party or by which the Purchaser or any
of its properties or assets are bound; provided, however, that no
representation or warranty is made hereunder with respect to any federal or
state antitrust laws or similar foreign laws, or (iii) the creation or
imposition of any Lien upon or with respect to any of the assets, properties
or rights owned or used by the Purchaser, except in each case under the
foregoing clauses (ii) and (iii) for such breaches, violations or Defaults
and such Liens which would not, individually or in the aggregate, reasonably
be expected to materially impair the ability of the Purchaser to perform its
obligations under, or to consummate the transactions contemplated by, the
Documents.
(b) No material consent, approval or authorization of or filing
with any Person is required on the part of the Purchaser in connection with
the execution and delivery of each of the Documents to which it is a party or
the
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consummation of the transactions contemplated hereby and thereby, except
filings, consents or approvals (i) required with respect to the HSR Act, (ii)
under Section 13(a) of the Exchange Act and (iii) with or from any Person
other than a Governmental Authority which, if not made or obtained, would
not, individually or in the aggregate, reasonably be expected to materially
impair the ability of the Purchaser to perform its obligations under, or to
consummate the transactions contemplated by, the Documents.
3.3 Financial Ability to Perform. The Purchaser has delivered to
the Shareholder complete and correct copies of a commitment letter from
Citicorp USA, Inc. for the aggregate amount of $275,000,000 in financing
including a term sheet accurately describing the proposed terms and
conditions of such financing (the "Bank Financing Commitment") and a highly
confident letter from Bankers Trust Company for the aggregate amount of
$225,000,000 in financing (collectively, the "Financing Commitments"). The
Financing Commitments have not been withdrawn or terminated as of the date
hereof, assuming the due execution and delivery by the Company of the Bank
Financing Commitment, and the Purchaser has no reason to believe as of the
date hereof that the Financing Commitments will not lead to the financing as
contemplated by the Financing Commitments.
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3.4 Litigation. There are no Actions pending or, to the knowledge of
the Purchaser, threatened, which question the validity of the Documents to which
it is a party or any action taken or to be taken by the Purchaser in connection
herewith or therewith, or which, individually or in the aggregate, would
reasonably be expected to materially impair the ability of the Purchaser to
perform its obligations under, or to consummate the transactions contemplated
by, the Documents to which it is a party.
3.5 Purchase for Investment. The Purchaser is acquiring the Shares
for investment and not with a view toward any resale or distribution thereof
except in compliance with the Securities Act of 1933, as amended.
3.6 Brokers. All negotiations relating to Documents and the
transactions contemplated hereby and thereby have been carried out without the
intervention of any person acting on behalf of the Purchaser in such manner as
to give rise to any valid claim against the Purchaser, the Shareholder or the
Company for any brokerage or finder's commission, fee or similar compensation,
except for Kohlberg Kravis Roberts & Co., L.P., whose fees in respect hereof
shall be paid by the Company.
4. Certain Covenants.
4.1 Consents; Obligations of the Parties. (a) Subject to the terms
and conditions of this Agreement,
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each party agrees, in each case both before and after the Closing, (i) to use
all reasonable best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this
Agreement, (ii) to execute any documents, instruments or conveyances of any
kind which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder, and (iii) to cooperate with each other
in connection with the foregoing, including (v) as contemplated by Section
4.1(b), (w) defending against any suits, actions or proceedings, judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any temporary
restraining order, preliminary injunction or other legal restraint or
prohibition entered or imposed by any court or other Governmental Authority
that is not yet final and nonappealable vacated or reversed, (x) to obtain
any necessary consents, approvals and waivers from any Person, including the
Permits and the consents, approvals and waivers set forth in Schedule 2.2
(provided, however, that no material amendment or modification shall be made
to any Permit or Contract to obtain any such consent, approval or waiver
without the Purchaser's consent), (y) to give all notices to, and make all
registrations and filings with third
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parties, including submissions of information requested by Governmental
Authorities, and (z) to fulfill all conditions to this Agreement required to
be fulfilled by it; provided, however, that none of the Purchaser, the
Shareholder or their respective Affiliates, including the Company, shall be
required to make any material monetary expenditure, commence or be a
plaintiff in any litigation or offer or grant any material accommodation
(financial or otherwise) to any Person. The Shareholder and Company shall
cooperate with any reasonable requests made to any party related to the
recording of the transactions contemplated by this Agreement as a
recapitalization for financial reporting purposes. The Shareholder agrees
to, and to cause the Company to, provide reasonably requested cooperation in
connection with the preparation of the Audited Financial Statements. The
Shareholder agrees to cause the Company to provide reasonably requested
cooperation in connection with the arrangement of any financing to be
consummated contemporaneous with the Closing, including, without limitation,
providing a certificate of the Chief Financial Officer of the Company with
respect to solvency matters. At or prior to the Closing, the Shareholder and
the Company shall enter into an agreement reasonably satisfactory to the
Shareholder pursuant to which the Company will agree to provide
indemnification (and contribution in respect thereof) to the
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Shareholder and its Affiliates, and each officer, director, employee,
representative and advisor of the Shareholder and such Affiliates in
connection with the offer or sale of securities in connection with the
financing of all or any portion of the Redemption Price in scope
substantially the same as set forth in Sections 8(a) and (e) of the
Registration Rights Agreement described in Schedule 1.
(b) Each of the Shareholder and the Purchaser shall as promptly as
practicable, but in no event later than ten business days following the
execution and delivery of this Agreement, file with the United States Federal
Trade Commission (the "FTC") and the United States Department of Justice (the
"DOJ") the notification and report form, if any, required for the transactions
contemplated hereby and any supplemental information requested in connection
therewith pursuant to the HSR Act. Any such notification and report form and
supplemental information shall be in substantial compliance with the
requirements of the HSR Act. The Shareholder and the Purchaser shall as
promptly as practicable comply with any other laws of any country or the
European Union which are applicable to any of the transactions contemplated
hereby and pursuant to which any consent, approval or authorization of, or
filing with, any Governmental Authority or any other person in connection with
such transactions is necessary. Each of the
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Shareholder and the Purchaser shall furnish to the other such necessary
information and reasonable assistance as the other may request in connection
with its preparation of any filing which is necessary under the HSR Act or
any other law. The Shareholder and the Purchaser shall keep each other
apprised of the status of any communications with, and any inquiries or
requests for additional information from, the FTC and the DOJ and any other
Governmental Authority and shall comply promptly with any such inquiry or
request. Each of the Shareholder and the Purchaser shall use its reasonable
best efforts to obtain any clearance required under the HSR Act or any other
consent, approval or authorization of any Governmental Authority necessary
for the purchase and sale of the Shares subject to the proviso to Section
4.1(a).
4.2 Obligations of the Shareholder.
4.2.1 Conduct of Business, etc. From the date hereof until the
Closing, except as set forth in Section 4.2.1 of the Shareholder's Disclosure
Schedule, contemplated by this Agreement or as otherwise consented to by the
Purchaser in writing, the Shareholder shall cause the Company and each of its
Subsidiaries to:
(a) carry on its business in the ordinary course and consistent with
past practices, and, consistent with past practices, use reasonable efforts
to preserve
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intact its present business organization and to preserve its relationships
with customers, suppliers, employees and others having business dealings
with it;
(b) not amend its charter documents or by-laws;
(c) not merge or consolidate with, or agree to merge or consolidate
with, or purchase substantially all of the assets of, or otherwise acquire
any business or any corporation, partnership, association or other business
organization or division thereof;
(d) not take any action or omit to take any action, which action or
omission would result in a breach or inaccuracy of any of the
representations and warranties set forth in this Agreement in any material
respect at, or as of any time prior to, the Closing or which if engaged in
since June 30, 1997 but before the date hereof, would constitute a breach
of the representations and warranties set forth in Section 2.15;
(e) not sell assign, transfer, convey, lease, mortgage, encumber or
pledge any material assets other than Inventory in the ordinary course of
business consistent with past practices;
(f) maintain its books of account and records in its usual, regular
and ordinary manner, consistent with its past practice;
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(g) not incur any indebtedness for borrowed money, or assume,
guarantee, endorse (other than endorsements for deposit or collection in
the ordinary course of business), or otherwise become responsible for
obligations of any other Person;
(h) not issue or commit to issue any shares of its capital stock or
any other securities or any securities convertible into shares of its
capital stock or any other securities, including options and warrants
therefor;
(i) not declare, pay or incur any obligation to pay any dividend on
its capital stock or declare, make or incur any obligation to make any
distribution or redemption with respect to capital stock;
(j) not cancel, release or assign any indebtedness owed to it or any
material claims or rights held by it, except in the ordinary course of
business and consistent with past practice;
(k) not make any investment either by purchase of stock or
securities, contributions to capital, property transfer, loan or advance
(including advances to the Shareholder) or otherwise, or by the purchase of
any property or assets of any other Person, including contributions to
Accuride Mexico or its subsidiaries, including Servicios AISA, AKW or AOT,
Inc.;
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(l) not terminate or make any material amendment in any Material
Contract;
(m) not grant any bonus, severance or termination pay (other than
pursuant to policies or agreements of the Company in effect on the date
hereof that are described in Section 2.10 of the Shareholder's Disclosure
Schedule) or increase any benefits payable under any severance or
termination pay policies or agreements in effect on the date hereof or
increase in any manner the compensation or fringe benefits of any employee
or pay any benefit not required by any existing Plan other than as required
by applicable law or consistent with past practice or as required by any
labor agreement in effect on the date hereof;
(n) not enter into or amend any Contract with an Affiliate;
(o) not enter into any Material Contract other than in the ordinary
course of business consistent with past practice;
(p) not make any change in any method of accounting or accounting
practice; or
(q) not agree or commit to do any of the foregoing referred to in
clauses (a)-(p); and
(r) promptly advise the Purchaser of (A) any fact, condition,
occurrence or change known to the
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Shareholder that would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect or cause a breach of this Section
4.2.1., (B) the occurrence, or failure to occur, of any event known to the
Shareholder which occurrence or failure would be reasonably likely to cause
any representation or warranty contained in Section 2 of this Agreement to
be untrue or inaccurate in any material respect as of the date of such
disclosure and (C) any material failure known to the Shareholder of the
Company, the Shareholder or their respective Affiliates to comply with or
satisfy any covenant or agreement required to be complied with by it under
this Agreement as of such date; provided, however, that such disclosure
shall not be deemed to be a breach of, or to cure any breach of, any such
representation, warranty, covenant or agreement.
Notwithstanding the foregoing, the intercompany receivable of the
Company from the Shareholder shall be cleared by applying such amounts to
shareholders' equity and cancelling such intercompany receivable, prior to the
Closing.
4.2.2 Access and Information. From the date hereof until the Closing,
upon reasonable notice, the Shareholder shall cause the Company and each of its
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Subsidiaries to give to the Purchaser and its representatives (including
representatives of financing sources) access at all reasonable times during
normal business hours to the personnel, properties, books and records of the
Company and its Subsidiaries and furnish for inspection such information and
documents in its possession or within its control relating to the Company and
its Subsidiaries as the Purchaser may reasonably request, provided that without
the prior written consent of the Shareholder, the Purchaser shall not be
entitled to any such access, information or documents (i) as to which the
attorney-client privilege applies or (ii) the disclosure of which is restricted
by contract or applicable law except in strict compliance with such contract or
law. All such information and documents obtained by the Purchaser shall be
subject to the terms of the Confidentiality Agreement, dated August 20, 1997
(the "Confidentiality Agreement"), between the Purchaser and the Shareholder.
4.3 Taxes. (a) Payments and Indemnity. (i) Shareholder's
Responsibility. The Shareholder shall pay and be responsible for (without
duplication of amounts otherwise payable) Taxes of or payable by or attribut-
able to the Company and its Subsidiaries (collectively, together with all
successors thereto, the "Company Group") for all taxable periods (or portions
thereof) ending, or attribut-
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able to any event occurring, on or prior to the Closing Date (including,
without limitation, such Taxes payable pursuant to section 1.1502-6 of
Treasury Regulations or any similar provision of the applicable state, local
or foreign tax law), other than (A) Taxes arising from any acts or omissions
of the Purchaser or, after the Closing, of any member of the Company Group,
which are not in the ordinary course of business, including an election by
the Purchaser (or, after the Closing, by any member of the Company Group)
under section 338 of the Code or under any similar provision of the
applicable state, local or foreign tax law, (B) Taxes that have been taken
into account in computing the Year End Working Capital, and (C), if the
Closing occurs after December 31, 1997, Taxes attributable to the period
beginning after December 31, 1997 and ending on the Closing Date (the "Short
Closing Period") and arising from the conduct of business and the ownership
of assets by the Company Group in the ordinary course of business as has
previously been conducted (it being agreed that in no event shall Taxes
described in this clause (C) include Taxes attributable to any deferred
intercompany gains). The Shareholder shall discharge its obligations, and
shall have no further obligation to pay any amounts, under this Section
4.3(a)(i) in respect of Taxes for which it is responsible under this Section
4.3(a)(i) by paying the full amount of such Taxes to
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the relevant member of the Company Group or to the relevant taxing authority.
(ii) Purchaser's Responsibility. The Company shall pay and be
responsible for, and shall cause its Subsidiaries to pay, (without duplication
of amounts otherwise payable) (A) Taxes of, payable by, or attributable to the
Company Group for all taxable periods (or portions thereof) beginning, or
attributable to any event occurring, after the Closing Date, (B) Taxes arising
from any acts or omissions of the Purchaser or, after the Closing, of any member
or the Company Group, which are not in the ordinary course of business,
including an election by the Purchaser (or, after the Closing, any member of the
Company Group) under section 338 of the Code or under any similar provision of
the applicable state, local or foreign tax law, (C) Taxes that have been taken
into account in computing the Year End Working Capital, and (D), if the Closing
occurs after December 31, 1997, Taxes attributable to the Short Closing Period
and arising from the conduct of business and the ownership of assets by the
Company Group in the ordinary course of business as has previously been
conducted (it being agreed that in no event shall Taxes described in this clause
(D) include Taxes attributable to any deferred intercompany gains). In the
event the Shareholder or any Non-Company Affiliate pays, or otherwise incurs any
Damage in
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respect of, any Taxes described in this Section 4.3(a)(ii), the Company shall
indemnify and hold harmless the Shareholder or any such Non-Company Affiliate
from and against such Tax or Damage.
(iii) Computation; Tax Benefit Payback; Payment.
(A) Straddle Period Tax. With respect to any Tax of any member of
the Company Group for or attributable to a portion of any taxable period (a
"Straddle Period") that begins before and ends after the Closing Date, for
which the Shareholder is responsible with respect to the portion of any such
Straddle Period ending on the Closing Date (the "Pre-Closing Straddle
Period") under Section 4.3(a)(i), and for which the Purchaser is responsible
with respect to the portion of any such Straddle Period beginning after the
Closing Date (the "Post-Closing Straddle Period") under Section 4.3(a)(ii),
the responsibilities of the Shareholder and the Purchaser for such Tax shall
be determined as follows: (x) Any property Tax shall be apportioned between
the Pre-Closing Straddle Period and the Post-Closing Straddle Period on the
basis of the number of days in the Pre-Closing Straddle Period and the number
of days in the Post-Closing Straddle Period; and (y) Any other Tax shall be
apportioned between the Pre-Closing Straddle Period and the Post-Closing
Straddle Period on the basis of the interim closing of the books as if such
Straddle Period ended as of
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the close of business on the Closing Date, provided that any such Tax
attributable to the ownership of any equity interest in a partnership or
other "flow-through entity" shall be so apportioned as if the taxable period
of such partnership or flow-through entity ended as of the close of business
on the Closing Date.
(B) Tax Benefit Payback. In the event that (x) one party (the "Tax
Indemnitor") is obligated to indemnify the other party (the "Tax Indemnitee")
for any Tax under this Section 4.3(a) and (y) the aggregate amount of such
indemnifiable Taxes for a particular taxable year does not exceed $300,000, then
the Tax Indemnitor and the Tax Indemnitee shall in good faith negotiate the
amount of the present value of any future Tax benefits to be realized by the Tax
Indemnitee resulting from such Taxes. Either the amount of such indemnity shall
be reduced by the amount of the present value of such Tax benefit or the Tax
Indemnitee shall pay the Tax Indemnitor an amount equal to such Tax Benefit. In
the event that either (p) the aggregate amount of indemnifiable Tax for a
particular taxable year exceeds $300,000 or (q) the Tax Indemnitor and the Tax
Indemnitee are unable to reach agreement on the present value of such Tax
benefit, the Tax Indemnitee shall promptly pay the amount of any such Tax
benefit to the Tax Indemnitor as and when the Tax Indemnitee actually realizes
such Tax benefit.
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The amount of any such Tax Benefit shall be computed by the Tax Indemnitee,
as certified by both the responsible officer and the independent public
accountants of the Tax Indemnitee.
(C) Payment. All amounts payable in respect of Taxes (including any
estimated taxes) by the Tax Indemnitor to the Tax Indemnitee shall be paid no
later than 3 business days prior to the due date for the payment of the related
Taxes (taking into account any applicable extension thereof). All such amounts
payable in respect of Taxes shall be set forth in a written notice from the Tax
Indemnitee to the Tax Indemnitor, which shall be certified by the responsible
officer and the independent public accountants of the Tax Indemnitee and shall
be received by the Tax Indemnitor no later than 10 business days prior to the
due date for the payment of such Taxes (taking into account any applicable
extension thereof). The failure of the Tax Indemnitee timely to send such
notice shall not relieve the Tax Indemnitor of its obligations under Section
4.3(a), unless such failure materially prejudices the interests of the Tax
Indemnitor.
(b) Tax Returns. (i) Shareholder's Responsibility. The Shareholder
shall cause the Company Group to join, for all taxable periods (or portions
thereof) ending on or prior to the Closing Date, in (A) the consolidated
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federal income Tax Returns of the Shareholder and (B) the consolidated,
combined or unitary state, local or foreign income tax returns of or
including the Shareholder or any Non-Company Affiliate with respect to which
the Company Group (x) has joined in the most recent taxable year or (y) is
required by law to join in filing, and shall prepare and file all such Tax
Returns. The Shareholder shall prepare or cause to be prepared and file or
cause to be filed all other Tax Returns that are required to be filed by or
in respect of any member of the Company Group on or prior to the Closing Date.
(ii) Purchaser's Responsibility. The Purchaser shall prepare or
cause to be prepared and file or cause to be filed all Tax Returns required to
be filed by or in respect of any member of the Company Group other than those
Tax Returns described as the Shareholder's responsibility in Section 4.3(b)(i)
above, and shall report on such Tax Returns (including any consolidated federal
income Tax Return filed by the Purchaser or any member of the Company Group for
all taxable periods (or portions thereof) beginning after the Closing Date) any
transactions or events by or relating to any member of the Company Group
occurring after the Closing. Any such Tax Returns with respect to which the
Purchaser is responsible for preparing and filing pursuant to this
Section 4.3(b)(ii) that include the taxable
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periods (or portions thereof) ending on or prior to the Closing Date shall,
insofar as they relate to any member of the Company Group or may affect the
amount of Tax for which the Shareholder is responsible under Section
4.3(a)(i), be on a basis consistent with the last previous such Tax Returns
filed in respect of such member of the Company Group, unless the Purchaser
receives prior written consent from the Shareholder. In the event that any
Tax Return, the preparation and filing of which is the responsibility of the
Purchaser, may affect the amount of Tax for which the Shareholder is
responsible under Section 4.3(a)(i), the Purchaser shall, and shall cause the
relevant member of the Company Group to, forward a draft of such Tax Return
to the Shareholder for its review no later than 30 days prior to the due date
for filing of such Tax Return (taking into account any applicable extension).
(iii) Cooperation. The Shareholder and the Purchaser shall cooperate
with each other, and the Purchaser shall cause the Company Group to cooperate
with the Shareholder, with respect to the preparation and filing of any Tax
Return for which the other is responsible pursuant to this Section 4.3(b).
Without limiting the generality of the foregoing, with respect to all federal
consolidated income Tax Returns and state and local consolidated, combined and
unitary Tax Returns of the Shareholder or any of
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its Affiliates for all taxable years (or portions thereof) ending on or prior
to the Closing Date, the Purchaser shall cause the Company Group to prepare
accurately and completely and submit to the Shareholder all "tax packages"
and "foreign reporting packages" and all other information reasonably
requested by the Shareholder and necessary for the preparation and filing of
such Tax Returns by the Shareholder not later than 105 days prior to the due
date for filing of such Tax Return (taking into account any applicable
extension).
(iv) Amended Returns. (A) For all taxable periods (or portions
thereof) ending on or prior to the Closing Date, the Purchaser shall not, and
shall cause the Company Group not to, file (or consent to file) any amended Tax
Returns or a claim for a refund of any Tax, unless (x) any such amended Tax
Return or claim for a refund may not affect the liability for Tax of the
Shareholder or any Non-Company Affiliate under Section 4.3(a)(i) or otherwise or
(y) the Shareholder shall have reviewed and consented in writing to the contents
of any such amended Tax Return (or claim for a refund) prior to the filing
thereof.
(B) In the event the Shareholder actually realizes any Tax benefit or
receives a refund of any Tax by filing any amended Tax Return or a claim for a
refund of any Tax with respect to the Company Group for any taxable period
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(or portion thereof) ending on or prior to the Closing Date and such Tax
benefit or refund directly results from a timing difference (i.e.,
acceleration of deduction or delay of income inclusion) and, as a result, the
Company Group shall be required to pay any Tax for any taxable period (or
portion thereof) beginning after the Closing Date in an amount greater than
the amount of Tax which the Company Group would be required to pay but for
such timing difference, then the Shareholder shall indemnify and hold
harmless the Company Group from and against any such incremental amount of
Tax as and when the Company Group actually pays such Tax, which shall be
certified by the responsible officer and the independent public accountants
of the Company.
(c) Refunds. The Shareholder shall be entitled to retain, or receive
immediate payment from any member of the Company Group or the Purchaser of, any
Tax refund (including, without limitation, refunds arising by reason of amended
Tax returns filed after the Closing Date) or credit of any Taxes (plus any
interest thereon received with respect thereto from the applicable taxing
authority) relating to any member of the Company Group, which the Shareholder is
responsible for under Section 4.3(a)(i) or has otherwise paid or caused to be
paid or otherwise borne the economic burden of by reason of any Tax being taken
into
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account in computing the Year End Working Capital. The Purchaser shall be
entitled to the benefit of any other refund or credit of Taxes (plus any
interest thereon received with respect thereto from the applicable taxing
authority) relating to any member of the Company Group. For avoidance of
doubt, the Shareholder and the Purchaser agree that the Purchaser shall be
entitled to the benefit of any refund of Taxes for which the Purchaser is
responsible under Sections 4.3(a)(i)(C) and 4.3(a)(ii)(D). No member of the
Company Group shall carry back any net operating loss, capital loss, tax
credit or other tax item from any taxable year (or portion thereof) beginning
after the Closing Date to any taxable year (or portion thereof) ending on or
before the Closing Date for federal, state or local income tax purposes, and
any refund of or credit for any Tax arising from any such carryback shall
belong to the Shareholder and the Shareholder shall not be obligated to pay
any such refund or credit to the Company Group, provided, that a member of
the Company Group may so carry back any such loss, credit or other tax item
(i) if such member of the Company Group is required by applicable tax law
only to carry back any such loss, credit, or other tax item, (ii) with
respect to Tax Returns other than those Tax Returns that have included at
least one member of the Company Group and the Shareholder (or any Non-Company
Affiliate), but only to the extent such
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carryback may not adversely affect the Tax liability of the Shareholder or
any Non-Company Affiliate or (iii) with respect to Taxes other than federal
income taxes for which the Purchaser is responsible under Section 4.3(a)(ii),
and in any of such events such member of the Company Group shall be entitled
to retain, and the Shareholder shall pay over to such member of the Company
Group, any refund of or credit for Tax resulting from such carryback. The
Purchaser and the Shareholder agree to cooperate, and the Purchaser agrees to
cause the Company Group to cooperate with the Shareholder, with respect to
claiming of any refund or credit referred to in this Section 4.3(c),
including discussing potentially available refunds or credits and preparing
and filing any amended Tax Return or other claim for a refund. In the event
the Closing occurs after December 31, 1997 and the Shareholder or any
Non-Company Affiliate realizes any Tax benefit by reason of any net operating
loss or capital loss incurred by the Company Group during the Short Closing
Period, the Shareholder shall pay to the Company any such Tax benefit as and
when the Shareholder or such Non-Company Affiliate actually realizes such Tax
benefit, the amount of which shall be certified by the responsible officer
and the independent public accountants of the Shareholder.
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(d) Audits. Each of the Purchaser and the Shareholder shall promptly
notify the other in writing within ten business days from its receipt of notice
of (i) any pending or threatened federal, state, local or foreign Tax audits or
assessments of any member of the Company Group, so long as any taxable periods
(or portions thereof) ending on or prior to the Closing Date remain open, and
(ii) any pending or threatened federal, state, local or foreign Tax audits or
assessments of the Purchaser or the Shareholder which may affect the Tax
liabilities of any member of the Company Group, in each case for taxable periods
(or portions thereof) ending on or prior to the Closing Date, provided that the
failure of one party to timely notify the other party of any such Tax audit or
assessment pursuant to this sentence shall not increase, decrease or otherwise
affect the indemnity right or obligation of either party, so long as such
failure does not prejudice the interest of such other party. The Shareholder
shall have the right to represent the interests of any member of the Company
Group in, and control, any Tax audit or administrative or court proceeding
relating to Taxes for any taxable periods (or portions thereof) ending on or
prior to the Closing Date and for which the Shareholder may be responsible
hereunder, and the Purchaser shall have the right to consult with the
Shareholder during such proceedings at its own expense. The
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Purchaser and the Shareholder agree that they shall cooperate fully, and
cause their respective Subsidiaries to cooperate fully, with each other and
their respective representatives in connection with any Tax audit or
proceeding, including timely furnishing all work papers and other documents
requested by any relevant taxing authority and making relevant employees and
officers available during normal business hours in connection with such audit
or proceeding.
(e) Conduct of Business. On the Closing Date, as to matters which
could affect the Tax Returns of the Shareholder or any member of the Company
Group with respect to taxable periods (or portions thereof) ending on or prior
to the Closing Date, the Purchaser shall cause the Company Group to carry, and
the Company Group shall carry, on its business only in the ordinary course in
substantially the same manner as heretofore conducted.
(f) Reconciliation of Payments. Within 30 days after all the relevant
information is made available to the Shareholder, the Shareholder shall provide
the Company with a schedule reconciling (i) all payments of estimated taxes
attributable to the taxable period (or portion thereof) ending on the Closing
Date and attributable to the Company Group with (ii) the actual tax liability of
the Company Group for such taxable period (or such portion). Any difference
between such estimated and actual payments shall be
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settled between the Company and the Shareholder within 30 days from the
receipt of such schedule by the Company.
(g) Tax Dispute Resolution Mechanism. Any dispute among the parties
involving Taxes arising under this Agreement shall be resolved as follows: (i)
the parties will in good faith attempt to negotiate a prompt resolution of the
dispute; (ii) if the parties are unable to negotiate a resolution of the dispute
within 30 days, the dispute will be submitted to the national office of a firm
of independent accountants of nationally recognized standing reasonably
satisfactory to the Shareholder and the Purchaser (the "Tax Dispute
Accountants"); (iii) the Tax Dispute Accountants shall resolve the dispute, in a
fair and equitable manner and in accordance with applicable Tax law and the
provisions of this Agreement, within 30 days after the parties have submitted
the dispute to the Tax Dispute Accountants, whose decision shall be final,
conclusive and binding on the parties, absent manifest error; (iv) any payment
to be made as a result of the resolution of a dispute shall be made and any
other action taken as a result of the resolution of a dispute shall be taken, on
or before the fifth business day following the date on which the dispute is
resolved; and (v) the fees and expenses of the Tax Dispute Accountants in
resolving a dispute will be borne by the Shareholder and the Purchaser in
inverse proportion as they may prevail on the
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issues resolved by the Tax Dispute Accountants, which inverse proportionate
allocation shall also be determined by the Tax Dispute Accountants at the
time the determination of the Tax Dispute Accountants is rendered on the
merits of the issues submitted.
(h) Cancellation of Certain Tax Sharing and Other Agreements. As of
the date immediately following the Closing Date, all intercompany tax sharing
agreements, practices or policies between the Shareholder or any Non-Company
Affiliate, on the one hand, and any member of the Company Group, on the other
hand, shall be canceled and be of no further effect.
(i) Research and Development Cost Study. At the request of the
Shareholder, the Purchaser agrees that it shall cooperate fully and cause the
Company Group to cooperate fully with the Shareholder and its officers,
employees, representatives and advisors in connection with the study of research
and development costs incurred by the Company Group, including the timely
furnishing of all work papers and other documents reasonably requested by the
Shareholder and making relevant officers and employees available for discussion
during normal business hours in connection with such study, provided that the
Company Group shall not bear the cost of such study.
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4.4 Publicity. No press release or public announcement related to
this Agreement or the transactions contemplated herein, shall be issued or made
without the joint approval of the Shareholder and the Purchaser, unless required
by law (in the reasonable opinion of their respective counsel) in which case the
Shareholder and the Purchaser, as the case may be, shall use its best efforts to
allow the other sufficient time, consistent with such obligations, to review the
nature of such legal obligations and to comment upon such disclosure prior to
publication.
4.5 Contact with Customers and Suppliers. The Purchaser (and all of
its representatives and Affiliates and any employees, directors or officers
thereof) shall contact and communicate with the customers, suppliers and
licensors of the Company and its Subsidiaries in connection with the
transactions contemplated hereby only with the prior consent of the Shareholder,
which shall not be unreasonably withheld and which consent may be conditioned
upon an officer of the Company being present at any such meeting or conference.
4.6 Financing. The Purchaser shall use its reasonable best efforts to
have the Company enter into definitive financing agreements with respect to the
financing contemplated by the Financing Commitments, on terms reasonably
satisfactory to the Purchaser, and to do all such acts
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and things reasonably necessary to consummate the financing transactions
contemplated by the Financing Commitments.
4.7 Non-Solicitation of Employees. For a period of five years
following the Closing Date, without the approval of the other party, the
Shareholder and its Subsidiaries shall not, and the Shareholder shall use its
best efforts to cause its other Affiliates not to, directly or indirectly,
actively solicit or induce any salaried employee of the Company or any of its
Subsidiaries to leave such employment and become an employee of the Shareholder
and its Affiliates, except for employees who have been involuntarily terminated
or who contact the Shareholder or its Affiliates on his or her own initiative
without any direct or indirect solicitation or encouragement from the
Shareholder or its Affiliates. This provision shall not apply to solicitations
through newspaper ads not specifically directed at the employees of the Company
or its Subsidiaries.
4.8 Transition Services. (a) From the date of this Agreement
through the Closing Date, the Shareholder agrees, and agrees to cause its
Subsidiaries, to continue to provide the Company and its Subsidiaries those
services currently provided by the Shareholder and its Subsidiaries on terms
consistent with past practice, including, notwithstanding anything to the
contrary in this Agreement, the
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payment of charges and expenses by the Company and its Subsidiaries to the
Shareholder and its Subsidiaries consistent with past practices. Without
limiting the generality of the foregoing, from the date of this Agreement
through the Closing Date, the Shareholder agrees to provide assistance to the
Company and its Subsidiaries with the goal of enabling the Company and its
Subsidiaries to operate independently of the Shareholder following the Closing,
including:
(i) Assistance with (A) obtaining stand alone insurance coverage for
the Company and its Subsidiaries for matters currently insured by the
Shareholder or its insurance policies and using its reasonable efforts to obtain
for the Company and its Subsidiaries pricing for such coverage similar to that
obtained by the Shareholder (taking into account the different deductibles set
by the Company and structure of the Company and its Subsidiaries after the
Closing), (B) making and collecting claims on the Shareholder's insurance
policies that cover the business of the Company and its Subsidiaries and (C) the
retention of outside vendors (including, but not limited to, administrator,
insurance provider and broker) by the Company, at the Company's cost, and
establish and assist with appropriate administrative procedures, including with
respect to worker's compensation and using its reasonable efforts to
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obtain for the Company and its Subsidiaries pricing for such services similar
to those obtained by the Shareholder;
(ii) Assistance with maintaining the information technology and
Internet access currently provided by the Shareholder, including assisting the
Company and its Subsidiaries in obtaining license agreements with third parties
to replace existing license agreements (in which the Shareholder is the
licensee) which license computer software used by the Company and its
Subsidiaries;
(iii) Assistance with the establishment of a stand-alone cash
management capabilities; and
(iv) Using reasonable efforts to audit, reconcile and resolve all
claims and disputes of employees of the Company and its Subsidiaries arising out
of the transition of health administration from First Health to The Principal
and processing all claims made by year-end 1997 within 60 days of submission.
(b) At the Closing, the Shareholder shall enter into a transition
services agreement with the Company (the "Transition Services Agreement"), the
principal terms of which are described in Exhibit 1 hereto.
4.9 Non-Competition. For a period of five years after the Closing
Date, the Shareholder and its Subsidiaries shall not, and the Shareholder shall
use its best efforts to cause any of its other Affiliates not to, engage,
directly
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or indirectly, in the manufacture, sale or distribution, or own,
manage, operate or control, directly or indirectly, any Person engaged in the
manufacture, sale or distribution, of rims and wheels for vehicles anywhere,
provided, however, that the foregoing shall not prohibit the Shareholder or any
of its Affiliates from: (i) engaging in or conducting any business contemplated
by the Transition Services Agreement during the term of such Agreement;
(ii) merging or consolidating with or into or acquiring a company (the
"Diversified Company") having not more than 20% of its sales (based on its
latest published annual audited financial statements) attributable to the
manufacture, sale or distribution of rims and wheels for vehicles, so long as
(a) the Shareholder shall promptly notify the Purchaser of any such merger,
consolidation or acquisition and (b) the Shareholder or such Affiliate shall
cause the Diversified Company to dispose of the portion thereof which has sales
attributable to the manufacture, sale or distribution of rims and wheels for
vehicles as promptly as practicable and in no event later than 12 months of such
merger, consolidation or acquisition; and (iii) owning the shares of the Company
as a result of the transactions contemplated hereby. This Section 4.9 shall not
apply following the sale, transfer or disposition of 51% or more of the
outstanding capital stock or substantially all of the assets of the Shareholder
or the merger of
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the Shareholder with or into another Person in which the shareholders of the
Shareholder own in the aggregate less than 51% of the outstanding capital
stock of the surviving entity.
4.10 Use of Business Name. It is expressly agreed that the Purchaser
is not purchasing or acquiring any right, title or interest in any trademarks,
logos, service marks, brand names or trade, corporate or business names
employing the name "Phelps Dodge Corporation" or any part or variation thereof,
or any trademarks, logos, service marks, brand names or trade, corporate or
business names confusingly or misleadingly similar thereto (collectively, the
"Shareholder's Marks"). To the extent the Shareholder's Marks are used by the
Company or any of its Subsidiaries on any materials constituting their
properties and assets, including any stationery, signage, invoices, receipts,
forms, packaging, advertising and promotional materials, product, training and
service literature and materials, software or like materials or appear on the
Companies' inventory (including work-in-process and inventory on order) at the
Closing Date, as promptly as commercially reasonable, but in no event later than
the first anniversary of the Closing Date, the Purchaser shall, and shall cause
the Company and its Subsidiaries to, remove, strike over or
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otherwise obliterate all the Shareholder's Marks from all such materials.
4.11 No Solicitation. From the date hereof to the Closing Date, the
Shareholder and its Subsidiaries shall not, and the Shareholder shall use its
best efforts to cause its other Affiliates or any Person acting on its behalf
not to, directly or indirectly, (i) solicit or encourage any inquiries or
proposals for, or initiate any discussions with respect to, or enter into or
continue any discussions, negotiations or agreements relating to the sale or
exchange of the Redeemed Shares or any other capital stock of the Company or its
Subsidiaries, the merger of the Company or its Subsidiaries with, or the direct
or indirect disposition of a significant amount of the assets or the business of
the Company or its Subsidiaries to, or business combination or similar
transaction involving the Company or its Subsidiaries with, any Person other
than the Purchaser or its Affiliates or (ii) furnish or cause to be furnished
any assistance or non-public information concerning the Company to any Person,
or otherwise cooperate with any Person, in connection with any unsolicited
inquiries or proposals from any Person with respect to the foregoing (other than
the Purchaser and its agents and representatives). The Shareholder and the
Company will immediately notify Purchaser if any such discussions or
negotiations are sought
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to be initiated, any inquiry or proposal is made, or any such information is
requested with respect to any such proposal and notify Purchaser of the terms
of any such proposal, including without limitation the identity of the
prospective purchaser or soliciting party.
4.12 Confidentiality Agreements. At the Closing, the Shareholder
shall assign the portion of each confidentiality agreement executed on the
Shareholder's behalf by J.P. Morgan & Co. Incorporated, as the Shareholder's
financial advisor, primarily relating to the Company or its Subsidiaries to the
Company, provided that the Shareholder shall not be required to assign any such
confidentiality agreement with any Person who received no more than the
Descriptive Memorandum in connection with such Person's review of the sale of
the Company. The Shareholder shall, at the Company's request and expense, use
all reasonable efforts to assist the Company in obtaining the benefits of any
such confidentiality agreement or any portion thereof that is not assigned to
the Company. Upon the Closing, the Confidentiality Agreement between Kohlberg
Kravis Roberts & Co., L.P. and J.P. Morgan Securities, Inc., as the
Shareholder's financial advisor, shall be terminated in respect of matters
solely relating to the Company.
4.13 Interim Financial Statements. From the date hereof through the
Closing, the Shareholder and the Company
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shall provide to the Purchaser by the 15th of each month, the Management
Letter prepared for the prior month, including the supporting schedules, the
unaudited balance sheet and related unaudited statements of income, cash flow
and shareholders' equity for the Company and its Subsidiaries for each
immediately preceding month, certified by the President and the Chief
Financial Officer of the Company.
4.14 Insurance. The Shareholder shall keep, or cause to be kept, all
Policies set forth on Section 2.16 of the Shareholder's Disclosure Schedule that
are currently maintained, or suitable replacements therefor (which may include
policies covering the Shareholder or any of its Subsidiaries containing terms
more or less favorable than those Policies set forth on Section 2.16 that are
currently maintained), in full force and effect through the Closing Date.
Following the Closing, the Shareholder shall provide reasonable
assistance in making and collecting claims on such Policies. Following the
Closing, in the event that the Shareholder does not take steps reasonably
requested by the Company to collect from any such insurer under a Policy for any
loss that relates to the Company and its Subsidiaries and their respective
businesses and properties, the Company shall have the right to make proofs of
loss, adjust all claims and/or receive proceeds from such
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Policies. For purposes of this Section 4.14, a Policy shall also include any
policy of insurance applicable to the Company or its Subsidiaries or the
Company Employees and their beneficiaries maintained for purposes of
providing benefits under any Plan as defined in Section 2.10.1.
4.15 Certain Dividends. (a) On or prior to the Closing the Company
shall cancel all declared and unpaid dividends payable to the Shareholder as of
December 31, 1997, including the dividend payable to the Shareholder that was
declared in December 1996. The Shareholder hereby waives all rights to any such
declared and unpaid dividends.
(b) On the last business day of 1997, Accuride Canada shall declare
and pay to the Company a dividend in an amount equal to Accuride Canada's cash
and cash equivalents balances as of such date.
5. Employees and Employee Benefit Plans.
5.1 Compensation and Benefits of Company Employees. (a) Each
employee of the Company and its Subsidiaries actively employed on the Closing
Date (including any employees of the Company or one of its Subsidiaries on
authorized leave of absence or disability) (the "Current Company Employees")
and each former employee of the Company or any of its Subsidiaries entitled
to any compensation, benefits or other payments arising in connection with
such former employee's employment with the Company or any of its
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Subsidiaries shall be referred to collectively as the "Company
Employees." Notwithstanding Section 8 of this Agreement, for purposes of
this Section 5, AKW shall not be considered a "Subsidiary." Effective on the
Closing, the Purchaser shall, or shall cause the Company and its Subsidiaries
to, continue to employ all Current Company Employees who are represented by a
union and provide compensation and benefits to all former Company Employees
represented by a union in accordance with the terms and conditions set forth
in any applicable Collective Bargaining Agreements and all non-represented
Current Company Employees in accordance with this Section 5 provided that
nothing in this Section 5 shall confer upon any Company Employee any right to
continued employment after the Closing or shall limit the ability of the
Purchaser, the Company or any of its Subsidiaries to terminate the employment
of any Company Employee after the Closing. From and for two years after the
Closing, the Purchaser will, or will cause the Company or one of its
Subsidiaries or the Purchaser's Subsidiaries, as applicable, to continue to
provide each non-represented Current Company Employee with a salary or wage
level and bonus opportunity and employee benefits and other terms and
conditions of employment that are, in terms of the total aggregate value,
comparable to the salary, bonus opportunity, benefits and terms and
conditions provided to each
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such Company Employee by the Shareholder, the Company or any of its
Subsidiaries, as applicable immediately prior to the Closing, except that,
for purposes of determining comparable value, any benefits or payments
payable solely on account of the transactions contemplated hereunder pursuant
to any employment or retention agreement entered into between the Shareholder
and any Company Employee or any other plan, contract, agreement or
arrangement that is not set forth in Section 2.10 of the Shareholder's
Disclosure Schedule shall be excluded. Nothing in this Section 5 (including,
without limitation, the foregoing) shall limit the ability of the Purchaser,
the Company or its Subsidiaries to amend or terminate any employee benefit or
otherwise change the salary or wage level, bonus opportunity or other terms
and conditions of employment provided that the covenants set forth in this
Section 5 are satisfied. Except as otherwise provided in this Section 5,
from and after the Closing, the Purchaser shall, or shall cause the Company
or one of its Subsidiaries
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or one of the Purchaser's Subsidiaries, as applicable, to honor, pay,
perform, and satisfy any and all liabilities, obligations and
responsibilities to or in respect of each Company Employee arising under the
terms of or in connection with any Plan or Collective Bargaining Agreement,
as in effect immediately prior to the Closing. The Purchaser will, or will
cause the Company, or one of its Subsidiaries or one of the Purchaser's
Subsidiaries, to provide that Company Employees will receive credit under
each employee benefit plan of the Purchaser, the Company, one of the
Company's Subsidiaries or one of the Purchaser's Subsidiaries, as the case
may be, on and after the Closing for all service with the Shareholder, the
Company and its Subsidiaries prior to the Closing for purposes of eligibility
to participate, vesting and eligibility to commence benefits, including, but
not limited to, subsidized early retirement benefits, provided, however, that
such credit shall not be required for purposes of benefit accrual. The
Shareholder shall retain or assume all liabilities, obligations and
responsibilities to or in respect of each Company Employee arising under the
terms of the Phelps Dodge Stock Option Plan (and all options or other awards
granted thereunder), the Phelps Dodge Retirement Plan, the Comprehensive
Executive Non-Qualified Retirement and Savings Plan of the Phelps Dodge
Corporation and, with respect to (i) former Company Employees who retired
prior to the Closing and (ii) Company Employees who, as of the Closing,
satisfied the age and service requirements for eligibility for benefits under
the Phelps Dodge Retiree Medical
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and Life Insurance Plan, the Phelps Dodge Retiree Medical and Life Insurance
Plan. Notwithstanding the foregoing, the Shareholder shall not provide credit
under the Phelps Dodge Retiree Medical and Life Insurance Plan for service
performed by any Company Employee described in (ii) in the immediately
preceding sentence after the Closing Date for any purpose (including, but not
limited to, credit for purposes of determining any such Company Employee's
contribution under such Plan). The Shareholder shall provide credit under
the Phelps Dodge Retirement Plan for service performed by any Current Company
Employee after the Closing for purposes of vesting and eligibility to
commence benefits (including, but not limited to, subsidized early retirement
benefits).
(b) The Purchaser shall, or shall cause the Company, or its
Subsidiaries, as applicable, to be responsible for any compensation, benefits or
other payments which become payable to any Company Employee employed by a
non-U.S. Subsidiary under any Employment Agreement, Collective Bargaining
Agreement, Plan or applicable law in connection with the transactions
contemplated hereby and the Purchaser shall indemnify and hold harmless the
Shareholder for any and all costs and liabilities incurred by the Shareholder
with respect to any claim for severance benefits payable to any Company Employee
employed by a non-U.S. Subsidiary under any Employment Agreement, Collective
Bargaining Agreement, Plan or applicable law as a result of or in connection
with the transactions contemplated hereby or any event occurring after the
Closing, including, without limitation, any claims
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of actual or constructive termination or "termination indemnities" under any
Foreign law. Notwithstanding the foregoing, the Shareholder shall retain all
liabilities, obligations and responsibilities to or in respect of any Company
Employee arising under the terms of any retention or employment agreement
entered into between the Shareholder and the Company Employee (which,
together with the liabilities specifically retained or assumed by the
Shareholder pursuant to Section 5.1(a), shall be referred to as the "Retained
Liabilities").
(c) The parties agree that (i) effective on the Closing Date, any
employee of the Shareholder or one of its Subsidiaries other than the Company or
one of its Subsidiaries who participates in The Pension Plan for Salaried
Employees of Accuride Canada Inc. (the "Canadian Plan") shall cease to accrue
any additional benefits under such Plan and (ii) they will reasonably cooperate
in order to transfer the assets and liabilities relating to such employees'
accrued benefits under the Canadian Plan to a plan designated by the
Shareholder. The Shareholder agrees to reimburse the Purchaser, the Company and
its Subsidiaries for the reasonable costs and expenses incurred in order to
effect such transfer.
5.2 Establishment of Accuride Plans.
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(a) The Shareholder shall, and shall cause the Company to, establish
a retirement plan (the "Accuride Retirement Plan"), a 401(k) plan (the "Accuride
401(k) Plan"), a flexible spending account plan (the "Accuride Flex Plan"),
health and welfare plans providing medical, dental, prescription drug, life
insurance, accidental death and dismemberment, long-term disability and
short-term disability benefits (the "Accuride Welfare Plans") and a retiree
medical and life insurance plan (the "Accuride Retiree Medical and Life
Insurance Plan" and, together with the Accuride Retirement Plan, the Accuride
401(k) Plan, the Accuride Flex Plan, and the Accuride Welfare Plans, the
"Accuride Plans") for the benefit of those Company Employees who are
participants in such plans. The Accuride Plans shall be effective no later than
the Closing (the "Effective Date"). The Phelps Dodge Retirement Plan, the
Phelps Dodge Employee Savings Plan, the Phelps Dodge Corporation Flexible
Benefits Plan, the Phelps Dodge health and welfare plans for active employees
and the Phelps Dodge Retiree Medical and Life Insurance Plans are referred to
herein as the "Shareholder's Plans." The Accuride Retirement Plan shall cover
the Current Company Employees covered by the Phelps Dodge Retirement Plan
immediately prior to the Closing and shall provide for substantially the same
vesting, benefit accrual and other terms and conditions as the Phelps Dodge
Retire-
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ment Plan, provided that such Current Company Employees will not receive
credit under the Accuride Retirement Plan for purposes of benefit accrual for
service prior to the Closing. The Accuride 401(k) Plan shall cover the Company
Employees covered by the Phelps Dodge Employee Savings Plan immediately prior to
the Closing and shall provide for substantially the same vesting, contribution
and other terms and conditions as the Phelps Dodge Employee Savings Plan, except
as provided in subsection 5.2(b). The Accuride Flex Plan and the Accuride
Welfare Plans shall cover the Company Employees covered by the Phelps Dodge
Corporation Flexible Benefits Plan and the Phelps Dodge Health and Welfare Plans
for active employees immediately prior to the Closing and shall provide for
substantially the same benefits and
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other terms and conditions as the Phelps Dodge Corporation Flexible Benefits
Plan and the Phelps Dodge Health and Welfare Plans for active employees. The
Accuride Retiree Medical and Life Insurance Plan shall cover the Current
Company Employees who, as of the Closing, failed to satisfy the age and
service requirements for eligibility for benefits under the Phelps Dodge
Retiree Medical and Life Insurance Plan and who satisfy the age and service
requirements for eligibility for benefits under the Accuride Retiree Medical
and Life Insurance Plan after the Closing, and shall provide for
substantially the same benefits and other terms and conditions as the Phelps
Dodge Retiree Medical and Life Insurance Plan; provided, however, that the
Accuride Retiree Medical and Life Insurance Plan shall not cover (i) former
Company Employees who retired prior to the Closing and (ii) Company Employees
who, as of the Closing, satisfy the age and service requirements for
eligibility for benefits under the Phelps Dodge Retiree Medical and Life
Insurance Plan. Subject to the establishment of the Accuride Plans, effective
on the Effective Date, except as provided below in Section 5.2(b), the
Company Employees shall cease to be active participants in the Shareholder's
Plans and shall accrue no further benefits thereunder. The Shareholder shall
use its best efforts to obtain insurance for the Accuride Plans (to the
extent the Shareholder's Plans are insured) and to retain for the Accuride
Plans the third-party vendors and service providers who provide services to
the Shareholder's Plans, provided that in the event any such third party
vendor or service provider cannot be so retained, the Shareholder agrees to
use its best efforts to procure for the Company and its Subsidiaries another
third party vendor or service provider prior to the Effective Date.
Notwithstanding the foregoing, the Purchaser agrees and acknowledges that the
rates and fees to be paid by the Company and its Subsidiaries to any third
party vendor or service provider may not be the same rates
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as paid by the Shareholder, the Company and its Subsidiaries under the
Shareholder's Plans for such services.
(b) The Accuride 401(k) Plan will contain a discretionary employer
contribution in lieu of a profit sharing contribution, and the creation of the
Accuride 401(k) Plan will be established by means of a spinoff of the accounts
of the Company Employees in accordance with Section 414(l) of the Code from the
Phelps Dodge Employee Savings Plan. The Shareholder, the Company or its
Subsidiaries, as the case may be, shall make all required contributions with
respect to the Company Employees attributable to service and contributions prior
to the Effective Date to the Phelps Dodge Employee Savings Plan prior to the
Effective Date and shall make all required contributions to the Accuride 401(k)
Plan attributable to service and contributions after the Effective Date in
accordance with the terms of each such Plan after the Effective Date. To the
extent the Effective Date occurs after December 31, 1997, each Company Employee
shall receive a prorated profit-sharing contribution for the portion of the 1998
calendar year occurring prior to the Effective Date (the "Contribution") in
accordance with the terms of the Phelps Dodge Employee Savings Plan. As soon as
administratively practicable after the Contribution is made, the Shareholder
shall or shall cause the account balances of all Company Employees attributable
to the Contribution to be
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transferred, in cash or in kind, to the Accuride 401(K) Plan.
(c) Without limiting the generality of the foregoing, the Accuride
Welfare Plans will (i) count service prior to the Closing credited under the
Phelps Dodge Health and Welfare Plans for active employees toward any and all
pre-existing condition limitations, (ii) recognize any and all previously
satisfied deductibles and co-payments and (iii) count all service with the
Shareholder, the Company and its Subsidiaries for all purposes under such plans.
(d) Without limiting the generality of the foregoing, the Accuride
Retirement Plan shall count all service with the Shareholder, the Company and
its Subsidiaries for purposes of eligibility to participate, eligibility to
commence benefits and vesting but shall not count such service for benefit
accrual purposes.
5.3 Employee Benefits Administration Services. For up to six months
after the Closing, the Shareholder agrees to assist the Company and its
Subsidiaries with the administration of the employee benefit plans established
pursuant to Section 5.1 and Section 5.2 in accordance with the terms of the
Transition Services Agreement.
6. Conditions Precedent.
6.1 General. The respective obligations set forth herein of the
Shareholder, the Company and the
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Purchaser to consummate the sale and purchase of the Shares and the Redeemed
Shares at the Closing shall be subject to the fulfillment or waiver, on or
before the Closing Date, in the case of the Shareholder and the Company, of
the conditions set forth in Sections 6.2 and 6.3, and in the case of the
Purchaser, of the conditions set forth in Sections 6.2 and 6.4 (collectively,
the "Closing Conditions").
6.2 Conditions to Obligations of All Parties.
6.2.1 HSR Act. The waiting period under the HSR Act shall have been
terminated or expired.
6.2.2 No Injunction, etc. Consummation of the transactions
contemplated hereby shall not have been restrained, enjoined or otherwise
prohibited by any applicable law, including any order, injunction, decree or
judgment of any court or other Governmental Authority, and no action or
proceeding brought by any Governmental Authority shall be pending at the Closing
Date before any court or other Governmental Authority to restrain, enjoin or
otherwise prevent the consummation of the transactions contemplated hereby, and
there shall not have been promulgated, entered, issued or determined by any
court or other Governmental Authority to be applicable to this Agreement any
applicable law making illegal the consummation of the transactions contemplated
hereby and no proceeding brought by any
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Governmental Authority with respect to the application of any such applicable
law shall be pending.
6.2.3 Governmental Consents. All material consents, authorizations,
permits or approvals of Governmental Authorities required to be made or obtained
prior to the Closing in connection with the execution and delivery of this
Agreement and the transactions contemplated hereby in addition to those referred
to in Sections 6.2.1 and 6.2.2 shall have been made or obtained.
6.2.4 Shareholder Board Ratification. The Board of Directors of the
Shareholder shall have ratified the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.
6.3 Conditions to Obligations of the Shareholder and the Company.
6.3.1 Representations and Warranties of the Purchaser. Each of the
representations and warranties in Section 3 shall be true and correct in all
material respects when made and at and as of the Closing with the same effect as
though made at and as of such time, except that those representations and
warranties which are made as of a specific date shall be correct in all material
respects only as of such date and those representations and warranties which
already are qualified by materiality shall be true and correct in all respects
as of the relevant date and time.
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The Purchaser shall have duly performed and complied in all material respects
with all agreements and obligations and satisfied all conditions to be
performed contained herein required to be performed, complied with or
satisfied by it at or before the Closing.
6.3.2 Officer's Certificate. The Purchaser shall have delivered to
the Shareholder a certificate, dated the Closing Date and signed by its
President or a Vice President, as to the fulfillment of the conditions set forth
in Section 6.3.1.
6.3.3 Opinion of Counsel. The Shareholder shall have received
opinions from Latham & Watkins, special counsel the Purchaser, dated the date of
the Closing and in form and substance reasonably satisfactory to the
Shareholder, to the effect of Sections 3.1, 3.2 and 3.4.
6.3.4 Documents. The Purchaser shall have entered into the Documents
(substantially in the form or on the terms attached to Schedule 1 hereto) to
which it is party and all of the agreements contemplated thereby to be performed
on or prior to the Closing shall have been performed.
6.4 Conditions to Obligations of the Purchaser.
6.4.1 Representations and Warranties of the Shareholder. Each of the
representations and warranties in Section 2 shall be true and correct in all
material respects
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when made and at and as of the Closing with the same effect as though made at
and as of such time, except that those representations and warranties which
are made as of a specific date shall be correct in all material respects only
as of such date and those representations and warranties which already are
qualified by materiality and those set forth in Section 2.4 shall be correct
in all respects as of the relevant date and time. The Shareholder and the
Company shall have duly performed and complied in all material respects with
all agreements and obligations and satisfied all conditions to be performed
contained herein required to be performed, complied with or satisfied by them
at or before the Closing.
6.4.2 Officer's Certificate. The Shareholder shall have delivered to
the Purchaser a certificate, dated the Closing Date and signed by its President
or a Vice President, as to the fulfillment of the conditions set forth in
Section 6.4.1.
6.4.3 Opinion of Counsel. The Purchaser shall have received opinions
from Scott A. Crozier, Vice President and General Counsel for the Shareholder,
and Debevoise & Plimpton, special counsel for the Shareholder, dated as of the
Closing and in form and substance reasonably satisfactory to the Purchaser, to
the effect of Sections 2.1, 2.2,
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2.3, 2.4, 2.5 and 2.13, which opinions may be relied upon by the banks in
connection with the Financing Commitments.
6.4.4 Resignations. The directors of the Company and each of the
Subsidiaries specified in a notice delivered by the Purchaser to the Shareholder
at least five days prior to the Closing shall have submitted their resignations
from the Boards of Directors of the Company and each of the Subsidiaries, as the
case may be, effective as of the Closing Date.
6.4.5 Consents. All material consents, authorizations or approvals
of any Person (other than any Governmental Authority) that are required or
necessary to be obtained or made by the Company or its Subsidiaries at or prior
to the Closing shall have been obtained and shall be in full force and effect at
and as of the Closing Date.
6.4.6 Financing. The Company shall have obtained the financing set
forth in the Financing Commitments on the terms set forth therein or on other
terms reasonably satisfactory to the Purchaser.
6.4.7 No Material Adverse Effect. There shall not have occurred any
event, change or condition that, individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect.
6.4.8 Documents. Each of the Company and the Shareholder shall have
entered into the Documents (substan-
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tially in the form or on the terms attached to Schedule 1 hereto) to which it
is a party and all of the agreements contemplated thereby to be performed on
or prior to the Closing shall have been performed.
6.4.9 Audited Financial Statements. The Company shall have delivered
to the Purchaser audited consolidated balance sheets of the Company and its
Subsidiaries as of December 31, 1996, 1995 and 1994 and the related audited
consolidated statements of income, consolidated statements of shareholders
equity and consolidated statements of cash flows (collectively, the "Audited
Financial Statements") which shall be accompanied by an unqualified report from
Deloitte & Touche, LLP, and the Audited Financial Statements shall be
substantially comparable with the Financial Statements for such periods.
6.4.10 Management Subscription Agreements. William P. Greubel and at
least seven of the individuals identified on Schedule 6.4.10 shall have entered
into management subscription agreements with the Company in a form reasonably
satisfactory to the Purchaser.
6.4.11 Lacks. The Company shall have executed a definitive agreement
with Lacks Industries, Inc. ("Lacks") providing for the application by Lacks of
plastic cladding and adhesive or bonding agent to wheels supplied by the
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Company, for sale by the Company to Ford Motor Company, and such agreement
shall be in full force and effect.
7. Indemnification.
7.1 Survival of Representations and Warranties and Covenants. Except
as otherwise provided, the representations and warranties contained in this
Agreement, and the schedules and certificates delivered in connection herewith,
and the covenants and agreements contained herein to be fully performed or
complied with at or prior to the Closing Date, shall survive until the date
which is twelve months after the Closing Date, whereupon they shall expire,
except with respect to representations and warranties set forth in Sections
2.14, 2.10.1, 2.10.2, 2.10.3 and 2.10.4, which shall survive until the
expiration of the applicable statute of limitations (with extensions) with
respect to the matters addressed in such sections. No claim for indemnification
under Section 7 of this Agreement may be asserted with respect to such
representations, warranties, covenants or agreements after the dates indicated
in the preceding sentence unless, prior to the date such representations,
warranties, covenants or agreements expire, the party seeking indemnification
has notified in reasonable detail the party from whom indemnification is sought
of a claim for indemnity hereunder. The representations, warranties and
agreements of each party hereto shall remain operative and in full
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force and effect regardless of any investigation made by or on behalf of any
other party hereto, any person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement.
7.2 Indemnification.
7.2.1 By the Shareholder. From and after the Closing, the Shareholder
agrees to indemnify, defend and hold harmless the Purchaser (which, for purposes
of this Section 7.2.1, shall include the Purchaser and its Affiliates (including
Kohlberg Kravis Roberts & Co., L.P. ("KKR") and after the Closing, the Company
and its Subsidiaries), and each officer, director, employee, representative and
advisor of the Purchaser and such Affiliates) from and against any loss,
liability (including, without limitation, liabilities arising under principles
of strict or joint and several liability), damage, claim (including, without
limitation, demands, allegations, orders or other actions by governmental
entities or other third parties) or cost or expense whatsoever (including,
without limitation, reasonable legal, consultant and expert fees and any court
costs) (collectively, "Damages"), incurred or sustained by the Purchaser arising
out of, resulting from or attributable to, (A) the nonfulfillment of any
agreement of the Shareholder under this Agreement, or (B) the breach of any
representation or warranty on the part of the Shareholder
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under this Agreement, or (C) the (i) Handling of any Hazardous Substance at
any time prior to the Closing at or from the Henderson Facility, the London
Facility or any Former Facility, including, but not limited to, the direct or
indirect effects of the Handling of any Hazardous Substance on natural
resources, Persons or property within or outside the boundaries of the
Henderson Facility, the London Facility or any Former Facility; provided,
however, the Shareholder's indemnity obligations pursuant to this clause
(C)(i) of Section 7.2.1 shall not apply to any Damage arising out of or
resulting from the investigation, assessment or remediation of a Hazardous
Substance unless such investigation, assessment or remediation is required by
or under an Environmental Law (the "Voluntary Action Exclusion"); provided
further, however, the Voluntary Action Exclusion shall not limit any defense
obligation in this Section 7.2.1; (ii) the failure at the Closing, or at any
time prior to the Closing, of the Henderson Facility, the London Facility or
any Former Facility to be in compliance with any applicable Environmental
Law; or (iii) the failure at the Closing, or at any time prior to the
Closing, of the Company to be in compliance with any Environmental Permit
associated with the Henderson Facility, the London Facility or Former
Facility, or (D) losses incurred by the Company and its Subsidiaries or their
respective officers, direc-
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tors, employees or agents which would, absent the effect of deductibles or
self-insured retentions of the Shareholder, be covered under a Policy, to the
extent of the amount of any deductible or self-insured retention of the
Shareholder under such Policy or (E) Retained Liabilities, provided that
there shall not be any duplicative payments or indemnities by the
Shareholder; provided, further, that any indemnification relating to Tax and
Section 2.14 shall be governed solely by Section 4.3. The term "Damages" is
not limited to matters asserted by third parties, but includes Damages
incurred or sustained in the absence of third party claims.
Payment by the Purchaser shall not be a condition precedent to
recovery. Amounts payable by the Shareholder to the Purchaser in respect of
Damages for which the Purchaser is entitled to indemnification hereunder shall
be payable by the Shareholder as incurred by the Purchaser.
The Purchaser's rights to indemnification under Section 7 of this
Agreement shall be limited as follows:
(a) The amount of any Damages incurred by the Purchaser shall be (i)
increased to take account of any Tax cost incurred (grossed up for such
increase) by the Purchaser arising from the receipt of indemnity payments
hereunder (unless such indemnity payment is treated as an adjustment to the
Purchase Price for tax purposes) and (ii) reduced to take account of any
Tax
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benefit realized by the Purchaser arising from the incurrence or payment
of any Damages or the assessment or adjustment giving rise to such
Damages. Such Tax cost or Tax benefit, as the case may be, shall be
computed for any year using the Purchaser's actual tax liability with and
without (A) the incurrence or payment of any Damages for which
indemnification is provided under Section 7 of this Agreement or (B) the
payment of any indemnification payments made pursuant to Section 7 of this
Agreement in such year and shall be certified by the responsible officer of
the Company (or the Purchaser) and the independent public accountants of
the Company. In the event that the Indemnitee will actually realize a Tax
cost or Tax benefit for a year(s) subsequent to the year in which the
indemnity payment is made, a payment in respect of such Tax cost or Tax
benefit shall be made in such subsequent year(s). Any indemnity payment
made pursuant to Section 7 of this Agreement will be treated as an
adjustment to the Purchase Price for Tax purposes, unless a determination
(as defined in section 1313 of the Code) with respect to the Indemnitee
causes any such payment not to constitute an adjustment to the Purchase
Price for U.S. federal income tax purposes.
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(b) The amount of any Damages incurred by the Purchaser shall be
reduced by the net amount (after giving effect to paragraph (a) above) the
Purchaser recovers (after deducting all attorneys' fees, expenses and other
costs of recovery) from any insurer or other party liable for such Damages,
and the Purchaser shall use reasonable efforts to effect any such recovery.
(c) The Purchaser shall not be entitled to indemnification for those
portions of any Damages (i) specifically reserved on the unaudited
consolidated balance sheet of the Company and any of its Subsidiaries as of
June 30, 1997 and on the consolidated balance sheet of the Company and its
Subsidiaries as of the Closing Date, or (ii) which resulted in a reduction
of the Redemption Price pursuant to Section 1.5.
(d) The Purchaser shall be entitled to indemnification pursuant to
Section 7.2.1(B) (other than with respect to breaches of the Shareholder's
representation and warranty contained in Sections 2.4 and 2.18 and the last
sentence of Section 2.6) only to the extent that the aggregate amount of
such Damages (adjusted as provided in paragraphs (a) and (b) above) exceeds
$8.5 million.
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(e) The aggregate amount of Damages payable to the Purchaser pursuant
to Section 7.2.1(A) or (B) shall not exceed 50% of the Redemption Price.
(f) The Purchaser may, or may cause the Company to, withhold and set
off against any other amounts due the Shareholder any amount as to which
the Shareholder is obligated to indemnify the Purchaser pursuant to this
Agreement.
7.2.2 By the Purchaser. From and after the Closing, the Purchaser
agrees to, and agrees to cause the Company and its Subsidiaries to, indemnify
and hold harmless the Shareholder (which, for purposes of this Section 7.2.2,
shall include the Shareholder and its Affiliates, and each officer, director,
employee, representative and adviser of the Shareholder and such Affiliates)
from and against any Damages incurred or sustained by the Shareholder arising
out of, resulting from or attributable to, (A) the nonfulfillment of any
agreement of the Purchaser under this Agreement or (B) the breach of any
representation or warranty on the part of the Purchaser under this Agreement,
provided that there shall not be any duplicative payments or indemnities by the
Purchaser, and provided, further, that any indemnification relating to Tax shall
be governed solely by Section 4.3.
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Payment by the Shareholder shall not be a condition precedent to
recovery. Amounts payable by the Purchaser or the Company and its Subsidiaries
to the Shareholder in respect of Damages for which the Shareholder is entitled
to indemnification hereunder shall be payable by the Purchaser, the Company and
its Subsidiaries as incurred by the Shareholder.
The Shareholder's rights to indemnification under Section 7 of this
Agreement shall be limited as follows:
(a) The amount of any Damages incurred by the Shareholder shall be (i)
increased to take account of any Tax cost incurred (grossed up for such
increase) by the Shareholder arising from the receipt of indemnity payments
hereunder (unless such indemnity payment is treated as an adjustment to the
Redemption Price for tax purposes) and (ii) reduced to take account of any
Tax benefit realized by the Shareholder arising from the incurrence or
payment of any Damages or the assessment or adjustment giving rise to such
Damages. Such Tax cost or Tax benefit, as the case may be, shall be
computed for any year using the Shareholder's actual tax liability with and
without (A) the incurrence or payment of any Damages for which
indemnification is provided under Section 7 of this Agreement or (B) the
payment of any indemnification payments made pursuant
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to Section 7 of this Agreement in such year, and shall be certified by the
responsible officer and the independent public accountants of the
Shareholder. In the event that the Indemnitee will actually realize a Tax
cost or Tax benefit for a year(s) subsequent to the year in which the
indemnity payment is made, a payment in respect of such Tax cost or Tax
benefit shall be made in such subsequent year(s). Any indemnity payment
made pursuant to Section 7 of this Agreement will be treated as an
adjustment to the Redemption Price for tax purposes, unless a determination
(as defined in section 1313 of the Code) with respect to the Indemnitee
causes any such payment not to constitute an adjustment to the Redemption
Price for U.S. federal income tax purposes.
(b) The amount of any Damages incurred by the Shareholder shall be
reduced by the net amount (after giving effect to paragraph (a) above) the
Shareholder recovers (after deducting all attorneys' fees, expenses and
other costs of recovery) from any insurer or other party liable for such
loss, liability or damage, and the Shareholder shall use reasonable efforts
to effect any such recovery.
(c) The Shareholder shall not be entitled to indemnification for
those portions of any Damages which
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resulted in an increase to the Redemption Price pursuant to Section 1.5.
(d) The Shareholder shall be entitled to indemnification pursuant to
Section 7.2.2(B) (other than with respect to breaches of the Purchaser's
representations and warranties contained in Section 3.6) only to the extent
that the aggregate amount of such Damages (adjusted as provided in
paragraphs (a) and (b) above) exceeds $8.5 million.
(e) The aggregate amount of Damages payable to the Shareholder under
this Section 7.2.2 shall not exceed 50% of the Redemption Price.
(f) The Shareholder may withhold and set off against any other
amounts due the Company or the Purchaser any amount as to which the
Purchaser is obligated to indemnify the Shareholder pursuant to this
Agreement.
7.2.3 Indemnification Procedures. (a) A Person entitled to
indemnification hereunder shall herein be referred to as an "Indemnitee." A
party obligated to indemnify an Indemnitee hereunder shall herein be referred to
as an "Indemnitor." Promptly after an Indemnitee either (a) receiving notice of
any claim or the commencement of any action by any third party which such
Indemnitee reasonably believes may give rise to a claim for indemnification from
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an Indemnitor hereunder or (b) sustaining any Damages not involving a
third-party claim or action with such Indemnitee reasonably believes may
give rise to a claim for indemnification from an Indemnitor hereunder or
(b) sustaining any Damages not involving a third-party claim or action
which such Indemnitee reasonably believes may
give rise to a claim for indemnification from an Indemnitor hereunder, such
Indemnitee shall, if a claim in respect thereof is to be made against an
Indemnitor under Section 7, notify such Indemnitor in writing in reasonable
detail of such claim, action or Damages, as the case may be; provided that
the failure to so notify the Indemnitor shall not affect rights to
indemnification hereunder except to the extent that the Indemnitor is
actually prejudiced by such failure. Upon receipt of such notice, the
Indemnitor shall be entitled to participate in such claim or action, to
assume the defense thereof at its expense, and to settle or compromise such
claim or action or consent to the entry of any judgment, provided that such
settlement or compromise shall be effected only with the consent of the
Indemnitee, which consent shall not be unreasonably withheld, unless such
settlement, compromise or judgment (i) includes as an unconditional term
thereof the giving by the claimant or the plaintiff of a release of the
Indemnitee from all liability with respect to such claim or action and (ii)
does not involve the imposition of equitable remedies or the imposition of
any obligations on such Indemnitee and does not otherwise adversely affect
the Indemnitee, other than as a
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result of the imposition of financial obligations for which such Indemnitee
will be indemnified hereunder. After notice to the Indemnitee of the
Indemnitor's election to assume the defense of such claim or action, the
Indemnitor shall not be liable to the Indemnitee under Section 7 for any
legal or other expenses subsequently incurred by the Indemnitee in connection
with the defense thereof other than reasonable costs of investigation,
provided that the Indemnitee shall have the right to employ counsel to
represent it if either (x) such claim or action involves remedies other than
monetary damages and such remedies, in the Indemnitee's reasonable judgment,
could have a material adverse effect on such Indemnitee or (y) the Indemnitee
shall have concluded in good faith that the counsel selected by the
Indemnitor has a conflict of interest because of the availability to it of
one or more additional or different defenses or counterclaims which are
inconsistent with one or more of those claims alleged by the Indemnitee, and
in any such event the fees and expenses of such separate counsel shall be
paid by the Indemnitor. If the Indemnitor does not elect to assume the
defense of such claim or action, the Indemnitee shall act reasonably and in
accordance with its good faith business judgment with respect thereto, and
shall not settle or compromise any such claim or action without providing the
Indemnitor the opportunity to participate in the settlement
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or reassume the defense of such claim or action. The parties hereto agree to
render to each other such assistance as may reasonably be requested in order
to insure the proper and adequate defense of any such claim or action.
(b) With respect to indemnification of the Purchaser by the
Shareholder pursuant to Section 7.2.1(D), the Shareholder shall be entitled to
take such actions with respect to the indemnified losses as the insurer under
the applicable Policy would be entitled to take under the terms of such Policy.
7.2.4 Mitigation. The parties shall cooperate with each other with
respect to resolving any claim or liability with respect to which one party is
obligated to indemnify the other party hereunder, including by making
commercially reasonable efforts to mitigate or resolve any such claim or
liability.
8. Definitions.
As used herein, the following terms have the following meanings:
Accounting Firm: as defined in Section 1.5.
Accuride Canada: as defined in Section 2.11.
Accuride Flex Plan: as defined in Section 5.2.
Accuride 401(K) Plan: as defined in Section 5.2.
Accuride Mexico: as defined in Section 1.5.
Accuride Plans: as defined in Section 5.2.
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Accuride Retiree Medical and Life Insurance Plans: as defined in
Section 5.2.
Accuride Retirement Plan: as defined in Section 5.2.
Accuride Welfare Plans: as defined in Section 5.2.
Action: any action, suit, litigation, claim, proceeding, arbitral or
mediation action, governmental audit, inquiry, criminal prosecution,
investigation or complaint.
Actual Capital Expenditures: as defined in Section 1.5.
Actual Closing: as defined in Section 4.3.
Actual Closing Date: as defined in Section 4.3.
Adjusted Redemption Price: as defined in Section 1.5.
Affiliate: of a Person means any other Person that directly or
indirectly controls, is controlled by, or is under common control with, the
first Person.
Agreement: shall mean this Agreement, including the Schedules and
Exhibits hereto.
AKW: as defined in the definition of "Subsidiary."
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Applicable Law: with respect to any Person, any domestic or foreign,
federal, state, provincial or local statute, law, ordinance, rule,
administrative interpretation, regulation, order, writ, injunction, directive,
judgment, decree or other requirement of any Governmental Authority applicable
to such Person, its business or any of its respective properties or assets.
Audited Financial Statements: as defined in Section 6.4.9.
Bank Financing Commitment: as defined in Section 3.3.
Business Day: any day other than a Saturday, Sunday or day on which
banks are permitted to close in the State of New York.
Canadian Plan: as defined in Section 5.1.
Capital Expenditures: as defined in Section 1.5.
Closing: as defined in Section 1.4.
Closing Conditions: as defined in Section 6.1.
Closing Date: as defined in Section 1.4.
Closing Date Amount: as defined in Section 1.3.
Closing Working Capital: as defined in Section 1.4.
Code: the Internal Revenue Code of 1986, as amended.
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Collective Bargaining Agreements: as defined in Section 2.10.1.
Common Stock: as defined in the Preamble.
Company: as defined in the Preamble.
Company Employees: as defined in Section 5.1.
Company Group: as defined in Section 4.3.
Company Intellectual Property: as defined in Section 2.11.
Company Licenses: as defined in Section 2.11.
Confidentiality Agreement: as defined in Section 4.2.2.
Contribution: as defined in Section 5.2.
Contracts: all agreements, contracts, leases, purchase orders,
undertakings, understandings, covenants not to compete, confidentiality
agreements, licenses, instruments, obligations and commitments to which the
Company or any of its Subsidiaries is a party or by which any assets of the
Company or its Subsidiaries are bound or affected (including any and all
amendments thereto).
Current Assets: as defined in Section 1.5.
Current Company Employees: as defined in Section 5.1.
Current Liabilities: as defined in Section 1.5.
Damages: as defined in Section 7.2.1.
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Default: (1) a breach of or default under any of the Contracts, (2)
the occurrence of an event that with the passage of time or the giving of notice
or both would constitute a breach of or default under any of the Contracts, or
(3) the occurrence of an event that with or without the passage of time or the
giving of notice or both would give rise to a right of termination, amendment,
renegotiation or acceleration or loss of any material benefits or payment of any
fee under any of the Contracts.
Descriptive Memorandum: as defined in Section 1.5.
Diversified Company: as defined in Section 4.9.
Documents: as defined in Section 2.1.
DOJ: as defined in Section 4.1.
Effective Date: as defined in Section 5.2.
Employment Agreements: as defined in Section 2.10.1.
Environmental Conditions: shall mean the introduction into the
environment of any pollution, including, without limitation, any contaminant,
irritant or pollutant or other Hazardous Substance (whether or not upon any
Facility or Former Facility or other property and whether or not such pollution
constituted at the time thereof a violation of any Environmental Law as a result
of any Release of any kind whatsoever of any Hazardous Substance) as a result
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of which the Company or any Subsidiary has become liable to any Person or by
reason of which any Facility or Former Facility may suffer or be subjected to
any Lien.
Environmental Laws: shall mean all laws, statutes, ordinances,
regulations, rules, notice requirements and court decisions that regulate or
relate to (i) the protection or clean-up of the environment; (ii) the Handling
of Hazardous Substances; (iii) the preservation or protection of waterways,
groundwater, drinking water, air, wildlife, plants or other natural resources;
or (iv) the health and safety of persons or property, including, without
limitation, protection of the health and safety of employees. Environmental
Laws shall include, without limitation, the Federal Insecticide, Fungicide,
Rodenticide Act, Resource Conservation & Recovery Act, Clean Water Act, Safe
Drinking Water Act, Atomic Energy Act, Occupational Safety and Health Act, Toxic
Substances Control Act, Clean Air Act, Comprehensive Environmental Response,
Compensation and Liability Act, Emergency Planning and Community Right-to-Know
Act, Hazardous Materials Transportation Act and all analogous or related
federal, state, local or foreign laws, each as amended.
Environmental Permit: shall mean any license, permit, franchise,
approval, authorization, consent or order of, or filing with, any Governmental
Authority, whether
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foreign, federal, state or local, or any other Person, necessary for the
past, present or anticipated conduct of the business of the Company or any of
its Subsidiaries that is required under, issued pursuant to, or authorized by
any Environmental Law.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
Exchange Act: as defined in Section 2.2.
Facility: shall mean all real property owned or leased by the Company
or any Subsidiary that is identified on Schedule 2.8 attached hereto, and all
buildings, structures, improvements and fixtures located thereon, whether owned,
leased or otherwise held or used by the Company or any Subsidiary and all
equipment and other personal property used or useful in connection with any such
real property, buildings, structures, improvements or fixture.
Financial Statements: as defined in Section 2.6.
Financing Commitments: as defined in Section 3.3.
Former Facility: shall mean all real property and related facilities
owned, leased or operated by the Company or any Subsidiary at any time prior to
the date hereof, and all buildings, structures, improvements and fixtures
located thereon, whether owned, leased or otherwise held or used by the Company
or any Subsidiary and all equipment and other personal property used or useful
in connection with any such
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real property, buildings, structures, improvements or fixture, but excluding
any Facility.
FTC: as defined in Section 4.1.
Governmental Authority: any domestic or foreign government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, any government authority, agency,
department, board, commission or instrumentality of the United States, any State
of the United States or any political subdivision thereof.
Handling: shall mean the production, use, treatment, storage,
transportation, generation, manufacture, processing, distribution, disposal,
emission, discharge, Release or threatened Release.
Hazardous Substance: shall mean any pollutant, contaminant, chemical,
waste and any toxic, infectious, carcinogenic, reactive, corrosive, ignitable or
flammable chemical or chemical compound or hazardous substance, material or
waste, whether solid, liquid or gas, including, without limitation, any quantity
of asbestos in any form, urea formaldehyde, PCB's, radon gas, crude oil or any
fraction thereof, all forms of natural gas, petroleum products or by-products or
derivatives, radioactive substance or material, pesticide, waste waters,
sludges, slag and any
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other substance, material or waste that is subject to regulation, control or
remediation under any Environmental Laws.
Henderson Facility: shall mean all real property owned or leased by
the Company or any Subsidiary in Henderson County, Kentucky, and all buildings,
structures, improvements and fixtures located thereon, whether owned, leased or
otherwise held or used by the Company or any Subsidiary and all equipment and
other personal property used or useful in connection with any such real
property, buildings, structures, improvements or fixtures.
HSR Act: as defined in Section 2.2.
Indemnitee: as defined in Section 7.2.3.
Indemnitor: as defined in Section 7.2.3.
Intellectual Property Licenses: as defined in Section 2.11.
Intellectual Property: all patents and applications therefor,
trademarks and service marks and registrations and applications therefor,
registered copyrights and applications therefor, trade names, software, material
trade secrets and confidential business information including, without
limitation, ideas, formulae, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development informa-
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tion, drawings, specifications, designs, plans, proposals, and technical data.
Internal Software: as defined in Section 2.11.
Inventory: all merchandise owned and intended for resale by the
Company and its Subsidiaries and all raw materials, work in process, finished
goods, wrapping, supply and packaging items and similar items of the Company and
its Subsidiaries, whether or not located on the premises, on consignment to a
third party, or in transit or storage.
IRS: the Internal Revenue Service of the United States.
KKR: as defined in Section 7.2.1.
Lacks: as defined in Section 6.4.11.
Laws: any laws, statutes, ordinances, regulations, rules, notice
requirements, court decisions, published agency guidelines and orders of any
Governmental Authority.
Leased Real Property: as defined in Section 2.8.
Liabilities: any direct or indirect liability, indebtedness,
obligation, commitment, expense, claim, deficiency, guaranty or endorsement of
or by any Person of any type, whether accrued, absolute, contingent, matured,
unmatured or other.
Licenses: as defined in Section 2.11.
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Liens: any claim, lien, pledge, covenant, easement, right of first
refusal, licenses, rights of way, option, charge, security interest, deed of
trust, mortgage, encroachment, building or use restriction, conditional sales
agreement or encumbrance, whether voluntarily incurred or arising by operation
of law, and includes any agreement to give any of the foregoing in the future,
and any contingent sale or other title retention agreement or lease in the
nature thereof. With respect to shares of capital stock, "Liens" shall also
include any voting agreement or agreement limiting or restricting the holder's
right to dispose of such shares.
London Facility: shall mean all real property owned or leased by the
Company or any Subsidiary in the County of Middlesex, Province of Ontario,
Canada, and all buildings, structures, improvements and fixtures located
thereon, whether owned, leased or otherwise held or used by the Company or any
Subsidiary and all equipment and other personal property used or useful in
connection with any such real property, buildings, structures, improvements or
fixtures.
Material Adverse Effect: a material adverse effect on the assets,
liabilities, financial condition, results of operations, business or prospects
of the Company
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and its Subsidiaries taken as a whole or on the consummation of the
transactions contemplated by this Agreement.
Material Contracts: as defined in Section 2.9.
Non-Company Affiliates: as defined in Section 2.14.
Notice of Disagreement: as defined in Section 1.5.
Owned Intellectual Property: as defined in Section 2.11.
Owned Real Property: as defined in Section 2.8.
Permits: as defined in Section 2.12.
Permitted Liens: as defined in Section 2.8.
Person: any natural person, firm, limited liability company, general
partnership, limited partnership, joint venture, association, corporation,
trust, Governmental Authority or other entity.
Plans: as defined in Section 2.10.
Policies: as defined in Section 2.16.
Post-Closing Straddle Period: as defined in Section 4.3.
Pre-Closing Straddle Period: as defined in Section 4.3.
Purchase Price: as defined in Section 1.2.
Purchaser: as defined in the Preamble.
Redeemed Shares: as defined in Section 1.3.
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Redemption: as defined in the Preamble.
Redemption Price: as defined in Section 1.3.
Redemption Price Adjustment: as defined in Section 1.5.
Release: shall mean and include any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment or the workplace of any Hazardous Substance,
and otherwise as defined in any Environmental Law.
Retained Liabilities: as defined in Section 5.1.
Shareholder: as defined in the Preamble.
Shareholder's Disclosure Schedule: the Disclosure Schedule delivered
by the Shareholder on the date hereof. Section numbers in the Shareholder's
Disclosure Schedule refer to the corresponding section numbers in this
Agreement. Matters set forth in one section of the Shareholder's Disclosure
Schedule need not be set forth in any other section thereof so long as its
relevance to the latter section is reasonably ascertainable from its inclusion
in the former section.
Shareholder's Marks: as defined in Section 4.10.
Shareholder's Plans: as defined in Section 5.2.
Shares: as defined in the Preamble.
Statement: as defined in Section 1.5.
Straddle Period: as defined in Section 4.3.
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Subsidiary: shall mean, with respect to any Person, any other Person
of which more than 50% of the securities or other ownership interests having by
their terms ordinary voting power to elect a majority of the board of directors,
or other persons performing similar functions, of such other Person, is directly
or indirectly owned or controlled by such Person, by one or more of such
Person's Subsidiaries or by such Person and any one or more of such Person's
Subsidiaries, provided, that with respect to the Company, "Subsidiary" shall
include AKW, L.P. and AKW General Partner, L.L.C. (collectively "AKW");
provided, further, that any representation or warranty of the Shareholder
contained herein pertaining to AKW is made by the Shareholder to its knowledge,
and any covenant of the Shareholder or the Company contained herein pertaining
to AKW is made to best of the Shareholder's or the Company's, as the case may
be, ability.
Tax or Taxes: shall mean all federal, state, local and foreign
income, gross receipts, sales, use, social security, employees' withholding,
unemployment, disability, excise, franchise, profits, property, capital stock,
premium, minimum and alternative minimum or other taxes, fees, stamp taxes and
duties, assessments or charges of any kind whatsoever (whether payable directly
or by withholding)
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imposed by any taxing authority, together with any interest thereon and any
penalties and additions thereto.
Tax Dispute Accountant: as defined in Section 4.4.
Tax Indemnitee: as defined in Section 4.4.
Tax Indemnitor: as defined in Section 4.4.
Tax Return: any report, return, statement or other written
information required to be filed with a taxing authority in connection with
Taxes.
Transition Services Agreement: as defined in Section 4.8.
Voluntary Action Exclusion: as defined in Section 7.2.1.
Working Capital: as defined in Section 1.5.
Working Capital Amount: as defined in Section 1.5.
Year End Working Capital: as defined in Section 1.5.
9. General Provisions.
9.1 Modification; Waiver. This Agreement may be modified only by a
written instrument executed by the parties hereto. Any of the terms and
conditions of this Agreement may be waived only in writing at any time on or
prior to the Closing Date by the party entitled to the benefits thereof.
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9.2 Entire Agreement. The Documents, including the Schedules and
Exhibits hereto (which are hereby incorporated by reference and made a part
hereof) are the entire agreement of the parties with respect to the subject
matter hereof and supersedes all other prior agreements, understandings,
statements, representations and warranties, oral or written, express or implied,
between the parties hereto and their respective Affiliates, representatives and
agents in respect of the subject matter hereof (including, without limitation,
the Confidential Descriptive Memorandum, dated August 18, 1997, with respect to
the Company and any supplements thereto), except that this Agreement does not
supersede the Confidentiality Agreement, the terms and conditions of which the
parties hereto expressly reaffirm.
9.3 Exclusivity of Representations and Warranties and Indemnification
Provision; Relationship Between the Parties. It is the explicit intent and
understanding of each of the parties hereto that neither party nor any of its
Affiliates, representatives or agents is making any representation or warranty
whatsoever, oral or written, express or implied, other than those set forth in
this Agreement and neither party is relying on any statement, representation or
warranty, oral or written, express or implied, made by the other party or such
other party's Affiliates, representatives or agents, except for the
representations and warran-
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ties set forth in this Agreement. EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH
IN THIS AGREEMENT, THE PARTIES EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY OR
REPRESENTATION AS TO CONDITION, MERCHANTABILITY OR SUITABILITY AS TO ANY OF
THE ASSETS OF THE BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES TAKEN AS A
WHOLE. The indemnity provided for in Section 7 of this Agreement shall be
the sole and exclusive remedy of the Purchaser after the Closing for any
inaccuracy of any representation or warranty of the Shareholder or any
failure or breach of any covenant, obligation, condition or agreement to be
performed or fulfilled by the Shareholder in this Agreement. The parties
agree that this is an arm's length transaction in which the parties'
undertakings and obligations are limited to the performance of their
obligations under the Documents. The Purchaser acknowledges that it is a
sophisticated investor, that it has undertaken a full investigation of the
business of the Company and its Subsidiaries taken as a whole, and that it
has only a contractual relationship with the Shareholder, based solely on the
terms of this Agreement, and that there is no special relationship of trust
or reliance between the Purchaser and the Shareholder.
9.4 Termination. This Agreement may be terminated:
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(a) at any time prior to the Closing Date by mutual consent of the
Purchaser and the Shareholder;
(b) by the Purchaser, if it shall not have received written
notification from the Shareholder on or before December 12, 1997 that the
condition set forth in Section 6.2.4 has been satisfied;
(c) by the Purchaser or the Shareholder, if the Closing shall not have
taken place on or before February 28, 1998 or such later date as the
parties may have agreed to in writing, provided that the non-occurrence of
the Closing is not attributable to a breach of the terms hereof by the
party seeking termination; or
(d) by either the Shareholder or the Purchaser, if a court of
competent jurisdiction or governmental, regulatory or administrative agency
or commission shall have issued a nonappealable final order, decree or
ruling or taken any other action having the effect of permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby.
In the event of such termination, no party shall have any further
liability hereunder, except (i) for willful breach of this Agreement and (ii)
the Confidentiality Agreement and this Section 9.4 and Section 9.5 shall survive
such termination and shall remain in full force and effect.
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9.5 Expenses. Except as expressly provided herein, including, without
limitation, Section 3.6, whether or not the transactions contemplated herein
shall be consummated, each party shall pay its own expenses incident to the
preparation and performance of this Agreement. Upon the Closing, the Company
shall pay the fees and expenses incurred by the Purchaser in connection with
this Agreement and the transactions contemplated hereby.
9.6 Further Actions. Each party shall execute and deliver such
certificates and other documents and take such other actions as may reasonably
be requested by the other party in order to consummate or implement the
transactions contemplated hereby.
9.7 Post-Closing Access. (a) In connection with any matter reasonably
related to the conduct of the Shareholder's business (such as preparing tax
returns and financial statements, responding to tax audits, defending Actions
and preparing reports to Governmental Authorities and shareholders) relating to
any period prior to, or any period ending on, the Closing for which access to
the Company's books and records is reasonably necessary, the Purchaser shall,
upon the request and at the expense of the Shareholder, permit the Shareholder
and its representatives reasonable access at all reasonable times during normal
business hours to the books and records of the Company and
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its Subsidiaries which shall have been transferred to the Purchaser;
provided, that access to such books and records shall not unreasonably
interfere with the normal operations of the Company and its Subsidiaries and
that the Shareholder and its representatives shall not be entitled to any
such access, information or documents (i) as to which the attorney-client
privilege applies or (ii) the disclosure of which is restricted by contract
or applicable law except in strict compliance with such contract or law. The
Purchaser shall not dispose of such books and records during the period
beginning with the Closing Date and ending on the later of the seventh
anniversary of the Closing Date or, with respect to books and records related
to Taxes, the expiration of the applicable statute of limitations, with
extensions, without the Shareholder's consent, which shall not be
unreasonably withheld. Following the expiration of such period, the
Purchaser may dispose of such books and records at any time upon giving 60
days' prior written notice to the Shareholder, unless the Shareholder agrees
to take possession of such books and records within 60 days at no expense to
the Purchaser.
(b) In connection with any matter reasonably related to the conduct of
the Company's and Purchaser's business (such as preparing tax returns and
financial statements, responding to tax audits, defending Actions and
138
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preparing reports to Governmental Authorities and shareholders), relating to
any period prior to, or any period ending on, the Closing for which access to
the Shareholder's books and records is reasonably necessary, the Shareholder
shall, upon the Company's request and expense, permit the Company and its
representatives reasonable access at all reasonable times during normal
business hours to the books and records of the Shareholder and its Affiliates
relating to the Company and its Subsidiaries as may be reasonably necessary;
provided, that access to such books and records shall not unreasonably
interfere with the normal operations of the Shareholder and its Affiliates
and that the Company and its representatives shall not be entitled to any
such access, information or documents (i) as to which the attorney-client
privilege applies or (ii) the disclosure of which is restricted by contract
or applicable law except in strict compliance with such contract of law. The
Shareholder shall not dispose of such books and records relating to the
Company and its Subsidiaries during the period beginning with the Closing
Date and ending on the later of the seventh anniversary of the Closing Date
or, with respect to books and records related to Taxes, the expiration of the
applicable statute of limitations, with extensions, without the Company's
consent, which shall not be unreasonably withheld. Following the expiration
of such
139
<PAGE>
period, the Shareholder may dispose of such books and records at any time
upon giving 60 days' prior written notice to the Purchaser, unless the
Company agrees to take possession of such books and records within 60 days at
no expense to the Shareholder.
(c) Without limiting the generality of the foregoing, promptly
following the date hereof, the Shareholder shall cooperate with the Company to
identify all documents, computer files and other records (or categories of
documents, computer files and records) that are in the possession or control of
the Shareholder that relate to the conduct of business of the Company and its
Subsidiaries. Prior to and after the Closing, upon the request of the Company,
the Shareholder shall deliver, at the Shareholder's expense, copies (or, if
requested, originals) of such documents, files and records of the Company;
provided that if the Shareholder has a reasonable need to retain such originals
(e.g., for tax returns), the Shareholder may deliver copies; and provided,
further, the Company shall not be entitled to such documents, files or records
(i) as to which the attorney-client privilege applies or (ii) the disclosure of
which is restricted by contract or applicable law except in strict compliance
with such contract of law and that the Shareholder may redact from such
documents,
140
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files and records, the portions thereof relating solely to the retained
business of the Shareholder.
9.8 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given or
made as follows: (a) if sent by registered or certified mail in the United
States return receipt requested, upon receipt; (b) if sent by reputable
overnight air courier (such as DHL or Federal Express), two business days after
mailing; (c) if sent by facsimile transmission, with a copy mailed on the same
day in the manner provided in (a) or (b) above, when transmitted and receipt is
confirmed by telephone; or (d) if otherwise actually personally delivered, when
delivered, and shall be delivered as follows:
if to the Shareholder or, prior to the Closing, the Company:
Phelps Dodge Corporation
2600 North Central Avenue
Phoenix, Arizona 85004
Fax Number: (602) 234-8050
Attention: Scott A. Crozier, Esq.
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Fax Number: (212) 909-6836
Attention: James C. Scoville, Esq.
141
<PAGE>
if to the Purchaser or, after the Closing, the Company:
Hubcap Acquisition L.L.C.
c/o Kohlberg Kravis Roberts & Co., L.P.
2800 Sand Hill Road
Menlo Park, California 94025
Fax Number: (650) 233-6561
Attention: James H. Greene, Jr.
with a copy to:
Latham & Watkins
75 Willow Road
Menlo Park, California 94025
Fax Number: (650) 463-2600
Attention: Peter F. Kerman, Esq.
or to such other address or to such other person as either party hereto shall
have last designated by notice to the other party.
9.9 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, but shall not be assignable, by operation of law or otherwise, by
either party hereto without the prior written consent of the other party and any
purported assignment or other transfer without such consent shall be void and
unenforceable, provided, that the Purchaser may assign this Agreement to any
lender to the Purchaser as security for obligations to such lender or to any
Affiliate of Purchaser, and provided, further, that no assignment to any such
lender or Affiliate
142
<PAGE>
shall in any way affect the Purchaser's obligation or liabilities under this
Agreement.
9.10 No Third Party Beneficiaries. Except as set forth in Section 7
or as otherwise provided herein, nothing in this Agreement shall confer any
rights upon any person or entity which is not a party or a successor or
permitted assignee of a party to this Agreement.
9.11 Counterparts. This Agreement may be executed in counterparts,
all of which shall constitute one and the same instrument.
9.12 Interpretation. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof. Any references to
Shareholder's knowledge or the knowledge of the Shareholder shall mean the
actual knowledge, after reasonable investigation and inquiry, of William P.
Greubel, Bradford C. Schultz, Elizabeth J. Hamme, Terrence J. Keating, William
D. Noll, J. Greg Szabo, Henry L. Taylor, Gary Bird (with respect to Section 2.16
only), Don Linder (with respect to Section 2.10 only), Daniel Luchtenfeld (with
respect to Section 2.14 only), Leo Pruitt (with respect to Section 2.17 only)
and Robert C. Swan (with respect to Sections 2.13 and 2.24 only).
143
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9.13 Governing Law. This Agreement shall be construed, performed and
enforced in accordance with the laws of the State of New York.
9.14 Consent to Jurisdiction, etc. (a) Each of the parties hereto
hereby irrevocably and unconditionally submits, for itself and its property,
to the jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby or for recognition or
enforcement of any judgment relating thereto, and each of the parties hereby
irrevocably and unconditionally agrees that any claim in respect of any such
action or proceeding may be heard and determined in such New York State court
or, to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(b) Each of the parties hereto hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively
do so, any objection which it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this
144
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Agreement or the transactions contemplated hereby in any New York State or
Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.9. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
9.15 Waiver of Punitive and Other Damages and Jury Trial. (a) THE
PARTIES TO THIS AGREEMENT EXPRESSLY WAIVE AND FOREGO ANY RIGHT TO RECOVER
PUNITIVE, EXEMPLARY, OR SIMILAR DAMAGES IN ANY ARBITRATION, LAWSUIT, LITIGATION
OR PROCEEDING ARISING OUT OF OR RESULTING FROM ANY CONTROVERSY OR CLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
145
<PAGE>
(c) EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
EITHER OF SUCH WAIVERS, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS
OF SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (iv) IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 9.15.
9.16 Severability. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
9.17 Specific Performance. Each of the Parties hereto agrees that the
other parties will be irreparably injured if the obligations of such party
contained in Sections 4.7 through 4.12, 4.14, 5.1, 9.6 and 9.7 are not
specifically enforced. Therefore, notwithstanding anything to the contrary in
this Agreement, each of the parties hereto shall have the right to enforce
specifically the performance by the other party under such sections, and such
party agrees to waive the defense in any such suit that the other
146
<PAGE>
party has an adequate remedy at law and to interpose no opposition, legal or
otherwise, as to the propriety of specific performance as a remedy. The
specific performance remedy described in this Section 9.17 shall be in
addition to, and not in lieu of, any other remedies at law or in equity that
the parties hereto may elect to pursue.
147
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first above written.
PHELPS DODGE CORPORATION
By /s/ Manuel J. Iraola
--------------------------
Name: Manuel J. Iraola
Title: Senior Vice President
HUBCAP ACQUISITION L.L.C.
By /s/ James H. Greene, Jr.
--------------------------
Name: James H. Greene, Jr.
Title: President
ACCURIDE CORPORATION
By /s/ William P. Greubel
--------------------------
Name: William P. Greubel
Title: President
<PAGE>
EXHIBIT 1
TERM SHEET FOR THE TRANSITION SERVICES AGREEMENT
I.T. Services. To provide the Company and its Subsidiaries with WAN and
Internet access for a period of up to six months after the Closing and assist
with orderly cut over (with appropriate modifications to establish a "firewall"
to maintain the secrecy of use by the Shareholder and its Subsidiaries).
Payroll Services. To provide payroll services for the hourly and salaried
employees of the Company and its Subsidiaries (but not including any non-U.S.
Subsidiaries) for a period of six months after the Closing including preparation
and processing of payroll (including 401(k) deposits and preparation and filing
of all federal and state and local withholding and payroll taxes) and supplying
of checks and deposit stubs for direct deposits for the purpose of making
payroll payments.
Employee Benefits Administration Services. For up to six months after the
Closing, the Shareholder agrees to assist the Company and its Subsidiaries with
the administration of the employee benefit plans established pursuant to
Section 5.1 and Section 5.2.
To the extent that the transition services contemplated by Section 4.8 have not
been completed by the Closing Date, the Shareholder will continue to assist the
Company and its Subsidiaries with such transition services after the Closing for
a period up to six months after the Closing, provided, however, that the
Shareholder may employ the services of third parties to provide any or all such
transition services, provided, further, that the cost related to such employment
shall be consistent with past practices.
The Company shall reimburse the Shareholder for the full costs and expenses
related to the services described above on a basis consistent with past practice
(taking into account the level of services to be provided). The services will
be provided at a level consistent with that currently provided by the
Shareholder and its Subsidiaries to the Company and its Subsidiaries. Any taxes
(excluding income taxes) assessed on the provision of services shall be paid by
the Company.
<PAGE>
Schedule 1
Letter Agreement, dated as of November 17, 1997, among Phelps Dodge Corporation,
Accuride Corporation and Hubcap Acquisition L.L.C.
Stockholders' Agreement, among Phelps Dodge Corporation, Accuride Corporation
and Hubcap Acquisition L.L.C., substantially in the form attached hereto as
Exhibit A.
Transition Services Agreement, between Accuride Corporation and Phelps Dodge
Corporation, contemplated by Section 4.8 of this Agreement, the principal terms
of which are set forth on Exhibit 1.
Registration Rights Agreement, between Accuride Corporation and Hubcap
Acquisition L.L.C., substantially in the form attached hereto as Exhibit B.
Indemnification Agreement to be entered into between Phelps Dodge Corporation
and Accuride Corporation, as provided in Section 4.1 of this Agreement.
2
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT OF
OF CERTIFICATE OF INCORPORATION OF
ACCURIDE CORPORATION
It is hereby certified that:
1. The name of the corporation is Accuride Corporation (the
"Corporation") and the original Certificate of Incorporation of the Corporation
was filed with the Secretary of State of Delaware on November 14, 1986, and that
a Certificate of Amendment of Certificate of Incorporation Before Payment of
Capital of the Corporation was filed with the Secretary of State of Delaware on
December 9, 1986, and that a Certificate of Correction to the Certificate of
Amendment of the Corporation was filed with the Secretary of State of Delaware
on December 12, 1986, and that a Certificate of Ownership and Merger of the
Corporation was filed with the Secretary of State of Delaware on December 27,
1989.
2. The Certificate of Incorporation of the Corporation, as amended,
is hereby amended by striking out Paragraph 4 thereof and by substituting in
lieu of said Paragraph the following new Paragraph:
4. The corporation shall have authority to issue two classes
of stock to be designated, respectively, "Preferred Stock" and
"Common Stock." The total number of shares which the
corporation shall have authority to issue is Fifty Thousand
(50,000) shares. Forty Five Thousand (45,000) shall be Common
Stock and Five Thousand (5,000) shall be Preferred Stock, each
with par value of $0.01 per share.
3. The amendment of the Certificate of Incorporation herein has been
duly adopted in accordance with the provisions of Sections 228 and 242 of the
General Corporation Law of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, Accuride Corporation has caused this certificate
to be signed by William P. Greubel, its President, as of January 21, 1998
By: /s/ William P. Greubel
-----------------------------
William P. Greubel,
President
S-1
<PAGE>
FILED
DEC 27 1989
/s/ [illegible] 1:30 P.M.
SECRETARY OF STATE
CERTIFICATE OF OWNERSHIP AND MERGER
Merging
NORTH AMERICAN WHEEL ACQUISITION CORP.,
a Delaware Corporation,
into
ACCURIDE CORPORATION, a Delaware Corporation,
Pursuant to Section 253
of the General Corporation Law of Delaware
NORTH AMERICAN WHEEL ACQUISITION CORP., a Delaware corporation
("North American Wheel"), does hereby certify:
FIRST: That North American Wheel owns all the outstanding shares of
stock of ACCURIDE CORPORATION, a Delaware corporation ("Accuride").
SECOND: That North American Wheel has determined to and does
hereby merge itself into Accuride pursuant to the following resolutions of the
Board of Directors of North American Wheel, duly adopted by the unanimous
written consent of the members of such Board on December 21, 1989 and filed
with the minutes of such Board:
MERGER
RESOLVED, that; subject to the approval of the sole stockholder of
all of the outstanding stock of the Corporation, the Corporation merge
into ACCURIDE CORPORATION, a Delaware corporation ("Accuride"),
<PAGE>
pursuant to Section 253 of the General Corporation Law of the State of
Delaware; and
FURTHER RESOLVED, that the merger shall be effective upon the date
of filing with the Secretary of State or the State of Delaware of a
Certificate of Ownership and Merger; and
FURTHER RESOLVED, that upon the effective date of the merger, (a)
each of the 100 outstanding shares of Common Stock of Accuride, all of
which are owned by the Corporation immediately prior to the merger, shall,
by virtue of the merger and without any action on the part of the
Corporation, be cancelled, and no cash or security or other property shall
be issued in respect thereof and (b) the 1,000,000 authorized and
outstanding shares of Common Stock of the Corporation and the 4,500
authorized and outstanding shares of Cumulative Preferred Stock of the
Corporation shall in the aggregate, by virtue of the merger and without
any action on the part of the Corporation, become 100 shares of
authorized and outstanding Common Stock of Accuride, and each holder of
shares of Common Stock and Cumulative Preferred Stock of the Corporation
shall be issued one share of Common Stock of Accuride for every 10,000
shares of Common Stock and 45 shares of Cumulative Preferred Stock of the
Corporation held upon surrender of certificates therefor; and
FURTHER RESOLVED, that upon the effective date of the merger, the
directors and officers of Accuride shall remain as such directors and
officers, unaffected and unimpaired by the merger; and
FURTHER RESOLVED, that the proper officers of the Corporation be,
and each of them hereby is, authorized and directed (a) to make and
execute a Certificate of Ownership and Merger setting forth a copy of
these resolutions to merge this Corporation into Accuride, and the date of
adoption thereof, and to cause the same to be filed with the Secretary of
State of the State of Delaware and certified copies to be recorded in the
offices of the Recorder of the County in Delaware in which the registered
offices of the Corporation and Accuride are located, and (b) to do all
acts and things whatsoever, whether within or
2
<PAGE>
without the State of Delaware, which may be necessary or proper to effect
said merger.
THIRD: That the merger has been approved by (a) resolutions duly
adopted by the unanimous written consent of the Board of Directors of North
American Wheel, in accordance with Section 253 of the General Corporation Law of
the State of Delaware (the "GCL") and (b) the unanimous written consent of
Phelps Dodge Corporation, a New York corporation ("Phelps Dodge"), the sole
stockholder of all of the outstanding shares of stock of North American Wheel,
in accordance with Section 228(a) of the GCL, pursuant to which Phelps Dodge
waived the statutory notice set forth in Section 253(a) of the GCL.
IN WITNESS THEREOF, North American Wheel has caused this certificate
to be signed by Douglas C. Yearley, its President, and attested by William C.
Tubman, its Secretary, this 21st day of December, 1989.
NORTH AMERICAN WHEEL
ACQUISITION CORP.
By /s/ D.C. Yearley
--------------------------
President
ATTEST:
/s/ W.C. Tubman
- ------------------------
Secretary
3
<PAGE>
FILED
DEC 9 1986
/s/ [illegible]
SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
BEFORE PAYMENT OF CAPITAL OF
UNITED STATES WHEEL CORP.
------------------------------
Adopted in accordance with the
provisions of Section 241 of the
General Corporation Law of
the State of Delaware
I, V. A. Brookens, the sole incorporator of United States Wheel
Corp., a corporation organized and existing under the laws of the State of
Delaware, do hereby certify as follows:
FIRST: That the Certificate of Incorporation of the corporation is
hereby amended by striking out Paragraph 1 in its entirety and substituting in
lieu thereof a new Paragraph 1 as follows:
"1. The name of the corporation is Accuride Corporation."
That the Certificate of Incorporation of the Corporation is
hereby further amended by creating a new Paragraph 7 as follows:
"7. To the fullest extent permitted by the General
Corporation Law of the State of Delaware as it now exists or
may hereafter be amended, no director of the corporation shall
be liable to the corporation or its stockholders for monetary
damages arising from a breach of fiduciary duty owed to the
corporation or its stockholders.
Any repeal or modification of the foregoing paragraph by
the stockholders of the corporation shall not adversely affect
any right or protection of a director of the corporation
existing at the time of such repeal or modification."
SECOND: That the corporation has not received any payment for any of
its stock.
<PAGE>
THIRD: That the foregoing amendments have been duly adopted,
pursuant to the provisions of Section 241 of the General Corporation Law of the
State of Delaware, by the sole incorporator, no directors having been named in
the Certificate of Incorporation and no directors having been elected.
IN WITNESS WHEREOF, I have signed this Certificate of Amendment of
Certificate of Incorporation as of the 9th day of December, 1986.
/s/ V. A. Brookens
----------------------------
V. A. Brookens
Sole Incorporator
-2-
<PAGE>
FILED
DEC 12 1986
/s/ [illegible]
SECRETARY OF STATE
CERTIFICATE OF CORRECTION
TO THE CERTIFICATE OF
AMENDMENT OF ACCURIDE CORPORATION
[Filed to correct a certain error
as filed in the office of the
Secretary of State of Delaware on
December 9, 1986]
Mitt Romney and Geoffrey S. Rehnert, being a majority of the
directors of Accuride Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware ("the
Corporation"), pursuant to Section 103(f) of the General Corporation Law, do
hereby certify as follows:
1. That the Certificate of Amendment to Certificate of Incorporation of
Accuride Corporation as filed on December 9, 1986 with the Delaware Secretary of
State was an inaccurate record of the corporate action taken therein and
requires correction.
2. That the Certificate of Amendment inaccurately stated no directors of
the Corporation were elected, pursuant to Section 241 of the General Corporation
Law of the State of Delaware.
3. That the Certificate of Amendment of the Corporation is hereby
rescinded.
4. That the directors of the Corporation attach a corrected Certificate of
Amendment to Certificate of Incorporation setting forth an accurate record of
the corporte action.
IN WITNESS WHEREOF, said Accuride Corporation has caused this Certificate
to be signed by a majority of its directors this 11th day of December, 1986.
ACCURIDE CORPORATION
/s/ Mitt Romney
-----------------------------
Mitt Romney,Director
/s/ Geoffrey S. Rehnert
-----------------------------
Geoffrey S. Rehnert, Director
<PAGE>
FILED
DEC 12 1986
/s/ [illegible]
SECRETARY OF STATE
CERTIFICATE OF INCORPORATION
OF
UNITED STATES WHEEL CORP.
1. The name of the corporation is:
UNITED STATES WHEEL CORP.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
4. The total number of shares of common stock which the corporation
shall have authority to issue is One Thousand (1,000) and the par value of each
of such shares is One Cent ($0.01) amounting in the aggregate to Ten Dollars
($10.00).
5. The board of directors is authorized to make, alter or repeal the
by-laws of the corporation. Election of directors need not be by written ballot.
6. The name and mailing address of the incorporator is:
V. A. Brookens
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
Delaware, do make this certificate, hereby declaring and certifying that this is
my act and deed and the facts herein stated are true, and accordingly have
hereunto set my hand this [illegible] day of November, 1986.
/s/ V. A. Brookens
------------------------------
V. A. Brookens
<PAGE>
EXHIBIT 3.2
BY-LAWS
OF
ACCURIDE CORPORATION
A Delaware Corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be at Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801, County of New Castle. The name of the corporation's
registered agent at such address shall be The Corporation Trust Company.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held for the purpose of electing directors and conducting
such other business as may come before the meeting. The date, time and place of
the annual meeting shall be determined by the president of the corporation and
if he does not act, the board of directors shall determine the date of such
meeting. Special meetings of stockholders for any other purpose may be held at
such time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
Special meetings of the stockholders may be called by the president for any
purpose and shall be called by the secretary if directed by the board of
directors.
Section 2. Notice. Written or printed notice of every annual or special
meeting of the stockholders, stating the place, date, time, and, in the case of
special meetings, the purpose or purposes, of such meeting, shall be given to
each stockholder entitled to vote at such meeting not less than 10 nor more than
60 days before the date of the meeting. All such notices shall
<PAGE>
be delivered, either personally or by mail, by or at the direction of the board
of directors, the president or the secretary, and if mailed, such notice shall
be deemed to be delivered when deposited in the United States mail addressed to
the stockholder at his or her address as it appears on the records of the
corporation, with postage prepaid.
Section 3. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, specifying the address of and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 4. Quorum. The holders of a majority of the outstanding shares of
capital stock entitled to vote at such meeting, present in person or represented
by proxy, shall constitute a quorum at all meetings of the stockholders, except
as otherwise provided by statute or by the certificate of incorporation. If a
quorum is not present, the holders of the shares present in person or
represented by proxy at the meeting, and entitled to vote thereat, shall have
the power, by the affirmative vote of the holders of a majority of such shares,
to adjourn the meeting to another time and/or place. Unless the adjournment is
for more than thirty days or unless a new record date is set for the adjourned
meeting, no notice of the adjourned meeting need be given to any stockholder,
provided that the time and place of the adjourned meeting were announced at the
meeting at which the adjournment was taken. At the adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.
Section 5. Vote Required. When a quorum is present or represented by proxy
at any meeting, the vote of the holders of a majority of the shares present in
person or represented by proxy entitled to vote on any question brought before
such meeting, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
-2-
<PAGE>
Section 6. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of common stock held
by such stockholder, except that no proxy shall be voted after three years from
its date, unless such proxy provides for a longer period.
Section 7. Informal Action. Any action required to be taken at any annual
or special meeting of stockholders of the corporation, or any action which may
be taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing. Any
action taken pursuant to such written consent of the stockholders shall have the
same force and effect as if taken by the stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the first board shall be two. Thereafter, the number of
directors shall be established from time to time by resolution of the board. The
directors shall be elected at the annual meeting of the stockholders, except as
provided in Section 4 of this Article III, and each director elected shall hold
office until the next annual meeting of stockholders and until a successor is
duly elected and qualified or until his or her earlier death, resignation or
removal as provided herein.
Section 3. Removal. Any director or the entire board of directors may be
removed at any time, with or without cause, by the holders of a majority of the
shares of stock of the corporation then entitled to vote at an election of
directors, except as otherwise provided by law.
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Section 4. Vacancies. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office though less than a quorum, and each
director so chosen shall hold office until the next annual meeting of
stockholders and until a successor is duly elected and qualified or until his or
her earlier death, resignation or removal as hereinafter provided.
Sections. Annual Meetings. The annual meeting of each newly elected board
of directors shall be held without other notice than this bylaw immediately
after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at the
request of the president on at least 24 hours notice to each director, either
personally, by telephone, by mail or by telegraph. In like manner and on like
notice, the president must call a special meeting on the written request of a
majority of directors.
Section 7. Quorum. A majority of the total number of directors shall
constitute a quorum for the transaction of business. The vote of a majority of
directors present at a meeting at which a quorum is present shall be the act of
the board of directors. If a quorum shall not be present at any meeting of the
board of directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed by
a majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation, which to the
extent provided in such resolution shall have and may exercise the powers of the
board of directors in the management and affairs of the corporation, except as
otherwise limited by statute. The board of directors may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the board of directors. Each committee shall keep
regular minutes of its meetings and report the same to the directors when
required.
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Section 9. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by the resolution of the board of
directors designating such committee, but in all cases the presence of at least
a majority of the members of such committee shall be necessary to constitute a
quorum. In the event that a member and that member's alternate, if alternates
are designated by the board of directors as provided in Section 8 of this
Article III, of such committee is/are absent or disqualified, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not such member or members constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in place of any
such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors or
any committee of the board of directors may participate in and act at any
meeting of such board or committee through the use of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in such a meeting shall
constitute attendance and presence in person at the meeting of the person or
persons so participating.
Section 11. Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be conclusively presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the secretary of the corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.
Section 12. Informal Action. Any action required or permitted to be taken
at any meeting of the board of directors, or of any committee thereof, may be
taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be elected by the
board of directors and shall consist of a
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president, one or more vice-presidents, a secretary, a treasurer, and such other
officers and assistant officers as may be deemed necessary or desirable by the
board of directors. Any number of offices may be held by the same person. In its
discretion, the board of directors may choose not to fill any office for any
period as it may deem advisable, except the offices of president and secretary.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at the first meeting of the
board of directors held after each annual meeting of stockholders. If the
election of officers shall not be held at such meeting, such election shall be
held as soon thereafter as conveniently may be. Vacancies may be filled or new
offices created and filled at any meeting of the board of directors. Each
officer shall hold office until the next annual meeting of the board of
directors and until a successor is duly elected and qualified or until his or
her earlier death, resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of directors
may be removed by the board of directors whenever in its judgment the best
interests of the corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term by the board of directors
then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of the fact that he or she is also a director of the
corporation.
Section 6. The President. The president shall be the chief executive
officer of the corporation; shall preside at all meetings of the stockholders
and board of directors; subject to the board of directors, shall have general
and active management of the business of the corporation; and shall see that all
orders and resolutions of the board of directors are carried into effect. The
president shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the board of directors to some other
officer or agent of the corporation. The president shall have such other powers
and perform such other duties as may be
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prescribed by the board of directors or as may be provided in these bylaws.
Section 7. Vice Presidents. The vice-president, or if there shall be more
than one, the vice-presidents in the order determined by the board of directors,
shall, in the absence or disability or at the request of the president, perform
the duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may, from time to
time, determine or these bylaws may prescribe.
Section 8. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors and all meetings of the
stockholders and record all the proceedings of the meetings of the corporation
and of the board of directors in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. The secretary
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the board of directors; perform such other duties as may be
prescribed by the board of directors or president, under whose supervision he or
she shall be; shall have custody of the corporate seal of the corporation and
the secretary, or an assistant secretary, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by his or
her signature or by the signature of such assistant secretary. The board of
directors may give general authority to any other officer to affix the seal of
the corporation and to attest the affixing by his or her signature. The
assistant secretary, or if there be more than one, the assistant secretaries in
the order determined by the board of directors, shall, in the absence or
disability of the secretary, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
Section 9. The Treasurer and Assistant Treasurer. The treasurer shall have
the custody of the corporate funds and securities; shall keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation;
shall deposit all monies and other valuable effects in the name and to the
credit of the corporation as may be ordered by the board of directors, taking
proper vouchers for such disbursements; and shall render to the president and
the board of directors, at its regular meeting or when the board of directors so
requires, an account of the corporation. If required by the board of directors,
the treasurer shall give the corporation a bond (which shall be rendered every
six years) in such sums and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of the office of treasurer and for the restoration to the corporation, in
case of death, resignation, retirement, or removal from
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office, of all books, papers, vouchers, money, and other property of whatever
kind in the possession or under the control of the treasurer belonging to the
corporation. The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the board of directors, shall
in the absence or disability of the treasurer, perform the duties and exercise
the powers of the treasurer and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
Section 10. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these bylaws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer, of the corporation or is or was
serving at the request of the corporation as a director, officer, employee,
fiduciary, or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in an official
capacity as a director, officer, employee, fiduciary, or agent or in any other
capacity while serving as a director, officer, employee, fiduciary, or agent,
shall be indemnified and held harmless by the corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the corporation to provide broader
indemnification rights than said law permitted the corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by such person
in connection therewith and such indemnification shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that, except
as provided in Section 2 hereof, the corporation shall indemnify any such person
seeking indemnification in connection with a proceeding initiated by such person
only if such proceeding was authorized by the board of directors of the cor-
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poration. The right to indemnification conferred in this Article shall be a
contract right and shall include the right to be paid by the corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, to the extent required by the General
Corporation Law of the State of Delaware the advance payment of such expenses
incurred by a director or officer shall be made only upon delivery to the
corporation of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Article or
otherwise. The Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
Section 2. If a claim under Section 1 above is not paid in full by the
Corporation within thirty days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any, has been tendered to the corporation) that the claimant has not met the
standards of conduct which make it permissible under the General Corporation Law
of the State of Delaware for the Corporation to indemnify the claimant for the
amount claimed, but the burden of such defense shall be on the corporation.
Neither the failure of the corporation (including its board of directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she has met the applicable standard of
conduct set forth in the General Corporation Law of the State of Delaware, nor
an actual determination by the corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
such applicable standard or conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
Section 3. The rights to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final disposition conferred
in this Article shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, bylaw, agreement, vote of stockholders or disinterested directors
or otherwise.
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Section 4. The corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee, fiduciary, or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the president or a vice-president and the secretary or an assistant secretary of
the corporation, certifying the number of shares owned by him or her in the
corporation. Where a certificate is signed (1) by a transfer agent or an
assistant transfer agent other than the corporation or its employee or (2) by a
registrar, other than the corporation or its employee, the signature of any such
president, vice-president, secretary, or assistant secretary may be facsimile.
In case any officer or officers who have signed, or whose facsimile signature or
signatures have been used on, any such certificate or certificates shall cease
to be such officer or officers of the corporation whether because of death,
resignation or otherwise before such certificate or certificates have been
delivered by the corporation, such certificate or certificates may nevertheless
be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures have been
used thereon had not ceased to be such officer or officers of the corporation.
All certificates for shares shall be consecutively numbered or otherwise
identified. The name 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
books of the corporation. All certificates surrendered to the corporation for
transfer shall be canceled, and no new certificate shall be issued in
replacement until the former certificate for a like number of shares shall have
been surrendered or canceled, except as otherwise provided in Section 2 with
respect to lost, stolen or destroyed certificates.
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
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authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, requite the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
in such sum as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 3. Fixing a Record Date. The board of directors may fix in
advance a date, not more than sixty nor less than ten days preceding the date of
any meeting of stockholders, or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion or,
exchange of capital stock shall go into effect, or a date in connection with
obtaining any consent, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such meeting, and any
adjournment thereof, or entitled to receive payment of any such dividend, or to
any such allotment of rights, or to exercise the rights in respect to any such
change, conversion, or exchange of capital stock, or to give such consent, and
in such case such stockholders and only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to such notice of,
and to vote at, such meeting and any adjournment thereof, or to receive payment
of such dividend, or to receive such allotment of rights, or to exercise such
rights, or to give such consent, as the case may be notwithstanding any transfer
of any stock on the books of the corporation after any such record date fixed as
aforesaid. If no record date is fixed, the time for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given, or
if notice is waived, at the close of business on the day next preceding the day
on which the meeting is held. The time for determining stockholders for any
other purpose shall be at the close of business on the date on which the board
of directors adopts the resolution relating thereto. A determination of
stockholders entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
Section 4. Registered Stockholders. The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of the other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of the State of Delaware.
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ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation. Before
payment of any dividend, there may be set aside out of any funds of the
corporation available for dividends such sum or sums as the directors from time
to time, in their absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or for such other purpose as the directors
shall think in the best interest of the corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.
Section 2. Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 4. Corporate Seal. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words Corporate Seal, Delaware.
Section 5. Securities Owned By Corporation. Voting securities in any other
corporation held by the corporation shall be voted by the president, unless the
board of directors specifically confers authority to vote with respect thereto,
which may be general or confined to specific instances, upon some other person
or officer. Any person authorized to vote securities shall have the power to
appoint proxies, with general power of substitution.
ARTICLE VIII
AMENDMENTS
These bylaws may be amended, altered, or repealed and new bylaws adopted
at any meeting of the board of directors by a majority vote. The fact that the
power to adopt, amend, alter, or repeal the bylaws has been conferred upon the
board of directors shall not divest the stockholders of the same powers.
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EXHIBIT 4.1
ACCURIDE CORPORATION
as Issuer
and
U.S. TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
____________________
INDENTURE
Dated as of January 21, 1998
_____________________
$300,000,000
9 1/4% Senior Subordinated Notes due 2008
9 1/4% Series B Senior Subordinated Notes due 2008
<PAGE>
ACCURIDE CORPORATION(5)
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT
OF 1939 AND INDENTURE, DATED AS OF JANUARY 21, 1998
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . 608
(a)(2) . . . . . . . . . . . . . . . . . . . . . . 608
(b) . . . . . . . . . . . . . . . . . . . . . . 609
312 (a) . . . . . . . . . . . . . . . . . . . . . . 701
(c) . . . . . . . . . . . . . . . . . . . . . . 702
313 (a) . . . . . . . . . . . . . . . . . . . . . . 703
(c) . . . . . . . . . . . . . . . . . . . . . . 703
314 (a)(4) . . . . . . . . . . . . . . . . . . . . . . 1010(a)
(c)(1) . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . 102
(e) . . . . . . . . . . . . . . . . . . . . . . 102
315 (a) . . . . . . . . . . . . . . . . . . . . . . 601(a)
(b) . . . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . . . 601(b)
(d) . . . . . . . . . . . . . . . . . . . . . . 601(c), 603
316 (a)(last
sentence) . . . . . . . . . . . . . . . . . . . . . . 101 ("Outstanding")
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . 502, 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . 513
(b) . . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . . 104(d)
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . 1003
318 (a) . . . . . . . . . . . . . . . . . . . . . . 111
__________________
(5). Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
<PAGE>
TABLE OF CONTENTS(6)
PAGE
PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
Acquired Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . 2
Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Applicable Premium . . . . . . . . . . . . . . . . . . . . . . . . . 3
Asset Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . 4
Bank Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bankruptcy Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 4
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Capitalized Lease Obligation . . . . . . . . . . . . . . . . . . . . 5
Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Change of Control. . . . . . . . . . . . . . . . . . . . . . . . . . 5
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Company Request" or "Company Order . . . . . . . . . . . . . . . . . 6
Consolidated Depreciation and Amortization Expense . . . . . . . . . 6
Consolidated Interest Expense. . . . . . . . . . . . . . . . . . . . 6
Consolidated Net Income. . . . . . . . . . . . . . . . . . . . . . . 6
Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . 7
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . 7
Credit Facilities. . . . . . . . . . . . . . . . . . . . . . . . . . 7
Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
____________________
(6). Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
PAGE
Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . 8
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Designated Noncash Consideration . . . . . . . . . . . . . . . . . 8
Designated Preferred Stock . . . . . . . . . . . . . . . . . . . . 8
Designated Senior Indebtedness . . . . . . . . . . . . . . . . . . 8
Disqualified Stock . . . . . . . . . . . . . . . . . . . . . . . . 8
EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Equity Interests . . . . . . . . . . . . . . . . . . . . . . . . . 9
Equity Offering. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . 9
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Exchange Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Exchange Offer Registration Statement. . . . . . . . . . . . . . . 10
Excluded Contribution. . . . . . . . . . . . . . . . . . . . . . . 10
Existing Indebtedness. . . . . . . . . . . . . . . . . . . . . . . 10
Financings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Fixed Charge Coverage Ratio. . . . . . . . . . . . . . . . . . . . 10
Fixed Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Foreign Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . 11
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Government Securities. . . . . . . . . . . . . . . . . . . . . . . 12
guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Guarantor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Hedging Obligations. . . . . . . . . . . . . . . . . . . . . . . . 12
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Independent Financial Advisor. . . . . . . . . . . . . . . . . . . 13
Initial Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Initial Purchasers . . . . . . . . . . . . . . . . . . . . . . . . 13
Interest Payment Date. . . . . . . . . . . . . . . . . . . . . . . 13
Investment Grade Securities. . . . . . . . . . . . . . . . . . . . 13
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Issuance Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
KKR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Moody's. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Net Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ii
<PAGE>
PAGE
Note Register" and "Note Registrar . . . . . . . . . . . . . . . . 15
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Offer Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Offering Memorandum. . . . . . . . . . . . . . . . . . . . . . . . 15
Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Officers' Certificate. . . . . . . . . . . . . . . . . . . . . . . 16
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 16
Outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Pari Passu Indebtedness. . . . . . . . . . . . . . . . . . . . . . 17
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Permitted Holders. . . . . . . . . . . . . . . . . . . . . . . . . 17
Permitted Investments. . . . . . . . . . . . . . . . . . . . . . . 17
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Predecessor Note . . . . . . . . . . . . . . . . . . . . . . . . . 19
preferred stock. . . . . . . . . . . . . . . . . . . . . . . . . . 19
QIB. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Qualified Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 19
Recapitalization . . . . . . . . . . . . . . . . . . . . . . . . . 19
Receivables Facility . . . . . . . . . . . . . . . . . . . . . . . 19
Receivables Fees . . . . . . . . . . . . . . . . . . . . . . . . . 19
Redemption Date. . . . . . . . . . . . . . . . . . . . . . . . . . 19
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . 20
Registration Default . . . . . . . . . . . . . . . . . . . . . . . 20
Registration Rights Agreement. . . . . . . . . . . . . . . . . . . 20
Regular Record Date. . . . . . . . . . . . . . . . . . . . . . . . 20
Regulation S . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Related Parties. . . . . . . . . . . . . . . . . . . . . . . . . . 20
Representative . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Repurchase Offer . . . . . . . . . . . . . . . . . . . . . . . . . 20
Responsible Officer. . . . . . . . . . . . . . . . . . . . . . . . 20
Restricted Investment. . . . . . . . . . . . . . . . . . . . . . . 20
Restricted Subsidiary. . . . . . . . . . . . . . . . . . . . . . . 20
Rule 144A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
S&P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Senior Credit Facilities . . . . . . . . . . . . . . . . . . . . . 21
Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . 21
Shelf Registration Statement . . . . . . . . . . . . . . . . . . . 21
Significant Subsidiary . . . . . . . . . . . . . . . . . . . . . . 22
Similar Business . . . . . . . . . . . . . . . . . . . . . . . . . 22
Special Record Date. . . . . . . . . . . . . . . . . . . . . . . . 22
Stated Maturity. . . . . . . . . . . . . . . . . . . . . . . . . . 22
iii
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PAGE
Subordinated Indebtedness. . . . . . . . . . . . . . . . . . . . . 22
Subordinated Note Obligations. . . . . . . . . . . . . . . . . . . 22
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Treasury Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Trust Indenture Act" or "TIA . . . . . . . . . . . . . . . . . . . 23
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Unrestricted Subsidiary. . . . . . . . . . . . . . . . . . . . . . 23
Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Voting Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Weighted Average Life to Maturity. . . . . . . . . . . . . . . . . 24
Wholly Owned Restricted Subsidiary . . . . . . . . . . . . . . . . 24
Wholly Owned Subsidiary. . . . . . . . . . . . . . . . . . . . . . 24
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. . . . . . . . . . . 24
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. . . . . . . . . . 25
SECTION 104. ACTS OF HOLDERS . . . . . . . . . . . . . . . . . . . . . 25
SECTION 105. NOTICES, ETC., TO TRUSTEE, THE COMPANY AND ANY
GUARANTOR. . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 106. NOTICE TO HOLDERS; WAIVER . . . . . . . . . . . . . . . . 27
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS. . . . . . . . . 28
SECTION 108. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . 28
SECTION 109. SEPARABILITY CLAUSE . . . . . . . . . . . . . . . . . . . 28
SECTION 110. BENEFITS OF INDENTURE . . . . . . . . . . . . . . . . . . 28
SECTION 111. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 112. LEGAL HOLIDAYS. . . . . . . . . . . . . . . . . . . . . . 28
SECTION 113. NO PERSONAL LIABILITY OF DIRECTORS,
OFFICERS, EMPLOYEES, OR STOCKHOLDERS . . . . . . . . . . 29
SECTION 114. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE TWO
NOTE FORMS
SECTION 201. FORMS GENERALLY . . . . . . . . . . . . . . . . . . . . . 29
SECTION 202. RESTRICTIVE LEGENDS . . . . . . . . . . . . . . . . . . . 31
SECTION 203. FORM OF CERTIFICATE TO BE DELIVERED UPON TERMINATION OF
RESTRICTED PERIOD. . . . . . . . . . . . . . . . . . . . 33
SECTION 204. FORM OF FACE OF NOTE. . . . . . . . . . . . . . . . . . . 34
SECTION 205. FORM OF REVERSE OF NOTE . . . . . . . . . . . . . . . . . 37
SECTION 206. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION . . . . . 42
ARTICLE THREE
THE NOTES
iv
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PAGE
SECTION 301. TITLE AND TERMS . . . . . . . . . . . . . . . . . . . . . 43
SECTION 302. DENOMINATIONS . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. . . . . . 44
SECTION 304. TEMPORARY NOTES . . . . . . . . . . . . . . . . . . . . . 45
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE . . . 46
SECTION 306. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTE . . . . . . . . . . 47
SECTION 307. SPECIAL TRANSFER PROVISIONS . . . . . . . . . . . . . . . 48
SECTION 308. FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED
INVESTORS. . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 309. FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS OF AN OFFSHORE GLOBAL NOTE. . . . . . . . 52
SECTION 310. MUTILATED, DESTROYED, LOST AND STOLEN NOTES . . . . . . . 53
SECTION 311. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED. . . . . . 54
SECTION 312. PERSONS DEEMED OWNERS . . . . . . . . . . . . . . . . . . 55
SECTION 313. CANCELLATION. . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 314. COMPUTATION OF INTEREST . . . . . . . . . . . . . . . . . 56
SECTION 315. CUSIP NUMBERS . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE . . . . . . . . . 56
SECTION 402. APPLICATION OF TRUST MONEY. . . . . . . . . . . . . . . . 58
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 58
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. . . . 60
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE . . . . . . . . . . . . . . . . . 61
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM. . . . . . . . . . . . . 62
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES. . 62
SECTION 506. APPLICATION OF MONEY COLLECTED. . . . . . . . . . . . . . 63
SECTION 507. LIMITATION ON SUITS . . . . . . . . . . . . . . . . . . . 63
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM AND INTEREST. . . . . . . . . . . . . 64
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES. . . . . . . . . . . . 64
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE. . . . . . . . . . . . . . 64
SECTION 511. DELAY OR OMISSION NOT WAIVER. . . . . . . . . . . . . . . 64
SECTION 512. CONTROL BY HOLDERS. . . . . . . . . . . . . . . . . . . . 65
SECTION 513. WAIVER OF PAST DEFAULTS . . . . . . . . . . . . . . . . . 65
v
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PAGE
SECTION 514. WAIVER OF STAY OR EXTENSION LAWS. . . . . . . . . . . . . 66
SECTION 515. UNDERTAKING FOR COSTS . . . . . . . . . . . . . . . . . . 66
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES . . . . . . . . . . . 66
SECTION 602. NOTICE OF DEFAULTS. . . . . . . . . . . . . . . . . . . . 67
SECTION 603. CERTAIN RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . . 68
SECTION 604. TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE
OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 605. MAY HOLD NOTES. . . . . . . . . . . . . . . . . . . . . . 69
SECTION 606. MONEY HELD IN TRUST . . . . . . . . . . . . . . . . . . . 69
SECTION 607. COMPENSATION AND REIMBURSEMENT. . . . . . . . . . . . . . 70
SECTION 608. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY . . . . . . . . . 70
SECTION 609. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR . . . . 71
SECTION 610. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. . . . . . . . . . 72
SECTION 611. MERGER, CONVERSION, CONSOLIDATION OR
SUCCESSION TO BUSINESS . . . . . . . . . . . . . . . . . 72
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES. . . . . . 73
SECTION 702. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS. . . . . . . 73
SECTION 703. REPORTS BY TRUSTEE. . . . . . . . . . . . . . . . . . . . 74
ARTICLE EIGHT
MERGER, CONSOLIDATION, OR SALE OF ASSETS
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. . . 74
SECTION 802. SUCCESSOR SUBSTITUTED . . . . . . . . . . . . . . . . . . 75
ARTICLE NINE
SUPPLEMENTS AND AMENDMENTS TO INDENTURE
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. . . . 76
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS . . . . . 77
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES. . . . . . . . . . . 78
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES . . . . . . . . . . . . 78
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT . . . . . . . . . . . 78
vi
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PAGE
SECTION 906. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES . . . . . . 78
SECTION 907. NOTICE OF SUPPLEMENTAL INDENTURES . . . . . . . . . . . . 78
SECTION 908. EFFECT ON SENIOR INDEBTEDNESS . . . . . . . . . . . . . . 79
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST. . . 79
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY. . . . . . . . . . . . . 79
SECTION 1003. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST. . . . . . . 80
SECTION 1004. CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . . . 81
SECTION 1005. PAYMENT OF TAXES AND OTHER CLAIMS. . . . . . . . . . . . 81
SECTION 1006. MAINTENANCE OF PROPERTIES. . . . . . . . . . . . . . . . 81
SECTION 1007. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 1008. COMPLIANCE WITH LAWS.. . . . . . . . . . . . . . . . . . 83
SECTION 1009. LIMITATION ON RESTRICTED PAYMENTS. . . . . . . . . . . . 83
SECTION 1010. LIMITATION ON INCURRENCE OF INDEBTEDNESS AND
ISSUANCE OF DISQUALIFIED STOCK . . . . . . . . . . . . . 88
SECTION 1011. LIMITATION ON LIENS. . . . . . . . . . . . . . . . . . . 92
SECTION 1012. LIMITATION ON TRANSACTIONS WITH AFFILIATES.. . . . . . . 92
SECTION 1013. LIMITATION ON DIVIDEND AND OTHER PAYMENT
RESTRICTIONS AFFECTING SUBSIDIARIES. . . . . . . . . . . 93
SECTION 1014. LIMITATION ON GUARANTEES OF INDEBTEDNESS BY
RESTRICTED SUBSIDIARIES. . . . . . . . . . . . . . . . . 95
SECTION 1015. LIMITATION ON OTHER SENIOR SUBORDINATED INDEBTEDNESS . . 96
SECTION 1016. PURCHASE OF NOTES UPON A CHANGE OF CONTROL . . . . . . . 96
SECTION 1017. LIMITATION ON SALES OF ASSETS. . . . . . . . . . . . . . 98
SECTION 1018. STATEMENT BY OFFICERS AS TO DEFAULT. . . . . . . . . . . 100
SECTION 1019. COMMISSION REPORTS AND REPORTS TO HOLDERS. . . . . . . . 101
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . 101
SECTION 1102. APPLICABILITY OF ARTICLE . . . . . . . . . . . . . . . . 101
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE. . . . . . . . . . 102
SECTION 1104. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED . . . . . . 102
SECTION 1105. NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . 102
SECTION 1106. DEPOSIT OF REDEMPTION PRICE. . . . . . . . . . . . . . . 103
SECTION 1107. NOTES PAYABLE ON REDEMPTION DATE . . . . . . . . . . . . 103
SECTION 1108. NOTES REDEEMED IN PART . . . . . . . . . . . . . . . . . 104
vii
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PAGE
ARTICLE TWELVE
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. COMPANY'S OPTION TO EFFECT LEGAL DEFEASANCE OR
COVENANT DEFEASANCE. . . . . . . . . . . . . . . . . . . 104
SECTION 1202. LEGAL DEFEASANCE AND DISCHARGE . . . . . . . . . . . . . 104
SECTION 1203. COVENANT DEFEASANCE. . . . . . . . . . . . . . . . . . . 105
SECTION 1204. CONDITIONS TO LEGAL DEFEASANCE OR COVENANT DEFEASANCE. . 105
SECTION 1205. DEPOSITED MONEY AND U.S. GOVERNMENT SECURITIES TO
BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS . . . . 107
SECTION 1206. REINSTATEMENT. . . . . . . . . . . . . . . . . . . . . . 107
ARTICLE THIRTEEN
SUBORDINATION OF NOTES
SECTION 1301. NOTES SUBORDINATE TO SENIOR INDEBTEDNESS.. . . . . . . . 108
SECTION 1302. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.. . . . . 108
SECTION 1303. SUSPENSION OF PAYMENT WHEN SENIOR INDEBTEDNESS
IN DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 109
SECTION 1304. ACCELERATION OF NOTES. . . . . . . . . . . . . . . . . . 110
SECTION 1305. WHEN DISTRIBUTION MUST BE PAID OVER. . . . . . . . . . . 110
SECTION 1306. NOTICE BY COMPANY. . . . . . . . . . . . . . . . . . . . 110
SECTION 1307. PAYMENT PERMITTED IF NO DEFAULT. . . . . . . . . . . . . 110
SECTION 1308. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS. 111
SECTION 1309. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. . . . . . . 111
SECTION 1310. TRUSTEE TO EFFECTUATE SUBORDINATION. . . . . . . . . . . 111
SECTION 1311. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY . . . . . . 112
SECTION 1312. DISTRIBUTION OR NOTICE TO REPRESENTATIVE . . . . . . . . 112
SECTION 1313. NOTICE TO TRUSTEE. . . . . . . . . . . . . . . . . . . . 112
SECTION 1314. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT. . . . . . . . . . . . . . . . . . . . 113
SECTION 1315. RIGHTS OF TRUSTEE AS A HOLDER OF SENIOR INDEBTEDNESS;
PRESERVATION OF TRUSTEES' RIGHTS. . . . . . . . . . . . 113
SECTION 1316. ARTICLE APPLICABLE TO PAYING AGENTS. . . . . . . . . . . 114
SECTION 1317. NO SUSPENSION OF REMEDIES. . . . . . . . . . . . . . . . 114
SECTION 1318. MODIFICATION OF TERMS OF SENIOR INDEBTEDNESS . . . . . . 114
SECTION 1319. CERTAIN TERMS. . . . . . . . . . . . . . . . . . . . . . 114
SECTION 1320. TRUST MONEYS NOT SUBORDINATED. . . . . . . . . . . . . . 114
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
viii
<PAGE>
INDENTURE, dated as of January 21, 1998, between ACCURIDE CORPORATION,
a corporation duly organized and existing under the laws of the State of
Delaware (the "Company"), having its principal office at 2315 Adams Lane, P.O.
Box 40, Henderson, Kentucky 42420, and U.S. TRUST COMPANY OF CALIFORNIA, N.A., a
national banking association, as trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of and issuance of its 9
1/4% Senior Subordinated Notes due 2008 (the "Initial Notes"), and 9 1/4% Series
B Senior Subordinated Notes due 2008 (the "Exchange Notes" and, together with
the Initial Notes, the "Notes"), of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture.
Upon the issuance of the Exchange Notes, if any, or the effectiveness
of the Shelf Registration Statement (as defined herein), this Indenture will be
subject to, and shall be governed by, the provisions of the Trust Indenture Act
of 1939, as amended, that are required or deemed to be part of and to govern
indentures qualified thereunder.
All things necessary have been done to make the Notes, when executed
and duly issued by the Company and authenticated and delivered hereunder by the
Trustee or the Authenticating Agent, the valid obligations of the Company and to
make this Indenture a valid agreement of the Company in accordance with their
and its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and words in the singular include the plural as well
as the singular, and words in the plural include the singular as well as
the plural;
<PAGE>
2
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, or defined by
Commission rule and not otherwise defined herein have the meanings assigned
to them therein, and the terms "cash transaction" and "self-liquidating
paper," as used in TIA Section 311, shall have the meanings assigned to
them in the rules of the Commission adopted under the Trust Indenture Act;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(e) the word "or" is not exclusive; and
(f) provisions of the Indenture apply to successive events and
transactions.
Certain terms, used principally in Articles Two, Ten, Twelve and
Thirteen, are defined in those Articles.
"Acquired Indebtedness" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"Act," when used with respect to any Holder, has the meaning set forth
in Section 104.
"ADM" means Accuride de Mexico, S.A. de C.V., a corporation organized
and existing under the laws of the United Mexican States.
"ADM Credit Facility" means the Credit Agreement dated as of November
5, 1997 between ADM and Citibank Mexico, S.A., Grupo Financiero Citibank,
including any collateral documents, instruments and agreements executed in
connection therewith, and any amendments, supplements, modifications,
extensions, renewals, restatements or refundings thereof and any credit
agreement (including all collateral documents, instruments and other agreements
or documents executed in connection therewith) that replaces, refunds or
refinances the Indebtedness under such Credit Agreement or any prior such credit
agreement, including any such replacement, refunding or refinancing credit
agreement that increases the amount borrowed thereunder within the limits
prescribed in this Indenture.
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3
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED, HOWEVER,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"Agent" means any Paying Agent, Authenticating Agent and Note
Registrar under this Indenture.
"Applicable Premium" means, with respect to a Note at any Redemption
Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the
excess of (A) the present value at such time of (1) the Redemption Price of such
Note at February 1, 2003 (such redemption price as described in the Notes) plus
(2) all required interest payments due on such Note through February 1, 2003,
computed using a discount rate equal to the Treasury Rate plus 75 basis points,
over (B) the principal amount of such Note.
"Asset Sale" means:
(i) the sale, conveyance, transfer or other disposition (whether in a
single transaction or a series of related transactions) of property or
assets (including by way of a sale and leaseback) of the Company or any
Restricted Subsidiary (each referred to in this definition as a
"disposition") or
(ii) the issuance or sale of Equity Interests of any Restricted
Subsidiary (whether in a single transaction or a series of related
transactions);
in each case, other than:
(a) a disposition of Cash Equivalents or Investment Grade Securities
or obsolete equipment in the ordinary course of business or inventory or
goods held for sale in the ordinary course of business;
(b) the disposition of all or substantially all of the assets of the
Company in a manner permitted pursuant to the provisions described in
Section 801 herein or any disposition that constitutes a Change of Control
pursuant to this Indenture;
(c) the making of any Restricted Payment or Permitted Investment that
is permitted to be made, and is made, under Section 1009;
(d) any disposition of assets with an aggregate fair market value of
less than $1.0 million;
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4
(e) any disposition of property or assets or issuance of securities
by a Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Restricted Subsidiary or any sale, disposition
or transfer of equipment from a Restricted Subsidiary to another Restricted
Subsidiary;
(f) any exchange of like property pursuant to Section 1031 of the
Internal Revenue Code of 1986, as amended, for use in a Similar Business;
(g) the lease, assignment or a lease or sub-lease of any real or
personal property in the ordinary course of business;
(h) any financing transaction with respect to property built or
acquired by the Company or any Restricted Subsidiary after the Issuance
Date, including, without limitation, sale-leasebacks and asset
securitizations;
(i) foreclosures on assets;
(j) any sale of Equity Interests in, or Indebtedness or other
securities of, an Unrestricted Subsidiary (with the exception of
Investments in Unrestricted Subsidiaries acquired pursuant to clause (j) of
the definition of Permitted Investments); and
(k) sales of accounts receivable, or participations therein, in
connection with any Receivables Facility.
"Authenticating Agent" means the Person appointed, if any, by the
Trustee as an authenticating agent pursuant to the last paragraph of Section
303.
"Bank Agent" means Citicorp USA, Inc., in its capacity as
administrative agent under the Senior Credit Facilities, and any successor
administrative agent thereunder.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of
1978, as amended, or any similar United States federal or state or foreign law
relating to bankruptcy, insolvency, receivership, winding-up, liquidation,
reorganization or relief of debtors or any amendment to, succession to or change
in any such law.
"Board of Directors" means, with respect to any Person, either the
board of directors of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
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5
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to close.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Capitalized Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized and reflected as a
liability on a balance sheet (excluding the footnotes thereto) in accordance
with GAAP.
"Cash Equivalents" means (a) United States dollars, (b) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof, (c) certificates of
deposit, time deposits and eurodollar time deposits with maturities of one year
or less from the date of acquisition, bankers' acceptances with maturities not
exceeding one year and overnight bank deposits, in each case with any commercial
bank having capital and surplus in excess of $500.0 million, (d) repurchase
obligations for underlying securities of the types described in clauses (b) and
(c) entered into with any financial institution meeting the qualifications
specified in clause (c) above, (e) commercial paper rated A-1 or the equivalent
thereof by Moody's or S&P and in each case maturing within one year after the
date of acquisition, (f) investment funds investing 95% of their assets in
securities of the types described in clauses (a)-(e) above, (g) readily
marketable direct obligations issued by any state of the United States of
America or any political subdivision thereof having one of the two highest
rating categories obtainable from either Moody's or S&P and (h) Indebtedness or
preferred stock issued by Persons with a rating of "A" or higher from S&P or
"A2" or higher from Moody's.
"Change of Control" means the occurrence of any of the following:
(a) the sale, lease or transfer, in one or a series of related
transactions, of all or substantially all of the assets of the Company and
its Subsidiaries, taken as a whole; or
(b) the Company becomes aware of (by way of a report or any other
filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written
notice or otherwise) the acquisition by any Person or group (within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any
successor provision), including any group acting for the purpose of
acquiring, holding or disposing of securities (within the meaning of
Rule 13d-5(b)(1) under the Exchange Act), other than the Permitted Holders
and their Related Parties, in a single transaction or in a related series
of transactions, by way of merger, consolidation or other business
combination or purchase of beneficial ownership
<PAGE>
6
(within the meaning of Rule 13d-3 under the Exchange Act, or any successor
provision) of 50% or more of the total Voting Stock of the Company.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated, whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issuance Date or issued after Issuance Date, and includes, without limitation,
all series and classes of such common stock.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture, until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company (a) by its Chairman, a Vice-Chairman, its
President or any Vice President and (b) by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary and delivered to the Trustee;
PROVIDED, HOWEVER, that such written request or order may be signed by any two
of the officers or directors listed in clause (a) above in lieu of being signed
by one of such officers or directors listed in such clause (a) and one of the
officers listed in clause (b) above.
"Consolidated Depreciation and Amortization Expense" means with
respect to any Person for any period, the total amount of depreciation and
amortization expense and other noncash charges (excluding any noncash item that
represents an accrual, reserve or amortization of a cash expenditure for a
future period) of such Person and its Restricted Subsidiaries for such period on
a consolidated basis and otherwise determined in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any period, the
sum, without duplication, of: (a) consolidated interest expense of such Person
and its Restricted Subsidiaries for such period (including amortization of
original issue discount, non-cash interest payments, the interest component of
Capitalized Lease Obligations, and net payments (if any) pursuant to Hedging
Obligations, excluding amortization of deferred financing fees) and
(b) consolidated capitalized interest of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued; PROVIDED, HOWEVER, that
Receivables Fees shall be deemed not to constitute Consolidated Interest
Expense; and PROVIDED FURTHER that the consolidated interest expense of any
Restricted Subsidiary that is party to any agreement that has not been legally
waived that restricts the declaration or payment of dividends or similar
distributions shall be included only to the extent (and in the same proportion)
that the Net Income of such Restricted Subsidiary was included in calculating
Consolidated Net Income (without giving effect to clause (vii) of the definition
thereof) for so long as such Restricted Subsidiary is party to any agreement
that has not been legally waived that restricts the declaration or payment of
dividends or similar distributions.
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7
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income, of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, and otherwise determined
in accordance with GAAP; PROVIDED, HOWEVER, that (i) any net after-tax
extraordinary gains or losses (less all fees and expenses relating thereto)
shall be excluded, (ii) the Net Income for such period shall not include the
cumulative effect of a change in accounting principles during such period, (iii)
any net after-tax income (loss) from discontinued operations and any net
after-tax gains or losses on disposal of discontinued operations shall be
excluded, (iv) any net after-tax gains or losses (less all fees and expenses
relating thereto) attributable to asset dispositions other than in the ordinary
course of business (as determined in good faith by the Board of Directors of the
Company) shall be excluded, (v) the Net Income for such period of any Person
that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted
for by the equity method of accounting, shall be excluded; PROVIDED that
Consolidated Net Income of the Company shall be increased by the amount of
dividends or distributions or other payments paid in cash (or to the extent
converted into cash) (without duplication in the case of calculating Restricted
Payments or Permitted Investments) to the referent Person or a Restricted
Subsidiary thereof in respect of such period, (vi) the Net Income of any Person
acquired in a pooling of interests transaction shall not be included for any
period prior to the date of such acquisition and (vii) the Net Income for such
period of any Restricted Subsidiary shall be excluded if the declaration or
payment of dividends or similar distributions by that Restricted Subsidiary of
its Net Income is not at the date of determination wholly permitted without any
prior governmental approval (which has not been obtained) or, directly or
indirectly, by the operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders, unless such
restriction with respect to the payment of dividends or in similar distributions
has been legally waived (other than restrictions contained in the ADM Credit
Facility); PROVIDED that Consolidated Net Income of the Company shall be
increased by the amount of dividends or other distributions or other payments
paid in cash (or to the extent converted into cash) (without duplication in the
case of calculating Restricted Payments or Permitted Investments) to the
referent Person or a Restricted Subsidiary thereof in respect of such period.
"Contingent Obligations" means, with respect to any Person, any
obligation of such Person guaranteeing any leases, dividends or other
obligations that do not constitute Indebtedness ("primary obligations") of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (A) for the purchase or payment of any such primary obligation or
(B) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, or (iii)
to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation against loss in respect
thereof.
"Corporate Trust Office" means the principal corporate trust office of
the Trustee, at which at any particular time its corporate trust business shall
be administered, which office at the date of execution of this Indenture is
located at 515 South Flower Street, Suite 2700, Los Angeles,
<PAGE>
8
California 90071, except that with respect to presentation of Notes for payment
or for registration of transfer or exchange, such term shall mean any office or
agency of the Trustee at which, at any particular time, its corporate agency
business shall be conducted.
"Credit Facilities" means, with respect to the Company, one or more
debt facilities (including, without limitation, the Senior Credit Facilities) or
commercial paper facilities with banks or other institutional lenders or
indentures providing for revolving credit loans, term loans, receivables
financing (including through the sale of receivables to such lenders or to
special purpose entities formed to borrow from such lenders against
receivables), letters of credit or other long-term indebtedness, in each case,
as amended, restated, modified, renewed, refunded, replaced or refinanced in
whole or in part from time to time.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Defaulted Interest" has the meaning set forth in Section 311.
"Depositary" means The Depository Trust Company, its nominees and
successors.
"Designated Noncash Consideration" means the fair market value of
noncash consideration received by the Company or one of its Restricted
Subsidiaries in connection with an Asset Sale that is so designated as
Designated Noncash Consideration pursuant to an Officers' Certificate, setting
forth the basis of such valuation, executed by the principal executive officer
and the principal financial officer of the Company, less the amount of cash or
Cash Equivalents received in connection with a sale of such Designated Noncash
Consideration.
"Designated Preferred Stock" means preferred stock of the Company
(other than Disqualified Stock) that is issued for cash (other than to a
Restricted Subsidiary) and is so designated as Designated Preferred Stock,
pursuant to an Officers' Certificate executed by the principal executive officer
and the principal financial officer of the Company, on the issuance date
thereof, the cash proceeds of which are excluded from the calculation set forth
in clause (iv)(3) of paragraph (a) of Section 1009.
"Designated Senior Indebtedness" means (a) Senior Indebtedness under
the Senior Credit Facilities and (b) any other Senior Indebtedness permitted
under this Indenture the principal amount of which is $25.0 million or more and
that has been designated by the Company as Designated Senior Indebtedness.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which, by its terms (or by the terms of any security into
which it is convertible or for which it is putable or exchangeable), or upon the
happening of any event, matures or is mandatorily redeemable (other than as a
result of a Change of Control or Asset Sale), pursuant to a sinking fund
<PAGE>
9
obligation or otherwise, or redeemable at the option of the holder thereof
(other than as a result of a Change of Control or Asset Sale), in whole or in
part, in each case prior to the date 91 days after the maturity date of the
Notes; PROVIDED, HOWEVER, that if such Capital Stock is issued to any plan for
the benefit of employees of the Company or its Subsidiaries or by any such plan
to such employees, such Capital Stock shall not constitute Disqualified Stock
solely because it may be required to be repurchased by the Company in order to
satisfy applicable statutory or regulatory obligations.
"EBITDA" means, with respect to any Person for any period, the
Consolidated Net Income (without giving effect to clause (vii) of the definition
thereof) of such Person for such period plus (a) provision for taxes based on
income or profits of such Person for such period deducted in computing
Consolidated Net Income, plus (b) Consolidated Interest Expense of such Person
for such period and any Receivables Fees paid by such Person or any of its
Restricted Subsidiaries during such period, in each case to the extent the same
was deducted in calculating such Consolidated Net Income, plus (c) Consolidated
Depreciation and Amortization Expense of such Person for such period to the
extent such depreciation and amortization were deducted in computing
Consolidated Net Income, plus (d) any expenses or charges related to any Equity
Offering, Permitted Investment or Indebtedness permitted to be incurred by this
Indenture (including such expenses or charges related to the Recapitalization)
and deducted in such period in computing Consolidated Net Income, plus (e) the
amount of restructuring charge deducted in such period in computing Consolidated
Net Income, plus (f) without duplication, any other non-cash charges reducing
Consolidated Net Income for such period (excluding any such charge which
requires an accrual of a cash reserve for anticipated cash charges for any
future period), plus (g) the amount of any minority interest expense deducted in
calculating Consolidated Net Income (other than minority interest expense
relating to any Restricted Subsidiary that is party to any agreement that has
not been legally waived that restricts the declaration or payment of dividends
or similar distributions), less, without duplication (h) non-cash items
increasing Consolidated Net Income of such Person for such period (excluding any
items which represent the reversal of any accrual of, or cash reserve for,
anticipated cash charges in any prior period). Notwithstanding the foregoing,
the amounts described in clause (a), clauses (c) through (f) and clause (h)
relating to any Restricted Subsidiary that is party to any agreement that has
not been legally waived that restricts the declaration or payment of dividends
or similar distributions shall be included in EBITDA only to the extent (and in
the same proportion) that the Net Income of such Restricted Subsidiary was
included in calculating Consolidated Net Income (without giving effect to
clause (vii) of the definition thereof) for so long as such Restricted
Subsidiary is party to any agreement that has not been legally waived that
restricts the declaration or payment of dividends or similar distributions.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means any public or private sale of Common Stock or
preferred stock of the Company (excluding Disqualified Stock), other than (i)
public offerings with respect to the Company's Common Stock registered on Form
S-8 and (ii) any such public or private sale that constitutes an Excluded
Contribution.
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"Event of Default" has the meaning set forth in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Exchange Notes" has the meaning stated in the first recital of this
Indenture and refers to any Exchange Notes containing terms substantially
identical to the Initial Notes (except that (i) such Exchange Notes shall not
contain terms with respect to transfer restrictions and shall be registered
under the Securities Act, and (ii) certain provisions relating to an increase in
the stated rate of interest thereon shall be eliminated) that are issued and
exchanged for the Initial Notes in accordance with the Exchange Offer, as
provided for in the Registration Rights Agreement and this Indenture.
"Exchange Offer" means the offer by the Company to the Holders of the
Initial Notes to exchange all of the Initial Notes for Exchange Notes, as
provided for in the Registration Rights Agreement.
"Exchange Offer Registration Statement" means the Exchange Offer
Registration Statement as defined in the Registration Rights Agreement.
"Excluded Contribution" means net cash proceeds, marketable securities
or Qualified Proceeds, in each case, received by the Company from (a)
contributions to its common equity capital and (b) the sale (other than to a
Subsidiary or to any Company or Subsidiary management equity plan or stock
option plan or any other management or employee benefit plan or agreement) of
Capital Stock (other than Disqualified Stock) of the Company, in each case
designated as Excluded Contributions pursuant to an Officers' Certificate
executed by the principal executive officer and the principal financial officer
of the Company on the date such capital contributions are made or the date such
Equity Interests are sold, as the case may be, which are excluded from the
calculation set forth in paragraph (c) of Section 1009.
"Existing Indebtedness" means Indebtedness of the Company or its
Restricted Subsidiaries in existence on the Issuance Date, plus interest
accruing thereon, after application of the net proceeds of the sale of the Notes
as described in the Offering Memorandum.
"Financings" means (i) an aggregate of approximately $180.0 million of
bank borrowings by the Company, including $135.0 million of borrowings under a
senior secured term loan facility and $45.0 million of borrowings under a $140.0
million senior secured revolving credit facility, (ii) $200.0 million aggregate
principal amount of Notes and (iii) $108.0 million from Hubcap Acquisition LLC,
pursuant to the Subscription Agreement dated as of November 17, 1997, between
Hubcap Acquisition LLC, the Company and Phelps Dodge Corporation, as
consideration for the issuance of 90 shares of Common Stock.
"Fixed Charge Coverage Ratio" means, with respect to any Person for
any period, the ratio of EBITDA of such Person for such period to the Fixed
Charges of such Person for such period. In the event that the Company or any of
its Restricted Subsidiaries incurs, assumes,
<PAGE>
11
guarantees or redeems any Indebtedness or issues or redeems Disqualified Stock
or preferred stock subsequent to the commencement of the period for which the
Fixed Charge Coverage Ratio is being calculated but prior to the event for which
the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation
Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro
forma effect to such incurrence, assumption, guarantee or redemption of
Indebtedness, or such issuance or redemption of Disqualified Stock or preferred
stock, as if the same had occurred at the beginning of the applicable
four-quarter period. For purposes of making the computation referred to above,
Investments, acquisitions, dispositions, mergers, consolidations and
discontinued operations (as determined in accordance with GAAP) that have been
made by the Company or any of its Restricted Subsidiaries during the
four-quarter reference period or subsequent to such reference period and on or
prior to or simultaneously with the Calculation Date shall be calculated on a
pro forma basis assuming that all such Investments, acquisitions, dispositions,
mergers, consolidations and discontinued operations (and the reduction of any
associated fixed charge obligations and the change in EBITDA resulting
therefrom) had occurred on the first day of the four-quarter reference period.
If since the beginning of such period any Person (that subsequently became a
Restricted Subsidiary or was merged with or into the Company or any Restricted
Subsidiary since the beginning of such period) shall have made any Investment,
acquisition, disposition, merger, consolidation or discontinued operation that
would have required adjustment pursuant to this definition, then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect thereto for
such period as if such Investment, acquisition, disposition, merger,
consolidation or discontinued operation had occurred at the beginning of the
applicable four-quarter period. For purposes of this definition, whenever pro
forma effect is to be given to a transaction, the pro forma calculations shall
be made in good faith by a responsible financial or accounting officer of the
Company. If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest on such Indebtedness shall be calculated as
if the rate in effect on the Calculation Date had been the applicable rate for
the entire period (taking into account any Hedging Obligations applicable to
such Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed
to accrue at an interest rate reasonably determined by a responsible financial
or accounting officer of the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP. For purposes of making the
computation referred to above, interest on any Indebtedness under a revolving
credit facility computed on a pro forma basis shall be computed based upon the
average daily balance of such Indebtedness during the applicable period.
Interest on Indebtedness that may optionally be determined at an interest rate
based upon a factor of a prime or similar rate, a eurocurrency interbank offered
rate, or other rate, shall be deemed to have been based upon the rate actually
chosen, or, if none, then based upon such optional rate chosen as the Company
may designate.
"Fixed Charges" means, with respect to any Person for any period, the
sum of (a) Consolidated Interest Expense of such Person for such period and
(b) all cash dividend payments (excluding items eliminated in consolidation) on
any series of preferred stock of such Person.
"Foreign Subsidiary" means a Restricted Subsidiary not organized or
existing under the laws of the United States, any State thereof, the District of
Columbia, or any territory thereof.
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12
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Issuance Date. For the purposes of this
Indenture, the term "consolidated" with respect to any Person shall mean such
Person consolidated with its Restricted Subsidiaries, and shall not include any
Unrestricted Subsidiary.
"Government Securities" means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such Government
Securities or a specific payment of principal of or interest on any such
Government Securities held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the Government Securities or the specific payment of principal of or
interest on the Government Securities evidenced by such depository receipt.
"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness or other obligations.
"Guarantee" means any guarantee of the obligations of the Company
under the Indenture and the Notes by any Person in accordance with the
provisions of this Indenture. When used as a verb, "Guarantee" shall have a
corresponding meaning.
"Guarantor" means any Person that incurs a Guarantee; provided that
upon the release and discharge of such Person from its Guarantee in accordance
with this Indenture, such Person shall cease to be a Guarantor.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (a) currency exchange, interest rate or
commodity swap agreements, currency exchange, interest rate or commodity prices
cap agreements and currency exchange, interest rate or commodity collar
agreements and (b) other agreements or arrangements designed to protect such
Person against fluctuations in currency exchange, interest rates or commodity
prices.
"Holder" means a holder of the Notes.
"Indebtedness" means, with respect to any Person, (a) any indebtedness
of such Person, whether or not contingent (i) in respect of borrowed money,
(ii) evidenced by bonds, notes,
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13
debentures or similar instruments or letters of credit or bankers' acceptances
(or, without double counting, reimbursement agreements in respect thereof),
(iii) representing the balance deferred and unpaid of the purchase price of any
property (including Capitalized Lease Obligations), except any such balance that
constitutes a trade payable or similar obligation to a trade creditor, in each
case accrued in the ordinary course of business or (iv) representing any Hedging
Obligations, if and to the extent of any of the foregoing Indebtedness (other
than letters of credit and Hedging Obligations) that would appear as a liability
upon a balance sheet (excluding the footnotes thereto) of such Person prepared
in accordance with GAAP, (b) to the extent not otherwise included, any
obligation by such Person to be liable for, or to pay, as obligor, guarantor or
otherwise, on the Indebtedness of another Person (other than by endorsement of
negotiable instruments for collection in the ordinary course of business) and
(c) to the extent not otherwise included, Indebtedness of another Person secured
by a Lien on any asset owned by such Person (whether or not such Indebtedness is
assumed by such Person); PROVIDED, HOWEVER, that Contingent Obligations incurred
in the ordinary course of business shall be deemed not to constitute
Indebtedness, and obligations under or in respect of Receivables Facilities
shall not be deemed to constitute Indebtedness of a Person.
In addition, "Indebtedness" of any Person shall include Indebtedness
described in the foregoing paragraph that would not appear as a liability on the
balance sheet of such Person if (1) such Indebtedness is the obligation of a
partnership or joint venture that is not a Restricted Subsidiary (a "Joint
Venture"), (2) such Person or a Restricted Subsidiary is a general partner of
the Joint Venture (a "General Partner") and (3) there is recourse, by contract
or operation of law, with respect to the payment of such Indebtedness to
property or assets of such Person or a Restricted Subsidiary; and such
Indebtedness shall be included in an amount not to exceed (x) the greater of
(A) the net assets of the General Partner and (B) the amount of such obligations
to the extent that there is recourse, by contract or operation of law, to the
property or assets of such Person or a Restricted Subsidiary (other than the
General Partner) or (y) if less than the amount determined pursuant to clause
(x) immediately above, the actual amount of such Indebtedness that is recourse
to such Person, if the Indebtedness is evidenced by a writing and is for a
determinable amount and the related interest expense shall be included in
Consolidated Interest Expense to the extent paid by the Company or its
Restricted Subsidiaries.
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Independent Financial Advisor" means an accounting, appraisal,
investment banking firm or consultant to Persons engaged in Similar Businesses
of nationally recognized standing that is, in the judgment of the Company's
Board of Directors, qualified to perform the task for which it has been engaged.
"Initial Notes" has the meaning specified in the recitals to this
Indenture.
"Initial Purchasers" means, collectively, BT Securities Corporation,
Chase Securities Inc., Goldman, Sachs & Co. and PaineWebber Incorporated, as
purchasers of the Initial Notes.
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14
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.
"Investment Grade Securities" means (a) securities issued or directly
and fully guaranteed or insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents), (b) debt securities or
debt instruments with a rating of BBB- or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such rating by such rating organization, or, if no
rating of S&P or Moody's then exists, the equivalent of such rating by any other
nationally recognized securities rating agency, but excluding any debt
securities or instruments constituting loans or advances among the Company and
its Subsidiaries, and (c) investments in any fund that invests exclusively in
investments of the type described in clauses (a) and (b) which fund may also
hold immaterial amounts of cash pending investment and/or distribution.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the form of loans
(including guarantees), advances or capital contributions (excluding advances to
customers, commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities issued by
any other Person and investments that are required by GAAP to be classified on
the balance sheet of the Company in the same manner as the other investments
included in this definition to the extent such transactions involve the transfer
of cash or other property. For purposes of the definition of "Unrestricted
Subsidiary" and Section 1009, (a) "Investments" shall include the portion
(proportionate to the Company's equity interest in such Subsidiary) of the fair
market value of the net assets of a Subsidiary of the Company at the time that
such Subsidiary is designated an Unrestricted Subsidiary; PROVIDED, HOWEVER,
that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the
Company shall be deemed to continue to have a permanent "Investment" in an
Unrestricted Subsidiary in an amount (if positive) equal to (x) the Company's
"Investment" in such Subsidiary at the time of such redesignation less (y) the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of such Subsidiary at the time of such
redesignation; and (b) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Board of Directors.
"Issuance Date" means the closing date for the sale and original
issuance of the Notes hereunder.
"KKR" means Kohlberg Kravis Roberts & Co., L.P.
"Letter of Credit Obligations" means all Obligations in respect of
Indebtedness of the Company with respect to letters of credit issued pursuant to
the Senior Credit Facilities which Indebtedness shall be deemed to consist of
(a) the aggregate maximum amount available to be drawn under all such letters of
credit (the determination of such aggregate maximum amount to
<PAGE>
15
assume compliance with all conditions for drawing) and (b) the aggregate amount
that has been paid by, and not reimbursed to, the issuers under such letters of
credit.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction);
provided that in no event shall an operating lease be deemed to constitute a
Lien.
"Maturity" means, with respect to any Note, the date on which any
principal of such Note becomes due and payable as therein or herein provided,
whether at the Stated Maturity by declaration of acceleration, call for
redemption or purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends.
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any Designated Noncash Consideration received in any Asset Sale),
net of the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and brokerage and
sales commissions), any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), amounts required to be
applied to the repayment of principal, premium (if any) and interest on
Indebtedness required (other than required by clause (i) of the second paragraph
of Section 1017) to be paid as a result of such transaction and any deduction of
appropriate amounts to be provided by the Company as a reserve in accordance
with GAAP against any liabilities associated with the asset disposed of in such
transaction and retained by the Company after such sale or other disposition
thereof, including, without limitation, pension and other post-employment
benefit liabilities and liabilities related to environmental matters or against
any indemnification obligations associated with such transaction.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 305.
"Notes" has the meaning stated in the first recital of this Indenture
and more particularly means any Notes authenticated and delivered under this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements (including, without limitation, reimbursement
obligations with respect to letters of
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16
credit and banker's acceptances), damages and other liabilities, and guarantees
of payment of such principal, interest, penalties, fees, indemnifications,
reimbursements, damages and other liabilities, payable under the documentation
governing any Indebtedness.
"Offer Period" means the period from the date of a Change of Control
until and including the Change of Control Payment Date.
"Offering Memorandum" means the Offering Memorandum dated June 24,
1997 with respect to the offering of the Notes.
"Officer" means the Chairman of the Board, the President, any
Executive Vice President, Senior Vice President or Vice President, the Treasurer
or the Secretary of the Company.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company that meets the requirements set
forth in Section 102.
"Opinion of Counsel" means a written opinion of counsel, which and who
are reasonably acceptable to, and addressed to, the Trustee complying with the
requirements of Section 102. Unless otherwise required by the TIA, such legal
counsel may be an employee of or counsel to the Company or the Trustee.
"Outstanding," when used with respect to Notes, means, as of the date
of determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(a) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes, or portions thereof, for whose payment or redemption money
in the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Notes; provided that, if such Notes
are to be redeemed, notice of such redemption has been duly given pursuant
to this Indenture or provision therefor satisfactory to the Trustee has
been made;
(c) Notes, except to the extent provided in Sections 1202 and 1203,
with respect to which the Company has effected defeasance and/or covenant
defeasance as provided in Article Eleven; and
(d) Notes in exchange for or in lieu of which other Notes (including
pursuant to Section 310) have been authenticated and delivered pursuant to
this Indenture, other than any such Notes in respect of which there shall
have been presented to the Trustee proof satisfactory to it that such Notes
are held by a bona fide purchaser in whose hands the Notes are valid
obligations of the Company;
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17
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or such other obligor shall be disregarded and deemed not to be Outstanding
(provided, that in connection with any offer by the Company or any obligor to
purchase the Notes, Notes tendered for purchase will be deemed to be Outstanding
and held by the tendering Holder until the date of purchase), except that, in
determining whether the Trustee shall be protected in making such calculation or
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes which the Trustee actually knows to be so owned
shall be so disregarded. Notes so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Notes and that
the pledgee is not the Company or any other obligor upon the Notes or any
Affiliate of the Company or such other obligor.
"Pari Passu Indebtedness" means (a) with respect to the Notes,
Indebtedness which ranks PARI PASSU in right of payment to the Notes and (b)
with respect to any Guarantee, Indebtedness which ranks PARI PASSU in right of
payment to such Guarantee.
"Paying Agent" means any Person (including the Company acting as
Paying Agent) authorized by the Company to pay the principal of (and premium, if
any) or interest on any Notes on behalf of the Company.
"Permitted Holders" means KKR and any of its Affiliates.
"Permitted Investments" means:
(a) any Investment in the Company or any Restricted
Subsidiary;
(b) any Investment in cash and Cash Equivalents or Investment Grade
Securities;
(c) any Investment by the Company or any Restricted Subsidiary of the
Company in a Person that is engaged in a Similar Business if as a result of
such Investment (i) such Person becomes a Restricted Subsidiary or (ii)
such Person, in one transaction or a series of related transactions, is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary;
(d) any Investment in securities or other assets not constituting
cash or Cash Equivalents and received in connection with an Asset Sale made
pursuant to Section 1017 or any other disposition of assets not
constituting an Asset Sale;
(e) any Investment existing on the Issuance Date;
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18
(f) advances to employees not in excess of $10.0 million outstanding
at any one time, in the aggregate;
(g) any Investment acquired by the Company or any of its Restricted
Subsidiaries (i) in exchange for any other Investment or accounts
receivable held by the Company or any such Restricted Subsidiary in
connection with or as a result of a bankruptcy, workout, reorganization or
recapitalization of the issuer of such other Investment or accounts
receivable or (ii) as a result of a foreclosure by the Company or any of
its Restricted Subsidiaries with respect to any secured Investment or other
transfer of title with respect to any secured Investment in default;
(h) Hedging Obligations permitted under clause (ix) of paragraph (b)
of Section 1010;
(i) loans and advances to officers, directors and employees for
business-related travel expenses, moving expenses and other similar
expenses, in each case incurred in the ordinary course of business;
(j) any Investment in a Similar Business having an aggregate fair
market value, taken together with all other Investments made pursuant to
this clause (j) that are at that time outstanding (without giving effect to
the sale of an Unrestricted Subsidiary to the extent the proceeds of such
sale do not consist of cash, marketable securities and/or Qualified
Proceeds), not to exceed the greater of (x) $75.0 million or (y) 15% of
Total Assets at the time of such Investment (with the fair market value of
each Investment being measured at the time made and without giving effect
to subsequent changes in value);
(k) Investments the payment for which consists of Equity Interests of
the Company (exclusive of Disqualified Stock); PROVIDED, HOWEVER, that such
Equity Interests will not increase the amount available for Restricted
Payments under clause (3) of paragraph (a) of Section 1009;
(l) additional Investments having an aggregate fair market value,
taken together with all other Investments made pursuant to this clause (l)
that are at that time outstanding (without giving effect to the sale of an
Unrestricted Subsidiary to the extent the proceeds of such sale do not
consist of cash, marketable securities and/or Qualified Proceeds or
distributions made pursuant to clause (xiii) of paragraph (b) of Section
1009), not to exceed the greater of (x) $30.0 million or (y) 5% of Total
Assets at the time of such Investment (with the fair market value of each
Investment being measured at the time made and without giving effect to
subsequent changes in value);
(m) Investments in a Similar Business having an aggregate fair market
value, taken together with all other Investments made pursuant to this
clause (m) that are at that time outstanding (without giving effect to the
sale of an Unrestricted Subsidiary to the extent the proceeds of such sale
do not consist of cash, marketable securities and/or Qualified Proceeds or
distributions made pursuant to clause (xiii) of paragraph (b) of
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19
Section 1009), not to exceed $75.0 million at the time of such Investment
(with the fair market value of each Investment being measured at the time
made and without giving effect to subsequent changes in value); PROVIDED
that at the time of such Investment the Company would be permitted to incur
at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first sentence of Section 1010;
(n) Investments relating to any special purpose Wholly-Owned
Subsidiary of the Company organized in connection with a Receivables
Facility that, in the good faith determination of the Board of Directors of
the Company, are necessary or advisable to effect such Receivables
Facility;
(o) guarantees (including Guarantees) of Indebtedness permitted under
Section 1010; and
(p) any transaction to the extent it constitutes an investment that
is permitted and made in accordance with the provisions of the paragraph
(b) of Section 1012, except transactions described in clauses (ii), (vi),
(vii) and (xi) of paragraph (b) thereunder.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 310 in exchange for a mutilated
security or in lieu of a lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Note.
"preferred stock" means any Equity Interest with preferential rights
of payment of dividends or upon liquidation, dissolution, or winding up.
"QIB" means a "Qualified Institutional Buyer" under Rule 144A.
"Qualified Proceeds" means assets that are used or useful in, or
Capital Stock of any Person engaged in, a Similar Business; PROVIDED that the
fair market value of any such assets or Capital Stock shall be determined by the
Board of Directors in good faith, except that in the event the value of any such
assets or Capital Stock may exceed $25.0 million or more, the fair value shall
be determined in writing by an independent investment banking firm of nationally
recognized standing.
"Recapitalization" means the consummation on the Issuance Date of the
series of transactions contemplated by the Subscription Agreement dated as of
November 17, 1997 between the Company, Hubcap Acquisition LLC and Phelps Dodge
Corporation.
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20
"Receivables Facility" means one or more receivables financing
facilities, as amended from time to time, pursuant to which the Company and/or
any of its Restricted Subsidiaries sells its accounts receivable to a Person
that is not a Restricted Subsidiary.
"Receivables Fees" means distributions or payments made directly or by
means of discounts with respect to any participation interest issued or sold in
connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any Receivables Facility.
"Redemption Date," when used with respect to any Note to be redeemed,
in whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Registration Default," has the meaning specified in the second
paragraph of Section 204.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of January 21, 1998, among the Company and the holders of
Initial Notes.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the January 15 or July 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Related Parties" means any Person controlled by a Permitted Holder,
including any partnership or limited liability company of which a Permitted
Holder or its Affiliates is the general partner or managing member, as the case
may be.
"Representative" means (a) with respect to the Senior Credit
Facilities, the Bank Agent and (b) with respect to any other Senior
Indebtedness, the indenture trustee or other trustee, agent or representative
for the holders of such Senior Indebtedness.
"Repurchase Offer" means an offer made by the Company to purchase all
or any portion of a Holder's Notes pursuant to Sections 1016 and 1017 herein.
"Responsible Officer," when used with respect to the Trustee, means
the chairman or any vice chairman of the board of directors, the chairman or any
vice chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
trust officer or assistant trust officer, the controller or any assistant
controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above-designated officers, and also
means, with respect to a particular corporate trust matter, any
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21
other officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" means, at any time, any direct or indirect
Subsidiary of the Company that is not then an Unrestricted Subsidiary; PROVIDED,
HOWEVER, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an
Unrestricted Subsidiary, such Subsidiary shall be included in the definition of
"Restricted Subsidiary."
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard and Poor's Ratings Group, a division of McGraw-
Hill, Inc. and its successors.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Senior Credit Facilities" means that certain Credit Agreement dated
as of January 21, 1998 among the Company, Accuride Canada, Inc., the Lenders,
Issuing Bank and Swing Line Bank (each as defined therein) from time to time
party thereto, the Bank Agent, Citicorp Securities, Inc. as Arranger, Bankers
Trust Company as Syndication Agent and Wells Fargo Bank N.A. as Documentation
Agent, including any collateral documents, instruments and agreements executed
in connection therewith, and any amendments, supplements, modifications,
extensions, renewals, restatements or refundings thereof and any indentures or
credit facilities or commercial paper facilities with banks or other
institutional lenders that replace, refund or refinance all or any part of the
loans, notes, other credit facilities or commitments thereunder, including any
such replacement, refunding or refinancing facility or indenture that increases
the amount borrowable thereunder or alters the maturity thereof, PROVIDED,
HOWEVER, that in connection with any facilities which refund, replace or
refinance such Credit Agreement there shall not be more than one facility at any
one time that is identified as the Senior Credit Facilities and, if at any time
there is more than one facility which would constitute the Senior Credit
Facilities, the Company will designate in writing to the Trustee which one of
such facilities will be the Senior Credit Facilities for purposes of this
Indenture.
"Senior Indebtedness" means (a) the Obligations under the Senior
Credit Facilities and (b) any other Indebtedness permitted to be incurred by the
Company hereunder, unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or subordinated in right
of payment to the Notes, including, with respect to clauses (a) and (b),
interest accruing subsequent to the filing of, or which would have accrued but
for the filing of, a petition for bankruptcy, in accordance with and at the rate
(including any rate applicable upon any default or event of default, to the
extent lawful) specified in the documents evidencing or governing such Senior
Indebtedness, whether or not such interest is an allowable claim in such
bankruptcy proceeding. Notwithstanding anything to the contrary in the
foregoing, Senior Indebtedness will not include (i) any liability for federal,
state, local or other taxes owed or owing by the Company, (ii)
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22
any obligation of the Company to any of its Subsidiaries, (iii) any accounts
payable or trade liabilities arising in the ordinary course of business
(including instruments evidencing such liabilities) other than obligations in
respect of letters of credit under the Senior Credit Facilities, (iv) any
Indebtedness that is incurred in violation hereof, (v) Indebtedness which, when
incurred and without respect to any election under Section 1111(b) of Title 11,
United States Code, is without recourse to the Company, (vi) any Indebtedness,
guarantee or obligation of the Company which is subordinate or junior to any
other Indebtedness, guarantee or obligation of the Company, (vii) Indebtedness
evidenced by the Notes and (viii) Capital Stock of the Company.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the Issuance Date.
"Similar Business" means the vehicular wheel and rim business and any
activity or business incidental, directly related or similar thereto, or any
line of business engaged in by the Company or its Subsidiaries on the Issuance
Date or any business activity that is a reasonable extension, development or
expansion thereof or ancillary thereto.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 311.
"Stated Maturity" when used with respect to any Note or any
installment of interest thereon, means the date specified in such Note as the
fixed date on which the principal of such Note or such installment of interest
is due and payable, and, when used with respect to any other Indebtedness, means
the date specified in the instrument governing such Indebtedness as the fixed
date on which the principal of such Indebtedness, or any installment of interest
thereon, is due and payable.
"Subordinated Indebtedness" means (a) with respect to the Notes, any
Indebtedness of the Company which is by its terms subordinated in right of
payment to the Notes and (b) with respect to any Guarantee, any Indebtedness of
the applicable Guarantor which is by its terms subordinated in right of payment
to such Guarantee.
"Subordinated Note Obligations" means any principal of, premium, if
any, and interest on the Notes payable pursuant to the terms of the Notes or
upon acceleration, together with and including any amounts received upon the
exercise of rights of rescission or other rights of action (including claims for
damages) or otherwise, to the extent relating to the purchase price of the Notes
or amounts corresponding to such principal, premium, if any, or interest on the
Notes.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association, or other business entity (other than a partnership, joint venture
or limited liability company) of which more than 50% of the total voting power
of shares of Capital Stock entitled (without regard to the
<PAGE>
23
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time of determination owned or controlled, directly
or indirectly, by such Person or one or more of the other Subsidiaries of that
Person or a combination thereof and (ii) any partnership, joint venture, limited
liability company or similar entity of which (x) more than 50% of the capital
accounts, distribution rights, total equity and voting interests or general or
limited partnership interests, as applicable, are owned or controlled, directly
or indirectly, by such Person or one or more of the other Subsidiaries of that
Person or a combination thereof whether in the form of membership, general,
special or limited partnership or otherwise and (y) such Person or any Wholly
Owned Restricted Subsidiary of such Person is a controlling general partner or
otherwise controls such entity.
"Total Assets" means the total consolidated assets of the Company and
its Restricted Subsidiaries, as shown on the most recent balance sheet of the
Company.
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the
period from the Redemption Date to February 1, 2003; PROVIDED, HOWEVER, that if
the period from the Redemption Date to February 1, 2003 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the Redemption Date to February 1, 2003 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force on the date as of which this Indenture was executed, except as
provided in Section 905.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
which at the time of determination is an Unrestricted Subsidiary (as designated
by the Board of Directors of the Company, as provided below) and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company
may designate any Subsidiary of the Company (including any existing Subsidiary
and any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity
Interests of, or owns, or holds any Lien on, any property of, the Company or any
Subsidiary of the Company (other than any Subsidiary of the Subsidiary to be so
designated), provided that (a) any Unrestricted Subsidiary must be an entity of
which shares of the capital stock or other equity interests (including
partnership interests) entitled to cast at least a majority of the votes that
may be cast by all shares or equity interests having ordinary voting power for
the election of directors or other governing body are
<PAGE>
24
owned, directly or indirectly, by the Company, (b) the Company certifies that
such designation complies with the requirements of Section 1009 and (c) each of
(I) the Subsidiary to be so designated and (II) its Subsidiaries has not at the
time of designation, and does not thereafter, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable with respect to any
Indebtedness pursuant to which the lender has recourse to any of the assets of
the Company or any of its Restricted Subsidiaries. The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that, immediately after giving effect to such designation, (i) the Company could
incur at least $1.00 of additional Indebtedness under paragraph (a) of
Section 1010, or (ii) the Fixed Charge Coverage Ratio for the Company and its
Restricted Subsidiaries would be greater than such ratio for the Company and its
Restricted Subsidiaries immediately prior to such designation, in each case on a
pro forma basis taking into account such designation. Any such designation by
the Board of Directors shall be notified by the Company to the Trustee by
promptly filing with the Trustee a copy of the board resolution giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"Vice President," when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or Disqualified Stock, as the case may be, at any date, the
quotient obtained by dividing (a) the sum of the products of the number of years
from the date of determination to the date of each successive scheduled
principal payment of such Indebtedness or redemption or similar payment with
respect to such Disqualified Stock multiplied by the amount of such payment, by
(b) the sum of all such payments.
"Wholly Owned Restricted Subsidiary" is any Wholly Owned Subsidiary
that is a Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person 100% of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person and one
or more Wholly Owned Subsidiaries of such Person.
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25
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company and any Guarantor
(if applicable) and any other obligor on the Notes (if applicable) shall furnish
to the Trustee an Officers' Certificate in form and substance reasonably
acceptable to the Trustee stating that all conditions precedent, if any,
provided for in this Indenture (including any covenant compliance with which
constitutes a condition precedent) relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including certificates
provided pursuant to Section 1018(a)) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual or such
firm, he or it has made such examination or investigation as is necessary
to enable him or it to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company, any Guarantor
or other obligor on the Notes may be based, insofar as it relates to legal
matters, upon a certificate or opinion of, or representations by, counsel,
unless such officer knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to the
<PAGE>
26
matters upon which his certificate or opinion is based are erroneous. Any such
certificate or Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company, any Guarantor or other obligor on the Notes stating
that the information with respect to such factual matters is in the possession
of the Company, any Guarantor or other obligor on the Notes unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section 104.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner that the Trustee deems sufficient.
(c) The principal amount and serial numbers of Notes held by any
Person, and the date of holding the same, shall be proved by the Note Register.
(d) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. Notwithstanding TIA Section 316(c),
such record date shall be the record date specified in or pursuant to such Board
Resolution, which shall be a date not earlier than the date 30 days prior to the
first solicitation of Holders generally in
<PAGE>
27
connection therewith and not later than the date such solicitation is completed.
If such a record date is fixed, such request, demand, authorization, direction,
notice, consent, waiver or other Act may be given before or after such record
date, but only the Holders of record at the close of business on such record
date shall be deemed to be Holders for the purposes of determining whether
Holders of the requisite proportion of Outstanding Notes have authorized or
agreed or consented to such request, demand, authorization, direction, notice,
consent, waiver or other Act, and for that purpose the Outstanding Notes shall
be computed as of such record date; provided that no such authorization,
agreement or consent by the Holders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after the record date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Note shall bind every future Holder of
the same Note and the Holder of every Note issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof (including in
accordance with Section 310) in respect of anything done, omitted or suffered to
be done by the Trustee, any Paying Agent or the Company or any Guarantor in
reliance thereon, whether or not notation of such action is made upon such Note.
SECTION 105. NOTICES, ETC., TO TRUSTEE, THE COMPANY AND ANY
GUARANTOR.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company or any Guarantor or
any other obligor on the Notes shall be sufficient for every purpose
hereunder if made, given, furnished or delivered in writing and mailed,
first-class postage prepaid, or delivered by recognized overnight courier,
to or with the Trustee and received at its Corporate Trust Office,
Attention: Corporate Trust Services -- Accuride Corporation, or
(2) the Company or any Guarantor by the Trustee or by any Holder
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or delivered, in writing, or
mailed, first-class postage prepaid, or delivered by recognized overnight
courier, to the Company or such Guarantor addressed to it at the address of
its principal office specified in the first paragraph of this Indenture, or
at any other address previously furnished in writing to the Trustee by the
Company or such Guarantor.
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28
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice of any event to Holders by
the Company or the Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder affected by such event, at his address as it
appears in the Note Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed
to have been received by such Holder, whether or not such Holder actually
receives such notice. Where this Indenture provides for notice in any manner,
such notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of or irregularities in regular
mail service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice for every purpose hereunder.
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 108. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 109. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
<PAGE>
29
SECTION 110. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, (other than the parties hereto, any Agent and their
successors hereunder and each of the Holders and, with respect to any provisions
hereof relating to the subordination of the Notes or the rights of holders of
Senior Indebtedness, the holders of Senior Indebtedness) any benefit or any
legal or equitable right, remedy or claim under this Indenture.
SECTION 111. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY THE LAW OF THE STATE
OF NEW YORK EXCLUDING (TO THE GREATEST EXTENT PERMISSIBLE BY LAW) ANY RULE OF
LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN
THE STATE OF NEW YORK. UPON THE ISSUANCE OF THE EXCHANGE NOTES OR THE
EFFECTIVENESS OF THE SHELF REGISTRATION STATEMENT, THIS INDENTURE SHALL BE
SUBJECT TO THE PROVISIONS OF THE TRUST INDENTURE ACT THAT ARE REQUIRED TO BE
PART OF THIS INDENTURE AND SHALL, TO THE EXTENT APPLICABLE, BE GOVERNED BY SUCH
PROVISIONS.
SECTION 112. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, any date established for
payment of Defaulted Interest pursuant to Section 311 or Redemption Date or
Stated Maturity or Maturity of any Note shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Notes) payment
of principal (or premium, if any) or interest need not be made on such date, but
may be made on the next succeeding Business Day with the same force and effect
as if made on the Interest Payment Date or date established for payment of
Defaulted Interest pursuant to Section 311, Redemption Date, or at the Stated
Maturity or Maturity; provided that no interest shall accrue for the period from
and after such Interest Payment Date, Redemption Date or date established for
payment of Defaulted Interest pursuant to Section 311, Stated Maturity or
Maturity, as the case may be, to the next succeeding Business Day.
SECTION 113. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES,
OR STOCKHOLDERS.
No director, officer, employee, incorporator or stockholders, as such,
of the Company or any Guarantor shall have any liability for any obligations of
the Company or such Guarantor under the Notes, this Indenture or any Guarantee
or for any claim based on, in respect of, or by reason of, such obligations or
their creations. Each Holder by accepting a Note waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Notes.
SECTION 114. COUNTERPARTS.
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30
This Indenture may be executed in any number of counterparts, each of
which shall be original; but such counterparts shall together constitute but one
and the same instrument.
ARTICLE TWO
NOTE FORMS
SECTION 201. FORMS GENERALLY.
The Initial Notes shall be known as the "9 1/4% Senior Subordinated
Notes due 2008" and the Exchange Notes shall be known as the "9 1/4% Series B
Senior Subordinated Notes due 2008," in each case, of the Company. The Notes
and the Trustee's certificate of authentication shall be in substantially the
forms set forth in this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Notes, as evidenced by their execution
of the Notes. Any portion of the text of any Note may be set forth on the
reverse thereof, with an appropriate reference thereto on the face of the Note.
Each Note shall be dated the date of its authentication.
The definitive Notes shall be printed, lithographed or engraved on
steel-engraved borders or may be produced in any other manner, all as determined
by the officers of the Company executing such Notes, as evidenced by their
execution of such Notes.
Initial Notes offered and resold in reliance on Rule 144A to QIBs or
resold in reliance on another exemption under the Securities Act to
institutional "Accredited Investors" (as defined in Rule 501(a)(1), (2), (3) or
(7) of the Securities Act) ("IAIs") will be issued on the Issuance Date in the
form of two permanent global Notes (with separate CUSIP numbers) substantially
in the form set forth in Sections 204 and 205 (each a "U.S. Global Note")
deposited with the Trustee, as custodian for the Depositary, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. One U.S.
Global Note (which may be represented by more than one certificate, if so
required by the Depositary's rules regarding the maximum principal amount to be
represented by a single certificate) will represent Initial Notes sold to QIB's
(the "Rule 144A Global Note"), and the other will represent Initial Notes resold
to IAI's after the Issuance Date (the "IAI Global Note"), which IAI Global Note,
as of the Issuance Date, will represent $0 aggregate principal amount of the
Initial Notes.
Initial Notes offered and resold in reliance on Regulation S, if any,
will initially be issued in the form of a temporary global Note (the "Temporary
Offshore Global Note"). Beneficial interests in the Temporary Offshore Global
Note will be exchanged for beneficial interests in a corresponding permanent
global Note (the APermanent Offshore Global Note@ and, together with the
Temporary Offshore Global Note, each an AOffshore Global Note@ and, together
with the Temporary Offshore Global Note and the U.S. Global Notes, each a
"Global Note") within a
<PAGE>
31
reasonable period after the expiration of the Restricted Period (as defined
below) upon delivery of the certification contemplated by Section 203. Each
Offshore Global Note will be deposited upon issuance with, or on behalf of, the
Trustee as custodian for the Depositary in the manner described in the preceding
paragraph for credit to the respective accounts of the purchasers (or to such
other accounts as they may direct) at Morgan Guaranty Trust Company of New York,
Brussels Office, as operator of the Euroclear System ("Euroclear"), or Cedel
Bank, sociJtJ anonyme ("Cedel"). Prior to the 40th day after the later of the
commencement of the offering of the Initial Notes and the Closing Date (such
period through and including such 40th day, the ARestricted Period@), interests
in the Temporary Offshore Global Note may only be held through Euroclear or
Cedel (as indirect participants in the Depositary) unless exchanged for
interests in a U.S. Global Note in accordance with the transfer and
certification requirements described herein.
Investors may hold their interests in the applicable Offshore Global
Note directly through Euroclear or Cedel, if they are participants in such
systems, or indirectly through organizations which are participants in such
systems. After the expiration of the Restricted Period (but not earlier),
investors may also hold such interests through organizations other than
Euroclear or Cedel that are participants in the Depositary's system. Euroclear
and Cedel will hold such interests in the applicable Offshore Global Note on
behalf of their participants through customers' securities accounts in their
respective names on the books of their respective depositaries. Such
depositaries, in turn, will hold such interests in the applicable Offshore
Global Note in customers' securities accounts in the depositaries' names on the
books of the Depositary.
The aggregate principal amount of each Global Note may from time to
time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided. Transfers among Global Notes by the beneficial owners of the
interests therein will be represented by appropriate increases and decreases to
the respective amounts of the appropriate Global Notes, as more fully provided
in Section 307.
Certificated Notes in registered form in substantially the form set
forth in Sections 204 and 205 (the "Physical Notes") shall be transferred in
certain circumstances to all beneficial owners in exchange for their beneficial
interests in the Global Notes as set forth in Section 306.
SECTION 202. RESTRICTIVE LEGENDS.
Unless and until (i) an Initial Note is sold under an effective
Registration Statement or (ii) an Initial Note is exchanged for an Exchange Note
in connection with an effective Registration Statement, in each case pursuant to
the Registration Rights Agreement, each such Global Note and Physical Note shall
bear the following legend (the "Private Placement Legend") on the face thereof:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED
<PAGE>
32
OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER SUCH SECURITY PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY
(OR ANY PREDECESSOR OF THIS SECURITY) ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY
IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY
FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO,
OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT (AND IF ACQUIRING THE SECURITIES FROM SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," IS ACQUIRING SECURITIES HAVING AN
AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $250,000), OR (F) PURSUANT
TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT; PROVIDED THAT THE COMPANY AND THE TRUSTEE SHALL
HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT
TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF
THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE.
Each Global Note, whether or not an Initial Note, shall also bear the
following legend on the face thereof:
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33
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
REPRESENTATIVE OF DTC AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTIONS 306 AND 307 OF THE INDENTURE.
<PAGE>
34
SECTION 203. FORM OF CERTIFICATE TO BE DELIVERED UPON TERMINATION OF
RESTRICTED PERIOD.
On or after March 2, 1998
U.S. Trust Company of California, N.A.
515 South Flower Street, Suite 2700
Los Angeles, CA 90071
Attention: Corporate Trust Department - Accuride Corporation
Re: ACCURIDE CORPORATION (the "Company")
9 1/4% SENIOR SUBORDINATED NOTES DUE 2008 (THE "NOTES")
Ladies and Gentlemen:
This letter relates to Notes represented by a temporary global note
(the "Temporary Offshore Global Note"). Pursuant to Section 201 of the
Indenture dated as of January 21, 1998 relating to the Notes (the "Indenture"),
we hereby certify that the persons who are the beneficial owners of
$[ ] principal amount of Notes represented by the Temporary Offshore
Global Note are persons outside the United States to whom beneficial interests
in such Notes could be transferred in accordance with Rule 904 of Regulation S
promulgated under the Securities Act of 1933, as amended. Accordingly, you are
hereby requested to issue a Permanent Offshore Global Note representing the
undersigned's interest in the principal amount of Notes represented by the
Temporary Offshore Global Note, all in the manner provided by the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
-----------------------------------
Authorized Signature
<PAGE>
35
SECTION 204. FORM OF FACE OF NOTE.
ACCURIDE CORPORATION
9 1/4% [Series B](1) Senior Subordinated Note due 2008
CUSIP No. _____
[Common Code No. ______](2)
[ISIN No. _____________](2)
No. __________ $________
ACCURIDE CORPORATION, a Delaware corporation (herein called the
"Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
____________________ or registered assigns, the principal sum of
____________________ Dollars on February 1, 2008, at the office or agency of the
Company referred to below, and to pay interest thereon on August 1, 1998 and
semi-annually thereafter, on February 1 and August 1 in each year, from January
21, 1998, or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, at the rate of 9 1/4% per annum, until the
principal hereof is paid or duly provided for, and (to the extent lawful) to pay
on demand interest on any overdue interest at the rate borne by the Notes from
the date on which such overdue interest becomes payable to the date payment of
such interest has been made or duly provided for. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be the January 15 or August
15 (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date, and such defaulted interest, and (to the extent lawful) interest on
such defaulted interest at the rate borne by the Notes, may be paid to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders not less than 10 days prior to such Special Record Date, or may be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said
Indenture.
[The Holder of this Note is entitled to the benefits of the
Registration Rights Agreement, dated as of January 21, 1998 (the "Registration
Rights Agreement"), between the Company and the Initial Purchasers named
therein. In the event that either (a) an Exchange Offer Registration Statement
(as such term is defined in the Registration Rights Agreement) is not filed with
the Commission on or prior to the 120th calendar day following the date of
original issue of the Notes, (b) such Exchange Offer Registration Statement has
not been declared effective on or
_____________________
(1). Include only for Exchange Notes.
(2) Include only for Temporary Offshore Global Note and Permanent Offshore
Global Note.
<PAGE>
36
prior to the 200th day following the date of original issue of the Notes or
(c) the Exchange Offer (as such term is defined in the Registration Rights
Agreement) is not consummated on or prior to the 230th calendar day following
the date of original issue of the Notes or a Shelf Registration Statement (as
such term is defined in the Registration Rights Agreement) with respect to the
Notes is not declared effective on or prior to the 230th day following the date
of original issue of the Notes (or in the case of a Shelf Registration Statement
required to be filed in response to a change in law or applicable
interpretations of the Staff of the Commission, if later, within 45 days after
publication of the change in law or interpretations but in no event before 120
calendar days after the Issuance Date) (each such event an "Exchange
Registration Default"), the interest rate borne by this Note shall be increased
by one-quarter of one percent per annum following such 120-day period in the
case of clause (a) above, following such 200-day period in the case of clause
(b) above, or such 230-day period in the case of clause (c) above (or, in the
case of a Shelf Registration Statement required to be filed in response to a
change in law or applicable interpretations of the Staff of the Commission, if
later, following such 45-day period after publication of the change in law or
interpretation but in no event before 120 calendar days after the Issuance
Date), which rate will be increased by an additional one-quarter of one percent
per annum for each 90-day period that any such additional interest continues to
accrue; provided that the aggregate increase in such annual interest rate will
in no event exceed one percent. Upon (x) the filing of the Exchange Offer
Registration Statement after the 120-day period described in clause (a) above,
(y) the effectiveness of the Exchange Offer Registration Statement after the
200-day period described in clause (b) above, or (z) the consummation of the
Exchange Offer or the effectiveness of a Shelf Registration Statement, as the
case may be, after the 230-day period described in clause (c) above (or, in the
case of a Shelf Registration Statement required to be filed in response to a
change in law or applicable interpretations of the Staff of the Commission, if
later, following such 45-day period after publication of the change in law or
interpretation but in no event before 120 calendar days after the Issuance
Date), the interest rate borne by the Notes from the date of such filing,
effectiveness or consummation, as the case may be, will be reduced to the
original interest rate set forth above if the Company is otherwise in compliance
with this paragraph; PROVIDED, HOWEVER, that, if after such reduction in
interest rate, a different event specified in clause (a), (b) or (c) above
occurs, the interest rate may again be increased and thereafter decreased
pursuant to the foregoing provisions. If the Company issues a notice that the
Shelf Registration Statement is unusable pending the announcement of a material
corporate transaction or otherwise pursuant to Section 2(f) of the Registration
Rights Agreement, or such a notice is required under applicable securities laws
to be issued by the Company, and the aggregate number of days in any consecutive
twelve-month period for which all such notices are issued and effective or
required to be issued exceeds 30 days in the aggregate (a "Shelf Registration
Default," and together with an Exchange Registration Default, a "Registration
Default"), then the interest rate borne by the Notes will be increased by
one-quarter of one percent per annum following the date that such Shelf
Registration Statement ceases to be usable beyond the period permitted above,
which rate shall be increased by an additional one-quarter of one percent per
annum for each 90-day period that such additional interest continues to accrue;
provided that the aggregate increase in such annual interest rate may in no
event exceed one percent. Upon the Company declaring that the Shelf
Registration Statement is usable after the interest rate has been increased
pursuant to the preceding sentence, the interest rate borne by the Notes will be
reduced to the original interest rate if the Company is otherwise in compliance
with this paragraph; PROVIDED, HOWEVER, that if after any such reduction in
interest rate the Shelf
<PAGE>
37
Registration Statement again ceases to be usable beyond the period permitted
above, the interest rate will again be increased and thereafter reduced pursuant
to the foregoing provisions.](3)
Payment of the principal of (and premium, if any, on) and interest on
this Note will be made at the office or agency of the Company maintained for
that purpose in The City of New York, or at such other office or agency of the
Company as may be maintained for such purpose, in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts; PROVIDED, HOWEVER, that payment of interest may be
made at the option of the Company (i) by check mailed to the address of the
Person entitled thereto as such address shall appear on the Note Register or
(ii) by wire transfer to an account maintained by the payee located in the
United States.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed
by the Trustee or the Authenticating Agent referred to on the reverse hereof by
manual signature, this Note shall not be entitled to any benefit under the
Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
ACCURIDE CORPORATION
By
-------------------------
Name:
Title:
___________________
(3). Include only for Initial Notes.
<PAGE>
38
SECTION 205. FORM OF REVERSE OF NOTE.
This Note is one of a duly authorized issue of securities of the
Company designated as its 9 1/4% [Series B](4) Senior Subordinated Notes due
2008 (the "Notes"), limited (except as otherwise provided in the Indenture
referred to below) in aggregate principal amount to $300,000,000, which may be
issued under the indenture (the "Indenture") dated as of January 21, 1998
between the Company and U.S. Trust Company of California, N.A., as trustee (the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties,
obligations and immunities thereunder of the Company, the Trustee and the
Holders, and of the terms upon which the Notes are, and are to be, authenticated
and delivered. Capitalized terms used herein without definition shall have the
meanings set forth in the Indenture.
The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness (as defined in the
Indenture), and this Note is issued subject to such provisions. Each Holder of
this Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Indenture and (c) appoints the Trustee his attorney-in-fact for
such purpose.
On or before each payment date, the Company shall deliver or cause to
be delivered to the Trustee or the Paying Agent an amount in dollars sufficient
to pay the amount due on such payment date.
The Notes are subject to redemption upon not less than 30 nor more
than 60 days' notice, at any time on and after February 1, 2003, as a whole or
in part, at the election of the Company, at a Redemption Price equal to the
percentage of the principal amount set forth below, plus, in each case, accrued
and unpaid interest, if any, to the applicable Redemption Date, if redeemed
during the twelve month period beginning February 1 of the years indicated
below:
YEAR REDEMPTION PRICE
2003 . . . . . . . . . . . . . . . . . . . . . . . . 104.625
2004. . . . . . . . . . . . . . . . . . . . . . . . . 103.083
2005 . . . . . . . . . . . . . . . . . . . . . . . . 101.542
2006 and thereafter . . . . . . . . . . . . . . . . . 100%
In addition, at any time or from time to time, on or prior to February
1, 2002, the Company may, at its option, redeem up to 40% of the aggregate
principal amount of Notes originally issued under the Indenture on the Issuance
Date at a Redemption Price equal to 109.25%
_______________
(4). Include only for the Exchange Notes.
<PAGE>
39
of the aggregate principal amount thereof, plus accrued and unpaid interest
thereon, if any, to the Redemption Date, with the net proceeds of one or more
Equity Offerings; provided that at least 60% of the aggregate principal amount
of Notes originally issued under the Indenture on the Issuance Date remains
outstanding immediately after the occurrence of each such redemption; and
PROVIDED FURTHER that each such redemption occurs within 60 days of the date of
closing of each Equity Offering.
If less than all the Notes are to be redeemed pursuant to the
preceding two paragraphs, the Trustee shall select the Notes or portions thereof
to be redeemed in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes being redeemed are listed, or if
the Notes are not so listed, on a pro rata basis, by lot or by such other method
the Trustee shall deem fair and appropriate; provided that no such partial
redemption shall reduce the portion of the principal amount of a Note not
redeemed to less than $1,000.
At any time on or prior to February 1, 2003, the Notes may also be
redeemed as a whole at the option of the Company upon the occurrence of a Change
of Control, upon not less than 30 nor more than 60 days prior notice (but in no
event more than 90 days after the occurrence of such Change of Control or
transfer event) mailed by first-class mail to each Holder's registered address,
at a redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and accrued and unpaid interest, if any, to, the
Redemption Date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date).
In the case of any redemption or repurchase of Notes, interest
installments whose Stated Maturity is on or prior to the Redemption Date will be
payable to the Holders of such Notes, or one or more Predecessor Notes, of
record at the close of business on the relevant Regular Record Date or Special
Record Date, as the case may be, referred to on the face hereof. Notes (or
portions thereof) for whose redemption and payment provision is made in
accordance with the Indenture shall cease to bear interest from and after the
Redemption Date.
In the event of redemption or repurchase of this Note in part only, a
new Note or Notes for the unredeemed portion hereof shall be issued in the name
of the Holder hereof upon the cancellation hereof.
Upon the occurrence of a Change of Control, unless the Company has
elected to redeem the Notes in connection with such Change of Control, the
Company will be required to make an offer to purchase on the Change of Control
Payment Date all outstanding Notes at a purchase price in cash equal to 101% of
the aggregate principal amount thereof, plus accrued and unpaid interest
thereon, if any, to the date of purchase, in accordance with the Indenture.
Holders that are subject to an offer to purchase will receive a Change of
Control Offer from the Company prior to any related Change of Control Payment
Date.
Under certain circumstances, in the event of certain Asset Sales, the
Company will be required to make an offer to all Holders to purchase the maximum
principal amount of Notes, in an integral multiple of $1,000, that may be
purchased out of Excess Proceeds at a purchase price in
<PAGE>
40
cash equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase, in accordance with the Indenture.
Holders that are subject to any offer to purchase will receive an Asset Sale
Offer from the Company prior to any related Asset Sale Purchase Date.
If an Event of Default shall occur and be continuing, the principal of
all the Notes may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture contains provisions for defeasance at any time of
(a) the entire indebtedness of the Company on this Note and (b) certain
restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders under the Indenture and the Notes and the
Guarantees, if any, at any time by the Company and the Trustee with the consent
of the Holders of a specified percentage in aggregate principal amount of the
Notes at the time Outstanding. Additionally, the Indenture permits that,
without notice to or consent of any Holder, the Company, any Guarantor and the
Trustee together may amend or supplement the Indenture, any Guarantee or this
Note (i) to cure any ambiguity, defect or inconsistency, (ii) to provide for
uncertificated Notes in addition to or in place of certificated Notes, (iii) to
comply with the covenant relating to mergers, consolidations and sales of
assets, (iv) to provide for the assumption of the Company's or any Guarantor's
obligations to Holders, (v) to make any change that would provide any additional
rights or benefits to the Holders or that does not adversely affect the legal
rights under the Indenture of any such Holder, (vi) to add covenants for the
benefit of the Holders or to surrender any right or power conferred upon the
Company, (vii) to comply with the requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the Trust Indenture
Act, (viii) to evidence and provide for the acceptance of appointment under the
Indenture by a successor Trustee pursuant to the requirements of Section 610
thereof, (ix) to make any change that does not adversely affect the legal rights
of any Holder or (x) to add a Guarantor under the Indenture. The Indenture also
contains provisions permitting the Holders of specified percentages in aggregate
principal amount of the Notes at the time Outstanding, on behalf of the Holders
of all the Notes, to waive compliance by the Company with certain provisions of
the Indenture, the Notes and the Guarantees, if any, and certain past Defaults
under the Indenture and the Notes and the Guarantees, if any, and their
consequences. Any such consent or waiver by or on behalf of the Holder of this
Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, any
Guarantor or any other obligor on the Notes (in the event such Guarantor or
other obligor is obligated to make payments in respect of the Notes), which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place, and rate, and in the coin or
currency, herein prescribed, subject to the subordination provisions of the
Indenture.
<PAGE>
41
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registerable on the Note
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Note Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any registration of transfer or
exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to pay all documentary, stamp or similar issue or transfer taxes or
other governmental charge payable in connection therewith.
Prior to the time of due presentment of this Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Company,
the Trustee nor any agent shall be affected by notice to the contrary.
THIS NOTE AND THE INDENTURE SHALL BE GOVERNED BY THE LAW OF THE STATE
OF NEW YORK EXCLUDING (TO THE GREATEST EXTENT PERMISSIBLE BY LAW) ANY RULE OF
LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN
THE STATE OF NEW YORK.
Interest on this Note shall be computed on the basis of a 360-day year
of twelve 30-day months.
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
INSERT TAXPAYER IDENTIFICATION NO.
please print or typewrite name and address including zip code of assignee
<PAGE>
42
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing attorney to transfer said Note on the books of the Company with full
power of substitution in the premises.
<PAGE>
43
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE GLOBAL
NOTE]
In connection with any transfer of this Note occurring prior to the
date that is the earlier of the date of an effective Registration Statement, as
defined in the Registration Rights Agreement dated as of January 21, 1998, or
January 21, 2000, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[CHECK ONE]
[ ] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by Rule 144A
thereunder.
OR
[ ] (b) this Note is being transferred other than in accordance with (a) above
and documents are being furnished that comply with the conditions of transfer
set forth in this Note and the Indenture.
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Note in the name of any Person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 307 of the Indenture shall have
been satisfied.
Date:
-------------------- ------------------------------------------
NOTICE: The signature must correspond with the
name as written upon the face of the
within-mentioned instrument in every
particular, without alteration or any
change whatsoever.
Signature Guarantee:
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
<PAGE>
44
Dated: NOTICE: To be executed by an executive officer.
-----------------
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Sections 1016 and 1017 of the Indenture, check the Box: [ ].
If you wish to have a portion of this Note purchased by the Company
pursuant to Sections 1016 and 1017 of the Indenture, state the amount (in
original principal amount) below:
$_____________________.
Date:
Your Signature:
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee:
<PAGE>
45
SECTION 206. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication shall be in substantially
the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned
Indenture.
U.S. TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By
----------------------------
Authorized Signatory
Dated: ____________________
<PAGE>
46
ARTICLE THREE
THE NOTES
SECTION 301. TITLE AND TERMS.
Except for Notes authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Notes pursuant to
Section 304, 305, 306, 307, 310, 906, 1016, 1017 or 1108 or pursuant to an
Exchange Offer, the aggregate principal amount of Notes which may be
authenticated and delivered under this Indenture is limited to $300,000,000,
including (a) $200,000,000 in aggregate principal amount of Notes being offered
on the Issuance Date and (b) additional series of notes which may be offered
subsequent to the Issuance Date (the "Subsequent Series Notes") in an aggregate
principal amount not to exceed $100,000,000, in each case upon receipt by the
Trustee of a Company Order, Officers' Certificate and Opinion of Counsel in
accordance with Section 303; PROVIDED, however, that no Subsequent Series Notes
may be authenticated and delivered in an aggregate principal amount of less than
$25,000,000. All Notes issued on the Issuance Date and all Subsequent Series
Notes shall be identical in all respects other than issuance dates, the date
from which interest accrues and any changes relating thereto. Notwithstanding
anything to the contrary contained in this Indenture, all Notes issued under
this Indenture shall vote and consent together on all matters as one class and
no series of Notes will have the right to vote or consent as a separate class on
any matter.
The Initial Notes shall be known and designated as the "9 1/4% Senior
Subordinated Notes due 2008" and the Exchange Notes shall be known and
designated as the "9 1/4% Series B Senior Subordinated Notes due 2008," in each
case, of the Company. The Stated Maturity of the Notes shall be February 1,
2008, and they shall bear interest at the rate of 9 1/4% per annum, which rate
may be increased in the event of a Registration Default pursuant to Section 2(f)
of the Registration Rights Agreement dated January 21, 1998 by and among the
Company and the parties named on the signature pages thereof, from January 21,
1998, or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, payable on August 1 and semi-annually thereafter on
February 1 and August 1 in each year, until the principal thereof is paid in
full and to the Person in whose name the Note (or any predecessor Note) is
registered at the close of business on the January 15 or July 15 next preceding
such interest payment date. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months, until the principal thereof is paid or
duly provided for. Interest on any overdue principal, interest (to the extent
lawful) or premium, if any, shall be payable on demand.
The principal of (and premium, if any) and interest on the Notes shall
be payable at the office or agency of the Company maintained for such purpose in
The City of New York, or at such other office or agency of the Company as may be
maintained for such purpose; PROVIDED, HOWEVER, that, at the option of the
Company, payment of interest may be paid by check mailed to addresses of the
Persons entitled thereto as such addresses shall appear on the Note Register;
PROVIDED that all payments of principal, premium, if any, and interest with
respect to Notes represented by one or more permanent global Notes registered in
the name of or held by the
<PAGE>
47
Depositary or its nominee will be made by wire transfer of immediately available
funds to the accounts specified by the Holders thereof.
Holders shall have the right to require the Company to purchase their
Notes, in whole or in part, in the event of a Change of Control pursuant to
Section 1016.
The Notes shall be subject to repurchase by the Company pursuant to an
Asset Sale Offer as provided in Section 1017.
The Notes shall be redeemable as provided in Article Twelve and in the
Notes.
The Indebtedness evidenced by the Notes shall be subordinated in right
of payment to Senior Indebtedness as provided in Article Thirteen.
SECTION 302. DENOMINATIONS.
The Notes shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its Chief
Executive Officer or any Vice President. The signature of any of these officers
on the Notes may be manual or facsimile signatures of the present or any future
such authorized officer and may be imprinted or otherwise reproduced on the
Notes.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Initial Notes executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Notes, and the Trustee in accordance with
such Company Order shall authenticate and deliver such Initial Notes directing
the Trustee to authenticate the Notes and certifying that all conditions
precedent to the issuance of Notes contained herein have been fully complied
with, and the Trustee in accordance with such Company Order shall authenticate
and deliver such Initial Notes. On Company Order, the Trustee shall
authenticate for original issue Exchange Notes in an aggregate principal amount
not to exceed $300,000,000; provided that such Exchange Notes shall be issuable
only upon the valid surrender for cancellation of Initial Notes of a like
aggregate principal amount in accordance with an Exchange Offer pursuant to the
Registration Rights Agreement. In each case, the Trustee shall be entitled to
receive an Officers' Certificate and an Opinion of Counsel of the Company that
it may reasonably request in connection with such authentication of Notes. Such
Company Order shall
<PAGE>
48
specify the amount of Notes to be authenticated and the date on which the
original issue of Initial Notes or Exchange Notes is to be authenticated.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture.
In case the Company or any Guarantor, pursuant to Article Eight, shall
be consolidated or merged with or into any other Person or shall convey,
transfer, lease or otherwise dispose of its properties and assets substantially
as an entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company or such
Guarantor shall have been merged, or the Person which shall have received a
conveyance, transfer, lease or other disposition as aforesaid, shall have
executed an indenture supplemental hereto with the Trustee pursuant to Article
Eight, any of the Notes authenticated or delivered prior to such consolidation,
merger, conveyance, transfer, lease or other disposition may, from time to time,
at the request of the successor Person, be exchanged for other Notes executed in
the name of the successor Person with such changes in phraseology and form as
may be appropriate, but otherwise in substance of like tenor as the Notes
surrendered for such exchange and of like principal amount; and the Trustee,
upon Company Request of the successor Person, shall authenticate and deliver
Notes as specified in such request for the purpose of such exchange. If Notes
shall at any time be authenticated and delivered in any new name of a successor
Person pursuant to this Section 303 in exchange or substitution for or upon
registration of transfer of any Notes, such successor Person, at the option of
the Holders but without expense to them, shall provide for the exchange of all
Notes at the time Outstanding for Notes authenticated and delivered in such new
name.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes on behalf of the Trustee. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Note Registrar or Paying Agent
to deal with the Company and its Affiliates.
<PAGE>
49
SECTION 304. TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Notes which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Notes may determine, as conclusively evidenced by their execution
of such Notes.
If temporary Notes are issued, the Company will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 1002, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
referred to as the "Note Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Notes and of transfers of Notes. The Note Register shall be in written form
or any other form capable of being converted into written form within a
reasonable time. At all reasonable times, the Note Register shall be open to
inspection by the Trustee. The Trustee is hereby initially appointed as
security registrar (the Trustee in such capacity, together with any successor of
the Trustee in such capacity, the "Note Registrar") for the purpose of
registering Notes and transfers of Notes as herein provided.
Upon surrender for registration of transfer of any Note at the office
or agency of the Company designated pursuant to Section 1002, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denomination or denominations of a like aggregate principal amount.
Furthermore, any Holder of a Global Note shall, by acceptance of such
Global Note, agree that transfers of beneficial interest in such Global Note may
be effected only through a book-entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book entry.
At the option of the Holder, Notes may be exchanged for other Notes of
any authorized denomination and of a like aggregate principal amount, upon
surrender of the Notes to
<PAGE>
50
be exchanged at such office or agency. Whenever any Notes are so surrendered
for exchange (including an exchange of Initial Notes for Exchange Notes), the
Company shall execute, and the Trustee shall authenticate and deliver, the Notes
which the Holder making the exchange is entitled to receive; provided that no
exchange of Initial Notes for Exchange Notes shall occur until an Exchange Offer
Registration Statement shall have been declared effective by the Commission, the
Trustee shall have received an Officers' Certificate confirming that the
Exchange Offer Registration Statement has been declared effective by the
Commission and the Initial Notes to be exchanged for the Exchange Notes shall be
cancelled by the Trustee.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Note Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Note Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange or redemption of Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 304, 906, 1016, 1017 or 1108, not involving any
transfer.
SECTION 306. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTE.
(a) Each Global Note initially shall (i) be registered in the name of
the Depositary for such Global Note or the nominee of the Depositary, (ii) be
delivered to the Trustee as custodian for the Depositary and (iii) bear legends
as set forth in Section 202.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depositary, or the Trustee as its custodian, or under the
Global Note, and the Depositary may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of such Global
Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or shall impair, as between the
Depositary and its Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers of such
Global Note in whole, but not in part, to the Depositary, its successors or
their respective nominees. Interests of beneficial owners in a Global Note may
be transferred in accordance with the rules and procedures of the Depositary and
the provisions of Section 307. If required to do so pursuant to any applicable
law or regulation, beneficial owners may obtain Notes in physical form
("Physical Notes") in
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51
exchange for their beneficial interests in a Global Note upon written request in
accordance with the Depositary's and the Registrar's procedures. In addition,
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in a Global Note if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for such Global
Note or the Depositary ceases to be a clearing agency registered under the
Exchange Act, at a time when the Depositary is required to be so registered in
order to act as Depositary, and in each case a successor depositary is not
appointed by the Company within 90 days of such notice or, (ii) the Company
executes and delivers to the Trustee and Note Registrar an Officers' Certificate
stating that such Global Note shall be so exchangeable or (iii) an Event of
Default has occurred and is continuing and the Note Registrar has received a
request from the Depositary.
(c) In connection with any transfer of a portion of the beneficial
interest in a Global Note pursuant to subsection (b) of this Section to
beneficial owners who are required to hold Physical Notes, the Note Registrar
shall reflect on its books and records the date and a decrease in the principal
amount of such Global Note in an amount equal to the principal amount of the
beneficial interest in the Global Note to be transferred, and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more Physical
Notes of like tenor and amount.
(d) In connection with the transfer of an entire Global Note to
beneficial owners pursuant to subsection (b) of this Section, such Global Note
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depositary in exchange for its beneficial
interest in such Global Note, an equal aggregate principal amount of Physical
Notes of authorized denominations.
(e) Any Physical Note delivered in exchange for an interest in a
Global Note pursuant to subsection (c) or subsection (d) of this Section shall,
except as otherwise provided by Section 307, bear the applicable legend
regarding transfer restrictions applicable to the Physical Note set forth in
Section 202.
(f) The registered holder of a Global Note may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
SECTION 307. SPECIAL TRANSFER PROVISIONS.
Unless and until (i) an Initial Note is sold under an effective
Registration Statement, or (ii) an Initial Note is exchanged for an Exchange
Note in connection with an effective Registration Statement, in each case
pursuant to the Registration Rights Agreement, the following provisions shall
apply:
(a) The following provisions shall apply with respect to any
proposed transfer of a Rule 144A Global Note or an IAI Global Note prior to the
two-year anniversary of the Issuance Date:
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52
(i) a transfer of a Rule 144A Global Note or an IAI Global
Note or a beneficial interest therein to a QIB shall be made upon the
representation of the transferee that it is purchasing the Note for its own
account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional
buyer" within the meaning of Rule 144A, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Company as the transferee has requested
pursuant to Rule 144A or has determined not to request such information and
that it is aware that the transferor is relying upon the transferee's
foregoing representations in order to claim the exemption from registration
provided by Rule 144A;
(ii) a transfer of a Rule 144A Global Note or an IAI Global
Note or a beneficial interest therein to an IAI shall be made upon receipt
by the Trustee or its agent of a certificate substantially in the form set
forth in Section 308 hereof from the proposed transferee and, if requested
by the Company or the Trustee, the delivery of an opinion of counsel,
certification and/or other information satisfactory to each of them; and
(iii) a transfer of a Rule 144A Global Note or an IAI Global
Note or a beneficial interest therein to a Non-U.S. Person shall be made
upon receipt by the Trustee or its agent of a certificate substantially in
the form set forth in Section 309 hereof from the transferor and, if
requested by the Company or the Trustee, the delivery of an opinion of
counsel, certification and/or other information satisfactory to each of
them.
(b) The following provisions shall apply with respect to any
proposed transfer of an Offshore Global Note prior to the expiration of the
Restricted Period:
(i) a transfer of an Offshore Global Note or a beneficial
interest therein to a QIB shall be made upon the representation of the
transferee that it is purchasing the Note for its own account or an account
with respect to which it exercises sole investment discretion and that it
and any such account is a "qualified institutional buyer" within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the transferee has requested pursuant
to Rule 144A or has determined not to request such information and that it
is aware that the transferor is relying upon its foregoing representations
in order to claim the exemption from registration provided by Rule 144A;
(ii) a transfer of an Offshore Global Note or a beneficial
interest therein to an IAI shall be made upon receipt by the Trustee or its
agent of a certificate substantially in the form set forth in Section 308
hereof from the proposed transferee and, if requested by the Company or the
Trustee, the delivery of an opinion of counsel, certification and/or other
information satisfactory to each of them; and
(iii) a transfer of an Offshore Global Note or a beneficial
interest therein to a Non-U.S. Person shall be made upon, if requested by
the Company or the Trustee,
<PAGE>
53
receipt by the Trustee or its agent of an opinion of counsel, certification
and/or other information satisfactory to each of them.
After the expiration of the Restricted Period, interests in an
Offshore Global Note may be transferred without requiring certification set
forth in Section 309 or any additional certification.
(c) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Note
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Note Registrar shall deliver only Notes that bear the
Private Placement Legend unless there is delivered to the Note Registrar an
Opinion of Counsel to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(d) GENERAL. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Note Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 306 or this
Section 307. The Company shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Note Registrar.
SECTION 308. FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS.
[date]
ACCURIDE CORPORATION
c/o U.S. Trust Company of California, N.A.
515 South Flower Street, Suite 2700
Los Angeles, CA 90071
Attention: Corporate Trust Department - Accuride Corporation
Dear Sirs:
In connection with our proposed purchase of $ principal amount
of the 9 1/4% Senior Subordinated Notes due 2008 (the "Notes") of Accuride
Corporation, a Delaware corporation (the "Company"), we confirm that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act of 1933, as
amended (the "Securities Act")
<PAGE>
54
purchasing for our own account or for the account of such an institutional
"accredited investor," and we are acquiring the Notes for investment purposes
and not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act or other applicable securities
law and we have such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
2. We understand and acknowledge that the Notes have not been
registered under the Securities Act, or any other applicable securities law and
may not be offered, sold or otherwise transferred except in compliance with the
registration requirements of the Securities Act or any other applicable
securities law, or pursuant to an exemption therefrom, and in each case in
compliance with the conditions for transfer set forth below. We agree on our own
behalf and on behalf of any investor account for which we are purchasing Notes
to offer, sell or otherwise transfer such Notes prior to the date which is two
years after the later of the date of original issue and the last date on which
the Company or any affiliate of the Company was the owner of such Notes (or any
predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the
Company, (b) pursuant to a registration statement which has been declared
effective under the Securities Act, (c) for so long as the Notes are eligible
for resale pursuant to Rule 144A under the Securities Act, to a person we
reasonably believe is a "Qualified Institutional Buyer" within the meaning of
Rule 144A (a "QIB") that purchases for its own account, or for the account of a
QIB, and to whom notice is given that the transfer is being made in reliance on
Rule 144A, (d) pursuant to offers and sales to non-U.S. persons that occur
outside the United States within the meaning of Regulation S under the
Securities Act, (e) to an institutional "accredited investor" that is acquiring
the Notes for its own account or for the account of such an institutional
"accredited investor" for investment purposes and not with a view to, or for
offer or sale in connection with, any distribution in violation of the
Securities Act or (f) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirement of law that the disposition of our property
or the property of such investor account or accounts be at all times within our
or their control and to compliance with any applicable state securities laws.
The foregoing restrictions on resale will not apply subsequent to the Resale
Restriction Termination Date. If any resale or other transfer of the Notes is
proposed to be made pursuant to clause (e) above prior to the Resale Restriction
Termination Date, the transferor shall deliver to the trustee (the "Trustee")
under the Indenture pursuant to which the Notes are issued a letter from the
transferee substantially in the form of this letter, which shall provide, among
other things, that the transferee is a person or entity as deemed in paragraph 1
of this letter and that it is acquiring such Notes for investment purposes and
not for distribution in violation of the Securities Act. We acknowledge that
the Company and the Trustee reserve the right prior to any offer, sale or other
transfer of the Notes pursuant to clauses (d), (e) and (f) above prior to the
Resale Restriction Termination Date to require the delivery of an opinion of
counsel, certifications and/or other information satisfactory to the Company and
the Trustee.
3. We are acquiring the Notes purchased by us for our own account or
for one or more accounts as to each of which we exercise sole investment
discretion.
<PAGE>
55
4. You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By: (Name of Purchaser)
Date:
Upon transfer the Notes would be registered in the name of the new beneficial
owner as follows:
TAXPAYER ID
NAME ADDRESS NUMBER
<PAGE>
56
SECTION 309. FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH
TRANSFERS OF AN OFFSHORE GLOBAL NOTE.
[date]
U.S. Trust Company of California, N.A.
515 South Flower Street, Suite 2700
Los Angeles, CA 90071
Attention: Corporate Trust Department - Accuride Corporation
Re: ACCURIDE CORPORATION
(the "Company") 9 1/4% Senior Subordinated
NOTES DUE 2008 (THE "NOTES")
Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the United States Securities Act of 1933,
as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the facilities
of a designated off-shore securities market and neither we nor any person
acting on our behalf knows that the transaction has been pre-arranged with
a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
<PAGE>
57
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_______________________
Authorized Signature
SECTION 310. MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
If (i) any mutilated Note is surrendered to the Trustee, or (ii) the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, and there is delivered to the Company,
any Guarantor and the Trustee such security or indemnity, in each case, as may
be required by them to save each of them harmless, then, in the absence of
notice to the Company any Guarantor or the Trustee that such Note has been
acquired by a bona fide purchaser, the Company shall execute and upon Company
Order the Trustee shall authenticate and deliver, in exchange for any such
mutilated Note or in lieu of any such destroyed, lost or stolen Note, a new Note
of like tenor and principal amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) in connection therewith.
Every new Note issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, any Guarantor and any other
obligor upon the Notes, whether or not the mutilated, destroyed, lost or stolen
Note shall be at any time enforceable by anyone, and shall be entitled to all
benefits of this Indenture equally and proportionately with any and all other
Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
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58
SECTION 311. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest at the office or agency of
the Company maintained for such purpose pursuant to Section 1002; PROVIDED,
HOWEVER, that each installment of interest may at the Company's option be paid
by (i) mailing a check for such interest, payable to or upon the written order
of the Person entitled thereto pursuant to Section 312, to the address of such
Person as it appears in the Note Register, PROVIDED that all payments of
principal, premium, if any, and interest with respect to Notes represented by
one or more permanent global Notes registered in the name of or held by the
Depositary or its nominee will be made by wire transfer of immediately available
funds to the accounts specified by the Holders thereof.
Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date shall forthwith cease to be
payable to the Holder on the Regular Record Date by virtue of having been such
Holder, and such defaulted interest and (to the extent lawful) interest on such
defaulted interest at the rate borne by the Notes (such defaulted interest and
interest thereon herein collectively called "Defaulted Interest") shall be paid
by the Company, at its election in each case, as provided in clause (1) or (2)
below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Notes (or their respective Predecessor
Notes) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Note and the date
(not less than 30 days after such notice) of the proposed payment (the
"Special Record Date"), and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the Special Record Date and not less
than 10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special
Record Date, and in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be given in the manner provided for in Section 106,
not less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so given, such Defaulted Interest shall be paid to the
Persons in whose names the Notes (or their respective Predecessor Notes)
are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following clause (2).
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59
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Company
to the Trustee of the proposed payment pursuant to this clause, such manner
of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
SECTION 312. PERSONS DEEMED OWNERS.
Prior to the due presentment of a Note for registration of transfer,
the Company, the Trustee and any agent of the Company, any Guarantor or the
Trustee may treat the Person in whose name such Note is registered as the owner
of such Note for the purpose of receiving payment of principal of (and premium,
if any) and (subject to Sections 305 and 311) interest on such Note and for all
other purposes whatsoever, whether or not such Note be overdue, and none of the
Company, any Guarantor, the Trustee nor any agent of the Company, any Guarantor
or the Trustee shall be affected by notice to the contrary.
SECTION 313. CANCELLATION.
All Notes surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. If the
Company shall acquire any of the Notes other than as set forth in the preceding
sentence, the acquisition shall not operate as a redemption or satisfaction of
the Indebtedness represented by such Notes unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 313. No
Notes shall be authenticated in lieu of or in exchange for any Notes cancelled
as provided in this Section, except as expressly permitted by this Indenture.
All cancelled Notes held by the Trustee shall be disposed of by the Trustee in
accordance with its customary procedures unless by Company Order the Company
shall direct that cancelled Notes be returned to it.
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60
SECTION 314. COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months.
SECTION 315. CUSIP NUMBERS.
The Company in issuing Notes may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers; if so, the Trustee shall use
such CUSIP numbers in addition to serial numbers in notices of redemption and
repurchase as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such CUSIP numbers
either as printed on the Notes or as contained in any notice of a redemption or
repurchase and that reliance may be placed only on the serial or other
identification numbers printed on the Notes, and any such redemption or
repurchase shall not be affected by any defect in or omission of such CUSIP
numbers.
In the event that the Company shall issue and the Trustee shall
authenticate any Subsequent Series Notes pursuant to the first paragraph of
Section 301, the Company shall use its best efforts to obtain the same CUSIP
number for such Subsequent Series Notes as is printed on the Notes outstanding
at such time; PROVIDED, however, that if any series of Subsequent Series Notes
is determined, pursuant to an Opinion of Counsel, to be a different class of
security than the Notes outstanding at such time for federal income tax
purposes, the Company may obtain a CUSIP number for such series of Subsequent
Series Notes that is different from the CUSIP number printed on the Notes then
outstanding.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
Notes expressly provided for herein or pursuant hereto) and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture when
(1) either
(a) all such Notes theretofore authenticated and delivered
(other than (i) Notes which have been lost, stolen or destroyed and
which have been replaced or paid as provided in Section 310 and
(ii) Notes for whose payment money has theretofore been deposited in
trust with the Trustee or any Paying Agent or segregated and held in
trust by the Company or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
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61
(b) all such Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable by reason of the making
of a notice of redemption or otherwise; or
(ii) will become due and payable at their Stated Maturity
within one year; or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company or any Guarantor, in the case of (i), (ii) or (iii)
above, has irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust for such purpose solely for the
benefit of the Holders, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be
sufficient without consideration of any reinvestment of interest to
pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for principal
of (and premium, if any) and interest to the date of such deposit (in
the case of Notes which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) no Default or Event of Default with respect to this Indenture or
the Notes shall have occurred and be continuing on the date of such deposit
or shall occur as a result of such deposit and such deposit will not result
in a breach or violation of, or constitute a default under, any other
instrument or agreement to which the Company or any Guarantor is a party or
by which it is bound;
(3) the Company or any Guarantor has paid or caused to be paid all
sums payable hereunder by the Company or any Guarantor;
(4) the Company has delivered irrevocable instructions to the Trustee
to apply the deposited money toward the payment of such Notes at maturity
or the Redemption Date, as the case may be; and
(5) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606 and, if money shall
have been deposited with the Trustee pursuant to subclause (b) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
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62
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
If the Trustee or Paying Agent is unable to apply any money or
Government Securities in accordance with Section 401 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's and any Guarantor's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 401; provided that if the Company has made any payment of principal of,
premium, if any, or interest on any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or Government Securities held
by the Trustee or Paying Agent.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Thirteen or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) default in payment when due and payable, upon redemption,
acceleration or otherwise, of principal or premium, if any, on the Notes
whether or not such payment shall be prohibited by Article Thirteen;
(ii) default for 30 days or more in the payment when due of
interest with respect to the Notes whether or not such payment shall be
prohibited by Article Thirteen;
(iii) default in the performance, or breach, of any covenant,
warranty or other agreement of the Company or any Guarantor contained in
this Indenture or any Guarantee under this Indenture (other than a default
in the performance, or breach, of a covenant, warranty or agreement which
is specifically dealt with in clauses (i) or (ii) of this Section 501) and
continuance of such default or breach for a period of 30 days after written
notice
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shall have been given to the Company or such Guarantor by the Trustee or to
the Company or such Guarantor and the Trustee by the Holders of at least
30% in aggregate principal amount of the Notes then Outstanding;
(iv) default under any mortgage, indenture or instrument under
which there is issued or by which there is secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries or the payment of which is guaranteed by the Company or any of
its Restricted Subsidiaries (other than Indebtedness owed to the Company or
a Restricted Subsidiary), whether such Indebtedness or guarantee now exists
or is created after the Issuance Date, if both (A) such default either (1)
results from the failure to pay any such Indebtedness at its stated final
maturity (after giving effect to any applicable grace periods) or (2)
relates to an obligation other than the obligation to pay principal of any
such Indebtedness at its stated final maturity and results in the holder or
holders of such Indebtedness causing such Indebtedness to become due prior
to its stated maturity and (B) the principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay principal at stated final maturity (after giving
effect to any applicable grace periods), or the maturity of which has been
so accelerated, aggregate $20.0 million or more at any one time
outstanding;
(v) failure by the Company or any of its Significant Subsidiaries
to pay final judgments aggregating in excess of $20.0 million, which final
judgments remain unpaid, undischarged and unstayed for a period of more
than 60 days after such judgment becomes final, and in the event such
judgment is covered by insurance, an enforcement proceeding has been
commenced by any creditor upon such judgment or decree which is not
promptly stayed;
(vi) the Company or any of its Significant Subsidiaries pursuant to
or within the meaning of Federal Bankruptcy Code: (A) commences a
voluntary case; (B) consents to the entry of an order for relief against it
in an involuntary case; (C) consents to the appointment of a Custodian of
it or for all or substantially all of its property; (D) makes a general
assignment for the benefit of its creditors, or (E) admits in writing that
it is generally not paying its debts (other than debts which are the
subject of a bona fide dispute) as they become due;
(vii) a court of competent jurisdiction enters an order or decree
under any Federal Bankruptcy Code that remains unstayed and in effect for
60 days and: (A) is for relief against the Company or any of its
Significant Subsidiaries in an involuntary case; (B) appoints a Custodian
of the Company or any of its Significant Subsidiaries or for all or
substantially all of the property of the Company or any of its Significant
Subsidiaries; or (C) orders the liquidation of the Company or any of its
Significant Subsidiaries; provided that clauses (A), (B) and (C) shall not
apply to an Unrestricted Subsidiary, unless such action or proceeding has a
material adverse effect on the interests of the Company or any Restricted
Subsidiary; or
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(viii) the Guarantee of any Significant Subsidiary shall for any
reason cease to be in full force and effect or is declared null and void or
any Responsible Officer of the Company or any Guarantor that is a
Significant Subsidiary denies that it has any further liability under its
Guarantee or gives notice to such effect (other than by reason of the
termination of this Indenture or the release of any such Guarantee in
accordance with this Indenture).
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than by reason of an Event of Default
specified in Section 501(vi) or 501(vii)) occurs and is continuing, the Trustee
or the Holders of at least 30% in principal amount of the Notes Outstanding may
declare the principal (and premium, if any), interest and any other monetary
obligations on all the then outstanding Notes to be due and payable immediately,
by a notice in writing to the Company (and to the Trustee if given by Holders);
PROVIDED, HOWEVER, that, so long as any Indebtedness permitted to be incurred
under this Indenture as part of the Senior Credit Facilities shall be
outstanding, such acceleration shall not be effective until the earlier of (i)
acceleration of any such Indebtedness under the Senior Credit Facilities or (ii)
five Business Days after the giving of written notice to the Company and the
Bank Agent of such acceleration. Upon the effectiveness of such declaration,
such principal and interest will be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default specified in
Section 501(vi) or 501(vii) occurs and is continuing, then the principal amount
of all the Notes shall IPSO FACTO become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article, the Holders of a majority
in aggregate principal amount of the Notes Outstanding, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay,
(A) all overdue interest on all Outstanding Notes,
(B) all unpaid principal of (and premium, if any, on) any
Outstanding Notes which has become due otherwise than by such
declaration of acceleration, and interest on such unpaid principal and
premium at the rate borne by the Notes (for purposes of this clause
(B) without duplication to amounts to be paid or deposited under
clause (A) above),
(C) to the extent that payment of such interest is lawful,
interest on overdue interest at the rate borne by the Notes, and
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(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default, other than the non-payment of amounts of
principal of (or premium, if any, on) or interest on Notes which have
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 513;
(3) if the rescission would not conflict with any judgment or decree;
and
(4) in the event of the cure or waiver of an Event of Default
specified in clause (iv) of Section 501, the Trustee shall have received an
Officers' Certificate and, if appropriate, an Opinion of Counsel that such
Event of Default has been cured or waived.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Upon a determination by the Company that the Senior Credit Facilities
are no longer in effect, the Company shall promptly give to the Trustee written
notice thereof, which notice shall be countersigned by the Bank Agent. Unless
and until the Trustee shall have received such written notice with respect to
the Senior Credit Facilities, the Trustee, subject to the TIA Sections 315(a)
through 315(d), shall be entitled in all respects to assume that the Senior
Credit Facilities are in effect (unless a Responsible Officer of the Trustee
shall have knowledge to the contrary).
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
If an Event of Default specified in Section 501(i) or 501(ii) occurs
and is continuing, the Trustee, in its own name as trustee of an express trust,
may institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any Guarantor (in accordance with the
applicable Guarantee) or any other obligor upon the Notes and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company, any Guarantor or any other obligor upon the Notes,
wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders under this Indenture or any Guarantee by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, including, seeking recourse against any Guarantor pursuant to the
terms of any Guarantee, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy including, without limitation,
seeking recourse against any Guarantor pursuant to the terms of a Guarantee, or
to enforce any other proper remedy, subject however to Section 513. No recovery
of any such judgment upon any property of the Company or any Guarantor shall
affect or impair any rights, powers or remedies of the Trustee or the Holders.
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SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor, including any
Guarantor, upon the Notes or the property of the Company or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal
of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal, premium, if any,
or interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Notes, to
take such other actions (including participating as a member, voting or
otherwise, of any official committee of creditors appointed in such matter)
and to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any Custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding; PROVIDED, HOWEVER, that the
Trustee may, on behalf of such Holders, vote for the election of a trustee in
bankruptcy or other similar official.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture, the Notes or the
Guarantees may be prosecuted and enforced by the Trustee without the possession
of any of the Notes or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name and as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders in respect of which such judgment has been
recovered.
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SECTION 506. APPLICATION OF MONEY COLLECTED.
Subject to Article Thirteen, any money collected by the Trustee
pursuant to this Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money on
account of principal (or premium, if any) or interest, upon presentation of the
Notes and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Notes in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due
and payable on such Notes for principal (and premium, if any) and interest,
respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto, including the Company or any other obligor on the Notes, as their
interests may appear or as a court of competent jurisdiction may direct,
provided that all sums due and owing to the Holders and the Trustee have
been paid in full as required by this Indenture.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Notes shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(2) the Holders of not less than 30% in principal amount of the
Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 30 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 30-day period by the Holders of a majority
or more in principal amount of the Outstanding Notes;
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it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture, any Note or any Guarantee to affect, disturb or prejudice the
rights of any other Holders, or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture,
any Note or any Guarantee, except in the manner herein provided and for the
equal and ratable benefit of all the Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment, as provided herein (including, if applicable, Article Eleven) and in
such Note of the principal of (and premium, if any) and (subject to Section 311)
interest on such Note on the respective Stated Maturities expressed in such Note
(or, in the case of redemption or repurchase, on the Redemption Date or
repurchase) and to institute suit for the enforcement of any such payment, and
such rights shall not be impaired without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture or any Guarantee and such proceeding
has been discontinued or abandoned for any reason, or has been determined
adversely to the Trustee or to such Holder, then and in every such case, subject
to any determination in such proceeding, the Company, any Guarantor, any other
obligor on the Notes, the Trustee and the Holders shall be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of
Section 310, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time
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to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of not less than a majority in principal amount of the
Outstanding Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture or any Guarantee,
(2) the Trustee need not take any action which might involve it in
personal liability or be unjustly prejudicial to the Holders not
consenting; and
(3) subject to the provisions of Section 315 of the Trust Indenture
Act, the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 513. WAIVER OF PAST DEFAULTS.
Subject to Sections 508 and 902, the Holders of a majority in
aggregate principal amount of the Outstanding Notes (including consents obtained
in connection with a purchase of or tender offer or exchange offer for the
Notes) may on behalf of the Holders of all the Notes waive any existing Default
or Event of Default and its consequences under the Indenture or any Guarantee
except a continuing Default or Event of Default in the payment of interest on,
premium, if any, or the principal of, any such Note held by a non-consenting
Holder, or in respect of a covenant or a provision which cannot be amended or
modified without the consent of all Holders.
In the event that any Event of Default specified in Section 501(iv)
shall have occurred and be continuing, such Event of Default and all
consequences thereof (including without limitation any acceleration or resulting
payment default) shall be annulled, waived and rescinded, automatically and
without any action by the Trustee or the Holders, if within 20 days after such
Event of Default arose (x) the Indebtedness or guarantee that is the basis for
such Event of Default has been discharged, or (y) the holders thereof have
rescinded or waived the acceleration, notice or action (as the case may be)
giving rise to such Event of Default, or (z) if the default that is the basis
for such Event of Default has been cured.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
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SECTION 514. WAIVER OF STAY OR EXTENSION LAWS.
The Company, the Guarantors and any other obligors upon the Notes,
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which would prohibit or forgive the Company, any
Guarantor or any such obligor from paying all or any portion of the principal
of, premium, if any, or interest on the Notes contemplated herein or in the
Notes or which may affect the covenants or the performance of this Indenture;
and each of the Company, any Guarantor and any such obligor (to the extent that
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 515. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Note by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Notes, or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of (or premium, if any) or interest on any Note on or after the
respective Stated Maturities expressed in such Note (or, in the case of
redemption, on or after the Redemption Date).
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of a Default or an Event of
Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith or willful misconduct on its part,
the Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions
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expressed therein, upon certificates or opinions furnished to the Trustee
and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Indenture, but not to verify the contents thereof.
(b) In case a Default or an Event of Default has occurred and is
continuing of which a Responsible Officer of the Trustee has actual knowledge or
of which written notice of such Default or Event of Default shall have been
given to the Trustee by the Company, any other obligor of the Notes or by any
Holder, the Trustee shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, EXCEPT that
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of a majority in aggregate principal amount of the
Outstanding Notes relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
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SECTION 602. NOTICE OF DEFAULTS.
Within 60 days after the occurrence of any Default hereunder, the
Trustee shall transmit in the manner and to the extent provided in TIA
Section 313(c), notice of such Default hereunder known to the Trustee, unless
such Default shall have been cured or waived; PROVIDED, HOWEVER, that, except in
the case of a Default in the payment of the principal of (or premium, if any) or
interest on any Note, the Trustee shall be protected in withholding such notice
if and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interest of the Holders;
and PROVIDED FURTHER that in the case of any Default of the character specified
in Section 501(iii) no such notice to Holders shall be given until at least 30
days after the occurrence thereof.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Subject to the provisions of TIA Sections 315(a) through 315(d):
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, request and rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its selection and any
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders
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pursuant to this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request
or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(8) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture.
(c) The Trustee shall not be required to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers if it shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 604. TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
NOTES.
The recitals contained herein and in the Notes, except for the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Notes, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Notes and
perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility on Form T-1 supplied to the Company are true and
accurate, subject to the qualifications set forth therein. The Trustee shall
not be accountable for the use or application by the Company of Notes or the
proceeds thereof.
SECTION 605. MAY HOLD NOTES.
The Trustee, any Paying Agent, any Note Registrar, any Authenticating
Agent or any other agent of the Company or of the Trustee, in its individual or
any other capacity, may become the owner or pledgee of Notes and, subject to TIA
Sections 310(b) and 311, may otherwise deal with the Company with the same
rights it would have if it were not Trustee, Paying Agent, Note Registrar,
Authenticating Agent or such other agent.
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SECTION 606. MONEY HELD IN TRUST.
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust hereunder for the purposes for which they were
received, but need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed in writing with the
Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(1) to pay to the Trustee from time to time such compensation as
shall be agreed to in writing between the Company and the Trustee for all
services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel and costs and expenses of
collection), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify each of the Trustee or any predecessor Trustee (and
their respective directors, officers, employees and agents) for, and to
hold it harmless against, any and all loss, damage, claim, liability or
expense, including taxes (other than taxes based on the income of the
Trustee) incurred without negligence or bad faith on its part, arising out
of or in connection with the acceptance or administration of this trust,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.
The obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. As security for the performance of such
obligations of the Company, the Trustee shall have a claim prior to the Holders
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the payment of principal of (and premium, if any) or
interest on particular Notes.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(vi) or (vii), the expenses
(including the reasonable charges and expenses of its counsel) of and the
compensation for such services are intended to constitute
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expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 608. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall be at all times a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a)(1), and which shall have an
office in The City of New York and shall have a combined capital and surplus of
at least $50,000,000 (or in the case of a corporation included in a bank holding
company system, the related bank holding company shall have a combined capital
and surplus of at least $50,000,000). If the Trustee does not have an office in
The City of New York, the Trustee may appoint an agent in The City of New York
reasonably acceptable to the Company to conduct any activities which the Trustee
may be required under this Indenture to conduct in The City of New York. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of federal, state, territorial or District of
Columbia supervising or examining authority, then for the purposes of this
Section 608, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 608, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 609. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of this Section.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor trustee by written instrument executed by
authority of the Board of Directors, a copy of which shall be delivered to the
resigning Trustee and a copy to the successor trustee. If an instrument
of acceptance required by this Section shall not have been delivered to the
Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
not less than a majority in principal amount of the Outstanding Notes, delivered
to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Company or by any
Holder who has been a bona fide Holder for at least six months, or
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(2) the Trustee shall cease to be eligible under Section 608 and
shall fail to resign after written request therefor by the Company or by
any Holder who has been a bona fide Holder for at least six months, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a Custodian of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee, or (ii) subject to TIA Section 315(e), any Holder who has been a bona
fide Holder for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Notes delivered to
the Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided, any Holder who has been a bona
fide Holder for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to the
Holders in the manner provided for in Section 106. Each notice shall include
the name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 610. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee,
the Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
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No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 611. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes. In case at
that time any of the Notes shall not have been authenticated, any successor
Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor Trustee. In all such cases such
certificates shall have the full force and effect which this Indenture provides
for the certificate of authentication of the Trustee shall have; PROVIDED,
HOWEVER, that the right to adopt the certificate of authentication of any
predecessor Trustee or to authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 10 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders as of such Regular Record Date; and
(b) at such other times as the Trustee may reasonably request in
writing, within 30 days after receipt by the Company of any such request, a list
of similar form and content to that in Subsection (a) hereof as of a date not
more than 15 days prior to the time such list is furnished;
PROVIDED, HOWEVER that if and so long as the Trustee shall be the Note
Registrar, no such list need be furnished.
SECTION 702. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS.
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Every Holder, by receiving and holding the same, agrees with the
Company and the Trustee that none of the Company or the Trustee or any agent of
either of them shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders in accordance with TIA
Section 312, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under TIA Section 312(b).
SECTION 703. REPORTS BY TRUSTEE.
Within 60 days after January 21 of each year commencing with January
21, 1999, the Trustee shall transmit to the Holders, in the manner and to the
extent provided in TIA Section 313(c), a brief report dated as of such January
21 if required by TIA Section 313(a).
ARTICLE EIGHT
MERGER, CONSOLIDATION, OR SALE OF ASSETS
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
(a) The Company will not consolidate or merge with or into or wind up
into (whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to any Person unless:
(i) the Company is the surviving corporation or the Person formed
by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made is a corporation organized or
existing under the laws of the United States, any state thereof, the
District of Columbia, or any territory thereof (the Company or such Person,
as the case may be, being herein called the "Successor Company");
(ii) the Successor Company (if other than the Company) expressly
assumes all the obligations of the Company under this Indenture and the
Notes pursuant to a supplemental indenture or other documents or
instruments in form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of
Default exists;
(iv) immediately after giving pro forma effect to such transaction,
as if such transaction had occurred at the beginning of the applicable
four-quarter period, (A) the Successor Company would be permitted to incur
at least $1.00 of additional Indebtedness under paragraph (a) of Section
1010, or (B) the Fixed Charge Coverage Ratio for the Successor Company and
its Restricted Subsidiaries would be greater than such Ratio for the
Company and its Restricted Subsidiaries immediately prior to such
transaction;
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(v) each Guarantor, if any, unless it is the other party to the
transactions described above, in which case clause (ii) shall apply, shall
have by supplemental indenture confirmed that its Guarantee shall apply to
such Person's obligations under this Indenture and the Notes; and
(vi) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and if a supplemental indenture is
required in connection with such transaction, such supplemental indenture,
comply with the requirements of this Indenture.
Notwithstanding the foregoing clause (iv), (a) any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company and (b) the Company may merge with an
Affiliate incorporated solely for the purpose of reincorporating the Company in
another State of the United States so long as the amount of Indebtedness of the
Company and its Restricted Subsidiaries is not increased thereby.
(b) Each Guarantor, if any, shall not, and the Company will not
permit a Guarantor to, consolidate or merge with or into or wind up into
(whether or not such Guarantor is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets, in one or more related transactions to, any Person, unless
at the time and after giving effect:
(i) such Guarantor is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if other than such
Guarantor) or to which such sale, assignment, transfer, lease, conveyance
or other disposition will have been made is a corporation organized or
existing under the laws of the United States, any State thereof, the
District of Columbia, or any territory thereof (such Guarantor or such
Person, as the case may be, being herein called the "Successor Guarantor");
(ii) the Successor Guarantor (if other than such Guarantor)
expressly assumes all the obligations of such Guarantor hereunder and under
such Guarantor's Guarantee pursuant to a supplemental indenture or other
documents or instruments in form reasonably satisfactory to the Trustee;
(iii) immediately after such transaction, no Default or Event of
Default exists; and
(iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
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SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with or merger of the Company
with or into or wind up into any other corporation or any sale, assignment,
conveyance, transfer, lease or other disposition of the properties and assets of
the Company substantially as an entirety to any Person in accordance with
Section 801, the successor Person formed by such consolidation or into which the
Company is merged or wound up or to which such sale, assignment, conveyance,
transfer, lease or other disposition is made will succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been named as the Company
therein, and thereafter (except in the case of a sale, assignment, transfer,
lease, conveyance or other disposition) the predecessor corporation will be
relieved of all further obligations and covenants under this Indenture and the
Notes; provided that, solely with respect to calculating amounts described in
clauses (A), (B) and (C) of paragraph (a) of Section 1009, any such surviving
entity to the Company shall only be deemed have succeeded to and be substituted
for the Company with respect to periods subsequent to the effective time of such
merger, consolidation, combination or transfer of assets.
ARTICLE NINE
SUPPLEMENTS AND AMENDMENTS TO INDENTURE
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holder, the Company, the Guarantors, if any
(with respect to a Guarantee to which it is a party), when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(3) to comply with Article Eight hereof;
(4) to provide for the assumption of the Company's or any
Guarantor's obligations to Holders of such Notes;
(5) to make any change that would provide any additional rights or
benefits to the Holders or that does not adversely affect the legal rights
hereunder of any such Holder;
(6) to add covenants for the benefit of the Holders or to
surrender any right or power conferred upon the Company;
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(7) to comply with requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the Trust
Indenture Act;
(8) to evidence and provide for the acceptance and appointment
hereunder of a successor Trustee pursuant to the requirements of
Section 610;
(9) to make any other change that does not adversely affect the
legal rights of any Holder; or
(10) to add a Guarantor hereunder.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of at least a majority in principal
amount of the Outstanding Notes (including, without limitation, consents
obtained in connection with a purchase of, tender offer or exchange offer, for
Notes), by Act of said Holders delivered to the Company and the Trustee, the
Company, when authorized by a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders under
this Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Note affected thereby
(with respect to any Notes held by a nonconsenting Holder):
(1) reduce the principal amount of the Notes whose Holders must
consent to an amendment, supplement or waiver; or
(2) reduce the principal of or change or have the effect of
changing the Stated Maturity of any Note or alter or waive the provisions
with respect to the redemption of the Notes (other than Sections 1016 and
1017 and the defined terms used therein); or
(3) reduce the rate of or change or have the effect of changing
the time for payment of interest on any Note; or
(4) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes Outstanding and a
waiver of the payment default that resulted from the acceleration), or in
respect of a covenant or provision contained in the Indenture or any
Guarantee which cannot be amended or modified without the consent of all
Holders; or
(5) make any Note payable in money other than that stated in the
Notes; or
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(6) make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of the Holders to receive
payments of principal of or premium, if any, or interest on the Notes; or
(7) make any change in the foregoing amendment and waiver
provisions; or
(8) impair the right of any Holder to receive payment of principal
of, or interest on such Holder's Notes on or after the due dates therefor
or to institute suit for the enforcement of any payment on or with respect
to such Holder's Notes; or
(9) make any change in the subordination provisions of this
Indenture that would adversely affect the Holders.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustees own rights, duties or
immunities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby (except as provided in Section 902).
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SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to the Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
SECTION 907. NOTICE OF SUPPLEMENTAL INDENTURES.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 902, the Company
shall give notice thereof to the Holders of each Outstanding Note affected, in
the manner provided for in Section 106, setting forth in general terms the
substance of such supplemental indenture.
SECTION 908. EFFECT ON SENIOR INDEBTEDNESS.
No supplemental indenture shall adversely affect the rights of any
holders of Senior Indebtedness under Article Thirteen unless the requisite
holders of each issue of Senior Indebtedness affected thereby shall have
consented to such supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST.
The Company covenants and agrees for the benefit of the Holders that
it will duly and punctually pay the principal of (and premium, if any) and
interest on the Notes in accordance with the terms of the Notes and this
Indenture.
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SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in The City of New York, (a) an office or
agency where Notes may be presented or surrendered for payment, where Notes may
be surrendered for registration of transfer or exchange and (b) an office or
agency where notices and demands to or upon the Company in respect of the Notes
and this Indenture may be served. The office or agency in respect of clause (a)
shall be U.S. Trust Company of California, N.A., c/o United States Trust Company
of New York (770 Broadway, 13th Floor, New York 10003, Attn: Corporate Trust
Services), and the office or agency in respect of clause (b) shall be U.S. Trust
Company of California, N.A., c/o United States Trust Company of New York (114 W.
47th Street, New York, New York 10036, Attn: Corporate Trust Administration),
unless in either case the Company shall designate and maintain some other office
or agency for one or more of such purposes. The Company will give prompt
written notice to the Trustee of any change in the location of any such office
or agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Notes may
be presented or surrendered for any or all such purposes and may from time to
time rescind any such designation; PROVIDED, HOWEVER, that no such designation
or rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in The City of New York for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and any change in the location of any such other office or agency.
SECTION 1003. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of (or premium, if any) or interest
on any of the Notes, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal of (or premium, if any)
or interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure to so act.
Whenever the Company shall have one or more Paying Agents for the
Notes, it will, on or before each due date of the principal of (or premium, if
any) or interest on any Notes, deposit with a Paying Agent a sum in same day
funds (or New York Clearing House funds if such deposit is made prior to the
date on which such deposit is required to be made) sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure to so act.
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The Company will cause each Paying Agent (other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of
(and premium, if any) or interest on Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Notes) in the making of any payment of principal
(and premium, if any) or interest; and
(3) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (or premium, if
any) or interest on any Note and remaining unclaimed for two years after such
principal, premium or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being required
to make any such repayment to the Company, may at the expense of the Company
cause to be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in the
Borough of Manhattan, The City of New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
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SECTION 1004. CORPORATE EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate
existence and that of each Restricted Subsidiary and the corporate rights
(charter and statutory) licenses and franchises of the Company and each
Restricted Subsidiary; PROVIDED, HOWEVER, that the Company shall not be required
to preserve any such existence (except the Company) right, license or franchise
if the Board of Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
each of its Restricted Subsidiaries, taken as a whole, and that the loss thereof
is not, and will not be, disadvantageous in any material respect to the Holders.
SECTION 1005. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary and
(b) all lawful claims for labor, materials and supplies, which, if unpaid, might
by law become a material liability or lien upon the property of the Company or
any Subsidiary; PROVIDED, HOWEVER, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being contested in good
faith by appropriate proceedings and for which appropriate reserves, if
necessary (in the good faith judgment of management of the Company) are being
maintained in accordance with GAAP.
SECTION 1006. MAINTENANCE OF PROPERTIES.
The Company will cause all material properties owned by the Company or
any Restricted Subsidiary or used or held for use in the conduct of its business
or the business of any Restricted Subsidiary to be maintained and kept in normal
condition, repair and working order and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly conducted at all times; PROVIDED, HOWEVER,
that nothing in this Section shall prevent the Company or any of its Restricted
Subsidiaries from discontinuing the maintenance of any of such properties if
such discontinuance is, in the judgment of the Company, desirable in the conduct
of its business or the business of any Restricted Subsidiary and not adverse in
any material respect to the Holders.
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SECTION 1007. INSURANCE.
To the extent available at commercially reasonable rates, the Company
will maintain, and will cause its Subsidiaries to maintain, insurance with
responsible carriers against such risks and in such amounts, and with such
deductibles, retentions, self-insured amounts and co-insurance provisions, as
are customarily carried by similar businesses, of similar size, including
professional and general liability, property and casualty loss, workers'
compensation and interruption of business insurance.
SECTION 1008. COMPLIANCE WITH LAWS.
The Company shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental regulatory authority, in respect of the conduct
of their respective businesses and the ownership of their respective properties,
except for such noncompliances as would not in the aggregate have a material
adverse effect on the financial condition or results of operations of the
Company and its Subsidiaries, taken as a whole.
SECTION 1009. LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company will not, and will not permit any Restricted
Subsidiaries, directly or indirectly, to take any of the following actions:
(i) declare or pay any dividend or make any distribution on
account of the Company's or any of its Restricted Subsidiaries' Equity
Interests, including any dividend or distribution payable in connection
with any merger or consolidation (other than (A) dividends or distributions
by the Company payable in Equity Interests (other than Disqualified Stock)
of the Company or (B) dividends or distributions by a Restricted Subsidiary
so long as, in the case of any dividend or distribution payable on or in
respect of any class or series of securities issued by a Subsidiary other
than a Wholly Owned Subsidiary, the Company or a Restricted Subsidiary
receives at least its pro rata share of such dividend or distribution in
accordance with its Equity Interests in such class or series of
securities);
(ii) purchase, redeem, defease or otherwise acquire or retire for
value any Equity Interests of the Company or any direct or indirect parent
of the Company;
(iii) make any principal payment on, or redeem, repurchase, defease
or otherwise acquire or retire for value in each case, prior to any
scheduled repayment, or maturity, any Subordinated Indebtedness (other than
Indebtedness permitted under the covenants described in clauses (vii) and
(viii) paragraph (b) the under Section 1010); or
(iv) make any Restricted Investment
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(all such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments"), unless, at the time of
such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(2) immediately before and immediately after giving effect to such
transaction on a pro forma basis, the Company could incur $1.00 of
additional Indebtedness under paragraph (a) of Section 1010; and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Issuance Date (including Restricted Payments
permitted by clauses (i), (ii) (with respect to the payment of dividends on
Refunding Capital Stock pursuant to clause (b) thereof), (iv) (only to the
extent that amounts paid pursuant to such clause are greater than amounts
that would have been paid pursuant to such clause if $5.0 million and $10.0
million were substituted in such clause for $10.0 million and $20.0
million, respectively), (v), (viii) and (ix) of the paragraph (b) of this
Section 1009, but excluding all other Restricted Payments permitted by
paragraph (b) of this Section 1009), is less than the sum of:
(A) 50% of the Consolidated Net Income of the Company for the period
(taken as one accounting period) from the fiscal quarter that first begins
after the Issuance Date to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are available at the
time of such Restricted Payment (or, in the case such Consolidated Net
Income for such period is a deficit, minus 100% of such deficit), plus
(B) 100% of the aggregate net cash proceeds and the fair market
value, as determined in good faith by the Board of Directors, of marketable
securities and Qualified Proceeds received by the Company since immediately
after the closing of the Recapitalization from the issue or sale of Equity
Interests of the Company (including Retired Capital Stock (as defined
below), but excluding cash proceeds, marketable securities and Qualified
Proceeds received from the sale of (a) Equity Interests to members of
management, directors or consultants of the Company and its Subsidiaries
after the Issuance Date to the extent such amounts have been applied to
Restricted Payments in accordance with clause (iv) of the next succeeding
paragraph, and (b) Designated Preferred Stock) or debt securities of the
Company that have been converted into such Equity Interests of the Company
(other than Refunding Capital Stock (as defined below) or Equity Interests
or convertible debt securities of the Company sold to a Restricted
Subsidiary of the Company and other than Disqualified Stock or debt
securities that have been converted into Disqualified Stock), plus
(C) 100% of the aggregate amount of cash, marketable securities and
Qualified Proceeds contributed to the capital of the Company following the
Issuance Date, plus
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(D) 100% of the aggregate amount received in cash, the fair market
value of marketable securities and Qualified Proceeds (other than
Restricted Investments) received by means of (A) the sale or other
disposition (other than to the Company or a Restricted Subsidiary) of
Restricted Investments made by the Company and its Restricted Subsidiaries
and repurchases and redemptions of such Restricted Investments from the
Company and its Restricted Subsidiaries by such Person and repayments of
loans or advances which constitute Restricted Investments by the Company
and its Restricted Subsidiaries or (B) the sale (other than to the Company
or a Restricted Subsidiary) of the stock of an Unrestricted Subsidiary or a
distribution from an Unrestricted Subsidiary (other than in each case an
Unrestricted Subsidiary to the extent the Investment in such Unrestricted
Subsidiary was made by the Company or a Restricted Subsidiary pursuant to
clauses (vi) or (x) of paragraph (b) of this Section 1009 or to the extent
such Investment constituted a Permitted Investment) or a dividend from an
Unrestricted Subsidiary, plus
(E) in the case of the redesignation of an Unrestricted Subsidiary as
a Restricted Subsidiary, the fair market value, as determined by the Board
of Directors in good faith or if such fair market value may exceed $25
million, in writing by an independent investment banking firm of nationally
recognized standing, at the time of the redesignation of such Unrestricted
Subsidiary as a Restricted Subsidiary (other than an Unrestricted
Subsidiary to the extent the Investment in such Unrestricted Subsidiary was
made by the Company or a Restricted Subsidiary pursuant to clauses (vi) or
(x) of paragraph (b) of this Section 1009 or to the extent such Investment
constituted a Permitted Investment).
(b) The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at the date of declaration such payment would have
complied with the provisions of the Indenture;
(ii) (A) the redemption, repurchase, retirement or other
acquisition of any Equity Interests ("Retired Capital Stock") or
Subordinated Indebtedness of the Company in exchange for, or out of the
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary) of, Equity Interests of the Company (other than any
Disqualified Stock) ("Refunding Capital Stock"), and (B) the declaration
and payment of dividends on the Refunding Capital Stock in an aggregate
amount per year no greater than the aggregate amount of dividends per annum
that was declarable and payable on such Retired Capital Stock immediately
prior to such retirement; PROVIDED, HOWEVER, that at the time of the
declaration of any such dividends, no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence thereof;
(iii) the redemption, repurchase or other acquisition or retirement
of Subordinated Indebtedness of the Company made by exchange for, or out of
the proceeds of the substantially concurrent sale of, new Indebtedness of
the Company so long as (A) the principal amount of such new Indebtedness
does not exceed the principal amount of the Subordinated Indebtedness being
so redeemed, repurchased, acquired or retired for value
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(plus the amount of any premium required to be paid under the terms of the
instrument governing the Subordinated Indebtedness being so redeemed,
repurchased, acquired or retired), (B) such Indebtedness is subordinated to
the Senior Indebtedness and the Notes at least to the same extent as such
Subordinated Indebtedness so purchased, exchanged, redeemed, repurchased,
acquired or retired for value, (C) such Indebtedness has a final scheduled
maturity date equal to or later than the final scheduled maturity date of
the Subordinated Indebtedness being so redeemed, repurchased, acquired or
retired and (D) such Indebtedness has a Weighted Average Life to Maturity
equal to or greater than the remaining Weighted Average Life to Maturity of
the Subordinated Indebtedness being so redeemed, repurchased, acquired or
retired;
(iv) a Restricted Payment to pay for the repurchase, retirement or
other acquisition or retirement for value of common Equity Interests of the
Company held by any future, present or former employee, director or
consultant of the Company or any Subsidiary pursuant to any management
equity plan or stock option plan or any other management or employee
benefit plan or agreement; PROVIDED, HOWEVER, that the aggregate Restricted
Payments made under this clause (iv) does not exceed in any calendar year
$10.0 million (with unused amounts in any calendar year being carried over
to succeeding calendar years subject to a maximum (without giving effect to
the following proviso) of $20.0 million in any calendar year); PROVIDED
FURTHER that such amount in any calendar year may be increased by an amount
not to exceed (A) the cash proceeds from the sale of Equity Interests of
the Company to members of management, directors or consultants of the
Company and its Subsidiaries that occurs after the Issuance Date (to the
extent the cash proceeds from the sale of such Equity Interest have not
otherwise been applied to the payment of Restricted Payments by virtue of
the preceding subclause (a)(3)) plus (B) the cash proceeds of key man life
insurance policies received by the Company and its Restricted Subsidiaries
after the Issuance Date less (C) the amount of any Restricted Payments
previously made pursuant to clauses (A) and (B) of this subparagraph (iv);
and provided further that cancellation of Indebtedness owing to the Company
from members of management of the Company or any of its Restricted
Subsidiaries in connection with a repurchase of Equity Interests of the
Company will not be deemed to constitute a Restricted Payment for purposes
of this Section 1009 or any other provision hereof;
(v) (A) the declaration and payment of dividends to holders of any
class or series of Designated Preferred Stock (other than Disqualified
Stock) issued after the Issuance Date or (B) the declaration and payment of
dividends on Refunding Capital Stock in excess of the dividends declarable
and payable thereon pursuant to clause (ii); PROVIDED, HOWEVER, in either
case, that for the most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date
of issuance of such Designated Preferred Stock or the declaration of such
dividends on Refunding Capital Stock, after giving effect to such issuance
or declaration on a pro forma basis, the Company and its Restricted
Subsidiaries would have had a Fixed Charge Coverage Ratio of at least 1.75
to 1.00;
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(vi) Investments in Unrestricted Subsidiaries having an aggregate
fair market value, taken together with all other Investments made pursuant
to this clause (vi) that are at that time outstanding (without giving
effect to the sale of an Unrestricted Subsidiary to the extent the proceeds
of such sale do not consist of cash, marketable securities and/or Qualified
Proceeds or distributions made pursuant to clause (xiii) of paragraph (b)
of this Section 1009), not to exceed $25.0 million at the time of such
Investment (with the fair market value of each Investment being measured at
the time made and without giving effect to subsequent changes in value);
(vii) repurchases of Equity Interests deemed to occur upon exercise
of stock options if such Equity Interests represent a portion of the
exercise price of such options;
(viii) the payment of dividends on the Company's Common Stock,
following the first public offering of the Company's Common Stock after the
Issuance Date, of up to 6% per annum of the net proceeds received by the
Company in such public offering, other than public offerings with respect
to the Company's Common Stock registered on Form S-8;
(ix) commencing on the six month anniversary of the
Recapitalization, a Restricted Payment to pay for the repurchase,
retirement or other acquisition or retirement for value of Equity Interests
of the Company in existence on the Issuance Date and which are not held by
KKR or any of their Affiliates on the Issuance Date (including any Equity
Interests issued in respect of such Equity Interests as a result of a stock
split, recapitalization, merger, combination, consolidation or otherwise,
but excluding any management equity plan or stock option plan or similar
agreement); provided that notwithstanding the foregoing proviso, the
Company and its Restricted Subsidiaries shall be permitted to make
Restricted Payments under this clause (ix) only if after giving effect
thereto, the Company would be permitted to incur at least $1.00 of
additional Indebtedness under paragraph (a) of Section 1010;
(x) Investments that are made with Excluded Contributions;
(xi) other Restricted Payments in an aggregate amount not to exceed
$20.0 million;
(xii) distributions or payments of Receivables Fees; and
(xiii) the distribution, as a dividend or otherwise, of shares of
Capital Stock, or Indebtedness, of Unrestricted Subsidiaries (with the
exception of Investments in Unrestricted Subsidiaries acquired pursuant to
clause (j) of the definition of Permitted Investments);
PROVIDED HOWEVER, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (iii) through (ix) and clause (xi),
no Default or Event or Default shall have occurred and be continuing or would
occur as a consequence thereof.
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To the extent the issuance of Equity Interests and the receipt of
capital contributions are applied to permit the issuance of Indebtedness
pursuant to clause (xii) of paragraph (b) of Section 1010, the issuance of such
Equity Interests and the receipt of such capital contributions shall not be
applied to permit payments under this covenant or Permitted Investments (other
than clauses (i) and (iii) of paragraph (b) of Section 1010).
(c) Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 1009 were computed, which calculations may
be based upon the Company's latest available financial statements. The Trustee
shall have no duty to recompute or recalculate or verify the accuracy of the
information set forth in such Officers' Certificate.
(d) As of the Issuance Date, all of the Company's Subsidiaries will
be Restricted Subsidiaries. The Company will not permit any Unrestricted
Subsidiary to become a Restricted Subsidiary except pursuant to the second to
last sentence of the definition of "Unrestricted Subsidiary." For purposes of
designating any Restricted Subsidiary as an Unrestricted Subsidiary, all
outstanding Investments by the Company and its Restricted Subsidiaries (except
to the extent repaid) in the Subsidiary so designated will be deemed to be
Restricted Payments in an amount determined as set forth in the last sentence of
the definition of "Investments." Such designation will be permitted only if a
Restricted Payment in such amount would be permitted at such time (whether
pursuant to clause (a) of this Section 1009 or under clauses (vi), (x) and (xi)
of paragraph (b) of this Section 1009) and if such Subsidiary otherwise meets
the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not
be subject to any of the restrictive covenants set forth in this Indenture.
SECTION 1010. LIMITATION ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE
OF DISQUALIFIED STOCK.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur" and collectively, an "incurrence") any
Indebtedness (including Acquired Indebtedness) and the Company will not issue
any shares of Disqualified Stock and will not permit any of its Restricted
Subsidiaries to issue any shares of preferred stock; PROVIDED, HOWEVER, that the
Company may incur Indebtedness (including Acquired Indebtedness) or issue shares
of Disqualified Stock if the Fixed Charge Coverage Ratio for the Company's and
its Restricted Subsidiaries' most recently ended four full fiscal quarters for
which internal financial statements are available immediately preceding the date
on which such additional Indebtedness is incurred or such Disqualified Stock is
issued would have been at least 1.75 to 1.00, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred or the Disqualified Stock had been
issued, as the case may be, and the application of proceeds therefrom had
occurred at the beginning of such four-quarter period.
(b) The foregoing limitations will not apply to:
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(i) the incurrence by the Company or its Restricted Subsidiaries
of Indebtedness under Credit Facilities and the issuance and creation of
letters of credit and bankers' acceptances thereunder (with letters of
credit and bankers' acceptances being deemed to have a principal amount
equal to the face amount thereof) up to an aggregate principal amount of
$325.0 million outstanding at any one time; PROVIDED that Indebtedness
incurred by Restricted Subsidiaries pursuant to this clause (i) does not
exceed $80.0 million at any one time outstanding unless incurred under a
Receivables Facility;
(ii) the incurrence by the Company of Indebtedness represented by
the Notes issued on the Issuance Date;
(iii) (x) the Existing Indebtedness (other than Indebtedness
described in clauses (i) and (ii)) and (y) the incurrence by ADM of
additional Indebtedness, that together with the Existing Indebtedness of
ADM, does not exceed $30.0 million;
(iv) Indebtedness (including Capitalized Lease Obligations)
incurred by the Company or any of its Restricted Subsidiaries, to finance
the purchase, lease or improvement of property (real or personal) or
equipment (whether through the direct purchase of assets or the Capital
Stock of any Person owning such assets) in an aggregate principal amount
which, when aggregated with the principal amount of all other Indebtedness
then outstanding and incurred pursuant to this clause (iv) and including
all Refinancing Indebtedness incurred to refund, refinance or replace any
other Indebtedness incurred pursuant to this clause (iv), does not exceed
20% of Total Assets;
(v) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including without
limitation letters of credit in respect of workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims; PROVIDED, HOWEVER, that
upon the drawing of such letters of credit or the incurrence of such
Indebtedness, such obligations are reimbursed within 30 days following such
drawing or incurrence;
(vi) Indebtedness arising from agreements of the Company or a
Restricted Subsidiary providing for indemnification, adjustment of purchase
price or similar obligations, in each case, incurred or assumed in
connection with the disposition of any business, assets or a Subsidiary,
other than guarantees of Indebtedness incurred by any Person acquiring all
or any portion of such business, assets or a Subsidiary for the purpose of
financing such acquisition; PROVIDED, HOWEVER, that (A) such Indebtedness
is not reflected on the balance sheet of the Company or any Restricted
Subsidiary (contingent obligations referred to in a footnote to financial
statements and not otherwise reflected on the balance sheet will not be
deemed to be reflected on such balance sheet for purposes of this clause
(A)) and (B) the maximum assumable liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds including non-cash
proceeds (the fair market value of such non-cash proceeds being measured at
the time received and without giving effect to any
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subsequent changes in value) actually received by the Company and its
Restricted Subsidiaries in connection with such disposition;
(vii) Indebtedness of the Company to a Restricted Subsidiary;
provided that any such Indebtedness is made pursuant to an intercompany
note and is subordinated in right of payment to the Notes; provided further
that any subsequent issuance or transfer of any Capital Stock or any other
event which results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any other subsequent transfer of any such
Indebtedness (except to the Company or another Restricted Subsidiary) shall
be deemed, in each case to be an incurrence of such Indebtedness;
(viii) Indebtedness of a Restricted Subsidiary to the Company or
another Restricted Subsidiary; provided that (A) any such Indebtedness is
made pursuant to an intercompany note and (B) if a Guarantor incurs such
Indebtedness from a Restricted Subsidiary that is not a Guarantor such
Indebtedness is subordinated in right of payment to the Guarantee of such
Guarantor; provided further that any subsequent transfer of any such
Indebtedness (except to the Company or another Restricted Subsidiary) shall
be deemed, in each case to be an incurrence of such Indebtedness;
(ix) Hedging Obligations that are incurred in the ordinary course
of business (but in any event excluding Hedging Obligations entered into
for speculative purposes);
(x) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary
in the ordinary course of business;
(xi) Indebtedness of any Guarantor in respect of such Guarantor's
Guarantee;
(xii) Indebtedness of the Company and any of its Restricted
Subsidiaries not otherwise permitted hereunder in an aggregate principal
amount, which when aggregated with the principal amount of all other
Indebtedness then outstanding and incurred pursuant to this clause (xii),
does not at any one time outstanding exceed the sum of (x) $150.0 million
and (y) 100% of the net cash proceeds received by the Company since
immediately after the Recapitalization from the issue or sale of Equity
Interests of the Company or net cash proceeds contributed to the capital of
the Company (in each case other than Disqualified Stock) as determined in
accordance with clauses (ii) and (iii) of paragraph (b) of Section 1009 to
the extent such net cash proceeds have not been applied pursuant to such
clauses to make Restricted Payments or to make other payments or exchanges
pursuant to the paragraph (b) of Section 1009 or to make Permitted
Investments (other than clauses (a) and (c) thereof) (it being understood
that any Indebtedness incurred under this clause (xii) shall cease to be
deemed incurred or outstanding for purposes of this clause (xii) but shall
be deemed to be incurred for purposes of paragraph (a) of this Section 1010
from and after the first date on which the Company could have incurred such
Indebtedness under paragraph (a) of this Section 1010 without reliance upon
this clause (xii));
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(xiii) (A) any guarantee by the Company of Indebtedness or other
obligations of any of its Restricted Subsidiaries so long as the incurrence
of such Indebtedness incurred by such Restricted Subsidiary is permitted
under the terms of this Indenture and (B) any guarantee by a Restricted
Subsidiary of Indebtedness of the Company, PROVIDED that such Guarantee is
incurred in accordance with paragraph (a) of Section 1014;
(xiv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness which serves to refund, refinance or
restructure any Indebtedness incurred as permitted under paragraph (a) and
clauses (ii) and (iii) (x) of this paragraph (b) of Section 1010, or any
Indebtedness issued to so refund, refinance or restructure such
Indebtedness including additional Indebtedness incurred to pay premiums and
fees in connection therewith (the "Refinancing Indebtedness") prior to its
respective maturity; PROVIDED, HOWEVER, that such Refinancing Indebtedness
(A) has a Weighted Average Life to Maturity at the time such Refinancing
Indebtedness is incurred which is not less than the remaining Weighted
Average Life to Maturity of Indebtedness being refunded or refinanced,
(B) to the extent such Refinancing Indebtedness refinances Indebtedness
subordinated or pari passu to the Notes, such Refinancing Indebtedness is
subordinated or pari passu to the Notes at least to the same extent as the
Indebtedness being refinanced or refunded and (C) shall not include (x)
Indebtedness of a Subsidiary that refinances Indebtedness of the Company or
(y) Indebtedness of the Company or a Restricted Subsidiary that refinances
Indebtedness of an Unrestricted Subsidiary; and provided further that
subclauses (A) and (B) of this clause (xiv) will not apply to any refunding
or refinancing of any Senior Indebtedness; and
(xv) Indebtedness or Disqualified Stock of Persons that are
acquired by the Company or any of its Restricted Subsidiaries or merged
into a Restricted Subsidiary in accordance with the terms of this
Indenture; provided that such Indebtedness or Disqualified Stock is not
incurred in contemplation of such acquisition or merger; and provided
further that after giving effect to such acquisition or merger, either
(A) the Company would be permitted to incur at least $1.00 of additional
Indebtedness under paragraph (a) or (B) the Fixed Charge Coverage Ratio is
greater than immediately prior to such acquisition or merger.
For purposes of determining compliance with this Section, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of permitted Indebtedness described in clauses (i) through (xvi)
above or is entitled to be incurred pursuant to paragraph (a) of this Section
1010, the Company shall, in its sole discretion, classify such item of
Indebtedness in any manner that complies with this Section and such item of
Indebtedness will be treated as having been incurred pursuant to only one of
such clauses or pursuant to paragraph (a) of this Section 1010 except as
otherwise set forth in clause (xii). Accrual of interest, the accretion of
accreted value and the payment of interest in the form of additional
Indebtedness will not be deemed to be an incurrence of Indebtedness for purposes
of this Section.
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For purposes of determining compliance with any U.S.
dollar-denominated restriction on the incurrence of Indebtedness, the U.S.
dollar-equivalent principal amount of Indebtedness denominated in a foreign
currency shall be calculated based on the relevant currency exchange rate in
effect on the date such Indebtedness was incurred, in the case of term debt, or
first committed, in the case of revolving credit debt; PROVIDED that (x) the
U.S. dollar-equivalent principal amount of any such Indebtedness outstanding or
committed on the Issuance Date shall be calculated based on the relevant
currency exchange rate in effect on December 31, 1997, and (y) if such
Indebtedness is incurred to refinance other Indebtedness denominated in a
foreign currency, and such refinancing would cause the applicable U.S.
dollar-denominated restriction to be exceeded if calculated at the relevant
currency exchange rate in effect on the date of such refinancing, such U.S.
dollar-denominated restriction shall be deemed not to have been exceeded so long
as the principal amount of such refinancing Indebtedness does not exceed the
principal amount of such Indebtedness being refinanced. The principal amount of
any Indebtedness incurred to refinance other Indebtedness, if incurred in a
different currency from the Indebtedness being refinanced, shall be calculated
based on the currency exchange rate applicable to the currencies in which such
respective Indebtedness is denominated that is in effect on the date of such
refinancing.
SECTION 1011. LIMITATION ON LIENS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly create, incur, assume or suffer to
exist any Lien that secures obligations under any Pari Passu Indebtedness or
Subordinated Indebtedness on any asset or property of the Company or such
Restricted Subsidiary, or any income or profits therefrom, or assign or convey
any right to receive income therefrom, unless the Notes are equally and ratably
secured (or senior to, in the event the Lien relates to Subordinated
Indebtedness) with the obligations so secured or until such time as such
obligations are no longer secured by a Lien.
No Guarantor will directly or indirectly create, incur, assume or
suffer to exist any Lien that secures obligations under any Pari Passu
Indebtedness or Subordinated Indebtedness of such Guarantor on any asset or
property of such Guarantor or any income or profits therefrom, or assign or
convey any right to receive income therefrom, unless the Guarantee of such
Guarantor is equally and ratably secured (or senior to, in the event the Lien
relates to Subordinated Indebtedness) with the obligations so secured or until
such time as such obligations are no longer secured by a Lien.
SECTION 1012. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction") involving
aggregate payments or consideration in excess of $5.0 million, unless:
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(i) such Affiliate Transaction is on terms that are not materially
less favorable to the Company or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with an unrelated Person; and
(ii) the Company delivers to the Trustee with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $10.0 million, a resolution adopted by the
majority of the Board of Directors of the Company approving such Affiliate
Transaction and set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above.
(b) The foregoing provisions will not apply to the following:
(i) transactions between or among the Company and/or any of its Restricted
Subsidiaries; (ii) Restricted Payments permitted by Section 1009; (iii) the
payment of customary annual management, consulting and advisory fees and related
expenses to KKR and its Affiliates; (iv) the payment of reasonable and customary
fees paid to, and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Restricted Subsidiary;
(v) payments by the Company or any of its Restricted Subsidiaries to KKR and its
Affiliates made for any financial advisory, financing, underwriting or placement
services or in respect of other investment banking activities, including,
without limitation, in connection with acquisitions or divestitures which
payments are approved by a majority of the Board of Directors of the Company in
good faith; (vi) transactions in which the Company or any of its Restricted
Subsidiaries, as the case may be, delivers to the Trustee a letter from an
Independent Financial Advisor stating that such transaction is fair to the
Company or such Restricted Subsidiary from a financial point of view or meets
the requirements of clause (i) of paragraph (a); (vii) payments or loans to
employees or consultants which are approved by a majority of the Board of
Directors of the Company in good faith; (viii) any agreement as in effect as of
the Issuance Date or any amendment thereto (so long as any such amendment is not
disadvantageous to the Holders in any material respect) or any transaction
contemplated thereby; (ix) the existence of, or the performance by the Company
or any of its Restricted Subsidiaries of its obligations under the terms of, any
stockholders agreement (including any registration rights agreement or purchase
agreement related thereto) to which it is a party as of the Issuance Date and
any similar agreements which it may enter into thereafter; PROVIDED, HOWEVER,
that the existence of, or the performance by the Company or any of its
Restricted Subsidiaries of obligations under any future amendment to any such
existing agreement or under any similar agreement entered into after the
Issuance Date shall only be permitted by this clause (ix) to the extent that the
terms of any such amendment or new agreement are not otherwise disadvantageous
to the Holders in any material respect; (x) the Recapitalization and the payment
of all fees and expenses related to the Recapitalization; (xi) transactions with
customers, clients, suppliers, or purchasers or sellers of goods or services, in
each case in the ordinary course of business and otherwise in compliance with
the terms of the Indenture which are fair to the Company or its Restricted
Subsidiaries, in the reasonable determination of the Board of Directors of the
Company or the senior management thereof, or are on terms at least as favorable
as might reasonably have been obtained at such time from an unaffiliated party;
and (xii) sales of accounts receivable, or participations therein, in connection
with any Receivables Facility.
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SECTION 1013. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or consensual restriction
on the ability of any such Restricted Subsidiary to:
(a) (i) pay dividends or make any other distributions to the Company
or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with
respect to any other interest or participation in, or measured by, its
profits or (ii) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries;
(b) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(c) sell, lease, or transfer any of its properties or assets to the
Company, or any of its Restricted Subsidiaries;
except (in each case) for such encumbrances or restrictions existing under or by
reason of:
(1) contractual encumbrances or restrictions in effect on the
Issuance Date, including, without limitation, pursuant to Existing
Indebtedness or the Senior Credit Facilities and their related
documentation;
(2) this Indenture and the Notes;
(3) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature discussed in
clause (c) above on the property so acquired;
(4) applicable law or any applicable rule, regulation or order;
(5) any agreement or other instrument of a Person acquired by the
Company or any Restricted Subsidiary in existence at the time of such
acquisition (but not created in contemplation thereof), which encumbrance
or restriction is not applicable to any Person, or the properties or assets
of any Person, other than the Person, or the property or assets of the
Person, so acquired;
(6) contracts for the sale of assets, including, without limitation
customary restrictions with respect to a Subsidiary pursuant to an
agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Subsidiary;
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(7) secured Indebtedness otherwise permitted to be incurred pursuant
to Sections 1010 and 1011 that limit the right of the debtor to dispose of
the assets securing such Indebtedness;
(8) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business;
(9) other Indebtedness of Restricted Subsidiaries permitted to be
incurred subsequent to the Issuance Date pursuant to Section 1010;
(10) customary provisions in joint venture agreements and other
similar agreements entered into in the ordinary course of business;
(11) customary provisions contained in leases and other agreements
entered into in the ordinary course of business; or
(12) any encumbrances or restrictions of the type referred to in
clauses (a), (b) and (c) above imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings of the contracts, instruments or obligations referred to in
clauses (1) through (11) above, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are, in the good faith judgment of the
Company's Board of Directors, no more restrictive with respect to such
dividend and other payment restrictions than those contained in the
dividend or other payment restrictions prior to such amendment,
modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing; or
(13) restrictions created in connection with any Receivables Facility
that, in the good faith determination of the Board of Directors of the
Company, are necessary or advisable to effect such Receivables Facility.
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SECTION 1014. LIMITATION ON GUARANTEES OF INDEBTEDNESS BY RESTRICTED
SUBSIDIARIES.
(a) The Company will not permit any Restricted Subsidiary to
guarantee the payment of any Indebtedness of the Company unless (i) such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture to the Indenture providing for a Guarantee of payment of the Notes by
such Restricted Subsidiary except that with respect to a guarantee of
Indebtedness of the Company (A) if the Notes are subordinated in right of
payment to such Indebtedness, the Guarantee under the supplemental indenture
shall be subordinated to such Restricted Subsidiary's guarantee with respect to
such Indebtedness substantially to the same extent as the Notes are subordinated
to such Indebtedness under the Indenture and (B) if such Indebtedness is by its
express terms subordinated in right of payment to the Notes, any such guarantee
of such Restricted Subsidiary with respect to such Indebtedness shall be
subordinated in right of payment to such Restricted Subsidiary's Guarantee with
respect to the Notes substantially to the same extent as such Indebtedness is
subordinated to the Notes; (ii) such Restricted Subsidiary waives and will not
in any manner whatsoever claim or take the benefit or advantage of, any rights
of reimbursement, indemnity or subrogation or any other rights against the
Company or any other Restricted Subsidiary as a result of any payment by such
Restricted Subsidiary under its Guarantee; and (iii) such Restricted Subsidiary
shall deliver to the Trustee an Opinion of Counsel to the effect that (A) such
Guarantee of the Notes has been duly executed and authorized and (B) such
Guarantee of the Notes constitutes a valid, binding and enforceable obligation
of such Restricted Subsidiary, except insofar as enforcement thereof may be
limited by bankruptcy, insolvency or similar laws (including, without
limitation, all laws relating to fraudulent transfers) and except insofar as
enforcement thereof is subject to general principles of equity; provided that
this paragraph (a) shall not be applicable to any guarantee of any Restricted
Subsidiary (x) that (A) existed at the time such Person became a Restricted
Subsidiary of the Company and (B) was not incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary of the Company or
(y) that guarantees the payment of Obligations of the Company or any Restricted
Subsidiary under the Senior Credit Facilities or any other Senior Indebtedness
and any refunding, refinancing or replacement thereof, in whole or in part,
provided that such refunding, refinancing or replacement thereof constitutes
Senior Indebtedness and PROVIDED FURTHER that any such Senior Indebtedness and
any refunding, refinancing or replacement thereof is not incurred pursuant to a
registered offering of securities under the Securities Act or a private
placement of securities (including under Rule 144A) pursuant to an exemption
from the registration requirements of the Securities Act, which private
placement provides for registration rights under the Securities Act.
(b) Notwithstanding the foregoing and the other provisions of this
Indenture, any Guarantee by a Restricted Subsidiary of the Notes shall provide
by its terms that it shall be automatically and unconditionally released and
discharged upon (i) any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all of the Company's Capital Stock in, or all or
substantially all the assets of, such Restricted Subsidiary (which sale,
exchange or transfer is not prohibited hereunder) or (ii) the release or
discharge of the guarantee which resulted in the creation of such Guarantee,
except a discharge or release by or as a result of payment under such guarantee.
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SECTION 1015. LIMITATION ON OTHER SENIOR SUBORDINATED INDEBTEDNESS.
The Company will not, and will not permit any Guarantor to, directly
or indirectly, incur any Indebtedness (including Acquired Indebtedness) that is
subordinate in right of payment to any Indebtedness of the Company or any
Indebtedness of any Guarantor, as the case may be, unless such Indebtedness is
either (a) PARI PASSU in right of payment with the Notes or such Guarantor's
Guarantee, as the case may be or (b) subordinate in right of payment to the
Notes, or such Guarantor's Guarantee, as the case may be.
SECTION 1016. PURCHASE OF NOTES UPON A CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, unless the Company
has elected to redeem the Notes in connection with such Change of Control, the
Company will make an offer to purchase all or any part (equal to $1,000 or an
integral multiple thereof) of the Notes pursuant to the offer described below
(the "Change of Control Offer") at a price in cash (the "Change of Control
Payment") equal to 101% of the aggregate principal amount thereof plus accrued
and unpaid interest thereon, if any, to the date of purchase.
(b) Within 30 days following any Change of Control, the Company shall
give to each Holder, with a copy to the Trustee, in the manner provided in
Section 106 a notice stating:
(1) a Change of Control Offer is being made pursuant to this Section
entitled "Purchase of Notes upon Change of Control," and that all Notes
properly tendered pursuant to such Change of Control Offer will be accepted
for payment;
(2) the purchase price and the purchase date, which will be no
earlier than 30 days nor later than 60 days from the date such notice is
mailed, except as may be otherwise required by applicable law (the "Change
of Control Payment Date");
(3) any Note not properly tendered will remain outstanding and
continue to accrue interest;
(4) unless the Company defaults in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the Change of
Control Offer will cease to accrue interest on the Change of Control
Payment Date;
(5) Holders electing to have any Notes purchased pursuant to a Change
of Control Offer will be required to surrender the Notes, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes
completed, to the Paying Agent specified in the notice at the address
specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;
(6) Holders will be entitled to withdraw their tendered Notes and
their election to require the Company to purchase such Notes, provided that
the Paying Agent receives, not later than the close of business on the last
day of the Offer Period, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of
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Notes tendered for purchase, and a statement that such Holder is
withdrawing such Holder's tendered Notes and his election to have such
Notes purchased;
(7) that Holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof; and
(8) any additional instructions a Holder must follow in order to have
its Notes repurchased in accordance with this Section 1016.
(c) Prior to complying with the provisions of this Section 1016, but
in any event within 30 days following a Change of Control, the Company will
either repay all outstanding Senior Indebtedness or obtain the requisite
consents, if any, under any outstanding Senior Indebtedness in each case
necessary to permit the repurchase of the Notes required by this Section 1016.
The Company will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws or regulations are applicable in connection with the repurchase of the
Notes pursuant to a Change of Control Offer. To the extent that the provisions
of any securities laws or regulations conflict with the provisions hereunder,
the Company will comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations described hereunder by
virtue thereof.
(d) On the Change of Control Payment Date, the Company shall, to the
extent permitted by law,
(i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer,
(ii) deposit with the Paying Agent an amount equal to the aggregate
Change of Control Payment in respect of all Notes or portions thereof so
tendered and
(iii) deliver, or cause to be delivered, to the Trustee for
cancellation the Notes so accepted together with an Officers' Certificate
stating that such Notes or portions thereof have been tendered to and
purchased by the Company.
(e) The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
(f) The Paying Agent shall promptly mail to each Holder the Change of
Control Payment for such Notes, and the Trustee will promptly authenticate and
mail to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered, if any, provided that each such new Note will
be in a principal amount of $1,000 or an integral multiple thereof.
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SECTION 1017. LIMITATION ON SALES OF ASSETS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, cause, make or suffer to exist an Asset Sale, unless (x) the
Company, or its Restricted Subsidiaries, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined in good faith by the Company) of the assets sold or
otherwise disposed of and (y) at least 75% of the consideration therefor
received by the Company, or such Restricted Subsidiary, as the case may be, is
in the form of cash or Cash Equivalents; provided that the amount of (a) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet or in the notes thereto) of the Company or any Restricted
Subsidiary (other than liabilities that are by their terms subordinated to the
Notes), that are assumed by the transferee of any such assets, (b) any
securities received by the Company or such Restricted Subsidiary from such
transferee that are converted by the Company or such Restricted Subsidiary into
cash (to the extent of the cash received) within 180 days following the closing
of such Asset Sale and (c) any Designated Noncash Consideration received by the
Company or any of its Restricted Subsidiaries in such Asset Sale having an
aggregate fair market value, taken together with all other Designated Noncash
Consideration received pursuant to this clause (c) that is at that time
outstanding, not to exceed the greater of (x) $50.0 million or (y) 15% of Total
Assets at the time of the receipt of such Designated Noncash Consideration (with
the fair market value of each item of Designated Noncash Consideration being
measured at the time received and without giving effect to subsequent changes in
value), shall be deemed to be cash for the purposes of this provision and for no
other purpose.
Within 365 days after the Company's or any Restricted Subsidiary's
receipt of the Net Proceeds of any Asset Sale, the Company or such Restricted
Subsidiary, at its option, may (i) apply the Net Proceeds from such Asset Sale
to permanently reduce (x) Obligations under the Senior Credit Facilities (and to
correspondingly reduce commitments with respect thereto), (y) other Senior
Indebtedness or Pari Passu Indebtedness (provided that if the Company shall so
reduce Obligations under Pari Passu Indebtedness, it will equally and ratably
reduce Obligations under the Notes if the Notes are then prepayable or, if the
Notes may not be then prepaid, the Company shall make an offer (in accordance
with the procedures set forth below for an Asset Sale Offer) to all Holders to
purchase at 100% of the principal amount thereof, plus the amount of accrued but
unpaid interest, if any, on the amount of Notes that would otherwise be prepaid)
or (z) Indebtedness of a Wholly Owned Restricted Subsidiary, (ii) apply the Net
Proceeds from such Asset Sale to an investment in any one or more businesses,
capital expenditures or acquisitions of other assets in each case, used or
useful in a Similar Business and/or (iii) apply the Net Proceeds from such Asset
Sale to an investment in properties or assets that replace the properties and
assets that are the subject of such Asset Sale. Pending the final application
of any such Net Proceeds, the Company or such Restricted Subsidiary may
temporarily reduce Indebtedness under a revolving credit facility, if any, or
otherwise invest such Net Proceeds in Cash Equivalents or Investment Grade
Securities. Any Net Proceeds from the Asset Sale that are not invested or
applied as provided and within the time period set forth in the first sentence
of this paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $15.0 million,
the Company shall make an offer to all Holders (an "Asset Sale Offer") to
purchase the maximum
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principal amount of Notes, that is an integral multiple of $1,000, that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the date fixed for the closing of such offer (the "Offered Price").
Within 10 Business Days after the date on which the aggregate amount of Excess
Proceeds exceeds $15.0 million, the Company shall give to each Holder, with a
copy to the Trustee, in the manner provided in Section 106 a notice stating:
(i) that the Holder has the right to require the Company to
repurchase such Holder's Notes at the Offered Price, subject to proration
in the event the Excess Proceeds are less than the aggregate Offered Price
of all Notes tendered;
(ii) the date of purchase of Notes pursuant to the Asset Sale Offer
(the "Asset Sale Purchase Date"), which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed;
(iii) that the Offered Price will be paid to Holders electing to
have Notes purchased on the Asset Sale Purchase Date, provided that a
Holder must surrender its Note to the Paying Agent at the address specified
in the notice prior to the close of business at least five Business Days
prior to the Asset Sale Purchase Date;
(iv) any Note not tendered will continue to accrue interest
pursuant to its terms;
(v) that unless the Company defaults in the payment of the Offered
Price, any Note accepted for payment pursuant to the Asset Sale Offer shall
cease to accrue interest on and after the Asset Sale Purchase Date;
(vi) that Holders will be entitled to withdraw their tendered Notes
and their election to require the Company to purchase such Notes, provided
that the Company receives, not later than the close of business on the
third Business Day preceding the Asset Sale Purchase Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Notes tendered for purchase, and a
statement that such Holder is withdrawing its election to have such Notes
purchased;
(vii) that the Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered; which unpurchased portion must be equal
to $1,000 in principal amount or an integral multiple thereof; and
(viii) the instructions a Holder must follow in order to have his
Notes purchased in accordance with this Section 1017.
To the extent that the aggregate amount of Notes tendered pursuant to
an Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes to be purchased
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in the manner described in Section 1104. Upon completion of any such Asset Sale
Offer, the amount of Excess Proceeds shall be reset at zero.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Section 1017, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under
this Indenture.
SECTION 1018. STATEMENT BY OFFICERS AS TO DEFAULT.
(a) The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing officers with a view to
determining whether it has kept, observed, performed and fulfilled, and has
caused each of its Subsidiaries to keep, observe, perform and fulfill its
obligations under this Indenture and further stating, as to each such officer
signing such certificate, that, to the best of his or her knowledge, the Company
during such preceding fiscal year has kept, observed, performed and fulfilled,
and has caused each of its Subsidiaries to keep, observe, perform and fulfill
each and every such covenant contained in this Indenture and no Default or Event
of Default occurred during such year and at the date of such certificate there
is no Default or Event of Default which has occurred and is continuing or, if
such signers do know of such Default or Event of Default, the certificate shall
describe its status, with particularity and that, to the best of his or her
knowledge, no event has occurred and remains by reason of which payments on
account of the principal of or interest, if any, on the Notes is prohibited or
if such event has occurred, a description of the event and what action each is
taking or proposes to take with respect thereto. The Officers' Certificate
shall also notify the Trustee should the Company elect to change the manner in
which it fixes its fiscal year end. For purposes of this Section 1018(a), such
compliance shall be determined without regard to any period of grace or
requirement of notice under this Indenture.
(b) When any Default has occurred and is continuing under this
Indenture, or if the trustee for or the holder of any other evidence of
Indebtedness of the Company or any Subsidiary gives any notice or takes any
other action with respect to a claimed default (other than with respect to
Indebtedness in the principal amount of less than $10 million), the Company
shall deliver to the Trustee by registered or certified mail or facsimile
transmission an Officers' Certificate specifying such event, notice or other
action within five Business Days of its occurrence.
SECTION 1019. COMMISSION REPORTS AND REPORTS TO HOLDERS.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on
an annual and quarterly basis on forms provided for such annual and quarterly
reporting pursuant to rules and regulations promulgated by the Commission, the
Company will file with the Commission (and provide the Trustee and Holders with
copies thereof (without exhibits), without cost to each Holder, within 15 days
after it files them with the Commission), (a) within 90 days after the end of
each fiscal year, annual reports on Form 10-K (or
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any successor or comparable form) containing the information required to be
contained therein (or required in such successor or comparable form); (b) within
45 days after the end of each of the first three fiscal quarters of each fiscal
year, reports on Form 10-Q (or any successor or comparable form); (c) promptly
from time to time after the occurrence of an event required to be therein
reported, such other reports on Form 8-K (or any successor or comparable form);
and (d) any other information, documents and other reports which the Company
would be required to file with the Commission if it were subject to Section 13
or 15(d) of the Exchange Act; PROVIDED, HOWEVER, the Company shall not be so
obligated to file such reports with the Commission if the Commission does not
permit such filing, in which event the Company will make available such
information to prospective purchasers of Notes, in addition to providing such
information to the Trustee and the Holders, in each case within 15 days after
the time the Company would be required to file such information with the
Commission, if it were subject to Sections 13 or 15(d) of the Exchange Act.
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. REDEMPTION.
The Notes may or shall, as the case may be, be redeemed, as a whole or
from time to time in part, subject to the conditions and at the Redemption
Prices specified in the form of Note, together with accrued interest to the
Redemption Date.
SECTION 1102. APPLICABILITY OF ARTICLE.
Redemption of Notes at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes pursuant to Section
1101 shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Notes to be redeemed and shall deliver to the Trustee
such documentation and records as shall enable the Trustee to select the Notes
to be redeemed pursuant to Section 1104.
SECTION 1104. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED.
If less than all the Notes are to be redeemed, the particular Notes to
be redeemed shall be selected not more than 60 days prior to the Redemption Date
by the Trustee, from the Outstanding Notes not previously called for redemption,
in compliance with the requirements of the
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principal national securities exchange, if any, on which such Notes are listed,
or, if such Notes are not so listed, on a pro rata basis, by lot or by such
other method as the Trustee shall deem fair and appropriate (and in such manner
as complies with applicable legal requirements) and which may provide for the
selection for redemption of portions of the principal of Notes; PROVIDED,
HOWEVER, that no such partial redemption shall reduce the portion of the
principal amount of a Note not redeemed to less than $1,000.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Notes shall relate, in the
case of any Note redeemed or to be redeemed only in part, to the portion of the
principal amount of such Note which has been or is to be redeemed.
SECTION 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided for in
Section 106 not less than 30 nor more than 60 days prior to the Redemption Date,
to each Holder to be redeemed. The Trustee shall give notice of redemption in
the Company's name and at the Company's expense; PROVIDED, HOWEVER, that the
Company shall deliver to the Trustee, at least 45 days prior to the Redemption
Date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
following items.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued interest to the
Redemption Date payable as provided in Section 1107, if any,
(3) if less than all Outstanding Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be redeemed,
as well as the aggregate principal amount of Notes to be redeemed and the
aggregate principal amount of Notes to be outstanding after such partial
redemption,
(4) in case any Note is to be redeemed in part only, the notice which
relates to such Note shall state that on and after the Redemption Date,
upon surrender of such Note, the holder will receive, without charge, a new
Note or Notes of authorized denominations for the principal amount thereof
remaining unredeemed,
(5) that on the Redemption Date the Redemption Price (and accrued
interest, if any, to the Redemption Date payable as provided in
Section 1107) will become due and payable upon each such Note, or the
portion thereof, to be redeemed, and, unless the
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Company defaults in making the redemption payment, that interest on Notes
called for redemption (or the portion thereof) will cease to accrue on and
after said date,
(6) the place or places where such Notes are to be surrendered for
payment of the Redemption Price and accrued interest, if any,
(7) the name and address of the Paying Agent,
(8) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price,
(9) the CUSIP number, and that no representation is made as to the
accuracy or correctness of the CUSIP number, if any, listed in such notice
or printed on the Notes, and
(10) the paragraph of the Notes pursuant to which the Notes are to be
redeemed.
SECTION 1106. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and
hold in trust as provided in Section 1003) an amount of money sufficient to pay
the Redemption Price of, and accrued interest on, all the Notes which are to be
redeemed on that date.
SECTION 1107. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified (together with accrued interest, if any, to
the Redemption Date), and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such Notes
shall cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price, together with accrued interest, if any, to the Redemption
Date; PROVIDED, HOWEVER, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Notes, or one or more Predecessor Notes, registered as such at the close of
business on the relevant Regular Record Date or Special Record Date, as the case
may be, according to their terms and the provisions of Section 311.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate borne by the Notes.
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SECTION 1108. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part (pursuant to the
provisions of this Article) shall be surrendered at the office or agency of the
Company maintained for such purpose pursuant to Section 1002 (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or such Holders attorney duly authorized in writing), and
the Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Note without service charge, a new Note or Notes, of any
authorized denomination as requested by such Holder, in an aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered, provided, that each such new Note will be in a
principal amount of $1,000 or integral multiple thereof.
ARTICLE TWELVE
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. COMPANY'S OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT
DEFEASANCE.
The Company and the Guarantors may, at their option by Board
Resolution, at any time, with respect to the Notes, elect to have either
Section 1202 or Section 1203 be applied to all Outstanding Notes upon compliance
with the conditions set forth below in this Article Twelve.
SECTION 1202. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 1201 of the option
applicable to this Section 1202, the Company and any Guarantor shall be deemed
to have been discharged from the obligations with respect to all Outstanding
Notes on the date the conditions set forth in Section 1204 are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance
means that the Company and each Guarantor shall be deemed to have paid and
discharged the entire Indebtedness represented by the Outstanding Notes, which
shall thereafter be deemed to be "Outstanding" only for the purposes of
Section 1205 and the other Sections of this Indenture referred to in (A) and (B)
below, and to have satisfied all its other obligations under such Notes and this
Indenture insofar as such Notes are concerned (and the Trustee, at the expense
of the Company, shall execute proper instruments acknowledging the same), except
for the following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of Outstanding Notes to receive, solely
from the trust fund described in Section 1204 and as more fully set forth in
such Section, payments in respect of the principal of (and premium, if any, on)
and interest on such Notes when such payments are due, (B) the Company's
obligations with respect to such Notes under Sections 304, 305, 310, 1002 and
1003, (C) the rights, powers, trusts, duties and immunities of the Trustee
hereunder, and the Company's obligations in connection therewith and (D) this
Article Twelve.
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Subject to compliance with this Article Twelve, the Company may
exercise its option under this Section 1202 notwithstanding the prior exercise
of its option under Section 1203 with respect to the Notes.
SECTION 1203. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 1201 of the option
applicable to this Section 1203, the Company and any Guarantor shall be released
from the obligations under any covenant contained in Section 801 and in
Sections 1006 through 1019 with respect to the Outstanding Notes on and after
the date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes shall thereafter be deemed not to be "Outstanding"
for the purposes of any direction, waiver, consent or declaration or Act of
Holders (and the consequences of any thereof) in connection with such covenants,
but shall continue to be deemed "Outstanding" for all other purposes hereunder
(it being understood that such Notes will not be outstanding for accounting
purposes). For this purpose, such Covenant Defeasance means that, with respect
to the Outstanding Notes, the Company and any Guarantor may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 501(iii), but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby.
SECTION 1204. CONDITIONS TO LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either
Section 1202 or Section 1203 to the Outstanding Notes:
(i) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of the Indenture who shall agree to comply with the provisions of this
Article Twelve applicable to it) as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Notes, cash in U.S.
dollars, non-callable Government Securities, or a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants selected by the Company,
to pay the principal of, premium, if any, and interest due on the
Outstanding Notes on the Stated Maturity or on the applicable Redemption
Date as the case may be, of such principal, premium, if any, or interest on
the Outstanding Notes;
(ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee (which opinion may be subject to
customary assumptions and exclusions) confirming that (A) the Company has
received from, or there has been published by, the United States Internal
Revenue Service a ruling or (B) since the Issuance Date, there has been a
change in
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the applicable U.S. federal income tax law, in either case to the effect
that, and based thereon such Opinion of Counsel in the United States (which
opinion may be subject to customary assumptions and exclusions) shall
confirm that the Holders will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of such Legal Defeasance and will
be subject to U.S. federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, the Holders will not recognize income, gain or
loss for U.S. federal income tax purposes as a result of such Covenant
Defeasance and will be subject to such tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, with respect to certain
bankruptcy or insolvency Events of Default, on the 91st day after the date
of deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under, the Senior
Credit Facilities or any other material agreement or instrument (other than
this Indenture) to which the Company or any Guarantor is a party or by
which the Company or any Guarantor is bound;
(vi) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that, as of the date of such opinion and subject to
customary assumptions and exclusions following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally under
any applicable U.S. federal or state law, and that the Trustee has a
perfected security interest in such trust funds for the ratable benefit of
the Holders;
(vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of defeating, hindering, delaying or defrauding any creditors of the
Company or any Guarantor or others; and
(viii) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States (which Opinion
of Counsel may be subject to customary assumptions and exclusions) each
stating that all conditions precedent provided for or relating to the Legal
Defeasance or the Covenant Defeasance, as the case may be, have been
complied with.
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SECTION 1205. DEPOSITED MONEY AND U.S. GOVERNMENT SECURITIES TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section 1003, all
money and Government Securities (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee, collectively for purposes of this
Section 1205, the "Trustee") pursuant to Section 1204 in respect of the
Outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Holders of such Notes of
all sums due and to become due thereon in respect of principal (and premium, if
any) and interest, but such money need not be segregated from other funds except
to the extent required by law. Money and Government Securities so deposited and
held in trust are not subject to Article Thirteen.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the Government Securities
deposited pursuant to Section 1204 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Notes.
Anything in this Article Twelve to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Securities held by it as provided in
Section 1204 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent legal defeasance or covenant
defeasance, as applicable, in accordance with this Article.
SECTION 1206. REINSTATEMENT.
If the Trustee or any Paying Agent is unable to apply any money or
Government Securities in accordance with Section 1205 by reason of any legal
proceeding or by any reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 1202 or 1203, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with
Section 1205; PROVIDED, HOWEVER, that if the Company makes any payment of
principal of (or premium, if any) or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money and
Government Securities held by the Trustee or Paying Agent.
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ARTICLE THIRTEEN
SUBORDINATION OF NOTES
SECTION 1301. NOTES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each Holder, by his acceptance
thereof, likewise covenants and agrees, for the benefit of the holders, from
time to time, of Senior Indebtedness that, to the extent and in the manner
hereinafter set forth in this Article, the Indebtedness represented by the Notes
and the payment of the principal of (and premium, if any) and interest on each
and all of the Notes and all other Subordinated Note Obligations are hereby
expressly made subordinate and subject in right of payment as provided in this
Article to the prior payment in full in cash or cash equivalents of all Senior
Indebtedness, whether outstanding on the Issuance Date or thereafter incurred,
created, assumed or, except as limited by Section 1014, guaranteed.
SECTION 1302. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(1) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or cash equivalents of all Obligations due in
respect of such Senior Indebtedness and to have all outstanding Letter of
Credit Obligations fully cash collateralized before the Holders are
entitled to receive any payment with respect to the Subordinated Note
Obligations (except that Holders may receive (i) shares of stock and any
debt securities that are subordinated at least to the same extent as the
Notes to (a) Senior Indebtedness and (b) any securities issued in exchange
for Senior Indebtedness and (ii) payments and other distributions made from
the trusts described in Article Twelve); and
(2) until all Obligations with respect to Senior Indebtedness (as
provided in subsection (1) above) are paid in full in cash or cash
equivalents and all outstanding Letter of Credit Obligations are fully cash
collateralized, any distribution to which Holders would be entitled but for
this Article shall be made to holders of Senior Indebtedness (except that
Holders may receive (i) shares of stock and any debt securities that are
subordinated at least to the same extent as the Notes to (a) Senior
Indebtedness and (b) any securities issued in exchange for Senior
Indebtedness and (ii) payments and other distributions made from the trusts
described in Article Twelve) as their interests may appear.
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SECTION 1303. SUSPENSION OF PAYMENT WHEN SENIOR INDEBTEDNESS IN
DEFAULT.
The Company may not make any payment or distribution to the Trustee or
any Holder in respect of Subordinated Note Obligations and may not acquire from
the Trustee or any Holder any Notes for cash or property (other than
(i) securities that are subordinated to at least the same extent as the Notes to
(a) Senior Indebtedness and (b) any securities issued in exchange for Senior
Indebtedness and (ii) payments and other distributions made from the trusts
described in Article Twelve) until all Senior Indebtedness has been paid in full
in cash or cash equivalents if:
(i) a default in the payment of any principal of, premium, if any, or
interest on, or of unreimbursed amounts under drawn letters of credit or in
respect of bankers' acceptances or fees relating to letters of credit or
bankers' acceptances constituting, Designated Senior Indebtedness occurs
and is continuing beyond any applicable grace period in the agreement,
indenture or other document governing such Designated Senior Indebtedness
(a "payment default"); or
(ii) a default, other than a payment default, on Designated Senior
Indebtedness occurs and is continuing that then permits holders of the
Designated Senior Indebtedness to accelerate its maturity (a "non-payment
default") and the Trustee receives a notice of the default (a "Payment
Blockage Notice") from a Person who may give it pursuant to Section 1313
hereof. No new period of payment blockage may be commenced unless and
until 365 days have elapsed since the effectiveness of the immediately
prior Payment Blockage Notice. However, if any Payment Blockage Notice
within such 365-day period is given by or on behalf of any holders of
Designated Senior Indebtedness (other than the Bank Agent under the Senior
Credit Facilities), the Bank Agent may give another Payment Blockage Notice
within such period. In no event, however, may the total number of days
during which any Payment Blockage Period or Periods is in effect exceed
179 days in the aggregate during any 365 consecutive day period. No
nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default shall
have been cured or waived for a period of not less than 90 days.
The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(1) in the case of a payment default, upon the date on which such
default is cured or waived or shall have ceased to exist or such Designated
Senior Indebtedness shall have been discharged or paid in full in cash or
cash equivalents, and
(2) in case of a nonpayment default, the earlier of (x) the date on
which such nonpayment default is cured or waived, (y) 179 days after the
date on which the applicable Payment Blockage Notice is received (the
"Payment Blockage Period") or (z) the date such Payment Blockage Period
shall be terminated by written notice to the Trustee from the requisite
holders of such Designated Senior Indebtedness necessary to terminate such
period or from their Representative,
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after which the Company shall resume making any and all required payments
in respect of the Notes, including any missed payments, if this Article
otherwise permits the payment, distribution or acquisition at the time of
such payment or acquisition.
SECTION 1304. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Indebtedness of the
acceleration.
SECTION 1305. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment or
distribution of any Subordinated Note Obligations at a time when such payment or
distribution is prohibited by Sections 1302 or 1303, such payment or
distribution shall be held by the Trustee or such Holder for the benefit of, and
shall be paid forthwith over and delivered upon written request to, the holders
of Senior Indebtedness as their interests may appear or to their Representative
under the indenture or other agreement (if any) pursuant to which such Senior
Indebtedness may have been issued, as their respective interests may appear, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay such Senior Indebtedness in full in cash or cash
equivalents in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the benefit of holders of Senior
Indebtedness, and to fully cash collateralize all outstanding Letter of Credit
Obligations.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article Thirteen, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into the Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
Thirteen, except if such payment or distribution is made as a result of the
willful misconduct or gross negligence of the Trustee. Nothing in this Section
1305 shall affect the obligation of any Person other than the Trustee to hold
such payment or distribution for the benefit of, and to pay or deliver such
payment or distribution over to, the holders of Senior Indebtedness or their
Representative.
SECTION 1306. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes that violate this Article, but failure to give such
notice shall not affect the subordination of the Notes to the Senior
Indebtedness as provided in this Article Thirteen.
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SECTION 1307. PAYMENT PERMITTED IF NO DEFAULT.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Notes shall prevent the Company, at any time except during the
pendency of any case, proceeding, dissolution, liquidation or other winding up,
assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 1302 or under the conditions
described in Section 1303, from making payments at any time of principal of (and
premium, if any, on) or interest on the Notes.
SECTION 1308. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS.
Subject to the payment in full of all Senior Indebtedness in cash or
cash equivalents, the Holders shall be subrogated (equally and ratably with the
holders of all Pari Passu Indebtedness of the Company) to the rights of the
holders of such Senior Indebtedness to receive payments and distributions of
cash, property and securities applicable to the Senior Indebtedness until the
Subordinated Note Obligations shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of Senior Indebtedness
of any cash, property or securities to which the Holders or the Trustee would be
entitled except for the provisions of this Article, and no payments over
pursuant to the provisions of this Article to the holders of Senior Indebtedness
by Holders or on their behalf or by the Trustee, shall, as among the Company,
its creditors other than holders of Senior Indebtedness, and the Holders, be
deemed to be a payment or distribution by the Company to or on account of the
Senior Indebtedness; it being understood that the provisions of this Article are
intended solely for the purpose of determining the relative rights of the
Holders, on the one hand, and the holders of Senior Indebtedness, on the other
hand.
SECTION 1309. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Notes is intended to or shall
(a) impair, as between the Company and the Holders, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders the
principal of (and premium, if any) and interest on the Notes as and when the
same shall become due and payable in accordance with their terms; or (b) affect
the relative rights against the Company of the Holders and creditors of the
Company other than their rights in relation to holders of Senior Indebtedness;
or (c) prevent the Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article of the holders of Senior Indebtedness. If
the Company fails because of this Article to pay principal (or premium, if any)
or interest on a Note on the due date, the failure is still a Default or Event
of Default.
SECTION 1310. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder by his acceptance thereof authorizes and directs the
Trustee on such Holder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all
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such purposes. If the Trustee does not file a proper proof of claim or proof of
debt in the form required in any proceeding referred to in Section 504 hereof at
least 30 days before the expiration of the time to file such claim, the Bank
Agent (if the Senior Credit Facilities are still outstanding) is hereby
authorized to file an appropriate claim for and on behalf of the Holders.
SECTION 1311. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
If at any time any payment of Obligations with respect to any Senior
Indebtedness is rescinded or must otherwise be returned upon the insolvency,
bankruptcy, reorganization or liquidation of the Company or otherwise, the
provisions of Article Thirteen shall continue to be effective or reinstated, as
the case may be, to the same extent as though such payments had not been made.
SECTION 1312. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to
in this Article Thirteen, the Trustee and the Holders shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other acts pertinent thereto or to this Article
Thirteen.
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SECTION 1313. NOTICE TO TRUSTEE.
(a) The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Notes. Notwithstanding the provisions of
this Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Notes, unless and
until the Trustee shall have received written notice thereof from the Company,
the Bank Agent or a holder of Senior Indebtedness or from any trustee, fiduciary
or agent therefor; and, prior to the receipt of any such written notice, the
Trustee, subject to TIA Sections 315(a) through 315(d), shall be entitled in all
respects to assume that no such facts exist; PROVIDED, HOWEVER, that, if the
Trustee shall not have received the notice provided for in this Section at least
three Business Days prior to the date upon which by the terms hereof any money
may become payable for any purpose (including, without limitation, the payment
of the principal of (and premium, if any) or interest on any Note), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it within three Business Days
prior to such date.
(b) Subject to TIA Sections 315(a) through 315(d), the Trustee shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee,
fiduciary or agent therefor) to establish that such notice has been given by a
holder of Senior Indebtedness (or a trustee, fiduciary or agent therefor). In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 1314. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to TIA Sections 315(a) through 315(d), and
the Holders shall be entitled to rely upon any order or decree entered by any
court of competent jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution, winding up or similar
case or proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article;
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provided that such court, trustee, receiver, custodian, assignee, agent or other
Person has been apprised of, or the order, decree or certificate makes reference
to, the provisions of this Article.
SECTION 1315. RIGHTS OF TRUSTEE AS A HOLDER OF SENIOR INDEBTEDNESS;
PRESERVATION OF TRUSTEES' RIGHTS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder. Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 607.
SECTION 1316. ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; PROVIDED,
HOWEVER, that Section 1315 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
SECTION 1317. NO SUSPENSION OF REMEDIES.
Nothing contained in this Article shall limit the right of the Trustee
or the Holders to take any action to accelerate the maturity of the Notes
pursuant to Article Five or to pursue any rights or remedies hereunder or under
applicable law, except as provided in Article Five.
SECTION 1318. MODIFICATION OF TERMS OF SENIOR INDEBTEDNESS.
Any renewal or extension of the time of payment of any Senior
Indebtedness or the exercise by the holders of Senior Indebtedness of any of
their rights under any agreement, instrument or other document creating or
evidencing Senior Indebtedness, including, without limitation, the waiver of
default thereunder, may be made or done all without notice to or assent from the
Holders or the Trustee.
No compromise, alteration, amendment, modification, extension, renewal
or other change of, or waiver, consent or other action in respect of, any
liability or obligation under or in respect of, or of any of the terms,
covenants or conditions of any agreement, indenture, instrument or other
document under which any Senior Indebtedness is outstanding or of such Senior
Indebtedness, whether or not in accordance with the provisions of any applicable
document, shall in any way alter or affect any of the provisions of this Article
Thirteen or of the Notes relating to the subordination thereof.
<PAGE>
120
SECTION 1319. CERTAIN TERMS.
For purposes of this Article Thirteen, (i) "cash equivalents" means
Government Securities with maturities of nine months or less and (ii) unless the
context clearly indicates otherwise, any payment or distribution to the Trustee
or any Holder in respect of any Subordinated Note Obligation shall include any
payment or distribution of any kind or character from any source, whether in
cash, property or securities, by set-off or otherwise, including any repurchase,
redemption, defeasance or acquisition of the Notes and any direct or indirect
payment payable by reason of any other Indebtedness or Obligation being
subordinated to the Notes.
SECTION 1320. TRUST MONEYS NOT SUBORDINATED.
Notwithstanding anything contained herein to the contrary, payments
from cash or the proceeds of Government Securities held in trust under Article
Twelve hereof by the Trustee (or other qualifying trustee) and which were
deposited in accordance with the terms and conditions of Article Twelve hereof
and not in violation of Section 1303 hereof for the payment of principal of (and
premium, if any) and interest on the Notes shall not be subordinated to the
prior payment of any Senior Indebtedness or subject to the restrictions set
forth in this Article Thirteen, and none of the Holders shall be obligated to
pay over any such amount to the Company or any holder of Senior Indebtedness or
any other creditor of the Company.
This Indenture may be signed in any number of counterparts each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same Indenture.
[Signature page follows]
<PAGE>
121
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
ACCURIDE CORPORATION,
a Delaware corporation
By: /s/ William P. Greubel
----------------------------
Name: William P. Greubel
Title: President
U.S. TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By: /s/ James D. Nesci
----------------------------
Name: James D. Nesci
Title: Authorized Signatory
<PAGE>
EXHIBIT 4.2
- -----------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of January 21, 1998
by and among
ACCURIDE CORPORATION
as Issuer,
and
BT ALEX. BROWN INCORPORATED
CITICORP SECURITIES, INC.
AND
J.P. MORGAN SECURITIES INC.,
as Initial Purchasers
- -----------------------------------------------------------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), is made and
entered into as of January 21, 1998, by and among Accuride Corporation, a
Delaware corporation (the "Issuer"), as issuer, and BT Alex. Brown Incorporated,
Citicorp Securities, Inc. and J.P. Morgan Securities Inc. (collectively, the
"Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated
January 15, 1998, among the Issuer and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by the Issuer to the Initial Purchasers
of $200,000,000 aggregate principal amount of the Issuer's 9 1/4% Senior
Subordinated Notes due 2008 (the "Notes"). In order to induce the Initial
Purchasers to enter into the Purchase Agreement, the Issuer has agreed to
provide to the Initial Purchasers and their direct and indirect transferees and
assigns the registration rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the closing under the Purchase
Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. DEFINITIONS. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"1933 ACT" shall mean the Securities Act of 1933, as amended from time
to time, and the rules and regulations of the SEC promulgated thereunder.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the SEC promulgated
thereunder.
"BROKER-DEALER" shall mean any broker or dealer registered under the
1934 Act.
"DEPOSITARY" shall mean The Depository Trust Company, or any other
depositary appointed by the Issuer, PROVIDED, HOWEVER, that any such depositary
must have an address in the Borough of Manhattan, in the City of New York.
"EXCHANGE NOTES" shall mean 9 1/4% Series B Senior Subordinated Notes
due 2008 to be issued by the Issuer under the Indenture containing terms
identical to the Notes (except that (i) interest thereon shall accrue from the
last date on which interest was paid on the Notes or, if no such interest has
been paid, from the date of original issuance of the Notes, (ii) the transfer
restrictions thereon shall be eliminated and (iii) certain provisions relating
to an increase in the stated rate of interest thereon shall be eliminated) to be
offered to Holders of Notes in exchange for Notes pursuant to the Exchange
Offer.
"EXCHANGE OFFER" shall mean the exchange offer by the Issuer of
Registrable Notes for Exchange Notes pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION" shall mean a registration under the 1933
Act effected pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto and
all material incorporated by reference therein.
<PAGE>
"HOLDERS" shall mean the Initial Purchasers, for so long as they own
any Registrable Notes, and each of their successors, assigns and direct and
indirect transferees who become registered owners of Registrable Notes under the
Indenture.
"INDENTURE" shall mean the Indenture relating to the Notes dated as of
January 21, 1998, between the Issuer and U.S. Trust Company of California, N.A.,
as trustee, as the same may be amended from time to time in accordance with the
terms thereof.
"INITIAL PURCHASERS" shall have the meaning set forth in the preamble
of this Agreement.
"ISSUER" shall have the meaning set forth in the preamble of this
Agreement and also includes the Issuer's successors.
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Notes; PROVIDED that
whenever the consent or approval of Holders of a specified percentage of
Registrable Notes is required hereunder, Registrable Notes held by the Issuer or
any of its affiliates (as such term is defined in Rule 405 under the 1933 Act)
(other than the Initial Purchasers or subsequent holders of Registrable Notes if
such subsequent holders are deemed to be such affiliates solely by reason of
their holding of such Registrable Notes) shall be disregarded in determining
whether such consent or approval was given by the Holders of such required
percentage or amount.
"PERSON" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
"PARTICIPATING BROKER-DEALER" means any Broker-Dealer which holds
Participating Broker-Dealer Notes.
"PARTICIPATING BROKER-DEALER NOTES" shall mean Notes acquired by a
Broker-Dealer in the Exchange Offer that such broker or dealer acquired for its
own account as a result of market making activities or other trading activities
(other than Registrable Notes acquired directly from the Issuer or any of its
affiliates).
"PROSPECTUS" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Notes covered by a Shelf Registration Statement, and by all other
amendments and supplements to a prospectus, including post-effective amendments,
and in each case including all material incorporated by reference therein.
"PURCHASE AGREEMENT" shall have the meaning set forth in the preamble
of this Agreement.
"REGISTRABLE NOTES" shall mean each Note, until the earliest to occur
of (a) the date on which such Note is exchanged for Exchange Notes upon
consummation of the Exchange Offer and entitled to be resold to the public by
the Holder thereof without complying with the prospectus delivery requirements
of the 1933 Act, (b) the date on which such Note has been disposed of in
accordance with a Shelf Registration Statement, (c) the date on which such Note
is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including delivery
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<PAGE>
of the Prospectus contained therein) or (d) the date on which such Note is
distributed to the public pursuant to Rule 144 under the 1933 Act.
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance by the Issuer with this Agreement, including
without limitation: (i) all SEC and National Association of Securities Dealers,
Inc. ("NASD") registration and filing fees, if any (including, without
limitation, the fees and expenses of any "qualified independent underwriter"),
(ii) all fees and expenses incurred in connection with compliance with state
securities, blue sky or other securities laws (including reasonable fees and
disbursements of counsel for any underwriters or Holders in connection with
state securities, blue sky or other securities qualification or of any of the
Exchange Notes or Registrable Notes), (iii) all expenses of any Persons in
preparing or assisting in preparing, word processing, printing and distributing
any Registration Statement, any Prospectus, any amendments or supplements
thereto, certificates representing the Exchange Notes and other documents
relating to the performance of and compliance with this Agreement, (iv) all
rating agency fees, if any, (v) the reasonable fees and disbursements of counsel
for the Issuer and, in the case of a Shelf Registration Statement, the
reasonable fees and disbursements (including the expenses of preparing and
distributing any underwriting or securities sales agreement) of one counsel (in
addition to appropriate local counsel) for the Holders (which counsel shall be
selected in writing by the Majority Holders), (vi) all application and filing
fees in connection with listing the Exchange Notes on a national securities
exchange or an automated quotation system, if any, (vii) the reasonable fees and
expenses of the independent public accountants of the Issuer, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, and (viii) the reasonable fees and expenses
of the trustee, including its counsel, and any exchange agent, escrow agent or
custodian, including their counsels, but excluding underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
Registrable Notes by a Holder.
"REGISTRATION STATEMENT" shall mean any registration statement of the
Issuer which covers any of the Exchange Notes or Registrable Notes pursuant to
the provisions of this Agreement, and all amendments and supplements to any such
Registration Statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"SHELF REGISTRATION" shall mean a registration effected pursuant to
Section 2(b) hereof.
"SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration
statement of the Issuer pursuant to the provisions of Section 2(b) of this
Agreement which covers all of the then Registrable Notes on an appropriate form
under Rule 415 under the 1933 Act, or any successor rule that may be adopted by
the SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"TIA" means the Trust Indenture Act of 1939, as amended.
"TRUSTEE" shall mean the trustee with respect to the Notes under the
Indenture.
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<PAGE>
2. REGISTRATION UNDER THE 1933 ACT.
(a) EXCHANGE OFFER REGISTRATION. To the extent not prohibited by
any applicable law or applicable interpretation of the Staff of the SEC, the
Issuer shall (A) file an Exchange Offer Registration Statement covering the
offer by the Issuer to the Holders to exchange all of their Registrable Notes
for Exchange Notes within 120 calendar days after the date hereof, (B) use its
best efforts to cause such Exchange Offer Registration Statement to be declared
effective by the SEC within 200 calendar days after the date hereof, (C) use its
best efforts to cause such Exchange Offer Registration Statement to remain
effective until the closing of the Exchange Offer or, in accordance with the
procedures set forth in Section 3(f), to the extent any Participating Broker-
Dealer participates in the Exchange Offer, use its best efforts to maintain the
effectiveness of the Exchange Offer Registration Statement for a period ending
on the earlier to occur of (i) the date when all Exchange Notes held by
Participating Broker-Dealers have been sold and (ii) 90 days after the
consummation of the Exchange Offer and (D) use its best efforts to consummate
the Exchange Offer on or prior to 230 calendar days following the date hereof.
No securities other than the Exchange Notes shall be included in the Exchange
Offer Registration Statement. The Exchange Notes will be issued under the
Indenture (or a trust indenture which is identical in all material respects to
the Indenture, other than such changes to the Indenture or any such identical
trust indenture as are necessary to comply with any requirements of the SEC to
effect or maintain the qualification thereof under the TIA, and which has been
qualified under the TIA). Upon the effectiveness of the Exchange Offer
Registration Statement, the Issuer shall promptly commence the Exchange Offer,
it being the objective of such Exchange Offer to enable each Holder (other than
Participating Broker-Dealers exchanging Participating Broker-Dealer Notes for
Exchange Notes, assuming that such Holder is not an affiliate of the Issuer
within the meaning of Rule 405 under the 1933 Act, acquires the Exchange Notes
in the ordinary course of such Holder's business and has no arrangements or
understandings with any person to participate in the Exchange Offer for the
purpose of distributing the Exchange Notes) to trade such Exchange Notes from
and after their receipt without any limitations or restrictions under the 1933
Act and without material restrictions under the securities laws of a substantial
proportion of the several states of the United States.
In connection with the Exchange Offer, the Issuer shall:
(i) mail to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(ii) keep the Exchange Offer open for not less than 20 business
days after the date notice thereof is mailed to the Holders (or such
different period as required by applicable law);
(iii) use the services of the Depositary for the Exchange Offer with
respect to Notes evidenced by global certificates;
(iv) permit Holders to withdraw tendered Registrable Notes at any
time prior to the close of business, New York City time, on the last
business day on which the Exchange Offer shall remain open, by sending to
the institution specified in the notice, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Registrable Notes delivered for exchange, and a statement that
such Holder is withdrawing his election to have such Notes exchanged;
(v) prior to effectiveness of the Exchange Offer Registration
Statement, if the SEC so requests, provide a supplemental letter to the SEC
(A) stating that the Issuer is registering the
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<PAGE>
Exchange Offer in reliance on the position of the SEC enunciated in MORGAN
STANLEY AND CO., INC. (available June 5, 1991) and EXXON CAPITAL HOLDINGS
CORPORATION (available May 13, 1988), as interpreted in the SEC's letter to
Shearman & Sterling dated July 2, 1993, and similar no-action letters and
(B) including a representation that the Issuer has not entered into any
arrangement or understanding with any Person to distribute the Exchange
Notes to be received in the Exchange Offer and that, to the best of the
Issuer's information and belief, each Holder participating in the Exchange
Offer is acquiring the Exchange Notes in its ordinary course of business
and has no arrangement or understanding with any Person to participate in
the distribution of the Exchange Notes received in the Exchange Offer; and
(vi) otherwise comply in all material respects with all applicable
laws relating to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer, the
Issuer shall:
(i) accept for exchange Registrable Notes duly tendered and not
validly withdrawn pursuant to the Exchange Offer in accordance with the
terms of the Exchange Offer Registration Statement and the letter of
transmittal which is an exhibit thereto;
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Notes so accepted for exchange by the Issuer;
and
(iii) cause the Trustee promptly to authenticate and deliver
Exchange Notes to each Holder of Registrable Notes equal in amount to the
Registrable Notes of such Holder so accepted for exchange.
The Exchange Offer shall not be subject to any conditions, other than
(i) that the Exchange Offer, or the making of any exchange by a Holder, does
not, in the good faith determination of the Issuer, (a) violate applicable law,
statute, rule or regulation, or (b) violate any applicable interpretation of the
Staff of the SEC and (ii) that there has been no action or proceeding instituted
in any court or before any governmental agency or regulatory authority or any
injunction, order or decree issued with respect to the Exchange Offer, which
would prohibit the Issuer from proceeding with the Exchange Offer. Each Holder
of Registrable Notes (other than Participating Broker-Dealers) who wishes to
exchange such Registrable Notes for Exchange Notes in the Exchange Offer shall
have represented that (w) it is not an affiliate (as defined in Rule 405 under
the 1933 Act) of the Issuer, (x) any Exchange Notes to be received by it were
acquired in the ordinary course of business, (y) at the time of the commencement
of the Exchange Offer it has no arrangement with any person to participate in
the distribution (within the meaning of the 1933 Act) of the Exchange Notes and
(z) it is not acting on behalf of any person who could not make the
representations in clauses (w) through (y). The Issuer shall inform the Initial
Purchasers of the names and addresses of the Holders to whom the Exchange Offer
is made, and the Initial Purchasers shall have the right to contact such Holders
and otherwise facilitate the tender of Registrable Notes in the Exchange Offer.
(b) SHELF REGISTRATION. (i) If, because of any change in law or
applicable interpretations thereof by the Staff of the SEC, the Issuer is not
permitted to effect the Exchange Offer as contemplated by Section 2(a) hereof,
or (ii) if for any other reason the Exchange Offer cannot be consummated within
230 calendar days following the date hereof, or (iii) if any Holder (other than
an Initial Purchaser) is not eligible to participate in the Exchange Offer or
(iv) upon the written request of any Initial Purchaser (with respect to any
Registrable Notes that it acquired directly from the Issuer), then the Issuer
shall upon receipt of notice of such event, or in the case of clause (iv) above,
within 90 days following the
5
<PAGE>
consummation of the Exchange Offer if any such Initial Purchaser shall hold
Registrable Notes that it acquired directly from the Issuer, the Issuer shall,
at its cost:
(A) as promptly as practicable, file with the SEC a Shelf
Registration Statement relating to the offer and sale of the then
outstanding Registrable Notes by the Holders from time to time in
accordance with the methods of distribution elected by the Majority Holders
of such Registrable Notes and set forth in such Shelf Registration
Statement, and use its best efforts to cause such Shelf Registration
Statement to be declared effective by the SEC by the 230th calendar day
after the date hereof (or within 90 calendar days following consummation of
the Exchange Offer) (or within 45 calendar days in the event of any changes
in law or applicable interpretations of the Staff of the SEC pursuant to
clause (b)(i) above but in no event before 120 calendar days after the date
hereof). In the event that the Issuer is required to file a Shelf
Registration Statement upon the request of any Holder (other than an
Initial Purchaser) not eligible to participate in the Exchange Offer
pursuant to clause (iii) above or upon the request of any Initial Purchaser
pursuant to clause (iv) above, the Issuer shall file and have declared
effective within 230 days of the date hereof by the SEC both an Exchange
Offer Registration Statement pursuant to Section 2(a) with respect to all
Registrable Notes and a Shelf Registration Statement (which may be a
combined Registration Statement with the Exchange Offer Registration
Statement) with respect to offers and sales of Registrable Notes held by
such Holder or such Initial Purchaser after completion of the Exchange
Offer;
(B) use its best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the Prospectus forming part
thereof to be usable by Holders for a period of two years from the Issuance
Date (or one year from the date the Shelf Registration Statement is
declared effective if such Shelf Registration Statement is filed upon the
request of any Initial Purchaser pursuant to clause (iv) above) or such
shorter period that will terminate when all of the Registrable Notes
covered by the Shelf Registration Statement have been sold pursuant to the
Shelf Registration Statement or all of the Registrable Notes become
eligible for resale pursuant to Rule 144 under the 1933 Act without volume
restrictions; and
(C) notwithstanding any other provisions hereof use its best efforts
to ensure that (i) any Shelf Registration Statement and any amendment
thereto and any Prospectus forming a part thereof and any supplement
thereto complies in all material respects with the 1933 Act and the rules
and regulations thereunder, (ii) any Shelf Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading and (iii) any Prospectus forming part of any Shelf Registration
Statement and any supplement to such Prospectus (as amended or supplemented
from time to time), does not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
in order to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
The Issuer further agrees, if necessary, to supplement or amend any
such Shelf Registration Statement if reasonably requested by the Majority
Holders with respect to information relating to the Holders and otherwise as
required by Section 3(b) below, to use all reasonable efforts to cause any such
amendment to become effective and such Shelf Registration Statement to become
usable as soon as reasonably practicable thereafter and to furnish to the
Holders of Registrable Notes copies of any such supplement or amendment promptly
after its being used or filed with the SEC.
6
<PAGE>
(c) EXPENSES. The Issuer shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a) and 2(b). Each Holder
shall pay all expenses of its counsel other than as set forth in the preceding
sentence, underwriting discounts and commissions (prior to the reduction thereof
with respect to selling concessions, if any) and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Notes pursuant
to the Shelf Registration Statement.
(d) EFFECTIVE REGISTRATION STATEMENT. An Exchange Offer Registration
Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement
pursuant to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC, PROVIDED, HOWEVER, that if,
after it has been declared effective, the offering of Registrable Notes pursuant
to a Registration Statement is interfered with by any stop order, injunction or
other order or requirement of the SEC or any other governmental agency or court,
such Registration Statement will be deemed not to have been effective during the
period of such interference, until the offering of Registrable Notes pursuant to
such Registration Statement may legally resume.
(e) REMEDIES FOR BREACH. In the event that (a) the Exchange Offer
Registration Statement is not filed with the Commission on or prior to the 120th
day following the date of original issue of the Notes, (b) such Exchange Offer
Registration Statement has not been declared effective on or prior to the 200th
day following the date of original issue of the Notes or (c) the Exchange Offer
is not consummated or a Shelf Registration Statement is not declared effective
on or prior to the 230th day following the date of original issue of the Notes,
the interest rate borne by the Notes shall be increased by one-quarter of one
percent per annum following such 120-day period in the case of clause (a) above,
following such 200-day period in the case of clause (b) above, or following such
230-day period in the case of clause (c) above (or, in the case of a Shelf
Registration Statement required to be filed in response to a change in law or
applicable interpretations of the Staff of the SEC, if later, within a 45-day
period after publication of the change in law or interpretation but in no event
before 120 calendar days after the date of original issue of the Notes), which
rate will be increased by an additional one-quarter of one percent per annum for
each 90-day period that any such additional interest continues to accrue;
PROVIDED that the aggregate increase in such annual interest rate will in no
event exceed one percent. Upon (x) the filing of the Exchange Offer
Registration Statement after the 120-day period described in clause (a) above,
(y) the effectiveness of the Exchange Offer Registration Statement after the
200-day period described in clause (b) above, or (z) the consummation of the
Exchange Offer or the effectiveness of a Shelf Registration Statement, as the
case may be, after the 230-day period described in clause (c) above (or, in the
case of a Shelf Registration Statement required to be filed in response to a
change in law or applicable interpretations of the Staff of the SEC, if later,
following such 45-day period after publication of the change in law or
interpretation but in no event before 120 calendar days after the date of
original issue of the Notes), the interest rate borne by the Notes from the date
of such filing, effectiveness, consummation or that the applicable registration
statement again becomes effective and usable, as the case may be, will be
reduced to the original interest rate set forth above if the Issuer is otherwise
in compliance with this paragraph; PROVIDED, HOWEVER, that if, after such
reduction in interest rate, a different event specified in clause (a), (b) or
(c) above occurs, the interest rate may again be increased and thereafter
decreased pursuant to the foregoing provisions. Notwithstanding the foregoing,
the Issuer may issue a notice that the Shelf Registration Statement is unusable
pending the announcement of a material corporate transaction and may issue any
notice suspending use of the Shelf Registration Statement required under
applicable securities laws to be issued and, in the event that the aggregate
number of days in any consecutive twelve-month period for which all such notices
are issued and effective exceeds 30 days in the aggregate, then the interest
rate borne by the Notes will be increased by one quarter of one percent per
annum following the date that such Shelf Registration Statement ceases to be
usable beyond the 30-day period permitted above, which rate shall be increased
by an additional one-quarter of one percent per annum for each subsequent 90-day
period
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<PAGE>
that such additional interest continues to accrue; PROVIDED that the aggregate
increase in such annual interest rate may in no event exceed one percent per
annum. Upon the Issuer declaring that the Shelf Registration Statement is
usable after the interest rate has been increased pursuant to the preceding
sentence, the interest rate borne by the Notes will be reduced to the original
interest rate if the Issuer is otherwise in compliance with this paragraph;
PROVIDED, HOWEVER, that if after any such reduction in interest rate the Shelf
Registration Statement again ceases to be usable beyond the period permitted
above, the interest rate will again be increased and thereafter reduced pursuant
to the foregoing provisions.
3. REGISTRATION PROCEDURES. In connection with the obligations of
the Issuer with respect to the Registration Statements pursuant to Sections 2(a)
and 2(b) hereof, the Issuer shall:
(a) prepare and file with the SEC a Registration Statement, within
the time period specified in Section 2, on the appropriate form under the
1933 Act, which form (i) shall be selected by the Issuer, (ii) shall, in
the case of a Shelf Registration, be available for the sale of the
Registrable Notes by the selling Holders thereof, (iii) shall, in the case
of the Exchange Offer Registration Statement, be available for the sale of
Participating Broker-Dealer Notes by the Holders thereof for the time
period described in Section 2(a) and (iv) shall comply as to form in all
material respects with the requirements of the applicable form and include
or incorporate by reference all financial statements required by the SEC to
be filed therewith, and use its best efforts to cause such Registration
Statement to become effective and remain effective in accordance with
Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to (i) the Exchange Offer Registration Statement as may be
necessary under applicable law to keep such Exchange Offer Registration
Statement effective for the period required to comply with Section 2(a)
(except to the extent the Issuer is unable to consummate the Exchange Offer
and the Issuer complies with Section 2(b)), and (ii) the Shelf Registration
Statement as may be necessary under applicable law to keep such Shelf
Registration Statement effective for the period required pursuant to
Section 2(b) hereof; cause each Prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the 1933 Act, and comply with the provisions of the 1933
Act with respect to the disposition of all securities covered by each
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the selling Holders thereof;
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Notes, at least ten days prior to filing, that the Shelf
Registration Statement with respect to the Registrable Notes is being filed
and advising such Holders that the distribution of Registrable Notes will
be made in accordance with the method elected by the Majority Holders; and
(ii) furnish to each Holder of Registrable Notes, to counsel for the
Initial Purchasers, to counsel for the Holders and to each underwriter of
an underwritten offering of Registrable Notes, if any, without charge, as
many copies of each Prospectus, including each preliminary Prospectus, and
any amendment or supplement thereto and such other documents as such Holder
or underwriter may reasonably request, including financial statements and
schedules and, if the Holder specifically so requests in writing, all
exhibits (including those incorporated by reference) in order to facilitate
the public sale or other disposition of the Registrable Notes; and (iii)
subject to the last paragraph of Section 3, hereby consent to the use of
the Prospectus, including each preliminary Prospectus, or any amendment or
supplement thereto by each of the selling Holders of Registrable Notes in
connection with the offering and sale of the Registrable Notes covered by
the Prospectus or any amendment or supplement thereto;
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(d) use its best efforts to register or qualify the Registrable Notes
under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Notes covered by a Registration
Statement and each underwriter of an underwritten offering of Registrable
Notes shall reasonably request by the time the applicable Registration
Statement is declared effective by the SEC, cooperate with the Holders in
connection with any filings required to be made with the NASD, keep each
such registration or qualification effective during the period such
Registration Statement is required to be effective and do any and all other
acts and things which may be reasonably necessary or advisable to enable
such Holder to consummate the disposition in each such jurisdiction of such
Registrable Notes owned by such Holder, PROVIDED, HOWEVER, that the Issuer
shall not be required to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d) or (ii) take any action which
would subject it to general service of process or taxation in any such
jurisdiction if it is not then so subject;
(e) in the case of a Shelf Registration and, to the extent that the
Issuer is required to maintain an effective Exchange Offer Registration
Statement for any Participating Broker-Dealer pursuant to Section 2(a)
above, notify each Holder of Registrable Notes and counsel for such Holders
promptly and, if requested by such Holder or counsel, confirm such advice
in writing promptly (i) when a Registration Statement has become effective
and when any post-effective amendments and supplements thereto become
effective, (ii) of any request by the SEC or any state securities authority
for post-effective amendments and supplements to a Registration Statement
and Prospectus or for additional information after the Registration
Statement has become effective, (iii) of the issuance by the SEC or any
state securities authority of any stop order suspending the effectiveness
of a Registration Statement or the initiation of any proceedings for that
purpose, (iv) if, between the effective date of a Registration Statement
and the closing of any sale of Registrable Notes covered thereby, the
representations and warranties of the Issuer contained in any underwriting
agreement, securities sales agreement or other similar agreement, if any,
relating to such offering cease to be true and correct in all material
respects, (v) of the receipt by the Issuer of any notification with respect
to the suspension of the qualification of the Registrable Notes for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose, (vi) of the happening of any event or the discovery of any
facts during the period such Registration Statement is effective which
makes any statement made in such Registration Statement or the related
Prospectus untrue in any material respect or which requires the making of
any changes in such Registration Statement or Prospectus in order to make
the statements therein not misleading and (vii) of any determination by the
Issuer that a post-effective amendment to a Registration Statement would be
appropriate;
(f) (A) in the case of the Exchange Offer, (i) include in the
Exchange Offer Registration Statement a "Plan of Distribution" section
covering the use of the Prospectus included in the Exchange Offer
Registration Statement by a Participating Broker-Dealer who holds
Participating Broker-Dealer Notes; PROVIDED that such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount
of Notes held by any such Broker-Dealer, except to the extent required by
the SEC as a result of a change in policy after the date of this Agreement,
(ii) furnish to each Participating Broker-Dealer, without charge, as many
copies of each Prospectus included in the Exchange Offer Registration
Statement, including any preliminary prospectus, and any amendment or
supplement thereto, as such Participating Broker-Dealer may reasonably
request, (iii) include in the Exchange Offer Registration Statement a
statement that any Participating Broker-Dealer who receives Exchange Notes
for Registrable Notes pursuant to the Exchange Offer, may be
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a statutory underwriter and must deliver a prospectus meeting the
requirements of the 1933 Act in connection with any resale of such Exchange
Notes, (iv) subject to the last paragraph of Section 3, hereby consent to
the use of the Prospectus forming part of the Exchange Offer Registration
Statement or any amendment or supplement thereto, by any Participating
Broker-Dealer in connection with the sale or transfer of the Participating
Broker-Dealer Notes covered by the Prospectus or any amendment or
supplement thereto, and (v) include in the transmittal letter or similar
documentation to be executed by an exchange offeree in order to participate
in the Exchange Offer (x) the following provision:
If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to
engage in, a distribution of Exchange Notes. If the
undersigned is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Registrable Notes,
it represents that the Registrable Notes to be exchanged for
Exchange Notes were acquired by it as a result of
market-making activities or other trading activities and
acknowledges that it will deliver a prospectus meeting the
requirements of the 1933 Act in connection with any resale
of such Exchange Notes acquired pursuant to the Exchange
Offer; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the 1933 Act;
and (y) a statement to the effect that by a Participating Broker-Dealer
making the acknowledgment described in subclause (x) and by delivering a
Prospectus in connection with the sale of Participating Broker-Dealer Notes
received in exchange for Registrable Notes, the Participating Broker-Dealer
will not be deemed to admit that it is an underwriter within the meaning of
the 1933 Act;
(B) the Issuer shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement as would
otherwise be contemplated by Section 3(b), or take any other action as a
result of this Section 3(f), for a period exceeding the time specified in
Section 2(a)(C) (as such period may be extended by the Issuer) and
Participating Broker-Dealers shall not be authorized by the Issuer to, and
shall not, deliver such Prospectus after such period has lapsed in
connection with resales contemplated by this Section 3.
(g) in the case of an Exchange Offer, furnish counsel for
Participating Broker-Dealers, if any, and in the case of a Shelf
Registration, furnish counsel for the Holders of Registrable Notes, copies
of any request by the SEC or any state securities authority for amendments
or supplements to a Registration Statement and Prospectus or for additional
information;
(h) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement as soon as
practicable and provide immediate notice to each Holder of the withdrawal
of any such order;
(i) in the case of a Shelf Registration and, to the extent that the
Issuer is required to maintain an effective Exchange Offer Registration
Statement for any Participating Broker-Dealer pursuant to Section 2(a)
above, furnish to each Holder of Registrable Notes, without charge, at
least one conformed copy of each Registration Statement and any
post-effective amendment thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested);
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(j) in the case of a Shelf Registration and, to the extent that the
Issuer is required to maintain an effective Exchange Offer Registration
Statement for any Participating Broker-Dealer pursuant to Section 2(a)
above, cooperate with the selling Holders of Registrable Notes to
facilitate the timely preparation and delivery of certificates representing
Registrable Notes to be sold and not bearing any restrictive legends; and
cause such Registrable Notes to be in such denominations (consistent with
the provisions of the Indenture) and registered in such names as the
selling Holders or the underwriters, if any, may reasonably request at
least one business day prior to the closing of any sale of Registrable
Notes;
(k) in the case of a Shelf Registration and, to the extent that the
Issuer is required to maintain an effective Exchange Offer Registration
Statement for any Participating Broker-Dealer pursuant to Section 2(a)
above, upon the occurrence of any event or the discovery of any facts,
each as contemplated by Section 3(e)(vi) hereof, use its best efforts to
prepare a supplement or post-effective amendment to a Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Notes, such Prospectus will
not contain at the time of such delivery any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Issuer agrees to notify each Holder to suspend use of the
Prospectus as promptly as practicable after the occurrence of such an
event, and each Holder hereby agrees to suspend use of the Prospectus until
the Issuer has amended or supplemented the Prospectus to correct such
misstatement or omission. At such time as such public disclosure is
otherwise made or the Issuer determines that such disclosure is not
necessary, in each case to correct any misstatement of a material fact or
to include any omitted material fact, the Issuer agrees promptly to notify
each Holder of such determination and to furnish each Holder such numbers
of copies of the Prospectus, as amended or supplemented, as such Holder may
reasonably request;
(l) obtain a CUSIP number for all Exchange Notes, not later than the
effective date of a Registration Statement, and provide the Trustee with
printed certificates for the Exchange Notes in a form eligible for deposit
with the Depositary;
(m) (i) cause the Indenture to be qualified under the TIA, no later
than the effective date of the first Registration Statement required by
this Agreement, (ii) cooperate with the Trustee and the Holders to effect
such changes to the Indenture as may be required for the Indenture to be so
qualified in accordance with the terms of the TIA and (iii) execute, and
use its best efforts to cause the Trustee to execute, all documents as may
be required to effect such changes, and all other forms and documents
required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(n) in the case of a Shelf Registration and, to the extent that the
Issuer is required to maintain an effective Exchange Offer Registration
Statement for any Participating Broker-Dealer pursuant to Section 2(a)
above, enter into agreements (including underwriting agreements) and take
all other customary and appropriate actions (including those reasonably
requested by the Majority Holders) in order to expedite or facilitate the
disposition of such Registrable Notes and in such event, whether or not an
underwriting agreement is entered into and whether or not the registration
is an underwritten registration,
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(i) make such representations and warranties to the Holders
of such Registrable Notes and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters
in similar underwritten offerings as may be reasonably requested by
them;
(ii) obtain opinions of counsel to the Issuer and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if any,
and the holders of a majority in principal amount of the Registrable
Notes being sold) addressed to each selling Holder and the
underwriters, if any, covering the matters customarily covered in
opinions requested in sales of securities or underwritten offerings;
(iii) obtain "cold comfort" letters and updates thereof from
the Issuer's independent certified public accountants addressed to the
underwriters, if any, and use its best efforts to have such letters
addressed to the selling Holders of Registrable Notes, such letters to
be in customary form and covering matters of the type customarily
covered in "cold comfort" letters to underwriters in connection with
similar underwritten offerings;
(iv) enter into a securities sales agreement with the Holders
and an agent of the Holders providing for, among other things, the
appointment of such agent for the selling Holders for the purpose of
soliciting purchases of Registrable Notes, which agreement shall be in
form, substance and scope customary for similar offerings; and
(v) deliver such documents and certificates as may be
reasonably requested and as are customarily delivered in similar
offerings.
The above shall be done at (i) the effectiveness of such Registration
Statement (and, if appropriate, each post-effective amendment thereto) and
(ii) each closing under any underwriting or similar agreement as and to the
extent required thereunder. In the case of any underwritten offering, the
Issuer shall provide written notice to the Holders of all Registrable Notes
of such underwritten offering at least 30 days prior to the filing of a
prospectus supplement for such underwritten offering. Such notice shall
(x) offer each such Holder the right to participate in such underwritten
offering, (y) specify a date, which shall be no earlier than ten days
following the date of such notice, by which such Holder must inform the
Issuer of its intent to participate in such underwritten offering and (z)
include the instructions such Holder must follow in order to participate in
such underwritten offering;
(o) in the case of a Shelf Registration and, to the extent that the
Issuer is required to maintain an effective Exchange Offer Registration
Statement for any Participating Broker-Dealer pursuant to Section 2(a)
above, make available for inspection by representatives of the Holders of
the Registrable Notes and any underwriters participating in any disposition
pursuant to such Registration Statement and any counsel or accountant
retained by such Holders or underwriters, at reasonable times and in a
reasonable manner, all financial and other records, pertinent corporate
documents and properties of the Issuer reasonably requested by any such
persons, and cause the respective officers, directors, employees and any
other agents of the Issuer to supply all information reasonably requested
by any such representative, underwriter, special counsel or accountant in
connection with such Registration Statement, PROVIDED, HOWEVER, that such
Persons shall first agree in writing with the Issuer that any information
that is reasonably and in good faith designated by the Issuer in writing as
confidential at the time of delivery of such information shall be kept
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<PAGE>
confidential by such Persons, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, (ii) disclosure of such information is
required by law (including any disclosure requirements pursuant to Federal
securities laws in connection with the filing of such Registration
Statement or the use of any Prospectus), (iii) such information becomes
generally available to the public other than as a result of a disclosure or
failure to safeguard such information by such Person or (iv) such
information becomes available to such Person from a source other than the
Issuer and its subsidiaries and such source is not known, after due
inquiry, by the relevant Holder to be bound by a confidentiality agreement;
PROVIDED FURTHER, that the foregoing investigation shall be coordinated on
behalf of the Holders by one representative designated by and on behalf of
such Holders and any such confidential information shall be available from
such representative to such Holders so long as any Holder agrees to be
bound by such confidentiality agreement;
(p) (i) a reasonable time prior to the filing of any Exchange Offer
Registration Statement, any Prospectus forming a part thereof, any
amendment to an Exchange Offer Registration Statement or amendment or
supplement to a Prospectus, provide copies of such document to the Initial
Purchasers and each other Broker-Dealer that has notified the Issuer that
it may or has exchanged Registrable Notes for Participating Broker-Dealer
Notes, and make such changes in any such document prior to the filing
thereof as any of the Initial Purchasers or such Broker-Dealers or their
counsel may reasonably request; (ii) in the case of a Shelf Registration, a
reasonable time prior to filing any Shelf Registration Statement, any
Prospectus forming a part thereof, any amendment to such Shelf Registration
Statement or amendment or supplement to such Prospectus, provide copies of
such document to the Holders of Registrable Notes, to the Initial
Purchasers, to counsel on behalf of the Holders and to the underwriter or
underwriters of an underwritten offering of Registrable Notes, if any, and
make such changes in any such document prior to the filing thereof as the
Majority Holders of Registrable Notes, the Initial Purchasers on behalf of
such Holders, their counsel and any underwriter may reasonably request; and
(iii) cause the representatives of the Issuer to be available for
discussion of such document as shall be reasonably requested by the Holders
of Registrable Notes, the Initial Purchasers on behalf of such Holders or
any underwriter and shall not at any time make any filing of any such
document of which such Holders, the Initial Purchasers on behalf of such
Holders, their counsel or any underwriter shall not have previously been
advised and furnished a copy or to which such Holders, the Initial
Purchasers on behalf of such Holders, their counsel or any underwriter
shall reasonably object, each of which actions in this clause (iii) by the
Holders shall be coordinated by one representative for all the Holders at
reasonable times and in a reasonable manner;
(q) in the case of a Shelf Registration, use its best efforts to
cause all Registrable Notes to be listed on any securities exchange, if
any, on which similar debt securities issued by the Issuer are then listed
if requested by the Majority Holders or by the underwriter or underwriters
of an underwritten offering of Registrable Notes, if any;
(r) in the case of a Shelf Registration, unless the rating in effect
for the Notes applies to the Exchange Notes and the Notes to be sold
pursuant to a Shelf Registration, use its best efforts to cause the
Registrable Notes to be rated with the appropriate rating agencies, if so
requested by the Majority Holders or by the underwriter or underwriters of
an underwritten offering of Registrable Notes, if any, unless the
Registrable Notes are already so rated; and
(s) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and make available to its security
holders, as soon as reasonably practicable, an earning
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statement covering at least 12 months which shall satisfy the provisions of
Section 11(a) of the 1933 Act and Rule 158 thereunder.
No Holder of Registrable Notes may include any of its Registrable
Notes in any Shelf Registration Statement pursuant to this Agreement unless and
until such Holder furnishes to the Issuer in writing, within 20 days after
receipt of a request therefor, such information as the Issuer may reasonably
request, including, without limitation, the information specified in item 507 of
Regulation S-K under the 1933 Act for use in connection with any Shelf
Registration Statement or Prospectus or preliminary Prospectus included therein.
No Holder of Registrable Notes shall be entitled to additional interest as
provided in such Holder's Registrable Notes unless and until such Holder shall
have used its best efforts to provide all such information. Each Holder as to
which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Issuer all information required to be disclosed in order to make
the information previously furnished to the Issuer by such Holder not materially
misleading.
In the case of a Shelf Registration Statement and, to the extent that
the Issuer is maintaining an effective Exchange Offer Registration Statement for
any Participating Broker-Dealer pursuant to Section 2(a) above, each Holder
agrees that, upon receipt of any notice from the Issuer of the happening of any
event or the discovery of any facts, each of the kind described in Section
3(e)(ii)-(vi) hereof, such Holder will forthwith discontinue disposition of
Registrable Notes pursuant to such Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 3(k) hereof, and, if so directed by the Issuer, such Holder will deliver
to the Issuer (at its expense) all copies in its possession, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Notes current at the time of receipt of such notice.
The Issuer will be deemed not to have used its best efforts to cause a
Registration Statement to become or remain effective during the requisite period
if the Issuer has voluntarily taken any action that resulted in any Registration
Statement not being declared effective and in Holders of Registrable Notes
covered thereby not being able to exchange or offer and sell such Registrable
Notes during that period or the delivery of a notice described in Section
3(e)(vi) hereof unless (A) such action was required by applicable law or (B)
such action was taken by the Issuer in good faith and for valid business reasons
(but not including avoidance of the Issuer's obligations hereunder), including a
material corporate transaction; PROVIDED that, in any event, the aggregate
number of days in any consecutive twelve-month period for which a Registration
Statement is not effective or usable does not exceed 30 days. In any event, any
suspension pursuant to this paragraph shall extend the period during which the
Registration Statement shall be maintained effective pursuant to this Agreement
by the number of days during the period from and including the date of the
giving of such notice to and including the date when the Holders shall have
received copies of the supplemented or amended Prospectus necessary to resume
such dispositions.
4. UNDERWRITTEN REGISTRATIONS. If any of the Registrable Notes
covered by any Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
manage the offering will be selected by the Majority Holders of such Registrable
Notes included in such offering and shall be reasonably acceptable to the
Issuer.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
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5. INDEMNIFICATION AND CONTRIBUTION.
(a) The Issuer agrees to indemnify and hold harmless (i) each Holder and
(ii) each person, if any, who controls (within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act) any Holder (any of the persons referred
to in this clause (ii) being hereinafter referred to as a "controlling person")
and (iii) the respective officers, directors, partners, employees,
representatives and agents of any Holder or any controlling person (any person
referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an
"INDEMNIFIED HOLDER"), to the fullest extent lawful, from and against any and
all losses, claims, damages, liabilities, judgments, actions and expenses
(including without limitation and as incurred, reimbursement of all reasonable
costs of investigating, preparing, pursuing or defending any claim or action, or
any investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Holder) directly or indirectly caused by, related to, based upon,
arising out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement,
preliminary prospectus or Prospectus (or any amendment or supplement thereto),
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by an untrue statement or omission or alleged untrue statement or
omission that is made in reliance upon and in conformity with information
relating to any of the Holders furnished in writing to the Issuer by any of the
Holders expressly for use therein and PROVIDED FURTHER, that the Issuer will not
be liable to the Holders or any person controlling any Holder with respect to
any such untrue statement or omission made in any preliminary prospectus that is
corrected in the Prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage or liability purchased the Notes
from any Holder in reliance upon a preliminary prospectus but was not sent or
given a copy of the Prospectus (as amended or supplemented) at or prior to the
written confirmation of the sale of such Notes to such person, unless such
failure to deliver the Prospectus (as amended or supplemented) was a result of
noncompliance by the Issuer with Section 3 of this Agreement. The Issuer also
agrees to reimburse each Indemnified Holder for any and all fees and expenses
(including, without limitation, the fees and expenses of counsel) as they are
incurred in connection with enforcing such Indemnified Holder's rights under
this Agreement (including, without limitation, its rights under this Section 5).
In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against any
of the Indemnified Holders with respect to which indemnity may be sought against
the Issuer, such Indemnified Holder (or the Indemnified Holder controlled by
such controlling person) shall promptly notify the Issuer in writing (PROVIDED,
that the failure to give such notice shall not relieve the Issuer of its
obligations pursuant to this Agreement unless such failure materially prejudices
the Issuer). Such Indemnified Holder shall have the right to employ its own
counsel in any such action and the fees and expenses of such counsel shall be
paid, as incurred, by the Issuer (regardless of whether it is ultimately
determined that an Indemnified Holder is not entitled to indemnification
hereunder). The Issuer shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any time
for such Indemnified Holders, which firm shall be designated by the Holders.
The Issuer shall be liable for any settlement of any such action or proceeding
effected with the Issuer's prior written consent, which consent shall not be
withheld unreasonably, and the Issuer agrees to indemnify and hold harmless each
Indemnified Holder from and against any loss, claim, damage, liability or
expense by reason of any settlement of any action effected with the written
consent of the Issuer.
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(b) Each Holder of Registrable Notes agrees, severally and not
jointly, to indemnify and hold harmless the Issuer and its directors, officers,
and any person controlling (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) the Issuer, and its officers, directors,
partners, employees, representatives and agents of each such person, to the same
extent as the foregoing indemnity from the Issuer to each of the Indemnified
Holders, but only with respect to claims and actions based on information
relating to such Holder furnished in writing by such Holder expressly for use in
any Registration Statement. In case any action or proceeding shall be brought
against the Issuer or its directors or officers or any such controlling person
in respect of which indemnity may be sought against a Holder of Registrable
Notes, such Holder shall have the rights and duties given the Issuer, and the
Issuer, such directors or officers or such controlling person shall have the
rights and duties given to each Holder by the preceding paragraph. In no event
shall any Holder be liable or responsible for any amount in excess of the amount
by which the total received by such Holder with respect to its sale of
Registrable Notes pursuant to a Registration Statement exceeds (i) the amount
paid by such Holder for such Registrable Notes and (ii) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
(c) If the indemnification provided for in this Section 5 is
unavailable to an indemnified party under Section 5(a) or Section 5(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Issuer, on the one hand, and the Holders, on the other hand, from their sale of
Registrable Notes or if such allocation is not permitted by applicable law, the
relative fault of the Issuer, on the one hand, and of the Indemnified Holder, on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of the Issuer, on the one
hand, and of the Indemnified Holder, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuer or by the Indemnified Holder and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of Section 5(a), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Issuer and each Holder of Registrable Notes agree that it would
not be just and equitable if contribution pursuant to this Section 5(c) were
determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 5, no Holder or
its related Indemnified Holders shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the total received by
such Holder with respect to the sale of its Registrable Notes pursuant to a
Registration Statement exceeds the sum of (A) the amount paid by such Holder for
such Registrable Notes PLUS (B) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
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entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 5(c) are several in proportion to the respective principal amount of
Notes held by each of the Holders hereunder and not joint.
6. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Issuer represents and agrees
that (i) it has not entered into nor will the Issuer on or after the date of
this Agreement enter into any agreement that is inconsistent with the rights
granted to the Holders of Registrable Notes in this Agreement or otherwise
conflicts with the provisions hereof and (ii) the rights granted to the Holders
hereunder do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Issuer's other issued and outstanding
securities under any such agreements.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Issuer has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Notes affected by such amendment, modification, supplement, waiver
or departure; PROVIDED, HOWEVER, that no amendment, modification, supplement or
waiver or consent to any departure from the provisions of Section 5 hereof and
this Section 6(b) shall be effective as against any Holder of Registrable Notes
unless consented to in writing by such Holder. Notwithstanding the foregoing, a
waiver or consent to departure from the provisions hereof that relate
exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer and that do not affect directly or indirectly the
rights of Holders whose securities are not being tendered pursuant to such
Exchange Offer shall be given by the Holders of a majority of the outstanding
principal amount of Registrable Securities subject to the Exchange Offer.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telecopier, or any courier guaranteeing overnight delivery (i)
if to a Holder (other than an Initial Purchaser), at the most current address
set forth on the records of the Registrar under the Indenture, (ii) if to an
Initial Purchaser, at the most current address given by such Initial Purchaser
to the Issuer by means of a notice given in accordance with the provisions of
this Section 6(c), which address initially is the address set forth in the
Purchase Agreement; and (iii) if to the Issuer, initially at the Issuer's
address set forth in the Purchase Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions of this
Section 6(c).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged, if telecopied; and on the next business day if timely delivered
to a courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; PROVIDED that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Notes in violation of the terms hereof or of the Purchase Agreement or the
Indenture. If any transferee of any Holder shall acquire
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Registrable Notes, in any manner, whether by operation of law or otherwise, such
Registrable Notes shall be held subject to all of the terms of this Agreement,
and by taking and holding such Registrable Notes, such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(e) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Issuer on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(i) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
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If the foregoing is in accordance with your understanding of this
Agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Issuer and the several
Initial Purchasers in accordance with its terms.
Very truly yours,
ACCURIDE CORPORATION
By: /s/ William P. Greubel
------------------------------
Name: William P. Greubel
Title: President
Accepted and agreed to as of
the date first written above:
BT ALEX. BROWN INCORPORATED
CITICORP SECURITIES, INC.
J.P. MORGAN SECURITIES INC.
BY: BT ALEX. BROWN INCORPORATED
By: /s/ George C. Hartmann, Jr.
----------------------------
Name: George C. Hartmann, Jr.
Title: Managing Director
<PAGE>
Exhibit 8.1
[Latham & Watkins Letterhead]
__________, 1998
Accuride Corporation
2315 Adams Lane
Henderson, Kentucky 42420
Re: Accuride Corporation, Registration Statement on Form S-4 (File
Number 333- )
--------------------------------------------------------------
Ladies/Gentlemen:
You have requested our opinion concerning the material federal
income tax consequences expected to result to holders from the exchange of the 9
1/4% Senior Subordinated Notes due 2008 of Accuride Corporation (the "Company"),
in connection with the Registration Statement on Form S-4 filed with the
Securities and Exchange Commission (the "Commission") on April , 1998 (File No.
333- ), as amended by Amendment No. 1 filed with the Commission on
, 1998 (collectively, the "Registration Statement").
The facts, as we understand them, and upon which with your
permission we rely in rendering the opinion expressed herein, are set forth in
the Registration Statement. Based on such facts, it is our opinion that the
material federal income tax consequences are accurately set forth under the
heading "Certain Federal Income Tax Considerations" in the Registration
Statement. No opinion is expressed as to any matter not discussed therein.
This opinion is based on various statutory provisions,
regulations promulgated thereunder and interpretations thereof by the Internal
Revenue Service and the courts having jurisdiction over such matters, all of
which are subject to change either prospectively or retroactively. Also, any
variation or difference in the facts from those set forth in the Registration
Statement may affect the conclusion stated herein.
This opinion is rendered to you solely for use in connection with
the Registration Statement. We consent to your filing this opinion as an
exhibit to the Registration Statement and to the reference of our firm under the
heading "Certain Federal Income Tax Considerations."
Very truly yours,
<PAGE>
Exhibit 10.1
STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement (this "Agreement") is entered into as of
January 21, 1998 by and among Accuride Corporation, a Delaware corporation, (the
"Company"), Phelps Dodge Corporation, a New York corporation ("Phelps Dodge")
and Hubcap Acquisition L.L.C., a Delaware limited liability company (the
"Hubcap").
RECITALS
Pursuant to a Stock Subscription and Redemption Agreement, dated as of
November 17, 1997, among the Company, Phelps Dodge and Hubcap (the "Subscription
Agreement"), upon the satisfaction of certain conditions in the Subscription
Agreement, (a) Hubcap has subscribed for and purchased from the Company, and the
Company has issued and sold to Hubcap ninety (90) shares of Common Stock and (b)
the Company has purchased from Phelps Dodge ninety (90) shares of Common Stock,
immediately after which Phelps Dodge owns ten (10) shares of Common Stock (the
"Retained Shares").
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized terms shall have
the following meanings:
AFFILIATE: When used with respect to a specified Person, another
Person that, either directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified.
BOARD: The Board of Directors of the Company.
CLOSING DATE: The date hereof.
COMMON STOCK: The Common Stock, par value $0.01 per share, of the
Company.
Common Stock Outstanding: The aggregate number of shares of Common
Stock from time to time outstanding and all such shares issuable (i) upon
conversion of all indebtedness or shares of stock convertible into or
exchangeable for Common Stock from time to time outstanding, and (ii) upon the
exercise of all outstanding rights, warrants or options to subscribe for or
purchase Common Stock or any securities set forth in subsection (i) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended from
time to time.
<PAGE>
EXEMPT TRANSACTION: See Section 3(f) hereof.
INITIAL PUBLIC OFFERING: The first Underwritten Offering of Common
Stock.
KKR AFFILIATE: With respect to a KKR Investor shall mean a Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with the KKR Investor; PROVIDED,
HOWEVER, that KKR Affiliate shall not in any event include any limited partner
of a KKR Investor or any limited partner of a member or a general partner of a
KKR Investor.
KKR HOLDER: The KKR Investor and any Person to whom a KKR Holder
transfers shares of Common Stock which Person is required by this Agreement to
be bound by the provisions of this Agreement.
KKR Investor: Hubcap.
KKR SHARES: As of any date of determination, the shares of Common
Stock then held by the KKR Holders.
NASD: National Association of Securities Dealers, Inc.
PERSON: An individual, partnership, limited liability company, joint
venture, corporation, trust or unincorporated organization, a government or any
department, agency or political subdivision thereof or other entity.
PHELPS HOLDER: Phelps Dodge and any Person to whom Phelps Dodge
transfers shares of Common Stock which Person is required by this Agreement to
be bound by the provisions of this Agreement.
PHELPS SHARES: As of any date of determination, the shares of Common
Stock then held by the Phelps Holder.
PIGGYBACK NOTICE: See Section 5(a) hereof.
PIGGYBACK REGISTRATION: A registration pursuant to Section 5 hereof.
PROSPECTUS: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement, including post-effective
amendments and all material incorporated by reference in such prospectus.
REGISTRABLE SECURITIES: All Retained Shares and any other securities
of the Company which may be issued or distributed with respect to, or in
exchange or substitution for, or conversion of, such Retained Shares and such
other securities pursuant to a stock split, stock dividends, or other
distribution, merger, consolidation, reclassification or recapitalization or
otherwise; PROVIDED, HOWEVER, that any Registrable Securities shall cease to be
Registrable Securities when (i) a Registration Statement with respect to the
sale of such Registrable Securities has been declared effective under the
Securities Act and such Registrable Securities
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have been disposed of in accordance with the plan of distribution set forth in
such Registration Statement, (ii) such Registrable Securities are distributed
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act, (iii) such Registrable Securities shall have been otherwise
transferred to a Person other than a KKR Investor and new certificates for them
not bearing a legend restricting further transfer under the Securities Act shall
have been delivered by the Company or (iv) held by a Phelps Holder which is
permitted to dispose of such Registrable Securities pursuant to Rule 144(k) of
the Securities Act and such Phelps Holder and its Affiliates own in the
aggregate less than 1% of Common Stock on a fully diluted basis; and PROVIDED,
FURTHER, that any securities that have ceased to be Registrable Securities
cannot thereafter become Registrable Securities and any security that is issued
or distributed in respect of securities that have ceased to be Registrable
Securities is not a Registrable Security.
REGISTRATION: A Piggyback Registration.
REGULATION D: The rules and regulations promulgated under the
Securities Act and commonly known as Regulation D.
REGISTRATION STATEMENT: Any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended from time to
time.
TRANSFER: See Section 2(b).
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A sale of Common
Stock to an underwriter for reoffering to the public pursuant to an effective
registration statement under the Securities Act.
Capitalized terms used herein and not defined herein shall have the
meaning assigned to them in the Subscription Agreement.
2. RESTRICTIONS ON TRANSFER; RIGHT OF FIRST REFUSAL.
(a) Except for transfers to a Proposed Purchaser pursuant to Section
3 or 4 hereof, and transfers pursuant to an effective registration statement
under the Securities Act, each Phelps Holder agrees not to Transfer any Phelps
Shares unless the transferee executes an agreement in form reasonably
satisfactory to the KKR Investor providing that such transferee shall comply
fully with the terms of this Agreement. No Transfer of Phelps Shares shall be
made unless the certificate (or certificates) representing shares of Phelps
Shares to be issued in such transfer shall bear the legend set forth below,
except for transfers pursuant to an effective registration statement:
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<PAGE>
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
COMPLIES WITH THE PROVISIONS OF THE STOCKHOLDERS' AGREEMENT DATED AS OF
JANUARY 21, 1998 AMONG ACCURIDE CORPORATION (THE "COMPANY") , THE HOLDER
NAMED ON THE FACE HEREOF, HUBCAP ACQUISITION LLC AND OTHERS (A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY). EXCEPT AS OTHERWISE
PROVIDED IN SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR (B) IF (I) THE COMPANY HAS BEEN FURNISHED WITH A SATISFACTORY
OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT OR THE RULES AND REGULATIONS IN EFFECT
THEREUNDER, AND IN COMPLIANCE WITH APPLICABLE PROVISIONS OF STATE
SECURITIES LAWS, AND (II) IF THE HOLDER IS A CITIZEN OR RESIDENT OF ANY
COUNTRY OTHER THAN THE UNITED STATES, OR THE HOLDER DESIRES TO EFFECT ANY
SUCH TRANSACTION IN ANY SUCH COUNTRY, THE COMPANY HAS BEEN FURNISHED WITH A
SATISFACTORY OPINION OR OTHER ADVICE OF COUNSEL FOR THE HOLDER THAT SUCH
TRANSACTION WILL NOT VIOLATE THE LAWS OF SUCH COUNTRY."
(b) Each Phelps Holder agrees that it will not, directly or
indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of any shares of any Phelps Shares (any such act, except if effected
pursuant to Section 3 or 4 hereof, sometimes referred to herein as a "Transfer,"
whether voluntary or involuntary) unless such Transfer is in compliance with the
terms and conditions of this Agreement and (i) the Transfer is pursuant to an
effective registration statement under the Securities Act or (ii) (A) counsel
for such Phelps Holder shall have furnished the Company with an opinion,
reasonably satisfactory in form and substance to the Company, that no such
registration is required because of the availability of an exemption from
registration under the Securities Act and (B) if such Phelps Holder is a citizen
or resident of any country other than the United States, or such Phelps Holder
desires to effect any Transfer in any such country, counsel for the Phelps
Holder (which counsel shall be reasonably satisfactory to the Company) shall
have furnished the Company with an opinion or other advice satisfactory in form
and substance to the Company to the effect that such Transfer will comply with
the securities laws of such jurisdiction.
(c) Notwithstanding any term of this Agreement to the contrary, and
subject to Sections 2(d) and 2(e), if, at any time prior to an Underwritten
Offering, a Phelps Holder receives a bona fide offer to purchase any or all of
its Phelps Shares (the "Offer") from a third party (the "Offeror") which the
Phelps Holder wishes to accept, the Phelps Holder shall cause the Offer to be
reduced to writing and shall notify the Company in writing of its wish to accept
the
4
<PAGE>
Offer. The Phelps Holder's notice shall contain an irrevocable offer to sell
such Phelps Shares to the Company (in the manner set forth below) at a purchase
price equal to the price contained in, and on the same terms and conditions of,
the Offer, and shall be accompanied by a true copy of the Offer (which shall
identify the Offeror). At any time within 45 days after the date of the receipt
by the Company of the Phelps Holders' notice, the Company shall have the right
and option to purchase, or to arrange for a third party to purchase, all of the
Phelps Shares covered by the Offer either (i) at the same price and on the same
terms and conditions as the Offer or (ii) if the Offer includes any
consideration other than cash, then at the sole option of the Phelps Holder, at
the equivalent all-cash price, determined in good faith by the Board, by
delivering a certified bank check or checks or wire transfer in the appropriate
amount to the Phelps Holder at the principal office of the Company against
delivery of certificates or other instruments representing Phelps Shares so
purchased, appropriately endorsed by the Phelps Holder. If at the end of such
45-day period, the Company has not tendered the purchase price for such shares
in the manner set forth above, the Phelps Holder may during the succeeding 30-
day period sell not less than all of shares of Common Stock covered by the Offer
to the Offeror at a price and on terms materially no less favorable to the
Phelps Holder than those contained in the Offer. No sale may be made to any
Offeror unless the Offeror agrees in writing with the Company to be bound by the
provisions of this Agreement as if it were a Phelps Holder. Promptly after such
sale, the Phelps Holder shall notify the Company of the consummation thereof and
shall furnish such evidence of the completion and time of completion of such
sale and of the terms thereof as may reasonably be requested by the Company.
If, at the end of the 30-day period following the expiration of the 45-day
period for the Company to purchase Phelps Shares, the Phelps Holder has not
completed the sale of such Phelps Shares as aforesaid, all the restrictions on
sale, transfer or assignment contained in this Section 2(c) shall again be in
effect with respect to such Phelps Shares. The terms of this Section 2(c) shall
not apply to a sale of Phelps Shares by a Phelps Holder under Section 3 or by a
Bring-Along Seller pursuant to Section 4.
(d) Subject to Section 2(e), notwithstanding any other term of this
Section 2,
(i) Any holder of Phelps Shares who is an individual may
Transfer any of his or her Phelps Shares to a member of the immediate family (as
defined in Regulation S-K 404(a) under the Securities Act) of such holder;
provided, however, that no such Transfer shall be effective until such member of
the immediate family has delivered to the Company a written acknowledgment and
agreement in form and substance reasonably satisfactory to the Company that the
Phelps Shares to be received by such member of the Immediate Family are subject
to all the provisions of this Agreement and that such Member of the Immediate
Family is bound hereby and a party hereto as a holder of Phelps Shares.
(ii) Upon the death of any holder of Phelps Shares who is an
individual, the Phelps Shares held by such holder may be distributed by will or
other instrument taking effect at death or by applicable laws of descent and
distribution to such holder's estate, executors, administrators and personal
representatives, and then to such holder's heirs, successors, legatees or
distributees, whether or not such recipients are Members of the Immediate Family
of such holder; PROVIDED, HOWEVER, that no such Transfer shall be effective
until the recipient has delivered to the Company a written acknowledgment and
agreement in form and substance reasonably satisfactory to the Company that the
Phelps Shares to be received by such
5
<PAGE>
recipient are subject to all the provisions of this Agreement and that such
recipient is bound hereby and a party hereto as a holder of Phelps Shares.
(iii) Any holder of the Phelps Shares who is an individual may
Transfer any or all of the Phelps Shares to a charitable trust; PROVIDED,
HOWEVER, that no such Transfer shall be effective until the trustees of each
trust have delivered to the Company a written acknowledgment and agreement in
form and substance reasonably satisfactory to the Company that the shares of
Common Stock to be received by such trust are subject to all the provisions of
this Agreement and that the trustees and the trust are bound hereby and a party
hereto as a holder of shares of Common Stock.
(iv) Any holder of the Phelps Shares may Transfer any or all
of the Phelps Shares (A) to an Affiliate of such holder or (B) in connection
with a merger, consolidation, business combination or similar transaction
involving such holder; PROVIDED, HOWEVER, that no such Transfer shall be
effective until the transferee has delivered to the Company a written
acknowledgment and agreement in form and substance reasonably satisfactory to
the Company that the shares of Common Stock to be received by such transferee
are subject to all the provisions of this Agreement and that such transferee is
bound hereby and a party hereto as a holder of shares of Common Stock.
(e) FURTHER RESTRICTION ON TRANSFER. Notwithstanding any of the
terms of this Section 2, a Phelps Holder may not Transfer any Phelps Shares to a
Person which is engaged, directly or indirectly, in the manufacture, sale or
distribution, or owns, manages or controls, directly or indirectly, any Person
which engages in the manufacture, sale or distribution, of rims and wheels for
vehicles anywhere; PROVIDED, that the foregoing shall not prohibit a Transfer
that is otherwise permitted by Section 2(d) as long as the transferee disposes
of the Phelps Shares as promptly as practicable but in no event later than 60
days after such Transfer.
3. "TAG-ALONG" RIGHT WITH RESPECT TO SALES BY KKR HOLDERS.
(a) SALES OF COMMON STOCK BY KKR HOLDERS. With respect to any
proposed sale or other disposition for value (collectively, a "Sale") of any
shares of Common Stock by a KKR Holder or KKR Holders (collectively, for
purposes of this Section 3, the "KKR Holder"), to a Person (a "Proposed
Purchaser") during the term of this Agreement, other than pursuant to an Exempt
Transaction, each Phelps Holder shall have the right and option to participate
in such Sale, on the same terms and subject to the same conditions as the Sale
by such KKR Holder of its Common Stock, for up to a number of Phelps Shares
owned by such Phelps Holder equaling the number derived by multiplying the total
number of shares of Common Stock which the KKR Holder proposes to sell (the
"Proposed Number of Shares") by a fraction, the numerator of which is the total
number of Phelps Shares owned by such Phelps Holder and the denominator of which
is the sum of (i) the total number of Phelps Shares owned by such Phelps Holder,
(ii) the total number of KKR Shares, and (iii) the total number of shares of
Common Stock (determined on a fully diluted basis) owned by Persons entitled to
the benefits of any other "tag-along" rights arising as a result of such
transfer.
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(b) NOTICES. The KKR Holder shall notify, or cause to be notified,
the Phelps Holders in writing of each proposed Sale subject to Section 3(a)
above (the "KKR Notice") promptly, but in any event no later than ten (10)
business days prior to the proposed Sale. Such notice shall set forth: (i) the
Proposed Number of Shares, (ii) the name and address of the Proposed Purchaser,
and (iii) the proposed amount of consideration and the material terms and
conditions of the Sale (the "Material Terms") and, if any portion of the
proposed consideration is not cash, the notice shall describe the terms of the
proposed consideration. The tag-along right may be exercised by any Phelps
Holder by delivery of a written notice to the KKR Holder (the "Tag-Along
Notice") within ten (10) business days following receipt of the notice specified
in the preceding sentence. The Tag-Along Notice shall state the amount of
Phelps Shares that such Phelps Holder proposes to include in such Sale to the
Proposed Purchaser. Each accepting Phelps Holder shall (i) prior to closing of
any such transfer, execute any purchase agreement or other documentation
required by the Proposed Purchaser to consummate the transfer, which purchase
agreement and other documentation shall, subject to Section 3(h), be on terms no
less favorable to the Phelps Holder than those executed by the KKR Holder with
respect to their Common Stock, including, without limitation, the Sales price,
the provision of, and representation and warranty as to, information requested
by the KKR Investor or the KKR Holder, and the provision of requisite
indemnifications; PROVIDED, that (w) no Phelps Holder will be required to
provide any information, representations or warranties, or covenants (other than
indemnification permitted by this Section 3) with respect to the Company, its
business or its operations, (x) any indemnification provided by the
Participating Sellers shall be pro rata in proportion with the number of Phelps
Shares to be sold (and on terms no less favorable to the Phelps Holder than the
indemnification provided by the KKR Holder), (y) the Phelps Holder shall not be
required to place any of the consideration in a post-closing escrow if permitted
by the Proposed Purchaser and (z) the KKR Holder and KKR Affiliates shall be
entitled to provide advisory services in connection with any Sale and to receive
compensation therefrom not subject to the terms of this paragraph (b), and (ii)
at the closing of any such Sale, deliver to the Phelps Holder the certificate or
certificates representing Phelps Shares to be sold or otherwise disposed of
pursuant to such Sale by such Phelps Holder, duly endorsed for transfer with
signatures guaranteed, against receipt of the purchase price thereof. If the
Phelps Holder has not provided the Tag Along Notice within the period specified
above or fails to otherwise comply with the terms of this Section 3 shall be
deemed to have waived its rights under this Section 3 with respect to the Sale
to the Proposed Purchaser. A Tag-Along Notice shall be irrevocable unless (A)
there shall be a material adverse change in the Material Terms or (B) otherwise
mutually agreed to in writing by the KKR Holder and such Participating Seller.
Promptly after the receipt of the Tag-Along Notice, the KKR Holder or the KKR
Investor will furnish the Phelps Holder with a copy of the proposed agreement
for the transfer, if any.
(c) NUMBER OF SHARES TO BE SOLD. If a Tag-Along Notice is received
pursuant to Section 3(b), a Phelps Holder shall be permitted to sell to the
Proposed Purchaser up to the maximum number of Phelps Shares determined as set
forth in Section 3(a) above, and the KKR Holder shall be permitted to sell to
the Proposed Purchaser up to a number of shares of Common Stock equal to the
Proposed Number of Shares, less the aggregate number of Phelps Shares of all
Phelps Holders and all other shares of Common Stock being sold to such Proposed
Purchaser in such transaction pursuant to tag-along rights arising as a result
of such transfer. Subject to the
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limitations of this Section 3(c), the KKR Holder shall have the right for a
120-day period following provision of the KKR Notice to sell to the Proposed
Purchaser up to the Proposed Number of shares of Common Stock on terms and
conditions materially no more favorable to the KKR Holder than those stated in
the Tag-Along Notice; provided that the provisions of this Section 3 will apply
to any such sale for so long as any shares of Common Stock are held by a Phelps
Holder.
(d) CUSTODY AGREEMENT AND POWER OF ATTORNEY. Upon delivering a Tag
Along Notice, the Phelps Holder will, if requested by the KKR Holder, execute
and deliver a custody agreement and power of attorney in form and substance
reasonably satisfactory to the KKR Holder (a "Custody Agreement and Power of
Attorney") with respect to Phelps Shares which are to be sold pursuant to
Section 3(b).
(e) OTHER AGREEMENTS. Subject to Section 3(b), each Phelps Holder
agrees that it will execute such other agreements as the KKR Holder or Proposed
Transferee may reasonably request in connection with a Sale pursuant to Section
3(b), the consummation of such Sale and the transactions contemplated thereby.
(f) EXEMPT TRANSACTION DEFINED. As used herein, the term "Exempt
Transaction" shall mean (i) Sales by any KKR Investor to any KKR Affiliates,
(ii) Sales by any KKR Affiliate to another KKR Affiliate or to a KKR Investor,
(iii) Sales by any KKR Investor and its respective KKR Affiliates to its
partners or members in the form of dividends or distributions (whether upon
liquidation or otherwise), and any subsequent Sales by such partners or members,
(iv) Sales by any KKR Holders made in a public distribution pursuant to an
effective registration statement under the Securities Act; or (v) a Sale, when
combined with series of transactions with the same transferee occurring within
12 months of such Sale, represent less than (10%) of the then outstanding shares
of Common Stock, PROVIDED that in the case of clauses (i) and (ii) above the
transferee agrees in writing to be bound by the provisions of this Agreement,
including this paragraph (f); PROVIDED, FURTHER that in the case of clause (iii)
above, if the transferee is an Affiliate of Kohlberg, Kravis, Roberts & Co.,
such transferee agrees in writing to be bound by the provisions of this
Agreement, including this paragraph (f).
4. "BRING-ALONG" RIGHT WITH RESPECT TO PHELPS SHARES.
(a) SALES BY KKR HOLDERS. In the event that the KKR Holders
determine, during the term of this Agreement, to effect a Sale of any of the KKR
Shares to a Proposed Purchaser, other than in an Exempt Transaction (a
"Bring-Along Sale"), then upon the request of the KKR Holders, each Phelps
Holder (a "Bring-Along Seller") will sell to such Proposed Purchaser the number
of Phelps Shares equal to the product of (i) the number of Phelps Shares then
held by such Phelps Holder, multiplied by (ii) the ratio of (A) the number of
shares of Common Stock which the KKR Holders propose to sell in the Bring-Along
Sale, divided by (B) the number of shares of Common Stock then held by the KKR
Holders. The terms and conditions of such Sale shall be no less favorable to
the Phelps Holder than those received by the KKR Holders with respect to their
Common Stock, including, without limitation, the sale price, the provision of,
and representation and warranty as to, information requested by the Company or
the KKR Holders, and the provision of requisite indemnifications; PROVIDED, that
(i) no Phelps
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Holder will be required to provide any information, representations or
warranties, or covenants (other than indemnification permitted by this Section
4) with respect to the Company, its business or its operations, (ii) any
indemnification provided by the Bring-Along Sellers shall be pro rata in
proportion with the number of Phelps Shares to be sold (and on terms no less
favorable to the Bring-Along Sellers than the indemnification provided by the
KKR Holders), (iii) the Bring-Along Sellers shall not be required to place any
of the consideration in a post-closing escrow if permitted by the Proposed
Purchaser and (iv) KKR Holders and KKR Affiliates shall be entitled to provide
advisory services in connection with any Sale and to receive compensation
therefrom not subject to the terms of this paragraph (a). Without limiting the
foregoing, upon the request of the KKR Holders made pursuant to this Section
4(a), the Phelps Holder will agree, in connection with the Sale, to, and will,
vote its shares of Common Stock in favor of any Sale and will not exercise any
dissenters' or appraisal rights with respect thereto (so long as the KKR Holders
vote their shares in favor of the Sale and not exercise such rights).
(b) NOTICE. Prior to making any Bring-Along Sale, the KKR Holders
shall, if they determine that Phelps Holders should participate in such Sale,
provide each Phelps Holder with written notice (the "Bring-Along Notice") not
less than 10 business days prior to the proposed date of the Bring-Along Sale
(the "Bring-Along Sale Date"). The Bring-Along Notice shall set forth: (i) the
name and address of the Proposed Purchaser; (ii) the proposed amount and form of
consideration to be paid per share of Common Stock and the material terms and
conditions of the Sale and, if any portion of the proposal consideration is not
cash, the notice shall describe the terms of such consideration; and (iii) the
Bring-Along Sale Date and the date upon which the Phelps Holder shall deliver to
the KKR Holders the certificates representing Phelps Shares, duly endorsed, and
the limited power of attorney referred to below. Each Phelps Holder shall (i)
prior to closing of any such transfer, execute any purchase agreement or other
documentation required by the Proposed Purchaser to consummate the Sale (subject
to paragraph (a) above), which purchase agreement and other documentation shall
be on terms no less favorable to the Phelps Holders than those executed by the
KKR Holders with respect to the Common Stock, and (ii) at the closing of any
such Sale, deliver to the Proposed Purchaser the certificate or certificates
representing Phelps Shares, duly endorsed for transfer with signatures
guaranteed, against receipt of the purchase price thereof.
(c) EFFECT OF BRING-ALONG SALE. If a Phelps Holder receives its
proportionate share of the purchase price from a Bring-Along Sale, but has
failed to deliver certificates representing the number of Phelps Shares held by
it as determined in accordance with this Section 4, it shall for all purposes be
deemed no longer to be a holder of such shares, shall have no voting rights in
respect of such shares, shall not be entitled to any dividends or other
distributions with respect to such shares, and shall have no other rights or
privileges granted to stockholders under law or this Agreement.
5. REGISTRATIONS.
(a) PIGGYBACK REGISTRATION. Subject to Section 6, if at any time
after the Company's Initial Public Offering the Company files a Registration
Statement (other than a registration statement on Form S-4 or S-8 or any
successor form to such Forms or any registration of securities as it relates to
an offering and sale to management of the Company
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pursuant to any employee stock plan or other employee benefit plan arrangement)
with respect to an offering that includes any shares of Common Stock, each
Phelps Holder hereby shall have all of the rights and privileges of the
Registration Rights Agreement of even date herewith, among the Company and
Hubcap (the "Registration Rights Agreement") and the Company and each Phelps
Holder agrees to be bound by all of the terms, conditions and obligations of the
Registration Rights Agreement, in each case as if the Phelps Holder were a
"Holder" (as defined in the Registration Rights Agreement) and as if the
Registrable Securities under this Agreement were "Registrable Securities" (as
defined in the Registration Rights Agreement); PROVIDED, HOWEVER, that this
Section 5(a) shall not give the Phelps Holder any rights under Section 3 of the
Registration Rights Agreement to request registration of the Phelps Shares.
Notwithstanding the foregoing, in the event that shares held by the KKR Holders
are registered in the Company's Initial Public Offering, the Phelps Holder shall
have the right to include in the Initial Public Offering that percentage of the
Phelps Shares equal to the percentage of KKR Shares included in the Initial
Public Offering.
(b) DEMAND REGISTRATION. Subject to Section 6 and the provisions of
the Registration Rights Agreement, at any time after the Company's Initial
Public Offering, on no more than one occasion following 180 days after the
Company's Initial Public Offering, Phelps Holders owning a majority of the
Phelps Shares may make a written request to the Company for a "shelf"
registration under and in accordance with the provisions of the Securities Act
of all or part of the Phelps Shares. Promptly upon receipt of any such request
(but in no event more than five business days thereafter), the Company will
serve written notice (the "Demand Notice") of such registration request to all
Phelps Holders, and the Company will include in such registration all
Registrable Securities of any Phelps Holder with respect to which the Company
has received written requests for inclusion therein within 10 days after the
Demand Notice has been given to the applicable Phelps Holders. All requests
made pursuant to this Section 5(b) will specify the aggregate amount of
Registrable Securities to be registered. Upon making a request pursuant to this
Section 5(b), each Phelps Holder hereby shall have all of the rights and
privileges of the Registration Rights Agreement and the Company and each Phelps
Holder agrees to be bound by all of the terms, conditions and obligations of the
Registration Rights Agreement, in each case as if the Phelps Holder were a
"Holder" (as defined in the Registration Rights Agreement) and as if the
Registrable Securities under this Agreement were "Registrable Securities" (as
defined in the Registration Rights Agreement); PROVIDED, HOWEVER, that this
Section 5(b) shall not give the Phelps Holder any rights under, or subject the
Phelps Holder to the limitations contained in, Sections 3(a), 3(f) and 3(g) of
the Registration Rights Agreement.
6. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
No Person may participate in any Underwritten Registration hereunder
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled to
approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements. Nothing in this
Section 6 shall be construed to create any additional rights regarding the
Registration of shares of Common Stock otherwise than as set forth herein.
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7. FINANCIAL STATEMENTS. During the term of this Agreement, the Company
shall furnish the Phelps Holder with a copy of the Company's financial
statements for each fiscal year ending after the date hereof (which shall be
audited if the Company has prepared audited financial statements) as soon as
practicable following the close of such fiscal year, and in any event within 120
days following the end of such fiscal year.
8. MISCELLANEOUS.
(a) TERMINATION OF AGREEMENT. Section 2 of this Agreement (and
applicable definitions in Section 1) shall terminate upon the Common Stock (or
such other class of common equity securities then held by the Phelps Holder)
being registered under the Exchange Act.
(b) ASSIGNMENT, BINDING EFFECT. This Agreement shall not be
assignable by the parties hereto, except to (i) any Person who, in connection
with a transfer of KKR Shares, is required by this Agreement, in connection with
such transfer, to agree to be bound by the provisions of this Agreement, and
(ii) any Person who in connection with a transfer of Phelps Shares is required
by this Agreement, in connection with such transfer, to agree to be bound by the
provisions of this Agreement. Subject to the foregoing, the provisions of this
Agreement shall be binding upon and accrue to the benefit of the Parties and
their respective heirs, legal representatives, successors and permitted assigns.
(c) AMENDMENTS. The provision of this Agreement, including the
provisions of this sentence, may be amended, modified or supplemented only by a
written instrument executed by holders of (i) at least a majority of the KKR
Shares, and (ii) at least a majority of the issued Phelps Shares.
(d) GOVERNING LAW. The laws of the state of Delaware shall govern
the interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be applied under principles of conflicts of
law. Any suit, action or proceeding by a party hereto with respect to this
Agreement, or any judgment entered by any court in respect of any thereof, may
be brought in any state or federal court of competent jurisdiction in the State
of Delaware, and each party hereto hereby submits to the exclusive jurisdiction
of such courts for the purpose of any such suit, action, proceeding or judgment.
By the execution and delivery of this Agreement, the Company and Hubcap hereby
appoint The Corporation Trust Company, at its office in Wilmington, Delaware,
and Phelps Dodge hereby appoints The Corporation Trust Company, at its office in
New York, New York, in each case as its agent upon which process may be served
in any such suit, action or proceeding. Service of process upon such agent,
together with notice of such service given to a party hereto in the manner
provided in Section 7(f) hereof, shall be deemed in every respect effective
service of process upon it in any suit, action or proceeding. Nothing herein
shall in any way be deemed to limit the ability of a party hereto to serve any
such writs, process or summonses in any other manner permitted by applicable law
or to obtain jurisdiction over any party hereto, in such other jurisdictions and
in such manner, as may be permitted by applicable law. Each party hereto hereby
irrevocably waives any objections which it may now or hereafter have to the
laying of the venue of any suit, action or proceeding arising out of or relating
to this Agreement brought in any state or federal court of competent
jurisdiction in the State of Delaware, and hereby further irrevocably waives
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any claim that any such suit, action or proceeding brought in any such court has
been brought in any inconvenient forum. No suit, action or proceeding against a
party hereto with respect to this Agreement may be brought in any court,
domestic or foreign, or before any similar domestic or foreign authority other
than in a court of competent jurisdiction in the State of Delaware, and each
party hereto hereby irrevocably waives any right which it may otherwise have had
to bring such an action in any other court, domestic or foreign, or before any
similar domestic or foreign authority.
INTERPRETATION. The headings of the sections contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not affect the meaning or interpretation of this
Agreement.
NOTICES. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified mail,
return receipt requested, postage prepaid, to the parties to this Agreement at
the following address or to such other address as either party to this Agreement
shall specify by notice to the other:
(1) If to the KKR Investor or a KKR Holder, to it in care of:
Kohlberg Kravis Roberts & Co.
2800 Sand Hill Road, Suite 200
Menlo Park, California 94025
Attn: James H. Greene, Jr.
with a copy to:
Latham & Watkins
75 Willow Road
Menlo Park, CA 94025
Attention: Peter F. Kerman, Esq.
(2) If to the Company, to it in care of:
Accuride Corporation
2315 Adams Lane
P.O. Box 40
Henderson, Kentucky 42420
Attention: President
with a copy to:
Latham & Watkins
75 Willow Road
Menlo Park, CA 94025
Attention: Peter F. Kerman, Esq.
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(3) If to Phelps Dodge or a Phelps Holder, to it in care of:
Phelps Dodge Corporation
2600 North Central Avenue
Phoenix, Arizona 85004
Facsimile: (602) 234-8050
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Facsimile: (212) 909-6836
Attention: James C. Scoville, Esq.
(g) WAIVER AND CONSENT. No action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained herein. The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as waiver of any preceding
or succeeding breach and no failure by any party to exercise any right or
privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder. Each party hereto,
in addition to being entitled to exercise all rights provided herein, in the
charter or granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. Each party hereto
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(h) INSPECTION. Copies of this Agreement will be available for
inspection or copying by any party at the offices of the Company through the
Secretary of the Company.
(i) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to constitute one and the same agreement.
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained
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herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matters.
(l) LIMITED LIABILITY. Notwithstanding any provision hereof, none of
the obligations of the KKR Holders, the Company, any Phelps Holder or any
Affiliate of any of the foregoing under this Agreement shall be an obligation of
any officer, director, member, limited partner or general partner of any of the
foregoing entities (or of any officer, director, member, limited partner or
general partner of any member, limited partner or general partner of any of the
foregoing entities). Any liability or obligation of the KKR Holders, the
Company, any Phelps Holder and any Affiliate of the Company arising out of this
Agreement shall be limited to and satisfied only out of the assets of the KKR
Holders, the Company, any Phelps Holder and such Affiliate of the Company,
respectively.
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IN WITNESS WHEREOF, the Parties have executed this Stockholders'
Agreement as of the date first above written.
ACCURIDE CORPORATION,
a Delaware corporation
By: /s/ William P. Greubel
-----------------------------
Its: President
HUBCAP ACQUISITION L.L.C.,
a Delaware limited liability company
By: /s/ James H. Greene, Jr.
-----------------------------
Its: President
PHELPS DODGE CORPORATION,
a New York corporation
By: /s/ Scott A. Crozier
-----------------------------
Its: Duly Authorized Signatory
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Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
by and between
ACCURIDE CORPORATION
as Issuer and
HUBCAP ACQUISITION L.L.C.
as Investors
Dated as of January 21, 1998
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of January 21, 1998, by and among Accuride Corporation, a
Delaware corporation (the "Issuer"), and Hubcap Acquisition L.L.C., a Delaware
limited liability company ("Hubcap").
This Agreement is made pursuant to that certain Stock Subscription and
Redemption Agreement, dated as of November 17, 1997, by and among the Issuer,
Hubcap and Phelps Dodge Corporation (the "Stock Subscription Agreement"). In
order to induce the Investors to consummate the transactions contemplated by the
Stock Subscription Agreement, the Issuer has agreed to provide the registration
rights set forth in this Agreement.
In consideration of the mutual covenants and agreements contained
herein, the parties hereto agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
AFFILIATE: With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
BOARD: The Board of Directors of the Issuer.
COMMON STOCK: The Common Stock, par value $0.01 per share, of the
Issuer.
DEMAND-NOTICE: see Section 3(a) hereof.
DEMAND REGISTRATION: A registration pursuant to Section 3(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended from
time to time.
HOLDER: Any party hereto (other than the Issuer) and any holder of
Registrable Securities who agrees in writing to be bound by the provisions of
this Agreement.
INVESTORS: Hubcap and any of its Affiliates which hold Registrable
Securities, collectively.
NASD: National Association of Securities Dealers, Inc.
PERSON: An individual, partnership, limited liability company, joint
venture, corporation, trust or unincorporated organization, a government or any
department, agency or political subdivision thereof or other entity.
PIGGYBACK NOTICE: See Section 4(a) hereof.
<PAGE>
PIGGYBACK REGISTRATION: A registration pursuant to Section 4 hereof.
PROSPECTUS: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
REGISTRABLE SECURITIES: All shares of Common Stock issuable on the
date hereof to the Investors pursuant to the Stock Subscription Agreement and
any securities of the Issuer which may be issued or distributed with respect to,
or in exchange or substitution for, or conversion of, such Common Stock and such
other securities pursuant to a stock dividend, stock split or other
distribution, merger, consolidation, recapitalization or reclassification or
otherwise; PROVIDED, HOWEVER, that any Registrable Securities shall cease to be
Registrable Securities when (i) a Registration Statement with respect to the
sale of such Registrable Securities has been declared effective under the
Securities Act and such Registrable Securities have been disposed of in
accordance with the plan of distribution set forth in such Registration
Statement, (ii) such Registrable Securities are distributed pursuant to Rule 144
(or any similar provision then in force) under the Securities Act or (iii) such
Registrable Securities shall have been otherwise transferred to a Person other
than an Investor and new certificates for them not bearing a legend restricting
further transfer under the Securities Act shall have been delivered by the
Issuer; and PROVIDED, FURTHER, that any securities that have ceased to be
Registrable Securities cannot thereafter become Registrable Securities and any
security that is issued or distributed in respect of securities that have ceased
to be Registrable Securities is not a Registrable Security.
REGISTRATION: A Demand Registration or a Piggyback Registration.
REGISTRATION EXPENSES: See Section 7 hereof.
REGISTRATION STATEMENT: Any registration statement of the Issuer
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended from time to
time.
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A sale of
securities of the Issuer to an underwriter for reoffering to the public.
2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) REGISTRABLE SECURITIES. The securities entitled to the benefits
of this Agreement are the Registrable Securities.
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(b) HOLDERS OF REGISTRABLE SECURITIES. A Person is deemed to be a
Holder of Registrable Securities whenever such Person owns Registrable
Securities or has the right to acquire such Registrable Securities, whether or
not such acquisition has actually been affected and disregarding any legal
restrictions upon the exercise of such right.
3. DEMAND REGISTRATION
(a) RIGHT TO DEMAND; DEMAND NOTICES. Subject to the provisions of
this Section 3 at any time and from time to time commencing 30 days after the
date hereof, the Investors may make a written request to the Issuer for
registration under and in accordance with the provisions of the Securities Act
of all or part of the Registrable Securities. Promptly upon receipt of any such
request (but in no event more than five business days thereafter), the Issuer
will serve written notice (the "Demand Notice") of such registration request to
all Holders, and the Issuer will include in such registration all Registrable
Securities of any Holder with respect to which the Issuer has received written
requests for inclusion therein within 10 days after the Demand Notice has been
given to the applicable Holders. All requests made pursuant to this Section 3
will specify the aggregate amount of Registrable Securities to be registered and
will also specify the intended methods of disposition thereof.
(b) ISSUER'S RIGHT TO DEFER REGISTRATION. If the Issuer is requested
to effect a Demand Registration and the Issuer furnishes to the Investors
requesting such registration a copy of a resolution of the Board certified by
the secretary of the Issuer stating that in the good faith judgment of the Board
it would be adverse to the Issuer and its securityholders for such registration
statement to be filed on or before the date such filing would otherwise be
required hereunder, the Issuer shall have the right to defer such filing for a
period of not more than 90 days after receipt of the request for such
registration from such Investors. If the Issuer shall so postpone the filing of
a registration statement and if the Investors within 30 days after receipt of
the notice of postponement advise the Issuer in writing that such Investors have
determined to withdraw such request for registration, then such Demand
Registration shall be deemed to be withdrawn and such request shall be deemed
not to have been exercised for purposes of determining whether the Holders
included in such Demand Registration are required to pay their PRO RATA portion
of the Registration Expenses pursuant to Section 3(d) hereof.
(c) REGISTRATION STATEMENT FORM. Registrations under this Section 3
shall be on such appropriate registration form of the SEC (i) as shall be
selected by the Issuer and as shall be reasonably acceptable to the Investors
and (ii) as shall permit the disposition of such Registrable Securities in
accordance with the intended method or methods of disposition specified in the
Investors' request for such registration. If, in connection with any
registration under this Section 3 which is proposed by the Issuer to be on
Form S-3 or any successor form to such Form, the managing underwriter, if any,
shall advise the Issuer in writing that in its opinion the use of another
permitted form is of material importance to the success of the offering, then
such registration shall be on such other permitted form.
(d) EXPENSES. The Issuer will pay all Registration Expenses in
connection with the first six (6) Demand Registrations of Registrable Securities
pursuant to this Section 3
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upon the written request of the Investors. All expenses for any subsequent
Demand Registrations of Registrable Securities pursuant to this Section 3 shall
be paid PRO RATA by the Issuer and all other Persons (including the Holders)
participating in such Demand Registration on the basis of the relative number of
shares of Common Stock of each such Person included in such registration.
(e) EFFECTIVE REGISTRATION STATEMENT. The Issuer shall be deemed to
have effected a Demand Registration if (i) the Registration Statement relating
to such Demand Registration is declared effective by the SEC; PROVIDED, HOWEVER,
that no Demand Registration shall be deemed to have been effected if (x) such
registration, after it has become effective, is interfered with by any stop
order, injunction or other order or requirement of the SEC or other governmental
agency or court by reason of an act or omission by the Issuer or (y) the
conditions to closing specified in the purchase agreement or underwriting
agreement entered into in connection with such registration are not satisfied
because of an act or omission by the Issuer (other than a failure of the Issuer
or any of its representatives to execute or deliver any closing certificate by
reason of facts or circumstances not within the control of the Issuer or such
representatives) or (ii) at any time after the Investors request a Demand
Registration and prior to the effectiveness of the Registration Statement, the
preparation of such Registration Statement is discontinued or such Registration
Statement is withdrawn or abandoned at the request of the Investors unless such
Investors have elected to pay and have paid to the Issuer in full the
Registration Expenses in connection with such Registration Statement.
(e) PRIORITY ON DEMAND REGISTRATIONS. If the managing underwriter or
agent of a Demand Registration (or, in the case of a Demand Registration not
being underwritten, any of the Investors), advises the Issuer in writing that in
its opinion the number of securities requested to be included in such Demand
Registration exceeds the number which can be sold in the offering covered by
such Demand Registration without a significant adverse effect on the price,
timing or distribution of the securities offered, the Issuer will include in
such registration only the number of securities that, in the opinion of such
underwriter or agent (or any of the Investors, as the case may be), can be sold
without a significant adverse effect on the price, timing or distribution of the
securities offered, selected PRO RATA among the Holders which have requested to
be included in such Demand Registration based upon the relative aggregate amount
of gross proceeds to be received by such Holders in such offering to the extent
necessary to reduce the total amount of securities to be included in such
offering to the amount recommended by such underwriters or agent (or any of the
Investors, as the case may be).
The Issuer and other holders of securities of the Issuer may include
such securities in such Registration if, but only if, such underwriter or agent
(or any of the Investors, as the case may be) concludes that such inclusion will
not interfere with the successful marketing of all the Registrable Securities
requested to be included in such registration.
(g) SELECTION OF UNDERWRITERS. If any offering pursuant to a Demand
Registration involves an Underwritten Offering, the Holders of a majority of the
Registrable Securities included in such Demand Registration shall have the right
to select the managing
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underwriter or underwriters to administer the offering, which managing
underwriters shall a firm of nationally recognized standing and reasonably
satisfactory to the Issuer.
4. PIGGYBACK REGISTRATIONS
(a) PARTICIPATION. Subject to Sections 4(b) and 10 hereof, if at any
time after the date hereof the Issuer files a Registration Statement (other than
a registration on Form S-4 or S-8 or any successor form to such Forms or any
registration of securities as it relates to an offering and sale to management
of the Issuer pursuant to any employee stock plan or other employee benefit plan
arrangement) with respect to an offering that includes any shares of Common
Stock, then the Issuer shall give prompt notice (the "Initial Notice") to the
Investors and the Investors shall be entitled to include in such Registration
Statement the Registrable Securities held by them. If the Investors elect to
include any or all of their Registrable Securities in such Registration
Statement, then the Issuer shall give prompt notice (the "Piggyback Notice") to
each Holder (excluding the Investors) and each such Holder shall be entitled to
include in such Registration Statement the Registrable Securities held by it.
The Initial Notice and Piggyback Notice shall offer the Investors and the
Holders, respectively, the opportunity to register such number of shares of
Registrable Securities as each Investor and each Holder may request and shall
set forth (i) the anticipated filing date of such Registration Statement and
(ii) the number of shares of Common Stock that is proposed to be included in
such Registration Statement. The Issuer shall include in such Registration
Statement such shares of Registrable Securities for which it has received
written requests to register such shares within 15 days after the Initial Notice
and 7 days after the Piggyback Notice has been given.
(b) UNDERWRITER'S CUTBACK. Notwithstanding the foregoing, if a
Registration pursuant to this Section 4 involves an Underwritten Offering and
the managing underwriter or underwriters of such proposed Underwritten Offering
delivers an opinion to the Holders that the total or kind of securities which
such Holders and any other persons or entities intend to include in such
offering would be reasonably likely to adversely affect the price, timing or
distribution of the securities offered in such offering, then the Issuer shall
include in such Registration (i) first, 100% of the securities the Issuer, or
the Person initiating such Registration, proposes to sell, and (ii) second, to
the extent of the amount of securities which all other Holders have requested to
be included in such Registration, which, in the opinion of the managing
underwriter or underwriters, can be sold without such adverse effect referred to
above, such amount to be allocated PRO RATA among all other Holders based upon
the relative aggregate amount of gross proceeds to be received by any other
Holders in the offering.
(c) EXPENSES. The Issuer will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 4.
(d) ISSUER CONTROL. The Issuer may decline to file a Registration
Statement after giving the Initial Notice or the Piggyback Notice, or withdraw a
Registration Statement after filing and after such Piggyback Notice, but prior
to the effectiveness of the Registration Statement, provided that the Issuer
shall promptly notify each Holder in writing of any such
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<PAGE>
action and provided further that the Issuer shall bear all reasonable expenses
incurred by such Holder or otherwise in connection with such withdrawn
Registration Statement.
(e) NO EFFECT ON DEMAND REGISTRATIONS. No registration effected
under this Section 4 shall be deemed to have been effected pursuant to Section 3
hereof or shall relieve the Issuer of its obligation to effect any registration
upon request under Section 3 hereof.
5. HOLD-BACK AGREEMENTS
(a) RESTRICTIONS ON PUBLIC SALE BY HOLDER OF REGISTRABLE SECURITIES.
Each Holder whose Registrable Securities are covered by a Registration Statement
filed pursuant to Sections 3 and 4 hereof agrees, if requested by the managing
underwriters in an Underwritten Offering, not to effect any public sale or
distribution of securities of the Issuer the same as or similar to those being
registered, or any securities convertible into or exchangeable or exercisable
for such securities, in such Registration Statement, including a sale pursuant
to Rule 144 under the Securities Act (except as part of such Underwritten
Registration), during the 7-day period prior to, and during the 90-day period
(or such longer period of up to 180 days as may be required by such underwriter)
beginning on, the effective date of any Registration Statement in which such
Holders are participating (except as part of such Registration) or the
commencement of the public distribution of securities, to the extent timely
notified in writing by the Issuer or the managing underwriters.
(b) RESTRICTIONS ON PUBLIC SALE BY THE ISSUER AND OTHERS. The Issuer
agrees not to effect any public sale or distribution of any securities the same
as or similar to those being registered by the Issuer, or any securities
convertible into or exchangeable or exercisable for such securities, during the
7-day period prior to, and during the 90-day period (or such longer period of up
to 180 days as may be required by such underwriter) beginning with, the
effective date of a Registration Statement filed under Sections 3 and 4 hereof
or the commencement of the public distribution of securities to the extent
timely notified in writing by a Holder or the managing underwriters (except as
part of such registration, if permitted, or pursuant to registrations on
Forms S-4 or S-8 or any successor form to such Forms or any registration of
securities for offering and sale to management of the Issuer pursuant to any
employee stock plan or other employee benefit plan arrangement). The Issuer
agrees to use reasonable efforts to obtain from each holder of its securities
the same as or similar to those being registered by the Issuer, or any
securities convertible into or exchangeable or exercisable for any of such
securities, an agreement not to effect any public sale or distribution of such
securities (other than securities purchased in a public offering) during such
period, except as part of any such registration if permitted.
(c) NO INCONSISTENT AGREEMENTS. Except with respect to the piggyback
registration rights described in Section 10 hereof, the Issuer will not enter
into any agreement with respect to its securities which is inconsistent with the
rights granted to the Holders by this Agreement.
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6. REGISTRATION PROCEDURES
In connection with the Issuer's Registration obligations pursuant to
Sections 3 and 4 hereof, the Issuer will use its best efforts to effect such
Registration to permit the sale of such Registrable Securities in accordance
with the intended method or methods of distribution thereof, and pursuant
thereto the Issuer will as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements relating to the applicable Demand Registration or
Piggyback Registration including all exhibits and financial statements required
by the SEC to be filed therewith, and use its best efforts to cause such
Registration Statement to become effective; PROVIDED, that the Issuer will
furnish copies of any amendments or supplements in the form filed with respect
to any Piggyback Registration, simultaneously with the filing of such amendments
or supplements;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep the
Registration Statement effective for a period of not less than 180 days (or such
shorter period which will terminate when all Registrable Securities covered by
such Registration Statement have been sold or withdrawn), or, if such
Registration Statement relates to an Underwritten Offering, such longer period
as in the opinion of counsel for the underwriters a Prospectus is required by
law to be delivered in connection with sales of Registrable Securities by an
underwriter or dealer; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act; and comply with the provisions of the Securities Act,
the Exchange Act, and the rules and regulations promulgated thereunder with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(c) notify the selling Holders and the managing underwriters, if any,
and (if requested) confirm such advice in writing, as soon as practicable after
notice thereof is received by the Issuer (i) when the Registration Statement or
any amendment thereto has been filed or becomes effective, the Prospectus or any
amendment or supplement to the Prospectus has been filed, and, to furnish such
selling Holders and managing underwriters with copies thereof, (ii) of any
request by the SEC for amendments or supplements to the Registration Statement
or the Prospectus or for additional information, (iii) of the issuance by the
SEC of any stop order suspending the effectiveness of the Registration Statement
or any order preventing or suspending the use of any preliminary Prospectus or
Prospectus or the initiation or threatening of any proceedings for such
purposes, (iv) if at any time the representations and warranties of the Issuer
contemplated by paragraph (m) below cease to be true and correct and (v) of the
receipt by the Issuer of any notification with respect to the suspension of the
qualification of the Registrable Securities for offering or sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose;
(d) promptly notify the selling Holders and the managing
underwriters, if any, at any time prior to nine months after the time of issue
of the Prospectus, when the Issuer
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becomes aware of the happening of any event as a result of which the Prospectus
included in such Registration Statement (as then in effect) contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein (in the case of the Prospectus and any preliminary
Prospectus, in light of the circumstances under which they were made) when such
Prospectus was delivered not misleading or, if for any other reason it shall be
necessary during such time period to amend or supplement the Prospectus in order
to comply with the Securities Act and, in either case as promptly as practicable
thereafter, prepare and file with the SEC, and furnish without charge to the
selling Holders and the managing underwriters, if any, a supplement or amendment
to such Prospectus which will correct such statement or omission or effect such
compliance;
(e) make every reasonable effort to obtain the withdrawal of any stop
order or other order suspending the use of any preliminary Prospectus or
Prospectus or suspending any qualification of the Registrable Securities;
(f) if requested by the managing underwriter or underwriters or a
Holder of Registrable Securities being sold in connection with an Underwritten
Offering, promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters and the Holders of a
majority of the Registrable Securities being sold agree should be included
therein relating to the plan of distribution with respect to such Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being sold to such underwriters, the purchase
price being paid therefor by such underwriters and with respect to any other
terms of the Underwritten (or best efforts underwritten) Offering of the
Registrable Securities to be sold in such offering; and make all required
filings of such Prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(g) furnish to each selling Holder and each managing underwriter,
without charge, one executed copy and as many conformed copies as they may
reasonably request, of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those incorporated
by reference);
(h) deliver to each selling Holder and the underwriters, if any,
without charge, as many copies of the Prospectus (including each preliminary
Prospectus) and any amendment or supplement thereto as such Persons may
reasonably request (it being understood that the Issuer consents to the use of
the Prospectus or any amendment or supplement thereto by each of the selling
Holders and the underwriters, if any, in connection with the offering and sale
of the Registrable Securities covered by the Prospectus or any amendment or
supplement thereto) and such other documents as such selling Holder may
reasonably request in order to facilitate the disposition of the Registrable
Securities by such Holder;
(i) on or prior to the date on which the Registration Statement is
declared effective, use its best efforts to register or qualify, and cooperate
with the selling Holders, the managing underwriter or agent, if any, and their
respective counsel in connection with the
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registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of each state and other jurisdiction of
the United States as any such seller, underwriter or agent reasonably requests
in writing and do any and all other acts or things reasonably necessary or
advisable to keep such registration or qualification in effect for so long as
such Registration Statement remains in effect and so as to permit the
continuance of sales and dealings therein for as long as may be necessary to
complete the distribution of the Registrable Securities covered by the
Registration Statement; PROVIDED that the Issuer will not be required to qualify
generally to do business in any jurisdiction where it in not then so qualified
or to take any action which would subject it to general service of process in
any such jurisdiction where it is not then so subject;
(j) cooperate with the selling Holders and the managing underwriter
or agent, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters;
(k) use its best efforts to cause the Registrable Securities covered
by the applicable Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Registrable Securities;
(l) not later than the effective date of the applicable Registration,
provide a CUSIP number for all Registrable Securities and provide the applicable
trustee or transfer agent with printed certificates for the Registrable
Securities which are in a form eligible for deposit with The Depository Trust
Company;
(m) make such representations and warranties to the Holders of
Registrable Securities being registered, and the underwriters or agents, if any,
in form, substance and scope as are customarily made by issuers in primary
underwritten public offerings;
(n) enter into such customary agreements (including an underwriting
agreement) and take all such other actions as the majority of the Holders of any
Registrable Securities being sold or the managing underwriter or agent, if any,
reasonably request in order to expedite or facilitate the Registration and
disposition of such Registrable Securities;
(o) obtain for delivery to the Holders of Registrable Securities
being registered and to the underwriter or agent an opinion or opinions from
counsel for the Issuer, upon consummation of the sale of such Registrable
Securities to the underwriters (the "Closing Date") in customary form and in
form, substance and scope reasonably satisfactory to such Holders, underwriters
or agents and their counsel;
(p) obtain for delivery to the Issuer and the underwriter or agent,
with copies to the Holders, a cold comfort letter from the Issuer's independent
public accountants in customary form and covering such matters of the type
customarily covered by cold comfort
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letters as the managing underwriter or the Holders of a majority of the
Registrable Securities being sold reasonably request, dated the effective date
of the Registration Statement and brought down to the Closing Date;
(q) cooperate with each seller of Registrable Securities and each
underwriter or agent participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the NASD;
(r) make available for inspection by a representative of the Holders
of a majority of the Registrable Securities, any underwriter participating in
any disposition pursuant to such Registration, and any attorney or accountant
retained by such Holders or underwriter, all financial and other records,
pertinent corporate documents and properties of the Issuer, and cause the
Issuer's officers, directors and employees to supply all information reasonably
requested by any such representative, underwriter, attorney or accountant in
connection with such Registration; PROVIDED that any records, information or
documents that are designated by the Issuer in writing as confidential shall be
kept confidential by such Persons unless disclosure of such records, information
or documents is required by law;
(s) use its best efforts to comply with all applicable rules and
regulations of the SEC and make generally available to its security holders, as
soon as reasonably practicable (but not more than eighteen months) after the
effective date of the Registration Statement, an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act and the rules and
regulations promulgated thereunder;
(t) as promptly as practicable after filing with the SEC of any
document which is incorporated by reference into the Registration Statement or
the Prospectus, provide copies of such document to counsel for the selling
Holders and to the managing underwriters, if any;
(u) provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by such Registration Statement from and
after a date not later than the effective date of such Registration Statement;
and
(v) use its best efforts to list (if such Registrable Securities are
not already listed) all Registrable Securities covered by such Registration
Statement on The New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market.
The Issuer may require each Holder of Registrable Securities as to
which any Registration is being effected to furnish to the Issuer such
information regarding the distribution of such securities and such other
information relating to such Holder and its ownership of Registrable Securities
as the Issuer may from time to time reasonably request in writing. Each Holder
agrees to furnish such information to the Issuer and to cooperate with the
Issuer as necessary to enable the Issuer to comply with the provisions of this
Agreement.
Each Holder agrees by acquisition of such Registrable Securities that,
upon receipt of any notice from the Issuer of the happening of any event of the
kind described in
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Section 6(d) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to such Registration Statement until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(d) hereof, or until it is advised in writing by the
Issuer that the use of the Prospectus may be resumed, and has received copies of
any additional or supplemental filings which are incorporated by reference in
the Prospectus, and, if so directed by the Issuer, such Holder will deliver to
the Issuer (at the Issuer's expense) all copies, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice.
7. REGISTRATION EXPENSES
All expenses incident to the Issuer's performance of or compliance
with this Agreement, including without limitation (i) all registration and
filing fees, and any other fees and expenses associated with filings required to
be made with any stock exchange, the SEC and the NASD (including, if applicable,
the fees and expenses of any "qualified independent underwriter" and its counsel
as may be required by the rules and regulations of the NASD), (ii) all fees and
expenses of compliance with state securities or blue sky laws (including fees
and disbursements of counsel for the underwriters or selling Holders in
connection with blue sky qualifications of the Registrable Securities and
determination of their eligibility for investment under the laws of such
jurisdictions as the managing underwriters or the majority of the Holders of the
Registrable Securities being sold may designate), (iii) all printing and related
messenger and delivery expenses (including expenses of printing certificates for
the Registrable Securities in a form eligible for deposit with The Depository
Trust Company and of printing prospectuses), () all fees and disbursements of
counsel for the Issuer and of all independent certified public accountants of
the Issuer (including the expenses of any special audit and "cold comfort"
letters required by or incident to such performance), (iv) Securities Act
liability insurance if the Issuer so desires or the underwriters so require,
(v) all fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange and all rating agency fees,
(vi) all reasonable fees and disbursements of one counsel selected by the
Holders of the Registrable Securities being registered to represent such Holders
in connection with such registration, (vii) all fees and disbursements of
underwriters customarily paid by the issuers or sellers of securities, excluding
underwriting discounts and commissions and transfer taxes, if any, and fees and
disbursements of counsel to underwriters (other than such fees and disbursements
incurred in connection with any registration or qualification of Registrable
Securities under the securities or blue sky laws of any state), and (viii) fees
and expenses of other Persons retained by the Issuer (all such expenses being
herein called "Registration Expenses"), will be borne by the Issuer, regardless
of whether the Registration Statement becomes effective (except as provided in
Section 3(e) hereof). The Issuer will, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any audit and
the fees and expenses of any Person, including special experts, retained by the
Issuer.
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8. INDEMNIFICATION
(a) INDEMNIFICATION BY ISSUER. The Issuer agrees to indemnify and
hold harmless, to the full extent permitted by law, each Holder, its officers,
directors and employees and each Person who controls such Holder (within the
meaning of the Securities Act) against all losses, claims, damages, liabilities
and expenses caused by any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or preliminary Prospectus or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any information
furnished in writing to the Issuer by such Holder expressly for use therein;
PROVIDED, HOWEVER, that the Issuer shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any such preliminary Prospectus if (i) such Holder
failed to deliver or cause to be delivered a copy of the Prospectus to the
Person asserting such loss, claim, damage, liability or expense after the Issuer
had furnished such Holder with a sufficient number of copies of the same and
(ii) the Prospectus completely corrected in a timely manner such untrue
statement or omission; and PROVIDED, FURTHER, that the Issuer shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission in the Prospectus, if
such untrue statement or alleged untrue statement, omission or alleged omission
is completely corrected in an amendment or supplement to the Prospectus and the
Holder thereafter fails to deliver such Prospectus as so amended or supplemented
prior to or concurrently with the sale of the Registrable Securities to the
Person asserting such loss, claim, damage, liability or expense after the Issuer
had furnished such Holder with a sufficient number of copies of the same. The
Issuer will also indemnify underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution,
their officers and directors and each Person who controls such Persons (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the Holders, if requested.
(b) INDEMNIFICATION BY SELLING HOLDER OF UNDERLYING SECURITIES.
In connection with each Registration, each selling Holder will furnish to the
Issuer in writing such information and affidavits as the Issuer reasonably
requests for use in connection with any Registration Statement or Prospectus and
agrees to indemnify and hold harmless, to the full extent permitted by law, the
Issuer, its directors and officers and each Person who controls the Issuer
(within the meaning of the Securities Act) against any losses, claims, damages
or liabilities and expenses resulting from any untrue statement of a material
fact or any omission of a material fact required to be stated in the
Registration Statement or Prospectus or preliminary Prospectus or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
or affidavit so furnished in writing by such selling Holder to the Issuer
specifically for inclusion in such Registration Statement or Prospectus and has
not been corrected in a subsequent writing prior to or concurrently with the
sale of the Registrable Securities to the Person asserting such loss, claim,
damage, liability or expense. In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the proceeds
received by such Holder
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upon the sale of the Registrable Securities giving rise to such indemnification
obligation. The Issuer shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, to the same extent as provided
above with respect to information so furnished in writing by such Persons
specifically for inclusion in any Prospectus or Registration Statement.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification hereunder will (i) give prompt (but in any event within 30 days
after such Person has actual knowledge of the facts constituting the basis for
indemnification) written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) permit such indemnifying
party to assume the defense of such claim with counsel reasonably satisfactory
to the indemnified party; PROVIDED, HOWEVER, that any delay or failure to so
notify the indemnifying party shall relieve the indemnifying party of its
obligations hereunder only to the extent, if at all, that it is prejudiced by
reason of such delay or failure; PROVIDED, FURTHER HOWEVER, that any Person
entitled to indemnification hereunder shall have the right to select and employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such Person unless
(a) the indemnifying party has agreed in writing to pay such fees or expenses,
or (b) the indemnifying party shall have failed to assume the defense of such
claim within a reasonable time after receipt of notice of such claim from the
Person entitled to indemnification hereunder and employ counsel reasonably
satisfactory to such Person or (c) in the reasonable judgment of any such
Person, based upon advice of its counsel, a conflict of interest may exist
between such Person and the indemnifying party with respect to such claims (in
which case, if the Person notifies the indemnifying party in writing that such
Person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such Person). If such defense is not assumed by the
indemnifying party, the indemnifying party will not be subject to any liability
for any settlement made without its consent (but such consent will not be
unreasonably withheld), PROVIDED that an indemnified party shall not be required
to consent to any settlement involving the imposition of equitable remedies or
involving the imposition of any material obligations on such indemnified party
other than financial obligations for which such indemnified party will be
indemnified hereunder. No indemnifying party will be required to consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation. Whenever the indemnified party or the indemnifying party receives a
firm offer to settle a claim for which indemnification is sought hereunder, it
shall promptly notify the other of such offer. If the indemnifying party
refuses to accept such offer within 20 business days after receipt of such offer
(or of notice thereof), such claim shall continue to be contested and, if such
claim is within the scope of the indemnifying party's indemnity contained
herein, the indemnified party shall be indemnified pursuant to the terms hereof.
If the indemnifying party notifies the indemnified Party in writing that the
indemnifying party desires to accept such offer, but the indemnified party
refuses to accept such offer within 20 business days after receipt of such
notice, the indemnified party may continue to contest such claim and, in such
event, the total maximum liability of the indemnifying party to indemnify or
otherwise reimburse the indemnified party hereunder with respect to such claim
shall be limited to and shall not exceed the amount of such offer, plus
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reasonable out-of-pocket costs and expenses (including reasonable attorneys'
fees and disbursements) to the date of notice that the indemnifying party
desires to accept such offer, PROVIDED that this sentence shall not apply to any
settlement of any claim involving the imposition of equitable remedies or to any
settlement imposing any material obligations on such indemnified party other
than financial obligations for which such indemnified party will be indemnified
hereunder. An indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim will not be obligated to pay the fees and expenses
of more than one counsel for all parties indemnified by such indemnifying party
with respect to such claim in any one jurisdiction, unless in the written
opinion of counsel to the indemnified party, reasonably satisfactory to the
indemnifying party, use of one counsel would be expected to give rise to a
conflict of interest between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the indemnifying
party shall be obligated to pay the fees and expenses of one such additional
counsel.
(d) OTHER INDEMNIFICATION. Indemnification similar to that specified
in this Section 8 (with appropriate modifications) shall be given by the Issuer
and each seller of Registrable Securities with respect to any required
registration or other qualification of securities under federal or state law or
regulation of governmental authority other than the Securities Act.
(e) CONTRIBUTION. If for any reason the indemnification provided for
in the preceding clauses (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by the preceding clauses (a)
and (b), then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations, provided that no selling Holder
shall be required to contribute in an amount greater than the dollar amount of
the proceeds received by such selling Holder with respect to the sale of any
securities. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
9. RULE 144
The Issuer covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder, and it will take such further action
as any Holder may reasonably request, all to the extent required from time to
time to enable such Holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemption provided by (a)
Rule 144 under the Securities Act, as such Rule may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon
the request of any Holder, the Issuer will deliver to such Holder a written
statement as to whether it has complied with such information and requirements.
Notwithstanding anything contained in this Section 9, the Issuer may deregister
under Section 12 of the Exchange Act if it then is permitted to do so pursuant
to the Exchange Act and the rules and regulations thereunder.
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10. ADDITIONAL PARTIES
The Issuer may enter into various stockholder's and stock option
agreements on or subsequent to the date hereof with certain key employees of the
Issuer or one of its subsidiaries (the "Management Investors") pursuant to which
the Management Investors will agree to purchase and/or will receive options to
purchase shares of Common Stock. In addition, the Issuer may enter into one or
more stockholder's agreements on or subsequent to the date hereof with Phelps
("Phelps", and, collectively with the Management Investors, the "Additional
Investors"). Such agreements may provide that (i) in the event the Issuer
registers shares of Common Stock held by the Investors, the Additional Investors
have the right, subject to certain conditions, to require the Issuer to register
under the Securities Act shares of Common Stock held by them, and (ii) the
Additional Investors will agree to be bound by all of the terms, conditions and
obligations of this Agreement. Each of the parties hereto acknowledges the
registration rights of the Additional Investors and agrees that the Issuer's
obligations under this Agreement, including, in particular, its obligations
under Section 4(b) hereof, coincide with its obligations to the Additional
Investors, with respect to registration rights. The parties hereto agree that
(i) each of each Management Investor and Phelps is a third-party beneficiary of
Section 4(c) hereof to the extent such Additional Investor has the right to
require the Issuer to register under the Securities Act shares of Common Stock
held by him upon receiving notice of a Registration requested by the Investors
pursuant to Section 4 hereof, and (ii) such Additional Investor shall have no
rights to request Registration under Section 3 hereof.
11. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Person may participate in any Underwritten Registration hereunder
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled to
approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements. Nothing in this
Section 11 shall be construed to create any additional rights regarding the
Registration of Registrable Securities in any Person otherwise than as set forth
herein.
12. MISCELLANEOUS
(a) REMEDIES. Remedies for breach by the Issuer of its obligations
to register the Registrable Securities shall be as set forth herein. Each
Holder, in addition to being entitled to exercise all rights provided herein or
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Issuer agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, any not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Issuer has obtained the written consent of the
Holders of a majority of the outstanding Registrable
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Securities; PROVIDED, HOWEVER, that the Issuer and the Investors may amend,
modify or supplement the provisions of this Agreement and may waive or consent
to departures from the provisions hereof, without the consent of the Holders of
a majority of the outstanding Registrable Securities so long as such amendment,
modification, supplement, waiver or consent does not adversely affect the rights
of Holders of Registrable Securities hereunder or so long as such amendment,
modification, supplement, waiver or consent affects the rights of the Investors
and other Holders of Registrable Securities hereunder equally.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the most current address given by such
Holder to the Issuer in accordance with the provisions of this Section 12(c),
which address initially is, with respect to the Investors, c/o Kohlberg Kravis
Roberts & Co., 2800 Sand Hill Road, Suite 200, Menlo Park, California 94025,
Attention: James H. Greene, Jr.; and
(ii) if to the Issuer, initially at the address set forth below
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 12(c): c/o Kohlberg Kravis Roberts & Co.,
2800 Sand Hill Road, Suite 200, Menlo Park, California 94025, Attention: James
H. Greene, Jr.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; 4 business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged by addressee, if by
facsimile transmission; and on the next business day it timely delivered to an
air courier guaranteeing overnight delivery.
(d) SUCCESSORS AND ASSIGNS. This Agreement including, without
limitation, all registration rights in connection with the ownership of all or a
portion of the Registrable Securities pursuant to Sections 3 and 4 hereof, shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties, including, without limitation, and without the need for an
express assignment subsequent Holders of Registrable Securities.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
principles of conflicts of laws.
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(h) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(i) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Issuer with respect to
the securities issued pursuant to the Stock Purchase Agreements. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matters.
(j) ADDITIONAL RIGHTS. If the Issuer at any time grants to any other
holder of Common Stock any rights to request the Issuer to effect the
Registration of any shares of Common Stock, or any "piggyback" registration
rights with respect to shares of Common Stock, on terms that are more favorable
to such holders than the terms set forth herein, then the terms of this
Agreement shall be deemed amended or supplemented to the extent necessary to
provide the Holders such more favorable rights and benefits.
(k) LIMITED LIABILITY OF PARTNERS. Notwithstanding any provision
hereof, none of the obligations of Hubcap under this Agreement shall be an
obligation of any officer, director, member, limited partner or general partner
of Hubcap or its Affiliates. Any liability or obligation of Hubcap arising out
of this Agreement shall be limited to and satisfied only out of the assets of
Hubcap.
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
The Issuer: ACCURIDE CORPORATION,
a Delaware corporation
By: /s/ William P. Greubel
------------------------
Its: President
Investor: HUBCAP ACQUISITION L.L.C.,
a Delaware limited liability
company
By: /s/ James H. Greene, Jr.
-------------------------
Its: President
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Exhibit 10.3
1998 STOCK PURCHASE AND OPTION PLAN
FOR EMPLOYEES OF
ACCURIDE CORPORATION AND SUBSIDIARIES
1. PURPOSE OF PLAN
The 1998 Stock Purchase and Option Plan for Employees of Accuride
Corporation and Subsidiaries (the "Plan") is designed:
(a) to promote the long term financial interests and growth of
Accuride Corporation (the "Company") and its Subsidiaries by attracting and
retaining management and personnel with the training, experience and
ability to enable them to make a substantial contribution to the success of
the Company's business;
(b) to motivate personnel by means of growth-related incentives to
achieve long range goals; and
(c) to further the identity of interests of participants with those
of the stockholders of the Company through opportunities for stock or
stock-based ownership in the Company.
2. DEFINITIONS
As used in the Plan, the following words shall have the following meanings:
(a) "Affiliate" shall mean (i) with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with, such Person, and (ii) with respect to the Company, also any
entity designated by the Board of Directors of the Company in which the
Company or one of its Affiliates has an interest, and (iii) with respect to
Kohlberg Kravis Roberts & Co., L.P. ("KKR"), also any Affiliate of any
partner of KKR. For purposes of this Plan, "Person" means an individual,
partnership, corporation, limited liability company, business trust, joint
stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature, and "control"
shall have the meaning given such term under Rule 405 of the Securities Act
of 1933.
(b) "Board of Directors" means the Board of Directors of the Company.
(c) "Committee" means the Compensation Committee of the Board of
Directors or another committee of the Board designated by the Board to
administer the Plan.
(d) "Common Stock" or "Share" means $.01 par value common stock of
the Company.
(e) "Employee" means a person, including an officer, in the regular
full-time employment of the Company or one of its Subsidiaries.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE>
(g) "Fair Market Value" means such value of a Share as reported for
stock exchange transactions and/or determined in accordance with any
applicable resolutions or regulations of the Committee in effect at the
relevant time.
(h) "Grant" means an award of Purchase Stock or a Non-Qualified Stock
Option made to a Participant pursuant to the Plan and described in
Paragraph 5, including any combination of the foregoing.
(i) "Grant Agreement" means an agreement between the Company and a
Participant that sets forth the terms, conditions and limitations
applicable to a Grant.
(j) "Participant" means an Employee, consultant, or other person
having a unique relationship with the Company or one of its Subsidiaries,
to whom one or more Grants have been made and such Grants have not all been
forfeited or terminated under the Plan; provided, however, a non-employee
director of the Company or one of its Subsidiaries may not be a
Participant.
(k) "Stock-Based Grants" means the collective reference to the grant
of Non-Qualified Stock Options and Purchase Stock.
(l) "Stock Options" means the "Non-Qualified Stock Options" described
in Paragraph 5.
(m) "Subsidiary" means any corporation (or other entity) other than
the Company in an unbroken chain of entities beginning with the Company if
each of the entities, or group of commonly controlled entities, other than
the last entity in the unbroken chain, then owns stock (or other equity
interest) possessing 50% or more of the total combined voting power of all
classes of equity in one of the other entities in such chain.
3. ADMINISTRATION OF PLAN
(a) The Plan shall be administered by the Committee. The members of
the Committee shall consist solely of individuals who are both "non-
employee directors" as defined by Rule 16b-3 promulgated under the Exchange Act
and "outside directors" for purposes of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), to the extent that the Company and its
Employees are subject to Section 16 of the Exchange Act or Section 162(m) of the
Code. The Committee may adopt its own rules of procedure, and the action of a
majority of the Committee, taken at a meeting or taken without a meeting by a
writing signed by such majority, shall constitute action by the Committee. The
Committee shall have the power, authority and the discretion to administer,
construe and interpret the Plan and Grant Agreements, to make rules for carrying
out the Plan and to make changes in such rules. Any such interpretations,
rules, and administration shall be made and done in good faith and consistent
with the basic purposes of the Plan.
(b) The Committee may delegate to the Chief Executive Officer and to
other senior officers of the Company its duties under the Plan subject to
such conditions and
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limitations as the Committee shall prescribe except that only the Committee
may designate and make Grants to Participants who are subject to Section 16
of the Exchange Act or Section 162(m) of the Code.
(c) The Committee may employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company, and the
officers and directors of the Company shall be entitled to rely upon the
advice, opinions or valuations of any such persons. Subject to the terms
and conditions of this Plan and any applicable Grant Agreement, all actions
taken and all interpretations and determinations made by the Committee in
good faith shall be final and binding upon all Participants, the Company
and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or the Grants, and all members of the
Committee shall be fully protected by the Company with respect to any such
action, determination or interpretation.
4. ELIGIBILITY
The Committee may from time to time make Grants under the Plan to such
Employees, consultants, or other persons having a unique relationship with the
Company or any of its Subsidiaries, and in such form and having such terms,
conditions and limitations as the Committee may determine. No Grants may be
made under this Plan to non-employee directors of the Company or any of its
Subsidiaries. Grants may be granted singly, in combination or in tandem. The
terms, conditions and limitations of each Grant under the Plan shall be set
forth in a Grant Agreement, in a form approved by the Committee, consistent,
however, with the terms of the Plan; provided, however, such Grant Agreement
shall contain provisions dealing with the treatment of Grants in the event of
the termination, death or disability of the Participant, and may also include
provisions concerning the treatment of Grants in the event of a change of
control of the Company.
5. GRANTS
From time to time, the Committee will determine the forms and amounts of
Grants for Participants. Such Grants may take the following forms in the
Committee's sole discretion:
(a) NON-QUALIFIED STOCK OPTIONS - These are options to purchase
Common Stock which are not "incentive stock options," within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended. At the time
of grant, the Committee shall determine, and shall have specified in the
Grant Agreement or other Plan rules, the option exercise period, the option
exercise price, and such other conditions or restrictions on the grant or
exercise of the Stock Option as the Committee deems appropriate, which may
include the requirement that the grant of Stock Options is predicated on
the acquisition of Purchase Stock under Paragraph 5(b) by the Participant.
In addition to other restrictions contained in the Plan and Grant
Agreement, Stock Options granted under this Paragraph 5(a), (i) may not be
exercised more than 10 years after the date granted and (ii) may not have
an option exercise price less than 50% of the Fair Market Value of Common
Stock on the date the option is granted. Payment of the option exercise
price shall be made in cash or, with the consent of the Committee, in
shares of Common Stock (including shares
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acquired by contemporaneous exercise of other Stock Options), or a
combination thereof, in accordance with the terms of the Plan, the Grant
Agreement and any applicable guidelines of the Committee in effect at the
time.
(b) PURCHASE STOCK - Purchase Stock is Common Stock with restrictions
or conditions on the Participant's right to transfer or sell such stock,
offered to a Participant at such price as determined by the Committee, the
acquisition of which may make such Participant eligible to receive Stock
Options under the Plan; provided, however, that the price of such Purchase
Shares may not be less than 50% of the Fair Market Value of the Common
Stock on the date such shares of Purchase Stock are offered.
6. LIMITATIONS AND CONDITIONS
(a) The number of Shares available for Grants under this Plan shall
be 2,598 shares of the authorized Common Stock as of the effective date of
the Plan. Unless restricted by applicable law, Shares related to Grants
that are forfeited, terminated, canceled or expire unexercised, shall
immediately become available for Grants.
(b) No Grants shall be made under the Plan beyond ten years after the
effective date of the Plan, but the terms of Grants made on or before the
expiration thereof may extend beyond such expiration. At the time a Grant
is made or amended or the terms or conditions of a Grant are changed, the
Committee may provide for limitations or conditions on such Grant.
(c) Nothing contained herein shall affect the right of the Company or
any Subsidiary to terminate any Participant's employment at any time or for
any reason.
(d) Except as otherwise prescribed by the Committee, the amounts of
the Grants for any employee of a Subsidiary, along with interest,
dividends, and other expenses accrued on deferred Grants shall be charged
to the Participant's employer during the period for which the Grant is
made. If the Participant is employed by more than one Subsidiary or by a
combination of the Company and a Subsidiary during the period for which the
Grant is made, the Participant's Grant and related expenses will be
allocated between the companies employing the Participant in a manner
prescribed by the Committee.
(e) Other than as specifically provided by will or by the applicable
laws of descent and distribution or the terms of any applicable trust, no
benefit under the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and
any attempt to do so shall be void. No such benefit shall, prior to
receipt thereof by the Participant, be in any manner liable for or subject
to the debts, contracts, liabilities, engagements, or torts of the
Participant.
(f) Participants shall not be, and shall not have any of the rights
or privileges of, stockholders of the Company in respect of any Shares
purchasable or otherwise acquired in connection with any Grant unless and
until certificates representing any such Shares have been issued by the
Company to such Participants; provided however that no
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delay in the issuance of certificates due to be issued hereunder
representing any such Shares shall operate to impair or prejudice any
Participant's rights to participate in a corporate transaction providing
for the disposition of such Shares.
(g) No election as to benefits or exercise of Stock Options or other
rights may be made during a Participant's lifetime by anyone other than the
Participant except by a legal representative appointed for or by the
Participant.
(h) Absent express provisions to the contrary, no Grant under this
Plan shall be deemed "compensation" for purposes of computing benefits or
contributions under any retirement plan of the Company or its Subsidiaries
and shall not affect any benefits under any other benefit plan of any kind
or subsequently in effect under which the availability or amount of
benefits is related to level of compensation. This Plan is not a "Pension
Plan" or "Welfare Plan" under the Employee Retirement Income Security Act
of 1974, as amended.
(i) Unless the Committee determines otherwise, no benefit or promise
under the Plan shall be secured by any specific assets of the Company or
any of its Subsidiaries, nor shall any assets of the Company or any of its
Subsidiaries be designated as attributable or allocated to the satisfaction
of the Company's obligations under the Plan.
(j) To the extent designated by the Committee, no Grant shall be
effective unless and until it is approved by the stockholders of the
Company holding more than 75% of the voting power of all outstanding Common
Stock of the Company in accordance with the provisions of Section
280G(b)(5) of the Code.
7. TRANSFERS AND LEAVES OF ABSENCE
For purposes of the Plan, unless the Committee determines otherwise: (a) a
transfer of a Participant's employment without an intervening period of
separation among the Company and any Subsidiary shall not be deemed a
termination of employment, and (b) a Participant who is granted in writing a
leave of absence shall be deemed to have remained in the employ of the Company
or a Subsidiary during such leave of absence.
8. ADJUSTMENTS
In the event of any change in the outstanding Common Stock (including an
exchange for cash) by reason of a stock split, reverse stock split, spin-off,
stock dividend, stock combination or reclassification, recapitalization,
reorganization, consolidation, merger, change of control, or similar event, the
Committee may adjust appropriately the number and kind of Shares subject to the
Plan and available for or covered by Grants and Share prices related to
outstanding Grants, and make such other revisions to outstanding Grants as it
deems are equitably required.
9. MERGER, CONSOLIDATION, EXCHANGE, ACQUISITION, DISTRIBUTION, LIQUIDATION OR
DISSOLUTION
In its sole discretion, and on such terms and conditions as it deems
appropriate, coincident with or after the grant of any Stock Option, the
Committee may provide that such Stock Option cannot be exercised after the
consummation of the merger or consolidation of the
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Company into another corporation, the exchange of all or substantially all of
the assets of the Company for the securities of another corporation, the
acquisition by another corporation of 80% or more of the Company's then
outstanding shares of voting stock or the recapitalization, reclassification,
liquidation or dissolution of the Company, or other adjustment or event which
results in shares of Common Stock being exchanged for or converted into cash,
securities or other property, and if the Committee so provides, it shall, on
such terms and conditions as it deems appropriate in its absolute discretion,
also provide, either by the terms of such Stock Option or by a resolution
adopted prior to the consummation of such merger, consolidation, exchange,
acquisition, recapitalization, reclassification, liquidation or dissolution,
that, for some period of time prior to the consummation of such transaction or
event, such Stock Option shall be exercisable as to all shares subject thereto,
notwithstanding anything to the contrary herein (but subject to the provisions
of Paragraph 6(b)) and that, upon the consummation of such event, such Stock
Option shall terminate and be of no further force or effect; provided, however,
that the Committee may also provide, in its absolute discretion, that even if
the Stock Option shall remain exercisable after any such event, from and after
such event, any such Stock Option shall be exercisable only for the kind and
amount of cash, securities and/or other property, or the cash equivalent thereof
(net of any applicable exercise price), receivable as a result of such event by
the holder of a number of shares of stock for which such Stock Option could have
been exercised immediately prior to such event.
In the event of a "spin-off" or other substantial distribution of assets of
the Company which has a material diminutive effect upon the Fair Market Value of
the Company's Common Stock, the Committee may in its discretion make an
appropriate and equitable adjustment to any Stock Option exercise price to
reflect such diminution.
10. ANTI-DILUTION
(a) If and whenever on or after the date of adoption hereof and prior
to the initial public offering of the Common Stock, the Company issues or
sells, or in accordance with this Paragraph 10 is deemed to have issued or
sold, any shares of Common Stock (or other equity securities which are
convertible or exchangeable into, or options or warrants to acquire, Common
Stock (collectively "Equity Securities")) (including shares held in the
Company's treasury) ("New Stock") some or all of which are issued and/or
sold, other than pursuant to the terms hereof, to Hubcap Acquisition
L.L.C., KKR, any partner of KKR or any Affiliate of any of the foregoing
(the "Existing Stockholders"), then immediately upon such issuance or sale
the Company shall, in a written notice (a "New Stock Notice") offer for
sale to each Participant that number of additional Equity Securities of the
same type such that the number of shares of Common Stock (assuming full
conversion or exercise of the Equity Securities), plus the number of
unexercised Options, held by such Participant immediately after such
issuance or sale (assuming purchase by such Participant of such additional
Equity Securities) equals the number of shares of Common Stock, plus the
number of unexercised Options, held by such Participant immediately prior
to such issuance or sale multiplied by the total number of shares of Common
Stock deemed under this Paragraph 10 to be held by the Existing
Stockholders immediately AFTER such issuance or sale, divided by the total
number of shares of Common Stock deemed under this Paragraph 10 to be held
by the Existing Stockholders immediately PRIOR to such issuance or sale
(assuming in each case full
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conversion or exercise of the Equity Securities). The New Stock Notice
shall state the number and type of Equity Securities offered for sale to
such Participant pursuant to this Paragraph 10, the purchase price per
Equity Security therefor, as determined pursuant to this Paragraph 10, and
the time and place for the closing of the purchase in the event such
Participant accepts the offer.
(b) A Participant may elect to purchase all, none, or any portion of
the Equity Securities offered for sale in a New Stock Notice by delivering
to the Company written notice thereof within five (5) business days
following such Participant's receipt of such New Stock Notice.
(c) For purposes of the computation referred to in this Paragraph 10,
the number of shares of Common Stock outstanding shall be deemed to include
all issued and outstanding shares of Common Stock plus all shares issuable
to the holders of any securities exercisable for, or convertible into,
shares of Common Stock. The purchase price per Equity Security offered for
sale pursuant to this Paragraph 10 shall be equal to the price per Equity
Security paid by the Existing Stockholders.
(d) The Existing Stockholders may, in their sole discretion, elect to
fulfill the Company's obligation to Participants under this Paragraph 10
out of such Existing Stockholders' holdings of Equity Securities. In the
event the Existing Stockholders fulfill the Company's obligations to
Participants under this Paragraph 10 with respect to an issuance or sale of
Common Stock, the Company shall have no further obligation to such
Participants under this Paragraph 10 with respect to such issuance or sale.
(e) This Paragraph 10 shall not apply to the issuance of Common Stock
(or other Equity Securities) pursuant to the conversion or exercise of any
Equity Securities. The Company shall not be obligated to make the offer
described in subparagraph 10(a) if it would require the registration of any
securities under any state or Federal securities law, provided that the
Company shall take all reasonable ministerial steps to qualify such offer
and issuance for applicable exemptions from registration under such law.
11. AMENDMENT AND TERMINATION
The Committee shall have the authority to make such amendments to any terms
and conditions applicable to outstanding Grants as are consistent with this Plan
provided that, except for adjustments under Paragraph 8 or 9 hereof, no such
action shall modify such Grant in a manner adverse to the Participant without
the Participant's consent except as such modification is provided for or
contemplated in the terms of the Grant. The Board of Directors may amend,
suspend or terminate the Plan.
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12. FOREIGN GRANTS AND RIGHTS
The Committee may make Grants to individuals who are subject to the laws of
nations other than the United States, which Grants may have terms and conditions
that differ from the terms provided elsewhere in the Plan for the purpose of
complying with foreign laws.
13. WITHHOLDING TAXES
The Company shall have the right to deduct from any cash payment made under
the Plan any federal, state or local income or other taxes required by law to be
withheld with respect to such payment. It shall be a condition to the
obligation of the Company to deliver Shares upon the exercise of a Stock Option
or upon delivery of any Purchase Stock that the Participant pay to the Company
such amount as may be requested by the Company for the purpose of satisfying any
liability for such withholding taxes. Any Grant Agreement may provide that the
Participant may elect, in accordance with any conditions set forth in such Grant
Agreement, to pay a portion or all of such withholding taxes in shares of Common
Stock (including shares acquired by contemporaneous exercise of other Stock
Options).
14. REGISTRATION
(a) If the Company shall have filed a registration statement pursuant
to the requirements of Section 12 of the Exchange Act, or engaged in a
Public Offering (as defined below), (i) the Company shall use reasonable
efforts to register the Stock Options and the Common Stock to be acquired
on exercise of the Stock Options on a Form S-8 Registration Statement or
any successor to Form S-8 to the extent that such registration is then
available with respect to such Stock Options and Common Stock and (ii) the
Company will use reasonable efforts to file the reports required to be
filed by it under the Securities Act of 1933, as amended, and the rules and
regulations in effect thereunder (the "Act") and the Exchange Act and the
rules and regulations adopted by the Securities and Exchange Commission
("SEC") thereunder, to the extent required from time to time to enable the
Participant to sell shares of Common Stock without registration under the
Act within the limitations of the exemptions provided under any applicable
rule or regulation of the SEC. Notwithstanding anything contained in this
Section 14, the Company may deregister under Section 12 of the Exchange Act
if it is then permitted to do so pursuant to the Exchange Act and the rules
and regulations thereunder. Nothing in this Section 14 shall be deemed to
limit in any manner any otherwise applicable restrictions on sales of
Common Stock.
(b) As used herein the term "Public Offering" shall mean the sale of
shares of Common Stock to the public pursuant to a registration statement
under the Act which has been declared effective by the SEC (other than a
registration statement on Form S-8 or any other similar form) which results
in an active trading market in the Common Stock.
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15. EFFECTIVE DATE AND TERMINATION DATES
The Plan shall be effective on and as of the date of its approval by the
stockholders of the Company and shall terminate ten years later, subject to
earlier termination by the Board of Directors pursuant to Paragraph 11.
* * * * * * * * * *
I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of Accuride Corporation and approved by the shareholders of the
Company on January 21, 1998.
Executed on this 21st day of January, 1998.
/s/ J. Greg Szabo
--------------------------
Secretary
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Exhibit 10.4
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
This Non-Qualified Stock Option Agreement (this "Agreement") is entered
into as of _______________ by and between ACCURIDE CORPORATION, a Delaware
corporation hereinafter referred to as the "Company," and __________________, an
employee of the Company or a Subsidiary (as defined below) of the Company,
hereinafter referred to as the "Optionee."
WHEREAS, the Company wishes to afford the Optionee the opportunity to
purchase shares of its $.01 par value Common Stock ("Common Stock");
WHEREAS, the Company wishes to carry out the Plan (as defined below), the
terms of which are hereby incorporated by reference and made a part of this
Agreement; and
WHEREAS, the Committee (as defined below) appointed to administer the Plan
has determined that it would be to the advantage and best interest of the
Company and its stockholders to grant the Non-Qualified Stock Option(s) provided
for herein to the Optionee as an incentive for increased efforts during his or
her term of employment with the Company or its Subsidiaries, and has advised the
Company thereof and instructed the undersigned officers to issue said Options;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall have
the meaning specified in the Plan or below unless the context clearly indicates
to the contrary.
Section 1.1 AFFILIATE
"Affiliate" shall mean (a) with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with,
such Person, and (b) with respect to the Company, also any entity designated by
the Board of Directors of the Company in which the Company or one of its
Affiliates has an interest, and (c) with respect to Kohlberg Kravis Roberts &
Co., L.P. ("KKR"), also any Affiliate of any partner of KKR. For purposes of
this Agreement, "Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature, and "control" shall have the meaning given such term under Rule 405 of
the Securities Act of 1933.
Section 1.2 CAUSE
"Cause" shall mean (i) the Optionee's willful and continued failure to
perform his or her duties with respect to the Company or its Subsidiaries which
continues beyond ten days after a written demand for substantial performance is
delivered to the Optionee by the Company or (ii) conduct by the Optionee
involving (x) dishonesty or breach of trust in connection with his or her
employment or (y) conduct which would be a reasonable basis for an indictment of
the Optionee for a felony or for a misdemeanor involving moral turpitude.
<PAGE>
Section 1.3 CHANGE OF CONTROL
A "Change of Control" means (i) a sale of all or substantially all of the
assets of the Company to a Person who is not an Affiliate of KKR or an entity in
which the shareholders of the Company immediately prior to such transaction do
not control more than 50% of the voting power immediately following the
transaction, (ii) a sale by KKR or any of its Affiliates resulting in more than
50% of the voting stock of the Company being held by a Person or Group that does
not include KKR or any of its Affiliates or (iii) a merger or consolidation of
the Company into another Person which is not an Affiliate of KKR or an entity in
which the shareholders of the Company immediately prior to such transaction do
not control more than 50% of the voting power immediately following the
transaction. "Group" means two or more Persons acting together as a
partnership, limited partnership, syndicate or other group for the purpose of
acquiring, holding or disposing of securities of the Company.
Section 1.4 CODE
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.5 COMMITTEE
"Committee" shall mean the committee appointed to administer the Plan.
Section 1.6 OPTIONS
"Options" shall mean the Non-Qualified Stock Options, which may include a
Time Option and/or a Performance Option, to purchase Common Stock granted under
this Agreement.
Section 1.7 PERFORMANCE OPTION
"Performance Option" shall mean an Option with respect to which the
commencement of exercisability is governed by Section 3.1(b) hereof.
Section 1.8 PERMANENT DISABILITY
The Optionee shall be deemed to have a "Permanent Disability" if the
Optionee is unable to engage in the activities required by employment by reason
of any medically determined physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months, as reasonably determined by the
Board of Directors of the Company in good faith and in its discretion.
Section 1.9 PERMITTED RETIREMENT
"Permitted Retirement" shall mean termination of employment with the
Company (and its Subsidiaries) at age 65 or over (or such other age as may be
approved by the Board of Directors of the Company) after having been employed by
the Company or one of its Subsidiaries for at least three years after the
Purchase Date, and other than by reason of termination for Cause, death, or
Permanent Disability.
Section 1.10 PLAN
"Plan" shall mean the 1998 Stock Purchase and Option Plan for Employees of
Accuride Corporation and Subsidiaries, as the same may be amended from time to
time.
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Section 1.11 PRONOUNS
The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.12 PURCHASE DATE
"Purchase Date" shall mean the "Purchase Date" as defined in the
Stockholder's Agreement.
Section 1.13 SECRETARY
"Secretary" shall mean the Secretary of the Company.
Section 1.14 STOCKHOLDER'S AGREEMENT
"Stockholder's Agreement" shall mean that certain Stockholder's Agreement
dated as of ___________ by and among the Company, the Optionee and Hubcap
Acquisition L.L.C., as the same may be amended from time to time.
Section 1.15 SUBSIDIARY
"Subsidiary" with respect to any entity shall mean any corporation (or
other entity) in an unbroken chain of entities beginning with such corporation
(or entity) if each of the entities, or group of commonly controlled entities,
other than the last entity in the unbroken chain, then owns stock (or other
equity interest) possessing 50% or more of the total combined voting power of
all classes of equity in one of the other entities in such chain.
Section 1.16 TIME OPTION
"Time Option" shall mean an Option with respect to which the commencement
of exercisability is governed by Section 3.1(a) hereof.
ARTICLE II.
GRANT OF OPTIONS
SECTION 2.1 GRANT OF OPTIONS
For good and valuable consideration, on and as of the date hereof the
Company irrevocably grants to the Optionee a Time Option and/or a Performance
Option to purchase any part or all of an aggregate of the number of shares set
forth with respect to each such Option on the signature page hereof of its
Common Stock upon the terms and conditions set forth in this Agreement.
Section 2.2 EXERCISE PRICE
The exercise price of the shares of stock covered by the Option(s) shall be
$5,000.00 per share without commission or other charge.
Section 2.3 CONSIDERATION TO THE COMPANY
In consideration of the granting of these Option(s) by the Company, the
Optionee agrees to render faithful and efficient services to the Company or one
of its Subsidiaries, with such duties and
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responsibilities as the Company shall from time to time prescribe, subject to
the terms and conditions hereof and of the Plan, the Stockholder's Agreement and
any other agreement or document relating to the Optionee's employment. Nothing
in this Agreement or in the Plan shall confer upon the Optionee any right to
continue in the employ of the Company or any of its Subsidiaries or shall
interfere with or restrict in any way the rights of the Company and its
Subsidiaries, which are hereby expressly reserved, to terminate the employment
of the Optionee at any time for any reason whatsoever, with or without Cause.
Section 2.4 ADJUSTMENTS IN OPTIONS
Subject to Section 9 of the Plan, in the event that the outstanding shares
of the stock subject to an Option are, from time to time, changed into or
exchanged for cash or a different number or kind of shares of the Company or
other securities of the Company by reason of a merger, consolidation,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, combination of shares, or otherwise, the Committee shall make an
appropriate and equitable adjustment in the number and kind of shares or other
consideration and the exercise price as to which such Option, or portions
thereof then unexercised, shall be exercisable in order to prevent dilution or
enlargement of the benefits intended to be made available with respect to any
Option. Any such adjustment made by the Committee shall be final and binding
upon the Optionee, the Company and all other interested persons.
ARTICLE III.
PERIOD OF EXERCISABILITY
Section 3.1 COMMENCEMENT OF EXERCISABILITY
(a) Subject to subsection (c), the Time Option shall become exercisable
with respect to an additional 20% of the total shares of Common Stock subject to
such Option as set forth herein on each Determination Date. Notwithstanding the
foregoing, the Time Option shall become exercisable as to 100% of the shares of
Common Stock subject to such Option immediately prior to the consummation of a
Change of Control (but only to the extent such Option has not otherwise
terminated); provided, however, that as a condition subsequent to the
acceleration of the exercisability of the Time Option pursuant to this
subsection, the Change of Control shall be consummated. In the event the
contemplated Change of Control is not consummated, the acceleration of
exercisability and any resulting exercise of the Option shall be void AB INITIO.
(b) Subject to subsection (c), the Performance Option shall become
exercisable with respect to an additional 20% of the total shares of Common
Stock subject to such Option as set forth herein on each Determination Date as
of which (A) Cumulative EBITDA equals or exceeds the Cumulative EBITDA Target
through such Determination Date and (B) actual EBITDA for the Plan Year ending
immediately prior to such Determination Date equals or exceeds the EBITDA Target
for that Plan Year. If EBITDA for a Plan Year is less than 100% of the EBITDA
Target for such Plan Year or Cumulative EBITDA is less than the Cumulative
EBITDA Target as of the last day of such Plan Year (a "Missed Year"), no portion
of the Performance Option shall become exercisable pursuant to this subsection
3.1(b) on the Determination Date for such Plan Year. If, in any Plan Year
subsequent to a Missed Year, EBITDA exceeds the EBITDA Target for such Plan Year
AND Cumulative EBITDA as of the last day of such Plan Year exceeds the
Cumulative EBITDA Target through such date, then any prior percentage of
Performance Options in respect of prior Missed Years shall become exercisable
(but only to the extent such Option has not otherwise terminated).
Notwithstanding the foregoing, in the event that as of the Determination Date
immediately preceding the consummation of a Change of Control the Performance
Option has become exercisable as to the entire portion for which such Option was
eligible to become
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exercisable, the Performance Option shall become exercisable as to 100% of the
shares of Common Stock subject to such Option immediately prior to the
consummation of Change of Control (but only to the extent such Option has not
otherwise terminated); provided, however, that as a condition subsequent to the
acceleration of the exercisability of the Performance Option pursuant to this
subsection, the Change of Control shall be consummated. In the event the
contemplated Change of Control is not consummated, the acceleration of
exercisability and any resulting exercise of the Option shall be void AB INITIO.
Further notwithstanding the above, the Performance Option shall become
exercisable as to 100% of the shares of Common Stock subject to such Option
after seven years and eleven months after the Purchase Date (but only to the
extent such Option has not otherwise terminated.)
(i) For purposes of this Section 3.1:
(ii) "Cumulative EBITDA" means with respect to any given
Determination Date, the sum of the EBITDA for the Company and its
consolidated Subsidiaries during the period commencing on the EBITDA Start
Date and ending on the last day of the Plan Year preceding the
Determination Date.
(iii) "Cumulative EBITDA Target" means with respect to any
Determination Date, the sum of the EBITDA Targets for the period commencing
on the EBITDA Start Date and ending on the last day of the Plan Year
preceding the Determination Date.
(iv) "Determination Date" means the first December 31 following
(and not coincident with) the Purchase Date and each of the next four
anniversaries thereof.
(v) "EBITDA" for a Plan Year shall be calculated with respect to
the Company and its consolidated Subsidiaries as set forth in the Company's
primary bank credit agreement dated January 21, 1998 among the Company,
Citicorp USA, Inc., as Administrative Agent, and the other parties named
therein; PROVIDED, that there shall be excluded from EBITDA (as an expense)
"board and management fees."
(vi) "EBITDA Start Date" means the January 1 preceding the first
Determination Date.
(vii) "EBITDA Target" for each Plan Year 1998 through 2002 shall be
the amount set forth on Exhibit A; PROVIDED, that to the extent that the
Company or any of its Subsidiaries or disposes of or acquires assets out of
the ordinary course of business, the Board of Directors of the Company will
equitably, in good faith, adjust the EBITDA Target to account for such
dispositions or acquisitions.
(viii) "Plan Year" is the twelve month period commencing on January 1
each year.
(c) Notwithstanding the foregoing, no Option or portion thereof shall
become exercisable as to any additional shares of Common Stock following the
termination of employment of the Optionee for any reason.
Section 3.2 EXPIRATION OF OPTIONS
Except as otherwise provided in Section 5 or 6 of the Stockholder's
Agreement, the Options may not be exercised to any extent by anyone after the
first to occur of the following events:
(a) The tenth anniversary of the date hereof; or
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(b) The first anniversary of the date of the Optionee's termination of
employment by reason of death, Permanent Disability or Permitted Retirement; or
(c) The first business day which is fifteen calendar days after the
earlier of (i) 75 days after termination of employment of the Optionee for any
reason other than for Cause, death, Permanent Disability or Permitted Retirement
or (ii) the delivery of notice by the Company that it does not intend to
exercise its call right under Section 6 of the Stockholder's Agreement;
PROVIDED, HOWEVER, that in any event the Options shall remain exercisable under
this subsection 3.2(c) until at least 45 days after termination of employment of
the Optionee for any reason other than for death, Permanent Disability or
Permitted Retirement; or
(d) The date the Option is terminated pursuant to Section 5, 6 or 10(b) of
the Stockholder's Agreement;
(e) The opening of business on the date of the Optionee's termination of
employment by the Company for Cause; or
(f) If the Committee so determines pursuant to Section 9 of the Plan, the
effective date of either the merger or consolidation of the Company into another
Person, or the exchange or acquisition by another Person of all or substantially
all of the Company's assets or 80% or more of its then outstanding voting stock,
or the recapitalization, reclassification, liquidation or dissolution of the
Company.
ARTICLE IV
EXERCISE OF OPTIONS
Section 4.1. PERSON ELIGIBLE TO EXERCISE
During the lifetime of the Optionee, only he or she may exercise an Option
or any portion thereof. After the death of the Optionee, any exercisable
portion of an Option may, prior to the time when an Option becomes unexercisable
under Section 3.2, be exercised by his or her personal representative or by any
person empowered to do so under the Optionee's will or under the then applicable
laws of descent and distribution.
Section 4.2 PARTIAL EXERCISE
Any exercisable portion of an Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under Section 3.2.
Section 4.3 MANNER OF EXERCISE
An Option, or any exercisable portion thereof, may be exercised solely by
delivering to the Secretary or his or her office all of the following prior to
the time when the Option or such portion becomes unexercisable under Section
3.2:
(a) Notice in writing signed by the Optionee or the other person then
entitled to exercise the Option or portion thereof, stating that the Option or
portion thereof is thereby exercised, such notice complying with all applicable
rules established by the Committee;
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(b) Full payment (in cash, by check, with the consent of the Committee in
shares of Common Stock duly endorsed for transfer to the Company, or by a
combination thereof) for the shares with respect to which such Option or portion
thereof is exercised;
(c) A bona fide written representation and agreement, in a form reasonably
satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the shares of
stock are being acquired for his or her own account, for investment and without
any present intention of distributing or reselling said shares or any of them
except as may be permitted under the Securities Act of 1933, as amended (the
"Act"), and then applicable rules and regulations thereunder, and that the
Optionee or other person then entitled to exercise such Option or portion
thereof will indemnify the Company against and hold it free and harmless from
any loss, damage, expense or liability resulting to the Company if any sale or
distribution of the shares by such person is contrary to the representation and
agreement referred to above; provided, however, that the Committee may, in its
absolute discretion, take whatever additional actions it deems appropriate to
ensure the observance and performance of such representation and agreement and
to effect compliance with the Act and any other federal or state securities laws
or regulations;
(d) Full payment to the Company (in cash, by check, with the consent of
the Committee in shares of Common Stock duly endorsed for transfer to the
Company, or by a combination thereof) of all amounts which, under federal, state
or local law, it is required to withhold upon exercise of the Option; and
(e) In the event the Option or portion thereof shall be exercised pursuant
to Section 4.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option.
Without limiting the generality of the foregoing, the Committee may require an
opinion of counsel acceptable to it to the effect that any subsequent transfer
of shares acquired on exercise of an Option does not violate the Act, and may
issue stop-transfer orders covering such shares. Share certificates evidencing
stock issued on exercise of this Option shall bear an appropriate legend
referring to the provisions of subsection (c) above and the agreements herein.
The written representation and agreement referred to in subsection (c) above
shall, however, not be required if the shares to be issued pursuant to such
exercise have been registered under the Act, and such registration is then
effective in respect of such shares.
Section 4.4 CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES
The shares of stock deliverable upon the exercise of an Option, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of an Option or portion thereof prior to fulfillment of all of the
following conditions:
(a) The obtaining of approval or other clearance from any state or federal
governmental agency which the Committee shall, in its absolute discretion,
determine to be necessary or advisable; and
(b) The lapse of such reasonable period of time following the exercise of
the Option as the Committee may from time to time establish for reasons of
administrative convenience.
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Section 4.5 RIGHTS AS STOCKHOLDER
The holder of an Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares purchasable
upon the exercise of the Option or any portion thereof unless and until
certificates representing such shares shall have been issued by the Company to
such holder.
ARTICLE V.
MISCELLANEOUS
Section 5.1 ADMINISTRATION
The Committee shall have the power to interpret the Plan and this Agreement
and to adopt such rules for the administration, interpretation and application
of the Plan as are consistent therewith and to interpret or revoke any such
rules. All actions taken and all interpretations and determinations made by the
Committee shall be final and binding upon the Optionee, the Company and all
other interested persons. No member of the Committee shall be personally liable
for any action, determination or interpretation made in good faith with respect
to the Plan or the Options. In its absolute discretion, the Board of Directors
may at any time and from time to time exercise any and all rights and duties of
the Committee under the Plan and this Agreement.
Section 5.2 OPTIONS NOT TRANSFERABLE
Except as provided in the Stockholder's Agreement, neither the Options nor
any interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Optionee or his or her successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; provided,
however, that this Section 5.2 shall not prevent transfers by will or by the
applicable laws of descent and distribution.
Section 5.3 SHARES TO BE RESERVED
The Company shall at all times during the term of the Options reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of this Agreement.
Section 5.4 NOTICES
Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary, and any notice to be
given to the Optionee shall be addressed to the Optionee at his or her most
recent address as reflected in the Company's records. By a notice given
pursuant to this Section 5.4, either party may hereafter designate a different
address for notices to be given to him, her or it. Any notice which is required
to be given to the Optionee shall, if the Optionee is then deceased, be given to
the Optionee's personal representative if such representative has previously
informed the Company of his or her status and address by written notice under
this Section 5.4. Any notice shall have been deemed duly given when enclosed in
a properly sealed envelope or wrapper addressed as aforesaid, and delivered by
hand (whether by courier or otherwise) or sent by registered or certified mail,
return receipt requested (with postage prepaid).
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Section 5.5 TITLES
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or Construction of this Agreement.
Section 5.6 APPLICABILITY OF PLAN AND STOCKHOLDER'S AGREEMENT
The Options and the shares of Common Stock issued to the Optionee upon
exercise of the Options shall be subject to all of the terms and provisions of
the Plan and the Stockholder's Agreement, to the extent applicable to the
Options and such shares. In the event of any conflict between this Agreement
and the Plan, the terms of the Plan shall control. In the event of any conflict
between this Agreement or the Plan and the Stockholder's Agreement, the terms of
the Stockholder's Agreement shall control.
Section 5.7 AMENDMENT
This Agreement may be amended only by a writing executed by the parties
hereto which specifically states that it is amending this Agreement.
Section 5.8 GOVERNING LAW
The laws of the State of Delaware shall govern the interpretation, validity
and performance of the terms of this Agreement regardless of the law that might
be applied under principles of conflicts of laws.
Section 5.9 JURISDICTION
Any suit, action or proceeding against the Optionee with respect to this
Agreement, or any judgment entered by any court in respect of any thereof, may
be brought in any court of competent jurisdiction in the State of Delaware, and
the Optionee hereby submits to the non-exclusive jurisdiction of such courts for
the purpose of any such suit, action, proceeding or judgment. The Optionee
hereby irrevocably waives any objections which he or she may now or hereafter
have to the laying of the venue of any suit, action or proceeding arising out of
or relating to this Agreement brought in any court of competent jurisdiction in
the State of Delaware, and hereby further irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in
any inconvenient forum. No suit, action or proceeding against the Company with
respect to this Agreement may be brought in any court, domestic or foreign, or
before any similar domestic or foreign authority other than in a court of
competent jurisdiction in the State of Delaware, and the Optionee hereby
irrevocably waives any right which he or she may otherwise have had to bring
such an action in any other court, domestic or foreign, or before any similar
domestic or foreign authority. The Company hereby submits to the jurisdiction
of such courts for the purpose of any such suit, action or proceeding.
[signature page follows]
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto as of the date first written above.
NAME, OPTIONEE ACCURIDE CORPORATION
By
- ------------------------- --------------------------
Signature Its
--------------------------
Optionee's Taxpayer
Identification Number:
- ---------------------------------
Aggregate number of shares of Common Stock
for which the Time Option granted hereunder is exercisable:
Aggregate number of shares of Common Stock for which
the Performance Option granted hereunder is exercisable:
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EXHIBIT A
PLAN YEAR $ EBITDA TARGET (MILLIONS)
1998 86.1
1999 91.2
2000 105.8
2001 112.6
2002 115.2
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Exhibit 10.5
FORM OF REPAYMENT AND STOCK PLEDGE AGREEMENT
THIS REPAYMENT AND STOCK PLEDGE AGREEMENT dated as of ______________ is
made and entered into by and between Accuride Corporation, a Delaware
corporation (the "Company"), and ____________ (the "Pledgor").
RECITALS
A. The Company has entered into a Stockholder's Agreement dated as of
____________ with the Pledgor and Hubcap Acquisition L.L.C. (the
"Stockholder's Agreement") whereby the Company has agreed to issue and
sell to Pledgor certain shares of common stock, par value $0.01 per
share, of the Company (the "Common Stock"), and has granted or may in
the future grant to Pledgor options to purchase Common Stock.
B. As part of the purchase price for the Purchase Stock (as defined in
the Stockholder's Agreement), the Pledgor is delivering to the Company
the promissory note of the Pledgor of even date herewith in the
principal amount of $___________ (the "Note").
C. The Pledgor wishes to grant further security and assurance to the
Company in order to secure the payment of the Note and, to that
effect, to pledge to the Company the Stock (as defined in the
Stockholder's Agreement) to be acquired pursuant to the Stockholder's
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
1. PLEDGE.
(a) As security for the payment and performance of all obligations of the
Pledgor on the Note, including the payment of the principal of and interest on
the Note, and in order to secure the Pledgor's obligations under this Agreement,
the Pledgor hereby delivers, pledges and assigns the Stock to the Company and
creates in the Company a security interest in the Pledged Securities (as defined
below).
(b) The "Pledged Securities" under this Agreement shall consist of
the Stock and all securities, certificates and instruments representing or
evidencing ownership of the Pledged Securities hereunder, and all proceeds and
products of any Pledged Securities hereunder, including, without limitation,
stock, cash, property or other dividends, securities, rights and other property
now or hereafter at any time or from time to time received, receivable or
otherwise distributed or distributable in respect of or in exchange for any or
all of such Pledged Securities including proceeds delivered to the Pledgee
pursuant to Section 2 and any substituted or additional Pledged Securities
required to be supplied under the terms of this Agreement.
<PAGE>
2. REPAYMENT. The Pledgor hereby agrees that at any time if the Pledgor shall
have received any cash payment or other distribution in respect of, or upon
transfer, sale or other disposition of, the Pledged Securities, then and in each
case until the Note is paid in full (including interest), the Pledgor shall
immediately deliver to the Company such amount (net of applicable income taxes
at the Pledgor's actual rate) in partial or full payment of the principal and
interest on the Note.
3. ADMINISTRATION OF PLEDGED SECURITIES. The following provisions shall
govern the administration of the Pledged Securities:
(a) So long as no Event of Default (as defined below) has occurred and is
continuing the Pledgor shall be entitled to act with respect to the Pledged
Securities in any manner not inconsistent with this Agreement, the Stockholder's
Agreement, the Note, or any document or instrument delivered or to be delivered
pursuant to or in connection with the Stockholder's Agreement.
(b) The Pledgor shall immediately upon request by the Company and in
confirmation of the security interests hereby created, execute and deliver to
the Company such further instruments, deeds, transfers, assurances and
agreements, in form and substance as the Company shall request, including any
financing statement and amendments thereto, or any other documents, as required
under Delaware law and other applicable law to protect the security interests
created hereunder.
4. DEFAULTS. The occurrence of any one or more of the following events or
conditions shall constitute an "Event of Default" under this Agreement:
(a) The Pledgor fails to make any principal or interest payment required
pursuant to the Note within 30 days of the due date therefor.
(b) The Pledgor makes or has made or furnishes or has furnished, any
material written warranty, representation or statement to Company in connection
with this Agreement, the Note or the Stockholder's Agreement which is or was
false or misleading when made or furnished.
(c) Any lien or encumbrance other than that created by this Agreement is
placed on, or any levy is made on the Pledged Securities, or any portion
thereof, or the Pledged Securities, or any portion thereof, is seized or
attached pursuant to legal process, and such lien, encumbrance, levy, seizure,
or attachment is not removed or released within thirty (30) days from the time
such lien or encumbrance was placed thereon or such levy, seizure or attachment
was effected.
(d) The Pledgor commences any bankruptcy, reorganization or insolvency
proceeding, or other proceeding under any federal, state or other law for the
relief of debtors.
(e) The Pledgor fails to obtain dismissal, within sixty (60) days after
commencement thereof, of any bankruptcy, insolvency, or reorganization
proceeding or other proceeding for relief under any bankruptcy law, including,
without limitation, the Federal Bankruptcy Code, or any law for the relief of
debtors, instituted against the Pledgor by one or more third parties, fails
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to oppose actively such proceeding, or, in any such proceeding defaults or files
an answer admitting the material allegations upon which the proceeding was
based, or alleges its willingness to have an order for relief entered or its
desire to seek liquidation, reorganization or adjustment of its debts.
(f) Any receiver, trustee or custodian is appointed by a court of
competent jurisdiction to take possession of all or any substantial portion of
the assets of the Pledgor and such order is not vacated within sixty days of the
entry thereof.
(g) The Pledgor shall fail generally to pay his or her debts as such debts
become due.
(h) The Pledgor shall effect or there shall otherwise occur a Transfer (as
defined in the Stockholder's Agreement) not otherwise permitted under the
Stockholder's Agreement.
5. REMEDIES IN CASE OF AN EVENT OF DEFAULT.
(a) In case an Event of Default shall have occurred and be continuing, the
Company shall be entitled to vote the Pledged Securities and shall have all of
the remedies of a secured party under the Delaware Uniform Commercial Code, and,
without limiting the foregoing, shall have the right, subject to any necessary
regulatory approvals, to sell, assign and deliver the whole or, from time to
time, any part of the Pledged Securities, or any interest in any part thereof,
at any private sale or at public auction, with or without demand of performance
or other demand, advertisement or notice of the time or place of sale or
adjournment thereof or otherwise (except the Company shall give 10 days' notice
to the Pledgor of the time and place of any sale pursuant to this Section 5),
for cash, and credit or for other property, for immediate or future delivery,
and for such price or prices and on such terms as the Company shall, in its sole
discretion, determine, the Pledgor hereby waiving and releasing any and all
right or equity of redemption whether before or after sale hereunder. At any
such sale the Company may bid for and purchase the whole or any part of the
Pledged Securities so sold free from any such right or equity of redemption.
The Company shall apply the proceeds of any such sale first to the payment of
all costs and expenses, including reasonable attorneys' fees, incurred by the
Company in enforcing its rights under this Agreement and then to the payment of
interest on and principal of the Note, with such payments to be applied in the
Company's sole discretion.
(b) The Pledgor recognizes that the Company may be unable to effect a
public sale of all or a part of the Pledged Securities by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the "Act"), or
in the rules and regulations promulgated thereunder, but may be compelled to
resort to one or more private sales to a restricted group of purchasers who will
be obliged to agree, among other things, to acquire the Pledged Securities for
their own account, for investment and not with a view to the distribution or
resale thereof. The Pledgor agrees that private sales so made may be at prices
and on other terms less favorable to the seller than if the Pledged Securities
were sold at public sale, and that the Company has no obligation to delay the
sale of the Pledged Securities for the period of time necessary to permit the
registration of the Pledged Securities for public sale under the Act; provided,
however, that no private sale shall be made of the Pledged Securities to any
Affiliate (as defined in the Stockholder's Agreement) of the Company or Hubcap
Acquisition L.L.C. ("Hubcap Acquisition") at a price per
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share of Common Stock less than the lesser of (i) the then Market Price Per
Share or (ii) the Initial Price Per Share of such Common Stock (each as defined
in the Stockholder's Agreement), subject to adjustment to reflect any stock
split, stock dividend, combination of shares, merger or other adjustment to
Common Stock. The Pledgor agrees that a private sale or sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner.
(c) If any consent, approval or authorization of any state, municipal or
other governmental department, agency or authority should be necessary to
effectuate any sale or disposition by the Company pursuant to this Section 5 of
the Pledged Securities, or any partial disposition of the Pledged Securities,
the Pledgor will execute all such applications and other instruments as may be
required in connection with securing any such consent, approval or
authorization, and will otherwise use his or her best efforts to secure the
same.
(d) Neither failure nor delay on the part of the Company to exercise any
right, remedy, power or privilege provided for herein or by statute or at law or
in equity shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege.
6. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of the Pledgor under
this Agreement shall remain in full force and effect without regard to, and
shall not be impaired or affected by: (a) any subordination, amendment or
modification of or addition or supplement to the Stockholder's Agreement or the
Note, or any assignment or transfer of either thereof; (b) any exercise or non-
exercise by the Company of any right, remedy, power or privilege under or in
respect of this Agreement, the Stockholder's Agreement or the Note, or any
waiver of any such right, remedy, power or privilege; (c) any waiver, consent,
extension, indulgence or other action or inaction in respect of this Agreement,
the Stockholder's Agreement or the Note, or any assignment or transfer of any
thereof; or (d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like, of the Company or its
successors, whether or not the Pledgor shall have notice or knowledge of any of
the foregoing.
7. TRANSFERS BY PLEDGOR. The Pledgor will not sell, assign, transfer or
otherwise dispose of, grant any option with respect to, or mortgage, pledge or
otherwise encumber the Pledged Securities or any interest therein.
8. ATTORNEY-IN-FACT. The Company or its successor is hereby appointed the
attorney-in-fact of the Pledgor for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instrument which the
Company reasonably may deem necessary or advisable to accomplish the purposes
hereof, including without limitation, the execution of the applications and
other instruments described in Section 5(c), which appointment as
attorney-in-fact is irrevocable as one coupled with an interest.
9. TERMINATION. Upon payment in full of principal of and interest on the Note
and upon the due performance of and compliance with all of the provisions of the
Note, this Agreement shall terminate, and the Pledgor shall be entitled to the
return of such of the Pledged Securities as has
4
<PAGE>
not theretofore been sold, released pursuant to Section 5 or otherwise applied
pursuant to the provisions of this Agreement.
10. NOTICES. All notices or other communications required or permitted to be
given hereunder shall be delivered as provided in the Stockholder's Agreement.
11. MISCELLANEOUS. The Company and its assigns shall have no obligation in
respect of the Pledged Securities, except to hold and dispose of the same in
accordance with the terms of this Agreement. This Agreement and any provisions
hereof may be amended, modified, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement of the
amendment, modification, waiver, discharge or termination is sought. The
provisions of this Agreement shall be binding upon the successors and assigns of
the Pledgor. The captions in this Agreement are for convenience of reference
only and shall not define or limit the provisions hereof. This Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Delaware, without regard to the conflicts of laws rules thereof. This
Agreement may be executed simultaneously in several counterparts, each of which
is an original, but all of which together shall constitute one instrument.
[signature page follows]
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Repayment and Stock
Pledge Agreement to be executed and delivered on the date first above written.
ACCURIDE CORPORATION,
a Delaware corporation
By: ____________________
Its: ____________________
PLEDGOR:
_________________________________
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<PAGE>
Exhibit 10.6
FORM OF
SECURED PROMISSORY NOTE
$__________ New York, New York
__________________
FOR VALUE RECEIVED, the undersigned hereby unconditionally promises to pay
to the order of Accuride Corporation, a Delaware corporation (the "Company"), at
its office at 2315 Adams Lane, Henderson, Kentucky 42420 in lawful money of the
United States, _____________ ($__________). The undersigned promises to pay
interest in like money at such office on the unpaid principal amount hereof from
time to time outstanding from the date hereof at the rate of 5.68% per annum.
Interest shall be calculated annually on the basis of a 365 day year and the
number of actual days elapsed.
Except as otherwise provided herein or in the Repayment and Stock Pledge
Agreement between the Company and the undersigned dated _________________ (the
"Pledge Agreement"), principal and interest payments hereunder shall be due as
set forth on Exhibit A.
Notwithstanding anything to the contrary in this Note, the unpaid principal
amount hereof, all accrued and unpaid interest hereunder and all other amounts
owing hereunder shall be due and payable in full on the date which is two months
after the date of termination of the undersigned's employment with the Company
or any of its subsidiaries; provided, however, that this paragraph shall have no
force and effect in the event the Company has not elected to repurchase the
shares purchased by the undersigned pursuant to this Promissory Note.
Notwithstanding anything to the contrary in this Note or the Pledge
Agreement, upon the undersigned's termination of employment with the Company or
any of its subsidiaries for any reason, the Company may, in its discretion,
apply the amount of any incentive compensation and any other compensation (other
than payments in the nature of severance and final paychecks), in each case to
the maximum extent permitted by law and net of all applicable income taxes at
the undersigned's actual rate to (or on behalf of) the undersigned to repay the
balance of the Note, if any, and the undersigned hereby consents, to the maximum
extent permitted by law, to the Company's application of all such payments to so
repay the Note.
This Note is issued in connection with the purchase by the undersigned of
shares of common stock, par value $0.01 per share, of the Company (the "Common
Stock") and the execution by the undersigned of the Stockholder's Agreement of
even date herewith among the Company, the undersigned and Hubcap Acquisition
L.L.C. (the "Stockholder's Agreement") and the pledge of such Stock and other
collateral (the "Pledged Securities") pursuant to the Pledge Agreement.
The undersigned shall have the right to prepay this Note, in whole or in
part, at any time without notice and without penalty and, notwithstanding
anything to the contrary herein, this
<PAGE>
Note shall be prepaid, in whole or in part and from time to time, from the
proceeds from any sale, transfer or other disposition of the Pledged Securities.
Any partial prepayments shall be applied first to accrued and unpaid interest
and then to principal.
Notwithstanding the existence of the Pledged Securities as security for
repayment of the Note, the undersigned remains personally liable to the Company
for any deficiency which the Pledged Securities do not cover.
If an Event of Default (as defined in the Pledge Agreement) shall have
occurred and be continuing, then, at such time, the unpaid principal amount
hereof, all accrued and unpaid interest hereunder and all other amounts owing
hereunder shall be and become immediately due and payable without notice to the
undersigned.
The Company shall have all of the rights to a secured creditor under the
Delaware Commercial Code with respect to the Pledged Securities pledged as
security hereunder.
The undersigned promises to pay all costs and expenses, including
reasonable attorney's fees incurred by the Company in collecting or attempting
to collect the indebtedness under the Note.
If any payment of principal or interest on this Note becomes due and
payable on a day other than a business day, such payment shall be made on the
next succeeding business day. As used herein, the term "business day" means any
day other than a Saturday, Sunday or other day on which banks in the City of New
York, New York are authorized by law to close.
Except as otherwise provided herein, presentment for payment, demand,
notice of dishonor, protest and notice of protest are hereby waived. All
notices, declarations and other communications hereunder shall be in writing,
hand delivered (including delivery by a courier service) as follows:
If to the Company:
Accuride Corporation
2315 Adams Lane
Henderson, KY 42420
Attention: President
If to the undersigned, to him at his most recent address as reflected in
the Company's records, or to such other address as the Company or the
undersigned may deliver to the other party from time to time in writing in like
manner.
This Note shall not be assigned by the undersigned without the prior
written consent of the Company. This Note may be assigned by the Company at any
time.
2
<PAGE>
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE.
_______________________________
[ ]
3
<PAGE>
EXHIBIT A
[$750,000]
DATE PAYMENT
1/30/98 $300,000 plus accrued interest
8/31/98 $450,000 plus accrued interest
[$200,000]
DATE PAYMENT
1/30/98 $40,000 plus accrued interest
8/31/98 $60,000 plus accrued interest
1/29/99 $50,000 plus accrued interest
12/31/99 $50,000 plus accrued interest
[$100,000]
DATE PAYMENT
1/30/98 $20,000 plus accrued interest
8/31/98 $30,000 plus accrued interest
1/29/99 $25,000 plus accrued interest
12/31/99 $25,000 plus accrued interest
4
<PAGE>
Exhibit 10.7
FORM OF
STOCKHOLDER'S AGREEMENT
This Stockholder's Agreement (this "Agreement") is entered into as of
______________ by and among ACCURIDE CORPORATION, a Delaware corporation (the
"Company"), __________________ (the "Purchaser") and HUBCAP ACQUISITION L.L.C.
("Acquisition") (being hereinafter collectively referred to as the "Parties").
RECITALS
Pursuant to the terms of the 1998 Stock Purchase and Option Plan for
Employees of Accuride Corporation and Subsidiaries, as the same may be amended
from time to time (the "Equity Plan"), the Company is making shares of its
common stock ("Common Stock") available for purchase by certain employees and is
granting options to purchase Common Stock to certain employees. This Agreement
is one of several agreements ("Other Purchasers' Agreements") which have been,
or which in the future will be, entered into between the Company and other
individuals who are or will be employees of the Company or one of its
Subsidiaries (collectively, the "Other Purchasers"). In addition, the Company
has entered into agreements (the "Investors' Agreements") with certain
institutional investors and other purchasers (collectively, the "Investors")
pursuant to which the Investors purchased or will purchase shares of Common
Stock. For purposes of this Agreement, "Subsidiary," with respect to any
entity, shall mean any corporation (or other entity) in an unbroken chain of
entities beginning with such corporation (or entity) if each of the entities, or
group of commonly controlled entities, other than the last entity in the
unbroken chain, then owns stock (or other equity interest) possessing 50% or
more of the total combined voting power of all classes of equity in one of the
other entities in such chain; "Affiliate" shall mean, with respect to any
Person, a Person directly or indirectly controlling, controlled by, or under
common control with, such Person, and with respect to the Company, also any
entity designated by the Board of Directors of the Company in which the Company
or one of its Affiliates has an interest, and, with respect to Kohlberg Kravis
Roberts & Co., L.P. ("KKR"), also any Affiliate of any partner of KKR; "Person"
shall mean an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other entity of whatever nature; and
"control" shall have the meaning given such term under Rule 405 of the
Securities Act of 1933 (the "Securities Act").
Pursuant to the terms of the Equity Plan, the Company has agreed to sell to
the Purchaser, and the Purchaser desires to purchase ________ shares of Common
Stock (the "Purchase Stock") at a price per share of $5,000.00. The purchase of
the Purchase Stock will be made on ______________ (the "Purchase Date") and
following the contemplated stock dividend which will result in Acquisition's
effective cost per share of Common Stock equaling $5,000.00 (the "Stock
Dividend"), unless the Company shall notify the Purchaser that the Purchase Date
has been extended, in which case the Purchase Date shall be the date specified
in such notice. On the
<PAGE>
Purchase Date, the Company also will grant to the Purchaser an option or options
(the "Options") to purchase _______ shares of Common Stock at an exercise price
of $5,000.00 per share, pursuant to the terms of the Equity Plan and the "Non-
Qualified Stock Option Agreement" of even date herewith by and between the
Company and the Purchaser. The Options may be granted as Time Options or
Performance Options (each as defined in the Non-Qualified Stock Option
Agreement). The term "Stock" as used in this Agreement shall include all shares
of Purchase Stock of the Company purchased by the Purchaser pursuant to this
Agreement and all shares of Common Stock issued to the Purchaser by the Company
upon exercise of the Options and of any other stock options held by the
Purchaser and any other Common Stock otherwise acquired by the Purchaser at any
time when this Agreement is in effect. The term "Options" as used in this
Agreement shall include all Options granted to the Purchaser pursuant to this
Agreement and any other stock options to purchase Common Stock granted to the
Purchaser by the Company and held by the Purchaser at any time when this
Agreement is in effect.
AGREEMENT
To implement the foregoing and in consideration of the mutual agreements
contained herein, the Parties agree as follows:
1. PURCHASE OF STOCK; ISSUANCE OF OPTIONS.
(a) On the Purchase Date, subject to the Stock Dividend, the Purchaser
hereby subscribes for and shall purchase, and the Company will sell to the
Purchaser, the Purchase Stock at a purchase price of $5,000.00 per share (the
"Initial Price Per Share") subject to the terms and conditions hereinafter set
forth and contained in the Equity Plan. The Company shall have no obligation to
sell any Purchase Stock to any person who (i) is a resident or citizen of a
state or other jurisdiction in which the sale of the Purchase Stock to him would
constitute a violation of the securities or "blue sky" laws of such jurisdiction
(provided that the Company shall take all reasonable ministerial actions under
such laws to avoid any such violation) or (ii) is not an employee of the Company
or one of its Subsidiaries on the Purchase Date.
(b) The Purchaser shall pay to the Company on the Purchase Date
$_________, in cash or a certified bank check or checks payable to the order of
the Company and a note payable to the Company in the principal amount of
$________ in consideration of the Purchase Stock; provided, that with the
consent of the Company, the Purchaser may deliver another form of payment for
the Purchase Stock. On the Purchase Date, in consideration of receipt of the
Initial Price Per Share, the Company will deliver to the Purchaser a
certificate, registered in the Purchaser's name, for the Purchase Stock.
(c) Upon and as of the Purchase Date, the Company shall issue to the
Purchaser Options to purchase ______________ shares of Common Stock subject to
the terms and conditions hereinafter set forth and contained in the Equity Plan
and the Non-Qualified Stock
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<PAGE>
Option Agreement, and the Parties shall execute and deliver to each other copies
of the Non-Qualified Stock Option Agreement concurrently with the issuance of
the Options.
2. THE PURCHASER'S REPRESENTATIONS AND WARRANTIES.
(a) The Purchaser hereby represents and warrants that he is acquiring the
Purchase Stock for investment for his own account and not with a view to, or for
resale in connection with, the distribution or other disposition thereof. The
Purchaser agrees and acknowledges that he will not, directly or indirectly,
offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of any
shares of Stock (any such act sometimes referred to herein as a "Transfer,"
whether voluntary or involuntary) unless such Transfer complies with the terms
and conditions of this Agreement and (i) the Transfer is pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
or the rules and regulations in effect thereunder (the "Securities Act") or (ii)
(A) counsel for the Purchaser (which counsel shall be acceptable to the Company)
shall have furnished the Company with an opinion, satisfactory in form and
substance to the Company, that no such registration is required because of the
availability of an exemption from registration under the Securities Act and (B)
if the Purchaser is a citizen or resident of any country other than the United
States, or the Purchaser desires to effect any Transfer in any such country,
counsel for the Purchaser (which counsel shall be acceptable to the Company)
shall have furnished the Company with an opinion or other advice satisfactory in
form and substance to the Company to the effect that such Transfer will comply
with the securities laws of such jurisdiction. Notwithstanding the foregoing,
the Company acknowledges and agrees that any of the following Transfers are
deemed to be in compliance with this Agreement and no opinion of counsel is
required in connection therewith: (w) a pledge of Purchase Stock to the Company
to secure a loan or guaranty made by the Company in connection with the
Purchaser's acquisition of Purchase Stock, (x) a Transfer made pursuant to
Section 5, 6, 8 or 9 hereof, (y) a Transfer upon the death of the Purchaser to
his executors, administrators, testamentary trustees, legatees or beneficiaries
(the "Purchaser's Estate") or a Transfer to the executors, administrators,
testamentary trustees, legatees or beneficiaries of a person who has become a
holder of Stock in accordance with the terms of this Agreement, provided that it
is expressly understood that any such transferee shall be bound by the
provisions of this Agreement and (z) a Transfer made after the Purchase Date in
compliance with the federal securities laws to a trust or custodianship the
beneficiaries of which may include only the Purchaser, his spouse or his lineal
descendants (which term shall include adoptive as well as biological
descendants) (the "Purchaser's Trust") or a Transfer made after the third
anniversary of the Purchase Date to such a trust by a person who has become a
holder of Stock in accordance with the terms of this Agreement, provided that
such Transfer is made expressly subject to this Agreement and that the
transferee agrees in writing to be bound by the terms and conditions hereof.
(b) The certificate (or certificates) representing the Stock shall bear
the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS
3
<PAGE>
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF THE STOCKHOLDER'S
AGREEMENT DATED AS OF ______________ BY AND AMONG ACCURIDE
CORPORATION (THE "COMPANY"), THE PURCHASER NAMED ON THE FACE HEREOF
AND HUBCAP ACQUISITION L.L.C. (A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY). EXCEPT AS OTHERWISE PROVIDED IN SUCH
AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR (B) IF (I) THE
COMPANY HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR
THE HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE
ACT OR THE RULES AND REGULATIONS IN EFFECT THEREUNDER, AND IN
COMPLIANCE WITH APPLICABLE PROVISIONS OF STATE SECURITIES LAWS, AND
(II) IF THE HOLDER IS A CITIZEN OR RESIDENT OF ANY COUNTRY OTHER THAN
THE UNITED STATES, OR THE HOLDER DESIRES TO EFFECT ANY SUCH
TRANSACTION IN ANY SUCH COUNTRY, THE COMPANY HAS BEEN FURNISHED WITH A
SATISFACTORY OPINION OR OTHER ADVICE OF COUNSEL FOR THE HOLDER THAT
SUCH TRANSACTION WILL NOT VIOLATE THE LAWS OF SUCH COUNTRY."
(c) The Purchaser acknowledges that he has been advised that (i) the Stock
has not been registered under the Securities Act, (ii) the Stock must be held
indefinitely and the Purchaser must continue to bear the economic risk of the
investment in the Stock unless it is subsequently registered under the
Securities Act or an exemption from registration is available, (iii) it is not
anticipated that there will be any public market for the Stock, (iv) an
exemption from registration under Rule 144 promulgated under the Securities Act
is not currently available with respect to the sales of any securities of the
Company, and the Company has made no covenant to make such an exemption
available (except as provided in Section 11(b) hereof), (v) when and if shares
of Stock may be disposed of without registration in reliance on Rule 144, such
disposition can be made only in limited amounts in accordance with the terms and
conditions of such Rule, (vi) if the Rule 144 exemption is not available, public
sale without registration will require compliance with some other exemption
under the Securities Act, (vii) a
4
<PAGE>
restrictive legend in the form heretofore set forth shall be placed on the
certificates representing the Stock, and (viii) a notation shall be made in the
appropriate records of the Company indicating that the Stock is subject to
restrictions on transfer and, if the Company should at some time in the future
engage the services of a stock transfer agent, appropriate stop transfer
restrictions will be issued to such transfer agent with respect to the Stock.
(d) If any shares of Stock are to be disposed of in accordance with Rule
144 under the Securities Act or otherwise, the Purchaser shall promptly notify
the Company of such intended disposition and shall deliver to the Company at or
prior to the time of such disposition such documentation as the Company may
reasonably request in connection with such sale, and, in the case of a
disposition pursuant to Rule 144, shall deliver to the Company an executed copy
of any notice on Form 144 required to be filed with the Securities and Exchange
Commission.
(e) The Purchaser agrees that, if any shares of the Common Stock (or
securities convertible into or exchangeable for Common Stock) of the Company are
offered to the public pursuant to an effective registration statement under the
Securities Act, the Purchaser will not effect any public sale or distribution of
any shares of Stock not covered by such registration statement within 7 days
prior to, or within 180 days after, the effective date of such registration
statement, unless otherwise agreed to in writing by the Company.
(f) The Purchaser represents and warrants that (i) he has received and
reviewed a Private Placement Memorandum, including all amendments and
supplements thereto (the "Private Placement Memorandum") relating to the Stock
and the documents referred to therein, certain of which documents set forth the
rights, preferences and restrictions relating to the Stock and (ii) he has been
given the opportunity to obtain any additional information or documents and to
ask questions and receive answers about such documents, the Company and its
Subsidiaries and the business and prospects of the Company and its Subsidiaries
which he deems necessary to evaluate the merits and risks related to his
investment in the Stock and he has relied solely on such information.
(g) The Purchaser further represents and warrants that (i) his financial
condition is such that he can afford to bear the economic risk of holding the
Stock for an indefinite period of time and has adequate means for providing for
his current needs and personal contingencies, (ii) he can afford to suffer a
complete loss of his investment in the Stock, (iii) all information which he has
provided to the Company concerning himself and his financial position is correct
and complete as of the date of this Agreement, (iv) he understands and has taken
cognizance of all risk factors related to the purchase of the Stock, including
those set forth in the Private Placement Memorandum referred to above, and (v)
his knowledge and experience in financial and business matters are such that he
is capable of evaluating the merits and risks of his purchase of the Stock as
contemplated by this Agreement.
3. RESTRICTION ON TRANSFER.
(a) Except for Transfers permitted by clauses (w), (x), (y), and (z) of
Section 2(a) or pursuant to Section 12, the Purchaser agrees that he will not
transfer, sell, assign, pledge,
5
<PAGE>
hypothecate or otherwise dispose of any shares of Stock at any time prior to the
fifth anniversary of the Purchase Date. No Transfer of any such shares in
violation hereof shall be made or recorded on the books of the Company and any
such Transfer shall be void and of no effect.
(b) Any attempt to Transfer any shares of Stock not in compliance with
this Agreement shall be null and void and neither the Company nor any transfer
agent shall give any effect in the Company's stock records to such attempted
Transfer.
4. RIGHT OF FIRST REFUSAL.
(a) If, at any time after the fifth anniversary of the Purchase Date and
prior to a Public Offering (as defined below), the Purchaser receives a bona
fide offer to purchase any or all of his shares of Stock (an "Offer") from a
third party (an "Offeror") which the Purchaser wishes to accept, the Purchaser
shall cause such Offer to be reduced to writing and shall notify the Company in
writing of his wish to accept such Offer. The Purchaser's notice shall contain
an irrevocable offer to sell such shares of Stock to the Company, (in the manner
set forth below) at a purchase price equal to the price contained in, and on the
same terms and conditions of, such Offer, and shall be accompanied by a true
copy of such Offer (which shall identify the Offeror thereof). At any time
within 45 days after the date of the receipt by the Company of the Purchaser's
notice described above, the Company shall have the right and option to purchase,
or to arrange for a third party to purchase, all of the shares of Stock covered
by the Offer either (i) at the same price and on the same terms and conditions
as the Offer or (ii) if the Offer includes any consideration other than cash,
then at the sole option of the Company, at the equivalent all cash price,
determined in good faith by the Company's Board of Directors, by delivering a
certified bank check or checks in the appropriate amount to the Purchaser at the
principal office of the Company against delivery of certificates or other
instruments representing the shares of Stock so purchased, appropriately
endorsed by the Purchaser. If at the end of such 45 day period, the Company has
not tendered the purchase price for such shares in the manner set forth above,
the Purchaser may during the succeeding 30 day period sell not less than all of
the shares of Stock covered by the Offer to the Offeror at a price and on terms
no less favorable to the Purchaser than those contained in the Offer. No sale
may be made to any Offeror unless such Offeror agrees in writing with the
Company to be bound by the provisions of this Section 4 in connection with any
resale by the Offeror. Promptly after any such sale to an Offeror, the Purchaser
shall notify the Company of the consummation thereof and shall furnish such
evidence of the completion and time of completion of such sale and of the terms
thereof as may reasonably be requested by the Company. If, at the end of the 30
day period following the expiration of the 45 day period during which the
Company may elect to purchase the Stock, the Purchaser has not completed the
sale of such shares of Stock as aforesaid, all the restrictions on sale,
transfer and assignment contained in this Agreement shall again be in effect
with respect to such shares of Stock.
(b) If, at any time after the fifth anniversary of the Purchase Date and
after the first Public Offering, the Purchaser receives an Offer, the provisions
of subsection (a) above shall continue to apply but "5 day(s)" shall be
substituted for "45 day(s)" and "2 day(s)" shall be substituted for "30 day(s)"
in each instance, respectively, where such term occurs therein.
6
<PAGE>
5. THE PURCHASER'S RESALE OF STOCK TO THE COMPANY AND SURRENDER OF OPTIONS
UPON THE PURCHASER'S DEATH OR DISABILITY.
(a) Except as otherwise provided herein, if on or prior to the later of
the first Public Offering and the fifth anniversary of the Purchase Date, (i)
(A) the Purchaser is still in the employ of the Company or any Subsidiary of the
Company or (B) the Purchaser has retired from the Company or any Subsidiary of
the Company at age 65 or over (or such other age as may be approved by the Board
of Directors of the Company) after having been employed by the Company or any of
its Subsidiaries for at least three years after the Purchase Date (a "Permitted
Retirement") and (ii) the Purchaser either dies or suffers a "Permanent
Disability" (as defined below) (each, a "Put Event"), then the Purchaser, the
Purchaser's Estate or the Purchaser's Trust, as the case may be, shall have the
right, for six months following the date of death or Permanent Disability, (X)
to sell to the Company, and the Company shall be required to purchase, on one
occasion, all or any portion of the shares of Stock then held by the Purchaser,
the Purchaser's Estate or the Purchaser's Trust, as the case may be, at the
"Section 5 Repurchase Price" (as determined in accordance with Section 7) and
(Y) to require the Company to pay to the Purchaser, the Purchaser's Estate or
the Purchaser's Trust, as the case may be, an amount equal to the "Option Excess
Price" (determined on the basis of the Section 5 Repurchase Price as provided in
Section 10) with respect to the termination of all or any portion of the
outstanding exercisable Options then held by the Purchaser, the Purchaser's
Estate or the Purchaser's Trust, as the case may be. The Purchaser, the
Purchaser's Estate or the Purchaser's Trust, as the case may be, shall send
written notice to the Company of its intention to sell shares of Stock and/or to
terminate Options in exchange for the payment referred to in the preceding
sentence (the "Redemption Notice"). The completion of the purchase shall take
place at the principal office of the Company on the tenth business day after the
giving of the Redemption Notice. The Section 5 Repurchase Price and any payment
with respect to Options as described above shall be paid by delivery to the
Purchaser, the Purchaser's Estate or the Purchaser's Trust, as the case may be,
of a certified bank check or checks in the appropriate amount payable to the
order of the Purchaser, the Purchaser's Estate or the Purchaser's Trust, as the
case may be, against delivery of certificates or other instruments representing
the Stock so purchased and appropriate documents canceling the Options so
terminated, appropriately endorsed or executed by the Purchaser, the Purchaser's
Estate or the Purchaser's Trust, or his or its duly authorized representative.
For purposes of this Agreement, the Purchaser shall be deemed to have suffered a
"Permanent Disability" if the Purchaser is unable to engage in the activities
required by employment by reason of any medically determined physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12 months, as
reasonably determined by the Board of Directors of the Company in good faith and
in its discretion.
(b) Notwithstanding anything in Section 5(a) to the contrary and subject
to Section 13, if there exists and is continuing a default or an event of
default on the part of the Company or any Subsidiary of the Company under any
loan, guarantee or other agreement under which the Company or any Subsidiary of
the Company has borrowed money, or such repurchase would result in a default or
an event of default on the part of the Company or any Subsidiary of the
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Company under any such agreement, or if a repurchase would not be permitted
under Section 170 of the General Corporation Law of the State of Delaware or
would otherwise violate the General Corporation Law of the State of Delaware
(each such occurrence being an "Event"), the Company shall not be obligated to
repurchase any of the Stock or to make payment of the Option Excess Price in
exchange for termination of any Options held by the Purchaser, the Purchaser's
Estate or the Purchaser's Trust, as the case may be, until the first business
day which is 15 calendar days after all of the foregoing Events have ceased to
exist (the "Repurchase Eligibility Date"); PROVIDED, HOWEVER, that (i) the
number of shares of Stock subject to repurchase under this Section 5(b) shall be
that number of shares of Stock and (ii) the number of "Exercisable Option
Shares" (as defined in Section 10) shall be that number of Exercisable Option
Shares, held by the Purchaser, the Purchaser's Estate or the Purchaser's Trust,
as the case may be, at the time of delivery of a Redemption Notice in accordance
with Section 5(a) hereof; PROVIDED, FURTHER, that the "Repurchase Calculation
Date" (as defined in Section 7) shall be determined in accordance with Section 7
as of the Repurchase Eligibility Date. All Options exercisable as of the date
of a Redemption Notice shall continue to be exercisable until terminated in
accordance with Section 10.
6. THE COMPANY'S RIGHT TO REPURCHASE STOCK AND CANCEL OPTIONS OF THE
PURCHASER.
(a) (i) If, on or prior to the later of the first Public Offering and
the fifth anniversary of the Purchase Date, (A) the Purchaser's active
employment with the Company (and/or, if applicable, its Subsidiaries) is
voluntarily or involuntarily terminated for any reason whatsoever, (B) the
beneficiaries of the Purchaser's Trust shall include any person or entity
other than the Purchaser, his spouse or his lineal descendants, (C) the
Purchaser shall effect a Transfer of any Stock other than as permitted in
this Agreement, or (D) there shall occur a Transfer of any Stock pursuant
to any bankruptcy proceeding, levy, property settlement or disposition
pursuant to law incident to marital separation or divorce (each, a "Call
Event"), the Company shall have the right to purchase all or any portion of
the shares of Stock then held by the Purchaser, the Purchaser's Estate and
the Purchaser's Trust, as the case may be, at the "Section 6 Repurchase
Price" (determined in accordance with Section 7); PROVIDED, HOWEVER, that
if the Call Event results from the death, Permanent Disability or Permitted
Retirement of the Purchaser, the Company shall have the right to purchase
all or any portion of the shares of Stock held by the Purchaser, the
Purchaser's Estate and the Purchaser's Trust, as the case may be, at the
Section 5 Repurchase Price. The Company shall have until 75 days after the
date of a Call Event in which to give notice in writing to the Purchaser,
the Purchaser's Estate or the Purchaser's Trust, as the case may be, of the
Company's exercise of such right ("Call Notice").
(ii) If, on or prior to the later of the first Public Offering and
the fifth anniversary of the Purchase Date, a Call Event occurs, the
Company shall have the right (in accordance with the requirements of the
Call Notice) to cancel all or any portion of the then exercisable
outstanding Options held by any of the Purchaser, the Purchaser's Estate
and the Purchaser's Trust, as the case may be, in exchange for payment to
the Purchaser, the Purchaser's Estate or the Purchaser's Trust, as the case
may be, with respect to each Exercisable Option Share so canceled, of an
amount equal to the Option
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Excess Price determined on the basis of the Section 6 Repurchase Price, or,
if the Call Event results from the death, Permanent Disability or Permitted
Retirement of the Purchaser, the Section 5 Repurchase Price.
(iii) The completion of each purchase and payment of the Option
Excess Price pursuant to the foregoing shall take place at the principal
office of the Company on the tenth business day after the later of the
giving of notice of the Company's exercise of its rights pursuant to
subsection (i) or (ii) above or the date of the Call Event. The Section 5
Repurchase Price or the Section 6 Repurchase Price, as the case may be, and
any payment with respect to Options as described above shall be paid by
delivery to the Purchaser, the Purchaser's Estate or the Purchaser's Trust,
as the case may be, of a certified bank check or checks in the appropriate
amount payable to the order of the Purchaser, the Purchaser's Estate or the
Purchaser's Trust, as the case may be, against delivery of certificates or
other instruments representing the Stock so purchased and appropriate
documents canceling the Options so terminated, appropriately endorsed or
executed by the Purchaser, the Purchaser's Estate or the Purchaser's Trust
or his or its duly authorized representative.
(b) Notwithstanding any other provision of this Section 6 to the contrary
and subject to Section 13, if there exists and is continuing any Event, the
Company shall delay the repurchase of the Stock and the payment with respect to
any Options (pursuant to a Call Notice timely given in accordance with Section
6(a) hereof) held by the Purchaser, the Purchaser's Estate or the Purchaser's
Trust, as the case may be, until the Repurchase Eligibility Date; PROVIDED,
HOWEVER, that the determination of (i) the number of shares of Stock subject to
repurchase under this Section 6(b) and (ii) the number of Exercisable Option
Shares subject to cancellation in exchange for payment under this Section 6(b)
shall be made at the time of delivery of a Call Notice in accordance with
Section 6(a) hereof; PROVIDED, FURTHER, that the Repurchase Calculation Date
shall be determined in accordance with Section 7 based on the Repurchase
Eligibility Date. All Options exercisable as of the date of a Call Notice shall
continue to be exercisable until terminated in accordance with Section 10.
7. DETERMINATION OF REPURCHASE PRICE.
(a) The Section 5 Repurchase Price and the Section 6 Repurchase Price are
each hereinafter referred to as the "Repurchase Price," as applicable the
Repurchase Price shall be calculated on the basis of the unaudited financial
statements of the Company or the Market Price Per Share (as defined in Section
7(f)) as of the "Repurchase Calculation Date" which shall be the last day of the
month preceding the later of (i) the month in which the event giving rise to the
repurchase occurs and (ii) the month in which the Repurchase Eligibility Date
occurs. The event giving rise to the repurchase shall be the Transfer, death,
Permanent Disability, Permitted Retirement or other termination of employment or
other event, as the case may be, not the giving of any notice pursuant to
Section 5 or 6.
(b) Prior to a Public Offering the Section 5 Repurchase Price shall be a
per share Repurchase Price equal to the greater of (i) the Initial Price Per
Share and (ii) the Adjusted Book Value Per Share (as defined in Section 7(d)) as
of the Repurchase Calculation Date. After a
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Public Offering, the Section 5 Repurchase Price shall be a per share Repurchase
Price equal to the greater of (x) the Initial Price Per Share and (y) the Market
Price Per Share (as defined in Section 7(f)) as of the Repurchase Calculation
Date.
(c) Prior to a Public Offering, the Section 6 Repurchase Price shall be a
per share Repurchase Price equal to the lesser of (i) the Adjusted Book Value
Per Share and (ii) the sum of (A) the Initial Price Per Share and (B) the
product of (1) the "Percentage" (as defined below) and (2) the amount, if any,
by which the Adjusted Book Value Per Share as of the Repurchase Calculation Date
exceeds the Initial Price Per Share. After a Public Offering, the Section 6
Repurchase Price shall be a per share Repurchase Price equal to the lesser of
(x) Market Value Per Share as of the Repurchase Calculation Date or (y) the sum
of (A) the Initial Price Per Share and (B) the product of (1) the Percentage and
(2) the amount, if any, by which the Market Value Per Share as of the Repurchase
Calculation Date exceeds the Initial Price Per Share.
The "Percentage" shall be determined as follows:
Repurchase Calculation Date Percentage
Prior to the first anniversary of the Purchase Date - 0 -
On and after the first anniversary of the Purchase
Date and prior to the second anniversary of the Purchase Date 20%
On and after the second anniversary of the Purchase Date and
prior to the third anniversary of the Purchase Date 40%
On and after the third anniversary of the Purchase Date and
prior to the fourth anniversary of the Purchase Date 60%
On and after the fourth anniversary of the Purchase Date and
prior to the fifth anniversary of the Purchase Date 80%
On and after the fifth anniversary of the Purchase Date 100%
(d) For purposes of this Agreement, Adjusted Book Value Per Share as of
any date of determination shall equal the sum of (i) the Initial Price Per Share
and (ii) the Book Value Per Share as of the date of determination minus the Book
Value Per Share as of the Purchase Date. "Book Value Per Share" as of any date
of determination shall equal the result of (x) the sum of (A) the stockholders'
equity of the Company, excluding amounts attributable to shares of the Company's
capital stock other than its Common Stock; the amount of any asset reversion
resulting from the termination of any pension plan of the Company or any of its
Subsidiaries; and excluding the effect of any decrease after the Purchase Date
in the valuation allowance recognized at the Purchase Date related to deferred
tax assets arising as a result of the "Recapitalization" (as defined below), all
as determined in accordance with generally accepted accounting principles
applied on a basis consistent with any prior periods, and (B) the aggregate
exercise prices of all outstanding stock options and other rights to acquire
common stock of the
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Company and the aggregate conversion prices of all securities convertible into
shares of Common Stock, divided by (y) the sum of the number of shares of Common
Stock then outstanding and the number of shares of Common Stock issuable upon
the exercise of all outstanding stock options and other rights to acquire Common
Stock and the conversion of all securities convertible into shares of Common
Stock. For purposes of this Agreement, Book Value Per Share as of the Purchase
Date will be based on the stockholders' equity of the Company immediately after
giving effect to purchase of Common Stock by Acquisition as of January 21, 1998,
the redemption of Common Stock held by Phelps Dodge Corporation, the incurrence
of related transaction fees and expenses, and the recognition of net deferred
tax assets or liabilities related thereto (the "Recapitalization").
(e) As used herein the term "Public Offering" shall mean the sale of
shares of Common Stock to the public pursuant to a registration statement under
the Securities Act which has been declared effective by the Securities and
Exchange Commission (other than a registration statement on Form S-8 or any
other similar form) which results in an active trading market in the Common
Stock. A "Qualified Public Offering" shall mean a Public Offering pursuant to
an effective registration statement relating to shares of Common Stock held by
any or all of Acquisition, KKR and any of their respective Affiliates.
(f) As used herein the term "Market Price Per Share" shall mean the price
per share equal to the average of the last sale price of the Common Stock on the
Repurchase Calculation Date on each exchange on which the Common Stock may at
that time be listed and on which the Common Stock traded on such date or, if
there shall have been no sales on any of such exchanges on the Repurchase
Calculation Date, the average of the closing bid and asked prices on each such
exchange at the end of the Repurchase Calculation Date or if there is no such
bid and asked price on the Repurchase Calculation Date on the next preceding
date when such bid and asked price occurred or, if the Common Stock shall not be
so listed, the average of the closing sales prices as reported by NASDAQ at the
end of the Repurchase Calculation Date in the over-the-counter market. If the
Common Stock is not so listed or reported by NASDAQ, then the Market Price Per
Share shall be the Adjusted Book Value Per Share.
(g) In determining the Repurchase Price, appropriate adjustments shall be
made for any future issuances of rights to acquire, and securities convertible
into, Common Stock and any stock dividends, splits, combinations,
recapitalizations, and any other adjustment in the number of outstanding shares
of Common Stock.
8. "TAG-ALONG" RIGHT.
(a) In the event that at any time prior to the fifth anniversary of the
first Public Offering, Acquisition (or one of its Affiliates or a KKR Affiliate
to whom Acquisition has previously transferred any of its shares of Common Stock
owned immediately following January 21, 1998, a "Transfer Affiliate") proposes
to sell for cash or any other consideration any shares of Common Stock owned by
it to any person (a "Proposed Purchaser"), in any transaction having such
substance (including a merger) other than (i) a Public Offering or (ii) a sale
to an Acquisition Affiliate or KKR Affiliate, Acquisition (or such Transfer
Affiliate) will notify the
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Purchaser, the Purchaser's Estate or the Purchaser's Trust, as the case may be,
in writing (a "Sale Notice") of such proposed sale (a "Proposed Sale") and the
material terms of the Proposed Sale as of the date of the Sale Notice (the
"Material Terms") promptly, and in any event not less than 15 days prior to the
consummation of the Proposed Sale and not more than 5 days after the execution
of the definitive agreement relating to the Proposed Sale, if any (the "Sale
Agreement"). If within 10 days of the receipt of the Sale Notice, Acquisition
(or such Transfer Affiliate) receives a written request (a "Sale Request") to
include Stock held by the Purchaser, the Purchaser's Estate or the Purchaser's
Trust in the Proposed Sale, the Stock so held by the Purchaser, the Purchaser's
Estate or the Purchaser's Trust shall be so included as provided herein;
PROVIDED, HOWEVER, that only one such Sale Request may be delivered by the
Purchaser, the Purchaser's Estate or the Purchaser's Trust, as the case may be,
with respect to any Proposed Sale for all Stock held by the Purchaser, the
Purchaser's Estate or the Purchaser's Trust; and PROVIDED, FURTHER, that any
Sale Request shall be irrevocable unless (x) there shall be a material adverse
change in the Material Terms or (y) otherwise mutually agreed to in writing by
the Purchaser, the Purchaser's Estate or the Purchaser's Trust, as the case may
be, and Acquisition (or such Transfer Affiliate). Promptly after the receipt of
the Sale Request, Acquisition (or such Transfer Affiliate) will furnish the
Purchaser, the Purchaser's Estate or the Purchaser's Trust, as the case may be,
with a copy of the Sale Agreement, if any.
(b) The number of shares of Stock that the Purchaser, the Purchaser's
Estate or the Purchaser's Trust, as the case may be, will be permitted to
include in a Proposed Sale pursuant to a Sale Request will be the product of (i)
the number of shares of Stock then held by, and the number of Exercisable Option
Shares that may then be acquired by, the Purchaser, the Purchaser's Estate or
the Purchaser's Trust and (ii) the ratio of (A) the number of shares of Common
Stock which Acquisition (or the Transfer Affiliate) proposes to sell in the
Proposed Sale, to (B) the number of shares of Common Stock then held by
Acquisition (and any Transfer Affiliates). Notwithstanding the above, if one of
more holders of shares of Common Stock who have been granted the same rights
granted hereunder elect not to include in the Proposed Sale the maximum number
of shares of Common Stock which such holder would have been permitted to include
in a Proposed Sale (the "Eligible Shares"), Acquisition, KKR and any of their
respective Affiliates, or any of them, may sell in the Proposed Sale that number
of additional shares of Common Stock owned by any of them not in excess of the
number of Eligible Shares not included in the Proposed Sale.
(c) Except as may otherwise be provided herein, shares of Stock subject to
a Sale Request will be included in a Proposed Sale pursuant hereto and to any
agreements with the Proposed Purchaser relating thereto, on the same terms and
subject to the same conditions applicable to the shares of Common Stock which
Acquisition (or the Transfer Affiliate) proposes to sell in the Proposed Sale.
Such terms and conditions shall include, without limitation, the sale price; the
payment of fees, commissions and expenses; the provision of, and representation
and warranty as to, information requested of Acquisition (or the Transfer
Affiliate); and the provision of requisite indemnifications; PROVIDED, HOWEVER,
that any indemnification provided by the Purchaser, the Purchaser's Estate or
the Purchaser's Trust shall be determined pro rata in
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proportion with the aggregate number of shares of Common Stock to be sold in the
Proposed Sale.
(d) Upon delivering a Sale Request, the Purchaser, the Purchaser's Estate
or the Purchaser's Trust, as the case may be, will, if requested by Acquisition
(or the Transfer Affiliate), execute and deliver a custody agreement and power
of attorney in form and substance satisfactory to Acquisition (or the Transfer
Affiliate) (a "Custody Agreement and Power of Attorney") with respect to the
shares of Stock which are to be included in the Proposed Sale pursuant hereto.
The Custody Agreement and Power of Attorney will provide, among other things,
that the Purchaser, the Purchaser's Estate or the Purchaser's Trust, as the case
may be, will deliver to and deposit in custody with the custodian and
attorney-in-fact named therein a certificate or certificates representing such
shares of Stock (duly endorsed in blank by the registered owner or owners
thereof or accompanied by duly executed stock powers in blank) and irrevocably
appoint said custodian and attorney-in-fact as the Purchaser's, the Purchaser's
Estate's or the Purchaser's Trust's, as the case may be, agent and
attorney-in-fact with full power and authority to act under the Custody
Agreement and Power of Attorney on behalf of the Purchaser, the Purchaser's
Estate or the Purchaser's Trust, as the case may be, with respect to the matters
specified therein.
(e) The Purchaser agrees that he will execute such other agreements as
Acquisition (or the Transfer Affiliate) may reasonably request in connection
with the consummation of a Proposed Sale and Sale Request and the transactions
contemplated thereby.
(f) Acquisition agrees that it shall not conduct any registered,
underwritten public offering of any of its equity securities.
9. "BRING-ALONG" RIGHT.
(a) In the event that at any time prior to the fifth anniversary of the
first Public Offering, Acquisition (or a Transfer Affiliate) proposes to sell
any of its holdings of Common Stock (the "Acquisition Shares") in a Proposed
Sale (a "Bring-Along Sale"), Acquisition (or such Transfer Affiliate) may
provide the Purchaser, the Purchaser's Trust, or the Purchaser's Estate, as the
case may be, written notice (a "Bring-Along Notice") of such Proposed Sale and
the Material Terms thereof not less than 10 business days prior to the proposed
date of the Bring-Along Sale (the "Bring-Along Sale Date") and the Purchaser
hereby agrees to sell to such Proposed Purchaser that number of shares of Stock
equal to the product of (i) the number of shares of Stock then held by, and the
number of Exercisable Option Shares that may then be acquired by, the Purchaser,
the Purchaser's Estate and the Purchaser's Trust and (ii) the ratio of (A) the
number of shares of Common Stock which Acquisition (or the Transfer Affiliate)
proposes to sell in the Proposed Sale to (B) the number of shares of Common
Stock then held by Acquisition (and all Transfer Affiliates) at the same price
and upon the same terms and conditions as such transfer of Acquisition Shares.
The Purchaser shall not exercise any dissenter's rights with respect to the
consummation of any such Proposed Sale.
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(b) On the Bring-Along Sale Date, the Purchaser (or the Purchaser's Trust
or the Purchaser's Estate, as the case may be) shall deliver a certificate or
certificates for his or its Stock, duly endorsed for transfer with signatures
guaranteed, to such Proposed Purchaser in the manner and at the address
indicated in the Bring-Along Notice against delivery of the purchase price for
such Stock. The provisions of this Section 9 shall apply regardless of the form
of consideration in the Bring-Along Sale.
10. TERMINATION OF OPTIONS.
All outstanding Options granted to the Purchaser under the Equity Plan or
otherwise, whether or not then exercisable, shall be automatically terminated
upon the payment by the Company to the Purchaser, pursuant to the provisions of
Section 5 or Section 6 of this Agreement, of an amount equal to the Option
Excess Price. If the Option Excess Price is zero or a negative number, all
outstanding Options granted to the Purchaser under the Equity Plan or otherwise,
whether or not then exercisable, shall be automatically terminated upon the
tenth business day after the later of (i) the date of the giving of the Call
Notice or Put Notice, as the case may be, and (ii) the date of the Call Event or
Put Event, as the case may be. The "Option Excess Price" with respect to each
share of Stock that may be acquired by exercise of an Option shall mean the
excess, if any, of (i) the Section 5 Repurchase Price or the Section 6
Repurchase Price, depending on which Repurchase Price would be used to
repurchase Stock pursuant to Section 5 or 6, as the case may be (regardless of
whether or not any Stock is actually subject to repurchase pursuant to such
Sections), over (ii) the exercise price applicable to such Option. For purposes
hereof, "Exercisable Option Shares" as of any date of determination shall mean
shares of Common Stock which, at such time, could be purchased upon exercise of
all outstanding Options granted to the Purchaser.
11. THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to the Purchaser that (i) this
Agreement has been duly authorized, executed and delivered by the Company and
(ii) the Stock, when issued and delivered in accordance with the terms hereof
and the Non-Qualified Stock Option Agreement, will be duly and validly issued,
fully paid and nonassessable.
(b) If the Company shall have filed a registration statement pursuant to
the requirements of Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or engaged in a Public Offering, (i) the Company
shall use reasonable efforts to register the Options and the Stock to be
acquired on exercise thereof on a Form S-8 Registration Statement or any
successor to Form S-8 to the extent that such registration is then available
with respect to such Options and Stock and (ii) the Company will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the Securities and Exchange Commission
("SEC") thereunder, to the extent required from time to time to enable the
Purchaser to sell shares of Stock without registration under the Securities Act
within the limitations of the exemptions provided under any applicable rule or
regulation of the SEC. Notwithstanding anything contained in this Section
11(b), the Company may deregister under Section 12 of the Exchange Act if it is
then permitted to do so pursuant to the Exchange
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Act and the rules and regulations thereunder. Nothing in this Section 11(b)
shall be deemed to limit in any manner the restrictions on Transfer of Stock
contained in this Agreement.
12. "PIGGYBACK" REGISTRATION RIGHTS.
(a) Until the later of first occurrence of a Qualified Public Offering and
the fifth anniversary of the Purchase Date, the Purchaser hereby agrees to be
bound by all of the terms, conditions and obligations of the Registration Rights
Agreement of even date herewith, among the Company and certain of the Investors
(the "Registration Rights Agreement") and, in the case of the first Qualified
Public Offering and subject to the limitations set forth in this Section 12,
shall have all of the rights and privileges of the Registration Rights
Agreement, in each case as if the Purchaser were a "Holder" (as defined in the
Registration Rights Agreement) other than the Company; PROVIDED, HOWEVER, that
the Purchaser shall not have any rights to request registration under Section 3
of the Registration Rights Agreement. Notwithstanding anything to the contrary
contained in the Registration Rights Agreement, the Purchaser's rights and
obligations under the Registration Rights Agreement shall be subject to the
limitations and additional obligations set forth in this Section 12. All shares
of Stock purchased by the Purchaser pursuant to this Agreement and held by the
Purchaser, the Purchaser's Estate or the Purchaser's Trust, including shares
purchased upon the exercise of Options, shall be deemed to be "Registrable
Securities" as defined in the Registration Rights Agreement.
(b) The Company will promptly notify the Purchaser in writing (a "Notice")
of any proposed registration (a "Proposed Registration") in connection with a
contemplated Qualified Public Offering. If within 15 days of the receipt by the
Purchaser of such Notice, the Company receives from the Purchaser, the
Purchaser's Estate or the Purchaser's Trust a written request (a "Request") to
register shares of Stock held by the Purchaser, the Purchaser's Estate or the
Purchaser's Trust, as the case may be (which Request will be irrevocable unless
otherwise mutually agreed to in writing by the Purchaser and the Company), such
shares of Stock will be so registered as provided in this Section 12; PROVIDED,
HOWEVER, that for each such registration statement only one Request, which shall
be executed by each of the Purchaser, the Purchaser's Estate or the Purchaser's
Trust, as the case may be, may be submitted for all Registrable Securities held
by the Purchaser, the Purchaser's Estate or the Purchaser's Trust.
(c) The maximum number of shares of Stock which will be registered
pursuant to a Request will be the lowest of (i) the number of shares of Stock
then held by the Purchaser (which for purposes of this subsection (c) shall
include shares held by the Purchaser's Estate and the Purchaser's Trust),
including all shares of Stock which may be acquired under unexercised Options to
the extent then exercisable, (ii) the maximum number of shares of Common Stock
which the Company can register in the Proposed Registration without adverse
effect on the offering in the view of the managing underwriters (reduced pro
rata with all Other Purchasers), and (iii) the maximum number of shares which
the Purchaser (pro rata based upon the aggregate number of shares of Common
Stock the Purchaser and all Other Purchasers have requested be registered) and
all Other Purchasers are permitted to register under the Registration Rights
Agreement.
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(d) Upon delivering a Request the Purchaser will, if requested by the
Company, execute and deliver a Custody Agreement and Power of Attorney in form
and substance satisfactory to the Company and as described pursuant to Section
8(d) with respect to the shares of Stock to be registered pursuant to this
Section 12.
(e) The Purchaser agrees that he will execute such other agreements as the
Company may reasonably request to further evidence the provisions of this
Section 12.
13. PRO RATA REPURCHASES.
Notwithstanding anything to the contrary contained in Sections 5, 6 and 7,
if at any time consummation of all purchases and payments to be made by the
Company pursuant to this Agreement and the Other Purchasers' Agreements would
result in an Event, then the Company shall make purchases from, and payments to,
the Purchaser and Other Purchasers pro rata (on the basis of the proportion of
the aggregate number of shares of Common Stock each such Purchaser and all Other
Purchasers have elected or are required to sell to the Company, including the
number of shares of Common Stock that could be acquired by each upon exercise of
then exercisable outstanding options to purchase Common Stock) for the maximum
number of shares of Common Stock permitted without resulting in an Event (the
"Maximum Repurchase Amount"). The provisions of Sections 5(b) and 6(b) shall
apply in their entirety to payments and repurchases with respect to options and
shares of Common Stock which may not be made due to the limits imposed by the
Maximum Repurchase Amount under this Section 13. Until all of such Common Stock
and options are purchased and paid for by the Company, the Purchaser and the
Other Purchasers whose Common Stock and options are not purchased in accordance
with this Section 13 shall have priority, on a pro rata basis, over other
purchases of Common Stock and payment for options by the Company pursuant to
this Agreement and the Other Purchasers' Agreements.
14. RIGHTS TO NEGOTIATE REPURCHASE PRICE.
Nothing in this Agreement shall be deemed to restrict or prohibit the
Company from purchasing shares of Stock or Options from the Purchaser, at any
time, upon such terms and conditions, and for such price, as may be mutually
agreed upon between the Parties, whether or not at the time of such purchase
circumstances exist which specifically grant the Company the right to purchase,
or the Purchaser the right to sell, shares of Stock or which specifically grant
the Company the right to cancel options or the Purchaser the right to receive
any Option Excess Price under the terms of this Agreement.
15. COVENANT REGARDING 83(B) ELECTION.
Except as the Company may otherwise agree in writing, the Purchaser hereby
covenants and agrees that he will make an election provided pursuant to Treasury
Regulation 1.83-2 with respect to the Stock, including without limitation, the
Stock to be acquired pursuant to Section 1 and the Stock to be acquired upon
each exercise of the Purchaser's Options, and the Purchaser further covenants
and agrees that he will furnish the Company with copies of the forms of
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election the Purchaser files within 30 days after the date hereof, and within 30
days after each exercise of the Purchaser's Non-Qualified Options and with
evidence that each such election has been filed in a timely manner.
16. NOTICE OF CHANGE OF BENEFICIARY.
Immediately prior to any transfer of Stock to the Purchaser's Trust, the
Purchaser shall provide the Company with a copy of the instruments creating the
Purchaser's Trust and with the identity of the beneficiaries of the Purchaser's
Trust. The Purchaser shall notify the Company immediately prior to any change
in the identity of any beneficiary of the Purchaser's Trust.
17. EXPIRATION OF CERTAIN PROVISIONS.
The provisions contained in Sections 4, 5 and 6 of this Agreement and the
portion of any other provision of this Agreement which incorporates the
provisions of Section 4, 5 or 6, shall terminate and be of no further force or
effect with respect to any shares of Stock sold by the Purchaser pursuant to an
effective registration statement filed by the Company pursuant to Section 12
hereof.
18. RECAPITALIZATIONS, ETC.
The provisions of this Agreement shall apply, to the full extent set forth
herein with respect to the Stock and the Options, to any and all shares of
capital stock of the Company or any capital stock, partnership units or any
other security evidencing ownership interests in any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in exchange for, or in substitution of the Stock or
the Options, by reason of any stock dividend, split, reverse split, combination,
recapitalization, liquidation, reclassification, merger, consolidation or
otherwise.
19. THE PURCHASER'S EMPLOYMENT BY THE COMPANY.
Nothing contained in this Agreement or in any other agreement entered into
by the Company and the Purchaser contemporaneously with the execution of this
Agreement (i) obligates the Company or any Subsidiary of the Company to employ
the Purchaser in any capacity whatsoever or (ii) prohibits or restricts the
Company (or any of its Subsidiaries) from terminating the employment, if any, of
the Purchaser at any time or for any reason whatsoever, with or without Cause,
and the Purchaser hereby acknowledges and agrees that neither the Company nor
any other person has made any representations or promises whatsoever to the
Purchaser concerning the Purchaser's employment or continued employment by the
Company.
20. STATE SECURITIES LAWS.
The Company hereby agrees to use its best efforts to comply with all state
securities or "blue sky" laws which might be applicable to the sale of the Stock
and the issuance of the Options to the Purchaser.
17
<PAGE>
21. BINDING EFFECT.
The provisions of this Agreement shall be binding upon and accrue to the
benefit of the Parties hereto and their respective heirs, legal representatives,
successors and assigns. In the case of a transferee permitted under Section
2(a) hereof, such transferee shall be deemed the Purchaser hereunder; provided,
however, that no transferee (including without limitation, transferees referred
to in Section 2(a) hereof) shall derive any rights under this Agreement unless
and until such transferee has delivered to the Company a valid undertaking to
become bound by the terms of this Agreement.
22. AMENDMENT.
This Agreement may be amended only by a written instrument signed by the
Parties hereto.
23. CLOSING.
Except as otherwise provided herein, the closing of each purchase and sale
of shares of Stock and the payment of the Option Excess Price, if any, pursuant
to this Agreement shall take place at the principal office of the Company on the
tenth business day following delivery of the notice by either Party to the other
of its exercise of the right to purchase or sell such Stock hereunder or to
cause the payment of the Option Excess Price, as the case may be.
24. APPLICABLE LAW.
The laws of the state of Delaware shall govern the interpretation, validity
and performance of the terms of this Agreement, regardless of the law that might
be applied under principles of conflicts of law. Any suit, action or proceeding
against the Purchaser, with respect to this Agreement, or any judgment entered
by any court in respect of any thereof, may be brought in any court of competent
jurisdiction in the State of Delaware, and the Purchaser hereby submits to the
non-exclusive jurisdiction of such courts for the purpose of any such suit,
action, proceeding or judgment. By the execution and delivery of this
Agreement, the Purchaser appoints the Secretary of the Company, at its principal
office, as his agent upon which process may be served in any such suit, action
or proceeding. Service of process upon such agent, together with notice of such
service given to the Purchaser in the manner provided in Section 28 hereof,
shall be deemed in every respect effective service of process upon him in any
suit, action or proceeding. Nothing herein shall in any way be deemed to limit
the ability of the Company to serve any such writs, process or summonses in any
other manner permitted by applicable law or to obtain jurisdiction over the
Purchaser, in such other jurisdictions and in such manner, as may be permitted
by applicable law. The Purchaser hereby irrevocably waives any objections which
he may now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Delaware, and hereby further irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in any inconvenient forum. No suit, action or proceeding
against the Company or Acquisition with respect to this Agreement may be
18
<PAGE>
brought in any court, domestic or foreign, or before any similar domestic or
foreign authority other than in a court of competent jurisdiction in the State
of Delaware, and the Purchaser hereby irrevocably waives any right which he may
otherwise have had to bring such an action in any other court, domestic or
foreign, or before any similar domestic or foreign authority. The Company and
Acquisition hereby submit to the jurisdiction of such courts for the purpose of
any such suit, action or proceeding.
25. ASSIGNABILITY OF CERTAIN RIGHTS BY THE COMPANY.
The Company shall have the right to assign any or all of its rights or
obligations to purchase shares of Stock pursuant to Sections 4, 5 and 6 hereof.
26. LIMITED LIABILITY OF MEMBERS OF ACQUISITION.
Notwithstanding any other provision of this Agreement, no recourse under
this Agreement or any documents or instruments delivered in connection with this
Agreement or any of the transactions contemplated hereby shall be had against
any current or future director, officer, employee, general or limited partner or
member, of Acquisition or KKR, or any of the foregoing, whether by the
enforcement of any assessment or by any legal or equitable proceeding, or by
virtue of any statute, regulation or other applicable law, it being expressly
agreed and acknowledged that no personal liability whatsoever shall attach to,
be imposed on or otherwise be incurred by any current or future officer, agent
or employee of, or any current or future member of Acquisition or any current or
future director, officer, employee, general or limited partner, member, assignee
or affiliate of any of the foregoing, as such for any obligation of Acquisition
under this Agreement or any documents or instruments delivered in connection
with this Agreement or any of the transactions contemplated hereby or for any
claim based on, in respect of or by reason of such obligations or their
creation.
27. MISCELLANEOUS.
In this Agreement (i) all references to "dollars" or "$" are to United
States dollars and (ii) the word "or" is not exclusive. If any provision of
this Agreement shall be declared illegal, void or unenforceable by any court of
competent jurisdiction, the other provisions shall not be affected, but shall
remain in full force and effect.
28. NOTICES.
All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered by hand
(whether by overnight courier or otherwise) or sent by registered or certified
mail, return receipt requested, postage prepaid, to the Party to whom it is
directed:
(a) If to the Company, to it at the following address:
Accuride Corporation
2315 Adams Lane
19
<PAGE>
Henderson, Kentucky 42420
Attn: General Counsel
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attn: Jed W. Brickner, Esq.
If to Acquisition, to it at the following address:
c/o Kohlberg Kravis Roberts & Co., L.P.
2800 Sand Hill Road, Suite 200
Menlo Park, California 94025
Attn: James H. Greene, Jr.
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attn: Jed W. Brickner, Esq.
(c) If to the Purchaser, to him at his most recent address as reflected in
the Company's records,
or at such other address as the Party shall have specified by notice in writing
to the other Parties in accordance with this Section 28.
29. COVENANT NOT TO COMPETE; CONFIDENTIAL INFORMATION.
(a) In consideration of the Company entering into this Agreement with the
Purchaser, the Purchaser hereby agrees effective as of the Purchase Date, for so
long as the Purchaser is employed by the Company or one of its Subsidiaries or
Affiliates (but not entities which are Affiliates solely by reason of their
relationship with KKR Partners II, L.P. ("Partners II")) and for a period of one
year thereafter (the "Noncompete Period"), the Purchaser shall not, directly or
indirectly, engage in the production, sale or distribution of rims or wheels for
vehicles or of any other product or service produced, sold or distributed by the
Company or its Subsidiaries or Affiliates (but not entities which are Affiliates
solely by reason of their relationship with Partners II) on the date hereof or
during the Noncompete Period anywhere in the world in which the Company or its
Subsidiaries or Affiliates (but not entities which are Affiliates solely by
reason of their relationship with Partners II) is doing business other than
through the Purchaser's employment with the Company or any of its Subsidiaries
or Affiliates. At the Company's option, the Noncompete Period may be extended
for an additional one year period if (i) within nine months following the
termination of the Purchaser's employment, the Company gives the
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<PAGE>
Purchaser notice of such extension and (ii) beginning with the first anniversary
of such date of termination, the Company pays the Purchaser, in installments
consistent with the Company's then current salary payment policies, an amount
equal to the Purchaser's base salary on the date of the termination of his
employment. For purposes of this Agreement, the phrase "directly or indirectly
engage in" shall include any direct or indirect ownership or profit
participation interest in an enterprise, whether as an owner, stockholder,
partner, member, joint venturer of otherwise, and shall include any direct or
indirect participation in an enterprise as a consultant, licensor of technology
or otherwise. Nothing herein will prevent the Purchaser from, at any time,
owning in the aggregate not more than 1% of the outstanding stock of any
publicly traded class of stock of a corporation.
(b) The Purchaser will not disclose or use at any time for so long as the
Purchaser is employed by the Company or one of its Subsidiaries or Affiliates
and for a period of five years thereafter, any Confidential Information (as
defined below) of which the Purchaser is or becomes aware, whether or not such
information is developed by him, except to the extent that such disclosure or
use is directly related to and required by the Purchaser's performance of
duties, if any, assigned to the Purchaser by the Company. As used in this
Agreement, the term "Confidential Information" means information that is not
generally known or available to the public and that is used, developed or
obtained by the Company or its Subsidiaries or Affiliates in connection with its
businesses, including but not limited to, (i) products or services; (ii) fees,
costs and pricing structures; (iii) designs; (iv) computer software, including
operating systems, applications and program listings; (v) flow charts, manuals
and documentation; (vi) data bases; (vii) accounting and business methods;
(viii) inventions, devices, new developments, methods and processes, whether
patentable or unpatentable and whether or not reduced to practice;
(ix) customers or customer requirements, order levels or projections and
customer or client lists; (x) other copyrightable works; (xi) all technology and
trade secrets; and (xii) all similar and related information in whatever form.
Confidential Information will not include any information that has been
published in a form generally available to the public prior to the date the
Purchaser proposes to disclose or use such information. The Purchaser
acknowledges and agrees that all copyrights, works, inventions, innovations,
improvements, developments, patents, trademarks and all similar or related
information which relate to the actual or anticipated business of the Company
and its Subsidiaries and Affiliates (including its predecessors) and conceived,
developed or made by the Purchaser while employed by the Company or its
Subsidiaries or Affiliates belong to the Company. The foregoing sentence does
not apply to any copyrights, works, inventions, innovations, improvements,
developments, patents, trademarks or other information: (i) for which no
equipment, supplies, facility or Confidential Information of the Company were
used; (ii) which were developed entirely on the Executive's own time; (iii)
which do not relate at the time of conception or reduction to practice to the
Company's current business or its anticipated research or development; and (iv)
which do not result from any work performed by Executive for the Company. The
Purchaser will perform all actions reasonably requested by the Company (whether
during or after the Noncompete Period) to establish and confirm such ownership
at the Company's expense (including without limitation assignments, consents,
powers of attorney and other instruments).
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<PAGE>
(c) Notwithstanding subsections (a) and (b) above, if at any time a court
holds that any of the restrictions stated in such subsections (a) and (b) are
unreasonable or otherwise unenforceable under circumstances then existing, the
Parties hereto agree that the maximum period, scope or geographic area
determined to be reasonable under such circumstances by such court will be
substituted for the stated period, scope or geographic area, and will be
effective, binding and enforceable against the Purchaser. Because the
Purchaser's services are unique and because the Purchaser has had access to
Confidential Information, the Parties hereto agree that money damages will be an
inadequate remedy for any breach of this Agreement. In the event a breach or
threatened breach of this Agreement, the Company or its successors or assigns
may, in addition to other rights and remedies existing in their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
relief in order to enforce, or prevent any violations of, the provisions hereof
(without the posting of a bond or other security).
[signature page follows]
22
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Stockholder's Agreement
as of the date first above written.
ACCURIDE CORPORATION
By
---------------------------------
HUBCAP ACQUISITION L.L.C.
By
---------------------------------
THE PURCHASER
---------------------------------
23
<PAGE>
Exhibit 10.8
FORM OF
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into this ___ day of ___________, by and
between ACCURIDE CORPORATION, a Delaware corporation (together with its
Subsidiaries, the "Company") and _________________ (the "Executive").
WHEREAS, the Company has determined that it is appropriate and in the best
interests of the Company to provide to the Executive protection in the event of
certain terminations of the Executive's employment relationship with the Company
in accordance with the terms and conditions contained herein and the Executive
desires to have such protection;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall be defined as set forth in this Section 1.
(a) "Affiliate" shall mean (i) with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with, such Person, and (ii) with respect to the Company, also any
entity designated by the Board of Directors of the Company in which the
Company or one of its Affiliates has an interest, and (iii) with respect to
Kohlberg Kravis Roberts & Co., L.P. ("KKR"), also any Affiliate of any
partner of KKR. For purposes of this Agreement, "Person" means an
individual, partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other entity of whatever nature, and
"control" shall have the meaning given such term under Rule 405 of the
Securities Act of 1933.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Cause" shall mean (i) the Executive's willful and continued
failure to perform his or her duties with respect to the Company or its
Subsidiaries which continues beyond ten days after a written demand for
substantial performance is delivered to the Executive by the Company or
(ii) conduct by the Executive involving (x) dishonesty or breach of trust
in connection with his or her employment or (y) conduct which would be a
reasonable basis for an indictment of the Executive for a felony or for a
misdemeanor involving moral turpitude.
(d) "Good Reason" shall mean (i) a material adverse change in the
nature of the Executive's job duties without his consent; (ii) a material
reduction in the rate of the Executive's base cash compensation, other than
in connection with and consistent with a general program in which the
compensation of one or more categories of management of the Company (or any
of its Subsidiaries) is systematically reduced; or (iii) a material breach
by the Company of the Stockholder's Agreement of even date herewith among
the Company, the Executive and Hubcap Acquisition L.L.C. or of its
obligation to make cash compensation payments to the Executive under any
written employment contract.
<PAGE>
(e) The Executive shall be deemed to have a "Permanent Disability" if
he or she is unable to engage in the activities required by employment by
reason of any medically determined physical or mental impairment which can
be expected to result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months, as reasonably
determined by the Board of Directors of the Company in good faith and in
its discretion.
(f) "Subsidiary" shall mean any corporation (or other entity) other
than the Company in an unbroken chain of entities beginning with the
Company if each of the entities, or group of commonly controlled entities,
other than the last entity in the unbroken chain, then owns stock (or other
equity interest) possessing 50% or more of the total combined voting power
of all classes of equity in one of the other entities in such chain.
2. SEVERANCE BENEFITS. If (a) the Executive's employment with the
Company is terminated at the initiative of the Executive for Good Reason, or
(b) the Executive's employment with the Company is terminated at the initiative
of the Company other than for Cause, and other than upon the Executive's death
or Permanent Disability, the Company shall pay to the Executive, in equal
installments in accordance with the Company's payroll practices, commencing on
the next payday following the date of termination of the Executive's employment
and continuing for a period of twelve months, an amount equal to the excess, if
any, of (x) his base salary at the rate of base salary in effect on the date of
termination over (y) the sum of (i) any other payment from the Company under any
employment, consulting or other agreement, plan, program or policy in the nature
of severance in respect of such termination, payable on or after the date of
such termination and (ii) any payment under any arrangement maintained by Phelps
Dodge Corporation (directly or indirectly) pursuant to which payments are to be
made to the Executive in whole or in part by reason of his termination of
employment with the Company and any payment from Phelps Dodge Corporation under
any employee benefit plan, program or arrangement or otherwise in the nature of
severance or bonus compensation in respect of such termination, payable on or
after the date of such termination. Payments to the Executive under the
Stockholder's Agreement of even date herewith among the Company, the Executive
and Hubcap Acquisition L.L.C. shall not be deemed payments in the nature of
severance or bonus compensation for purposes of the preceding sentence.
3. NO SEVERANCE BENEFITS FOLLOWING TERMINATION FOR CAUSE OR VOLUNTARY
TERMINATION WITHOUT GOOD REASON. If the Executive's employment is terminated by
the Company for Cause or by the Executive's voluntary termination without Good
Reason, no severance payments or benefits or death benefits shall be payable
under this Agreement either upon that termination or at any time thereafter.
4. MISCELLANEOUS.
(a) NO ASSIGNMENT WITHOUT CONSENT OF COMPANY. No rights of any kind
under this Agreement shall, without the written consent of the Company, be
transferable
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or assignable by the Executive, his spouse or any other person, or be
subject to alienation, encumbrance, garnishment, attachment, execution, or
levy of any kind, voluntary or involuntary. This Agreement shall be
binding upon and shall inure to the benefit of the Company and its
successors and assigns.
(b) SAVINGS CLAUSE. If any provision or part of a provision of this
Agreement is held to be void or not enforceable for any reason, the
remainder of the provision not so held void and all other provisions of
this Agreement shall remain in full force and effect to the fullest extent
possible.
(c) NO RIGHTS IN ANY PROPERTY OF COMPANY. The undertakings of the
Company herein constitute merely the unsecured promise of the Company to
make payments as provided for herein. No property of the Company is or
shall, by reason of this Agreement, be held in trust for the Executive, his
spouse, or any other person, and neither the Executive nor his spouse or
any other person shall have, by reason of this Agreement, any rights, title
or interest of any kind in or to any property of the Company.
(d) GOVERNING LAW. The laws of the State of Delaware shall govern
the interpretation, validity and performance of the terms of this Agreement
regardless of the law that might be applied under principles of conflicts
of laws.
(e) JURISDICTION. Any suit, action or proceeding with respect to this
Agreement, or any judgment entered by any court in respect of any thereof,
may be brought in any court of competent jurisdiction in the State of
Delaware and the Executive hereby submits to the non-exclusive jurisdiction
of such courts for the purpose of any such suit, action, proceeding or
judgment. The Executive hereby irrevocably waives any objections which he
may now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any
court of competent jurisdiction in the State of Delaware, and hereby
further irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in any inconvenient
forum. No suit, action or proceeding against the Company with respect to
this Agreement may be brought in any court, domestic or foreign, or before
any similar domestic or foreign authority other than in a court of
competent jurisdiction in the State of Delaware, and the Executive hereby
irrevocably waives any right which he may otherwise have had to bring such
an action in any other court, domestic or foreign, or before any similar
domestic or foreign authority. The Company hereby submits to the
jurisdiction of such courts for the purpose of any such suit, action or
proceeding.
(f) EMPLOYMENT OF THE EXECUTIVE BY THE COMPANY. Nothing herein shall
be construed as an offer or commitment by the Company to continue the
Executive's employment with the Company for any period of time.
3
<PAGE>
(g) FACILITY OF PAYMENT. If the Company shall find that any person
to whom any amount is payable hereunder is unable to care for his affairs,
any payment due (unless a prior claim therefor shall have been made by a
duly appointed guardian, committee, or other legal representative) may be
paid to any person deemed by the Company to have incurred expense for such
person otherwise entitled to payment, in such manner and proportions as the
Company may determine.
(h) GENDER. A pronoun in the masculine, feminine, or neuter gender
shall be deemed, where appropriate, to include also the masculine,
feminine, and neuter gender.
(i) AMENDMENT. This Agreement may only be amended in a writing
signed by the Executive and the Company.
[signature page follows]
4
<PAGE>
IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the
Executive have executed this Severance Agreement on the day and year first above
written.
ACCURIDE CORPORATION
By________________________________
Its________________________________
"Company"
[NAME]
__________________________________
"Executive"
5
<PAGE>
EXHIBIT 10.9
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
CONTRIBUTION AGREEMENT
among
ACCURIDE CORPORATION,
KAISER ALUMINUM &
CHEMICAL CORPORATION,
AKW General Partner L.L.C.
and
AKW L.P.
dated as of May 1, 1997
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I.
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II.
THE TRANSACTIONS; CLOSING. . . . . . . . . . . . . . . . 17
2.1 Formation of the Company. . . . . . . . . . . . . . 17
2.2 Purchase and Sale of Accuride Purchased Inventory;
Capital Contributions to General Partner and the
Company; Ancillary Agreements . . . . . . . . . . . 17
2.3 Accuride Sub Purchase of Company Interest . . . . . 23
2.4 Company Purchase of Kaiser Inventory. . . . . . . . 24
2.5 Contributions and Transfers . . . . . . . . . . . . 24
2.6 Determination of Fair Market Value of Inventory . . 24
2.7 Employee Related Price Adjustments. . . . . . . . . 25
2.8 Assumption of Liabilities; Excluded Liabilities . . 30
2.9 Excluded Contracts. . . . . . . . . . . . . . . . . 32
2.10 Closing. . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF KAISER . . . . . . . . 33
3.1 Corporate Existence, Power and Authorization. . . . 33
3.2 No Conflicts; Consents and Approvals. . . . . . . . 34
3.3 Governmental Authorizations; Compliance with Law. . 35
3.4 Real Property . . . . . . . . . . . . . . . . . . . 36
3.5 Assets. . . . . . . . . . . . . . . . . . . . . . . 39
3.6 Material Agreements . . . . . . . . . . . . . . . . 41
3.7 Intellectual Property . . . . . . . . . . . . . . . 42
3.8 Labor Matters . . . . . . . . . . . . . . . . . . . 43
3.9 Employee Benefit Plans; ERISA . . . . . . . . . . . 43
3.10 Litigation . . . . . . . . . . . . . . . . . . . . 44
3.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . 45
3.12 Environmental Matters. . . . . . . . . . . . . . . 45
3.13 Insurance. . . . . . . . . . . . . . . . . . . . . 48
3.14 Brokers. . . . . . . . . . . . . . . . . . . . . . 48
3.15 Customers and Suppliers. . . . . . . . . . . . . . 48
3.16 Disclosure . . . . . . . . . . . . . . . . . . . . 48
3.17 Product Liability. . . . . . . . . . . . . . . . . 49
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF ACCURIDE . . . . . . . 49
4.1 Corporate Existence, Power and Authorization. . . . 49
4.2 No Conflicts; Consents and Approvals. . . . . . . . 50
4.3 Governmental Authorizations; Compliance with Law. . 51
4.4 Assets. . . . . . . . . . . . . . . . . . . . . . . 52
4.5 Material Agreements . . . . . . . . . . . . . . . . 53
4.6 Intellectual Property . . . . . . . . . . . . . . . 53
4.7 Litigation. . . . . . . . . . . . . . . . . . . . . 54
4.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . 55
4.9 Employee Benefit Plans; ERISA . . . . . . . . . . . 55
4.10 Insurance . . . . . . . . . . . . . . . . . . . . . 56
4.11 Brokers . . . . . . . . . . . . . . . . . . . . . . 56
4.12 Product Liability . . . . . . . . . . . . . . . . . 56
4.13 Disclosure. . . . . . . . . . . . . . . . . . . . . 56
ARTICLE V.
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . 57
5.1 Conditions to Obligations of All Parties. . . . . . 57
5.2 Conditions to Obligations of Accuride . . . . . . . 59
5.3 Conditions to Obligations of Kaiser . . . . . . . . 61
ARTICLE VI.
COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 62
6.1 Covenants of Accuride and Kaiser. . . . . . . . . . 62
6.2 Covenants of Kaiser - Employee Matters. . . . . . . 66
6.3 Covenants of Kaiser - Environmental Matters . . . . 68
6.4 Covenants of Kaiser - Phase I Improvements. . . . . 70
6.5 Covenants of the Company - Environmental Matters. . 70
6.6 Covenants of the Company - Employee Matters . . . . 71
6.7 Speedline Agreements. . . . . . . . . . . . . . . . 81
6.8 Accuride Excluded Contracts . . . . . . . . . . . . 83
ARTICLE VII.
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . 84
7.1 Indemnification . . . . . . . . . . . . . . . . . . 84
7.2 Indemnification Procedures. . . . . . . . . . . . . 88
7.3 Third-Party Beneficiaries . . . . . . . . . . . . . 89
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ARTICLE VIII.
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . 89
8.1 Termination . . . . . . . . . . . . . . . . . . . . 89
8.2 Governing Law . . . . . . . . . . . . . . . . . . . 90
8.3 Arbitration . . . . . . . . . . . . . . . . . . . . 90
8.4 Survival. . . . . . . . . . . . . . . . . . . . . . 91
8.5 Entire Agreement; Amendment; Assignment, etc. . . . 91
8.6 Notices . . . . . . . . . . . . . . . . . . . . . . 92
8.7 Expenses. . . . . . . . . . . . . . . . . . . . . . 94
8.8 Severability. . . . . . . . . . . . . . . . . . . . 95
8.9 No Third-Party Beneficiaries. . . . . . . . . . . . 95
8.10 Section Headings; Counterparts; etc . . . . . . . . 95
8.11 Further Assurances. . . . . . . . . . . . . . . . . 95
</TABLE>
iii
<PAGE>
<TABLE>
Schedules
<S> <C>
Schedule 1 Phase 1 Improvements
Schedule 2.2 Capital Contributions
Schedule 2.2(d)(ii) Accuride Contracts
Schedule 2.2 (e) Kaiser Excluded Assets and Excluded Inventory
Schedule 2.2(e)(ii) Kaiser Machinery, Equipment, Furniture
Schedule 2.2(e)(iii) Kaiser Contracts
Schedule 2.7 Employee Related Price Adjustments
Schedule 2.8 Assumed Liabilities
Schedule 3.1 Kaiser Investments
Schedule 3.2 Kaiser Consents
Schedule 3.3 Kaiser Governmental Authorizations
Schedule 3.4 Assigned Real Property Lease Agreements
Schedule 3.4(b) Kaiser Permitted Real Property Liens
Schedule 3.4(d) Lease Exceptions
Schedule 3.5 Liens on Kaiser Assets and Inventory
Schedule 3.7 Kaiser Intellectual Property
Schedule 3.8 Kaiser Labor Matters
Schedule 3.9 Kaiser Employee Benefit Plans
Schedule 3.10 Kaiser Litigation
Schedule 3.12 Kaiser Environmental Matters
Schedule 3.13 Kaiser Insurance
Schedule 3.15 Kaiser Customers and Suppliers
Schedule 3.17 Kaiser Product Liability
Schedule 4.1 Accuride Investments
Schedule 4.2 Accuride Consents
Schedule 4.3 Accuride Governmental Authorizations
Schedule 4.4 Liens on Accuride Assets
Schedule 4.6 Accuride Intellectual Property
Schedule 4.7 Accuride Litigation
Schedule 4.10 Accuride Insurance
Schedule 4.12 Accuride Product Liability
Schedule 6.3 Kaiser Environmental Compliance
Schedule 6.3(a) Pits Operation and Maintenance Plan
Exhibits
Exhibit A Certificate of Limited Partnership
Exhibit B Limited Partnership Agreement
Exhibit C Interest Purchase Agreement
Exhibit D Erie Lease Agreement
Exhibit E Accuride Technical Services Agreement
Exhibit F Kaiser Technical Services Agreement
Exhibit G Accuride Sales and Marketing Agreement
Exhibit H Kaiser Manufacturing Agreement
Exhibit I Accuride Administrative Services Agreement
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Exhibit J Trademark License Agreement
Exhibit K Kaiser Production Services Agreement
Exhibit L CFT Agreement
Exhibit M Limited Liability Company Agreement
Exhibit N Certificate of Formation of LLC
Exhibit O Kaiser Administrative Services Agreement
</TABLE>
v
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CONTRIBUTION AGREEMENT, dated as of May 1, 1997, among ACCURIDE
CORPORATION, a Delaware corporation ("Accuride"), KAISER ALUMINUM & CHEMICAL
CORPORATION, a Delaware corporation ("Kaiser"), AKW General Partner L.L.C., a
Delaware limited liability company (the "General Partner"), and AKW L.P., a
Delaware limited partnership (the "Company").
W I T N E S S E T H:
WHEREAS, Accuride and Kaiser have formed the Company as a limited
partnership under the laws of Delaware, pursuant to a Certificate of Limited
Partnership in the form of Exhibit A hereto (the "Certificate of Limited
Partnership"), in order to engage in the Business (as hereinafter defined);
WHEREAS, Accuride, through Accuride Ventures, Inc., a Delaware
corporation and wholly-owned subsidiary of Accuride ("Accuride Sub"), and Kaiser
desire to enter into a limited partnership agreement, in the form of Exhibit B
hereto (the "Limited Partnership Agreement"), providing for the formation and
operation of the Company and for certain rights and restrictions applicable to
the limited partners thereof;
WHEREAS, each of Accuride, through Accuride Sub, and Kaiser desires to
contribute certain assets to the Company and to receive limited partnership
interests in the Company proportionate to its respective capital contribution;
WHEREAS, in connection with the transactions contemplated by this
Agreement, Accuride Sub and Kaiser have entered into an interest purchase
agreement, dated the date hereof, in the form of Exhibit C hereto (the "Interest
Purchase Agreement"), pursuant to which Kaiser will sell a portion of its
Interest (as defined herein) to Accuride Sub, so that upon consummation of such
sale each of Accuride Sub and Kaiser will have 50% of the limited partners'
total Interest in the Company;
WHEREAS, Accuride Sub and Kaiser have formed the General Partner as a
limited liability company under the laws of Delaware, pursuant to a Certificate
of Formation of Limited Liability Company in the form of Exhibit N hereto (the
"Certificate of Formation of LLC"), in order to act as the general partner of
the Company; and desire to capitalize the General Partner with assets such that
each of Accuride
<PAGE>
Sub and Kaiser will have a 50% interest in the General Partner; and desire to
enter into a limited liability company agreement, in the form of Exhibit M
hereto (the "Limited Liability Company Agreement"), providing for certain
rights and restrictions applicable to the members thereof;
WHEREAS, the General Partner desires to contribute such assets to the
Company and to receive a 2% Interest in the Company;
NOW, THEREFORE, in consideration of the mutual covenants, and subject
to the terms and conditions, contained herein, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings set
forth below or in the Section of this Agreement referred to below:
"Accountant" has the meaning given in Section 2.7.
"Accumulated Benefit Obligation" has the meaning given in Section
2.7(ii).
"Accumulated Postretirement Benefit" or "APBO" has the meaning given
in Section 2.7(ii).
"Accuride" has the meaning given in the first paragraph hereof.
"Accuride Administrative Services Agreement" means the administrative
services agreement between Accuride and the Company, to be dated the Closing
Date, substantially in the form of Exhibit I hereto.
"Accuride Assets" has the meaning given in Section 2.2(d).
"Accuride Contracts" has the meaning given in
Section 2.2(d).
"Accuride Contributed Intellectual Property" has the meaning given in
Section 2.2(d).
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"Accuride Employee" means any employee of Accuride who, pursuant to
this Agreement or any other Ancillary Agreement, becomes employed by the Company
on the Closing Date or within 90 days thereafter.
"Accuride Excluded Contracts" has the meaning given in Section 2.2(d).
"Accuride Excluded Intellectual Property" means (A) the Accuride
Licensed Intellectual Property, (B) any marks and names that incorporate the
"Accuride" name or any variant thereof, (C) the Finite Element Analysis software
and IDEA2000 programs, and (D) any other Intellectual Property listed on
Schedule 4.6 (B).
"Accuride Initial Company Interest" has the meaning given in Section
2.2(d).
"Accuride Intellectual Property" has the meaning given in Section 4.6.
"Accuride Intellectual Property Licenses" has the meaning given in
Section 4.6.
"Accuride Inventory Purchase Price" has the meaning given in Section
2.2(a).
"Accuride Licensed Intellectual Property" has the meaning given in
Section 2.2(d).
"Accuride Owned Intellectual Property" has the meaning given in
Section 4.6.
"Accuride Purchased Interest" has the meaning given in Section 2.3.
"Accuride Purchased Inventory" has the meaning given in Section
2.2(a).
"Accuride Retained Inventory" has the meaning given in Section 2.2(d).
"Accuride Sales and Marketing Agreement" means the Accuride Sales and
Marketing Agreement between Accuride and the Company, to be dated as of the
Closing Date, substantially in the form of Exhibit G hereto.
"Accuride Severance Plan" has the meaning given in Section 6.6(i).
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<PAGE>
"Accuride Sub" has the meaning given in the recitals.
"Accuride Technical Services Agreement" means the Accuride Technical
Services Agreement between Accuride and the Company, to be dated as of the
Closing Date, substantially in the form of Exhibit E hereto.
"ACM Expenditures" has the meaning given in Section 6.3.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with,
such Person. Control of any Person shall consist of the power to direct the
management and policies of such Person whether through the ownership of voting
securities or by contract or otherwise and shall be deemed to exist upon the
ownership of securities entitling the holder thereof to exercise more than 50%
of the voting power in the election of directors of such Person.
"Agreements" has the meaning given in Section 3.6.
"Amended and Restated Aluminum Supply Agreement" has the meaning given
in Section 7.1(d).
"Ancillary Agreements" means this Agreement, the Certificate of
Formation of LLC, the Limited Liability Company Agreement, the Certificate of
Limited Partnership, the Limited Partnership Agreement, the Interest Purchase
Agreement, the Erie Lease Agreement, the Accuride Administrative Services
Agreement, the Accuride Technical Services Agreement, the Trademark License
Agreement, the Kaiser Technical Services Agreement, the Accuride Sales and
Marketing Agreement, the Kaiser Manufacturing Agreement, the CFT Agreement, the
Kaiser Production Services Agreement, the Kaiser Administrative Services
Agreement and all other agreements or instruments entered into or executed in
connection with any of the Transactions which the parties agree to treat as
Ancillary Agreements pursuant to Section 2.2(f).
"Applicable Law" means all applicable provisions of all constitutions,
treaties, statutes, laws (including, but not limited to, the common law), rules,
regulations, ordinances, codes or orders of any Governmental Authority and of
all orders, decisions, injunctions, judgments, awards and decrees or consents of
or agreements with any Governmental Authority.
4
<PAGE>
"Assigned Contracts" has the meaning given in Section 2.2(e)(iii).
"Assigned Lease Properties" has the meaning given in Section 3.4.
"Assignment" has the meaning given in Section 6.7.
"Assumed Liabilities" has the meaning given in Section 2.8.
"Bargaining Unit Kaiser Employee" means any Kaiser Employee who is
covered under the terms of a collective bargaining agreement with Kaiser in
effect immediately prior to the Closing Date.
"Bargaining Unit 401(k) Plan" has the meaning given in Section 6.6(c).
"Bargaining Unit Pension Plan" has the meaning given in Section
6.6(a).
"Benefit Uplift" has the meaning given in Section 2.7(ii).
"Business" means the design, manufacture, marketing and sale of Joint
Venture Products and, as reference requires, means such Business as conducted by
Kaiser or Accuride, in each case prior to the Closing Date, or, upon formation
of the Company, as it will be conducted by the Company on and after the Closing
Date.
"Business Day" means any calendar day other than a Saturday or Sunday
or a day on which either state or national banks in the States of Arizona,
California, Kentucky, Ohio, Pennsylvania or New York are not open for the
conduct of normal banking business.
"Business Plan" means the definitive business plan for the Company in
substantially the form of Exhibit A to the Limited Partnership Agreement.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et seq.
"Certificate of Formation of LLC" has the meaning given in the
recitals.
5
<PAGE>
"Certificate of Limited Partnership" has the meaning given in the
recitals.
"CFT Agreement" means the CFT Agreement between Kaiser and the
Company, to be dated as of the Closing Date, substantially in the form of
Exhibit L hereto.
"Claim" has the meaning given in Section 7.1.
"Closing" has the meaning given in Section 2.10.
"Closing Date" has the meaning given in Section 2.10.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor act thereto, and, to the extent applicable, any
Treasury Regulations promulgated thereunder.
"Commissioned Studies" has the meaning given in Section 3.6.
"Company" has the meaning given in the first paragraph hereof.
"Company Inventory Purchase Price" has the meaning given in Section
2.4.
"Company Purchased Inventory" has the meaning given in Section 2.4.
"Company Severance Plan" has the meaning given in Section 6.6(i).
"Employee" means any Accuride Employee and any Kaiser Employee.
"Employee Related Price Adjustment" has the meaning given in Section
2.7.
"Environmental Compliance Plan" has the meaning given in Section 6.3.
"Environmental Laws" means any and all federal, state and local laws
(including case law), regulations, ordinances, rules, orders, permits and
governmental restrictions relating to human health or the environment, including
without limitation, ambient air, surface water, ground water, sewers or land, or
within any building, tunnel, pit
6
<PAGE>
or other structure, including, without limitation, those relating to the
generation, manufacture, treatment, storage or disposal of Hazardous
Substances.
"Erie Facilities" means all the real property that is owned or leased
by Kaiser and located in Erie, Pennsylvania, together with the buildings,
structures and improvements thereon, except for the Erie Property.
"Erie Lease Agreement" means the Erie Lease Agreement between Kaiser
and the Company, to be dated as of the Closing Date, substantially in the form
of Exhibit D hereto.
"Erie Property" has the meaning given in Section 3.4.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Fair Market Value" means the lower of cost or market value, adjusted,
in the case of the Kaiser Included Inventory, to reflect the actual fair market
value of the metal content pursuant to Section 2.6 without taking into account
costs of hedging or other price protection support relating thereto.
"Fully Eligible Kaiser Employees" has the meaning given in Section
6.2(b).
"General Partner" has the meaning given in the first paragraph hereof.
"Governmental Authority" means any nation or political subdivision
thereof, including any state, county or municipality; and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to any of the foregoing, including, without limitation, any
legislature, elected official, authority, agency, department, board, commission,
court, tribunal or instrumentality.
"Governmental Authorizations" has the meaning given in Section 3.3.
"Hazardous Substances" means (i) any substance currently listed,
defined, designated, regulated or classified as hazardous, toxic, radioactive or
dangerous, under any Environmental Law applicable in the jurisdiction in which
the Business operates and (ii) any toxic waste, pollu-
7
<PAGE>
tant, contaminant, toxic substance, hazardous waste, petroleum, or any
fraction thereof, radon, radioactive material, friable asbestos containing
material, urea formaldehyde foam insulation, lead and polychlorinated
biphenyls.
"Indemnified Party" has the meaning given in Section 7.2.
"Indemnifying Party" has the meaning given in Section 7.2.
"Intellectual Property" means any and all United States and foreign:
(i) patents (including design patents, industrial designs and utility models)
and patent applications (including docketed patent disclosures awaiting filing,
reissues, divisions, continuations-in-part and extensions), patent disclosures
awaiting filing determination, inventions and improvements thereto made or
developed prior to the Closing Date; (ii) trademarks, service marks, trade
names, trade dress, logos, business and product names, slogans, and
registrations and applications for registration thereof; (iii) copyrights
(including software) and registrations thereof; (iv) inventions, processes,
designs, formulae, trade secrets, know-how, industrial models, confidential and
technical information, manufacturing, engineering and technical drawings,
product specifications and confidential business information; (v) intellectual
property rights similar to any of the foregoing; and (vi) copies and tangible
embodiments thereof (in whatever form or medium, including electronic media).
"Interest" means, with respect to a Partner, the entire partnership
interest of such Partner in the Company at any time, which interest shall be
determined as provided in the definition of "Interest" set forth in Article I of
the Limited Partnership Agreement.
"Interest Purchase Agreement" has the meaning given in the recitals.
"Joint Venture Products" means (i) aluminum wheels 16" in diameter and
larger primarily for light, medium and heavy duty trucks, trailers and buses
(classes 1-8), although certain of such wheels may also be sold into the
automotive original
8
<PAGE>
equipment manufacturer market; (ii) tire molds for automotive and
light-medium-heavy truck applications, as to each of clauses (i) and (ii)
above, produced by forging, fabricating or casting for marketing and sale
worldwide, including without limitation in the original equipment
manufacturer market, after-market and repair and replacement markets; and
(iii) such additional or different products as the Members Committee (as
defined in the Limited Liability Company Agreement) may approve pursuant to
Section 6.4 of the Limited Liability Company Agreement. Notwithstanding the
foregoing, Joint Venture Products shall not include, without Kaiser's written
consent, motorcycle wheels and wheel parts, wheel centers for any
applications, forged one piece wheel blanks sold to other wheel manufacturers
and finished wheels for the automotive aftermarket market produced or being
contemplated for production by Kaiser.
"Kaiser" has the meaning given in the first paragraph hereof.
Kaiser Administrative Services Agreement" means the administrative
services agreement between Kaiser and the Company in substantially the form of
Exhibit O hereto.
"Kaiser Assets" has the meaning given in Section 2.2(e).
"Kaiser 401(k) Plan" has the meaning given in Section 6.6(d).
"Kaiser Contracts" has the meaning given in Section 2.2(e).
"Kaiser Contributed GP Inventory" has the meaning given in Section
2.2(e).
"Kaiser Contributed LP Inventory" has the meaning given in Section
2.2(b).
"Kaiser Employee" means any employee of Kaiser who is actively
employed in connection with the Business and who, pursuant to this Agreement or
any other Ancillary Agreement, becomes employed by the Company on the Closing
Date or within 90 days thereafter or, in the case of a Bargaining Unit Kaiser
Employee, within such other period of time following the Closing Date as may be
specified in any agreement between the Company and the Union. Any Employee of
Kaiser who is on short-term disability, such as maternity leave, or other
authorized short-term leave of absence and who immediately prior to going on
such leave had been actively employed in connection with the Business shall be
considered "actively employed" for purposes of the preceding sentence.
9
<PAGE>
"Kaiser Excluded Assets and Excluded Inventory" has the meaning given
in Section 2.2(e).
"Kaiser Excluded Inventory" has the meaning given in Section 2.2(e).
"Kaiser Included Inventory" means all inventories of Joint Venture
Products held by or on behalf of Kaiser on the Closing Date, other than the
Kaiser Excluded Inventory.
"Kaiser Initial Company Interest" has the meaning given in Section
2.2(e).
"Kaiser Intellectual Property" has the meaning given in Section 3.7.
"Kaiser Intellectual Property Licenses" has the meaning given in
Section 3.7.
"Kaiser Manufacturing Agreement" means the Manufacturing Agreement
between Kaiser and the Company, to be dated as of the Closing Date,
substantially in the form of Exhibit H hereto.
"Kaiser Owned Intellectual Property" has the meaning given in Section
3.7.
"Kaiser Production Services Agreement" means the Kaiser Production
Services Agreement between Kaiser and the Company to be dated as of the Closing
Date, substantially in the form of Exhibit K hereto.
"Kaiser Retiree Coverage" has the meaning given in Section 2.7(iii).
"Kaiser Severance Plan" has the meaning given in Section 6.6(i).
"Kaiser Technical Services Agreement" means the Technical Services
Agreement between Kaiser and the Company, to be dated as of the Closing Date,
substantially in the form of Exhibit F hereto.
"KRP" has the meaning given in Section 6.6(b).
"Lien" means any mortgage, lien, debt, pledge, security interest,
encumbrance, assessment, restriction, charge or other adverse claim or interest
of every nature.
10
<PAGE>
"Limited Liability Company Agreement" has the meaning given in the
recitals.
"Limited Partners" means Accuride Sub and Kaiser and any Person who
becomes a Limited Partner as provided in the Limited Partnership Agreement and
who is listed as a limited partner of the Company in the books and records of
the Company, in such Person's capacity as a limited partner of the Company.
"Limited Partnership Agreement" has the meaning given in the recitals.
"Limited Partnership Interest Purchase Price" has the meaning given in
Section 2.3.
"Material Adverse Effect" means a material adverse effect on the
condition (financial or otherwise), results of operations, assets, liabilities
or business of, or on the Business as carried out by, Kaiser, Accuride or the
Company, as the case may be.
"Measurement Date" has the meaning given in Section 2.7.
"Medical Examinations" means the physical examinations of Kaiser
Employees to be conducted by Kaiser in Erie, Pennsylvania and Cleveland, Ohio
prior to the Closing.
"New 401(k) Plan" has the meaning given in Section 6.6(d).
"New Bargaining Unit 401(k) Plan" has the meaning given in Section
6.6(c).
"New Bargaining Unit Pension Plan" has the meaning given in Section
6.6(a).
"New Salaried Pension Plan" has the meaning given in Section 6.6(b).
"Partner" means a Limited Partner or the General Partner.
"Partially Eligible Kaiser Employees" shall have the meaning given in
Section 2.7(iii).
"Permitted Liens" has the meaning given in Section 3.5(a).
11
<PAGE>
"Permitted Real Property Liens" has the meaning given in Section
3.4(b).
"Person" means any individual, corporation, partnership, association,
public body, governmental authority, trust or other entity.
"Phase I Improvements" means the operating and capital improvements
necessary to complete certain cost reductions, including the conversion of the
manufacturing operations to a single spin process and enclosure of the pump
room, as set forth on Schedule 1.
"Phelps Dodge 401(k) Plan" has the meaning given in Section 6.6(d).
"Phelps Dodge Retirement Plan" has the meaning given in Section
6.6(b).
"Pits" are those pits located in the buildings leased to the Company
pursuant to the Erie Lease Agreement which contain the hydraulic presses which
will be used in the Business.
"Plans" has the meaning given in Section 3.9.
"Projected Benefit Obligation" has the meaning given in Section
2.7(ii).
"Real Property" has the meaning given in Section 3.4.
"Regulated Activity" means any generation, treatment, handling,
storage, recycling, transportation or disposal of any Hazardous Substance by
Kaiser, except as is customary for the Business.
"Related Persons" has the meaning given in Section 3.9.
"Release" or "Released" means any discharge, leak, emission or
release, of a Hazardous Substance.
"Salaried Employee" means any Accuride Employee and any Salaried
Kaiser Employee.
"Salaried Kaiser Employee" means any Kaiser Employee other than a
Bargaining Unit Kaiser Employee.
12
<PAGE>
"Special Retirement Payment" has the meaning given in Section 2.7(i).
"Special Retirement Payments" has the meaning given in Section 6.6(a).
"Speedline" has the meaning given in Section 6.7.
"Speedline Agreements" means, collectively, the Cast Aluminum Wheel
Supply Agreement, dated as of December 1, 1995, between Accuride and Speedline
Aluminia, S.p.A. ("Speedline"); the Memorandum of Agreement re: Cast Aluminum
Wheel Venture, dated as of December 1, 1995, between Accuride and Speedline; and
the Letter Agreement, dated June 1, 1996, between Accuride and Speedline.
"Speedline Letter" has the meaning given in Section 6.7.
"SRP" has the meaning given in Section 2.7(i).
"Taxes" means any tax, duty, fee, levy, impost, assessment or charge
of any nature, together with all interest or penalties thereon and additions
thereto, imposed by any Governmental Authority, or any liability for the payment
of any of the foregoing (including without limitation as a result of any express
or implied obligation to indemnify any other Person).
"Tax Return" means any return, report, declaration, form, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto and any amendment thereof.
"Trademark License Agreement" means the Trademark License Agreement
between Accuride and the Company, to be dated the Closing Date, substantially in
the form of Exhibit J hereto.
"Transactions" means the transactions contemplated by this Agreement
and all other Ancillary Agreements.
"Treasury Regulations" means the federal income tax regulations,
including any temporary or proposed regulations, promulgated under the Code, as
such may be amended from time to time.
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"Ultra-Forge Convertor Contract" means the Convertor Contract, dated
July 1, 1992, between Kaiser and Ultra-Forge Incorporated, as amended by
letter dated January 3, 1997 from Kaiser to Ultra-Forge Incorporated.
"Ultra-Forge Lease Agreement" means the Lease Agreement, dated
November 1, 1988, between The Bell Company and Kaiser, as amended by the letters
dated October 12, 1993 from Kaiser to Sarum Management Inc. and November 30,
1993 from Amer Cunningham Brennan Co., L.P.A. to Kaiser, relating to the
warehouse and manufacturing building and premises located at 129 Marc Avenue,
Cuyahoga Falls, Ohio.
"Ultra-Forge Property" has the meaning given in Section 3.4.
"Union" means the United Automobile Aerospace and Agricultural
Implement Workers of America.
"Venture Proposal" has the meaning given in Section 6.1(c)(4).
ARTICLE II.
THE TRANSACTIONS; CLOSING
2.1 Formation of the Company. Prior to the Closing, Accuride, through
Accuride Sub, and Kaiser shall (i) cause the General Partner to be organized as
a Delaware limited liability company with such minimum capital, if any, as they
reasonably determine is required for the Company prior to the Closing Date,
(ii) cause the Company to be organized as a Delaware limited partnership to be
known as "AKW L.P." or by such other name as Accuride and Kaiser shall mutually
agree, and (iii) execute and deliver the Limited Liability Company Agreement and
the Limited Partnership Agreement. Upon formation of the Company, Accuride and
Kaiser shall cause the Company to become a party to this Agreement.
2.2 Purchase and Sale of Accuride Purchased Inventory; Capital
Contributions to General Partner and the Company; Ancillary Agreements. Upon
the terms and subject to the conditions set forth in this Agreement and in
reliance upon the representations, warranties and covenants contained herein, on
the Closing Date:
(a) Accuride Purchase of Kaiser Inventory. Subject to Section 2.7,
Accuride shall purchase from Kaiser, and Kaiser shall transfer, sell and
deliver to Accuride, all the right, title and interest of Kaiser
14
<PAGE>
in and to such inventory of Joint Venture Products, including finished
goods, work in progress, raw materials and supplies, held by or on
behalf of Kaiser as has a Fair Market Value of $435,000 (the "Accuride
Purchased Inventory") for a purchase price of $435,000 (the "Accuride
Inventory Purchase Price"), payable in cash by wire transfer of
immediately available funds to the account or accounts specified in
writing by Kaiser subject to adjustment as provided for in Section 2.6;
(b) Capital Contributions to General Partner. Accuride, on behalf of
Accuride Sub, shall contribute to the General Partner, and the General
Partner shall accept and assume, all the right, title and interest of
Accuride in and to the Accuride Purchased Inventory, in exchange for a 50%
interest in the General Partner to be held by Accuride Sub; and Kaiser
shall contribute to the General Partner, and, subject to Section 2.6, the
General Partner shall accept and assume, all the right, title and interest
of Kaiser in and to such inventories of raw materials, work in process,
finished products, goods, spare parts, replacement and component parts, and
office and other supplies of Joint Venture Products as has a Fair Market
Value of $435,000 (the "Kaiser Contributed GP Inventory"), in exchange for
a 50% interest in the General Partner.
(c) Capital Contributions of General Partner. The General Partner
shall contribute to the Company, and the Company shall accept and assume,
all the right, title and interest of the General Partner in and to the
Accuride Purchased Inventory and the Kaiser Contributed GP Inventory, in
exchange for a 2% interest in the Company.
(d) Capital Contributions of Accuride. Accuride, on behalf of
Accuride Sub, shall contribute to the Company, and the Company shall accept
and assume, all the right, title and interest of Accuride in and to the
following assets primarily relating to the Business as the same shall exist
on the Closing Date (collectively, the "Accuride Assets"), in exchange for
a 0% Interest in the Company to be held by Accuride Sub (the "Accuride
Initial Company Interest"):
(i) all tooling, if any, used primarily in the Business and held
by or on behalf of Kaiser;
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<PAGE>
(ii) subject to any required consents, all of Accuride's rights
(other than (A) rights to assert claims and take other rightful
actions in respect of breaches, defaults and other violations
attributable to conduct preceding the Closing and (B) rights to
receive payment for products sold or services rendered by or on behalf
of Accuride prior to the Closing), under all sales contracts, purchase
orders, agreements with distributors, agents and sales representatives
and all other contracts, leases, agreements, commissioned studies and
commitments, in each case primarily relating to the Business, other
than the contracts listed on Schedule 2.2(d)(ii)(A) hereto (the
"Accuride Excluded Contracts"), but including without limitation the
contracts, leases, agreements, commissioned studies and commitments
listed on Schedule 2.2(d)(ii)(B) (the "Accuride Contracts");
(iii) all pricing schedules, marketing brochures and other sales
and marketing materials primarily relating to the Business;
(iv) all Accuride Owned Intellectual Property and all rights
thereunder or in respect thereof primarily relating to the Business as
it is conducted on the Closing Date, including, but not limited to,
rights to sue for and remedies against infringements thereof, and
rights of priority and protection of interests therein and all
tangible embodiments thereof, other than the Accuride Excluded
Intellectual Property (the "Accuride Contributed Intellectual
Property");
(v) the license to use the Intellectual Property of Accuride
described in Schedule 2.2(d)(ii)(C) granted by Accuride to the Company
pursuant to the Accuride License Agreement (the "Accuride Licensed
Intellectual Property");
(vi) to the extent their transfer is permitted by law, all
Governmental Authorizations, including all applications therefor; and
(vii) subject to Section 7.1(d), all guarantees, warranties,
indemnities and similar rights in favor of Accuride with respect to
any Accuride Asset.
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<PAGE>
provided, however, Accuride will retain and not contribute, and the Company
will not accept or assume, Accuride's right, title and interest in and to
(w) the Speedline Agreements, (x) the finished goods inventory of Joint
Venture Products held at any location controlled by Accuride or previously
purchased and in transit to Accuride at such locations (the "Accuride
Retained Inventory"), (y) all of Accuride's rights to Joint Venture
Products sold or leased prior to the Closing (including, but not limited
to, products hereafter returned or repossessed and unpaid sellers' rights
of rescission, replevin, reclamation and rights to stoppage in transit),
and (z) all causes of action, lawsuits, judgments, claims and demands of
any nature available to or being pursued by Accuride with respect to the
conduct of the Business by Accuride or the ownership, use, function or
value of any Accuride Asset, in each case prior to the Closing, whether
arising by way of counterclaim or otherwise. The value of the property
contributed by Accuride to the Company is set forth on Schedule 2.2.
(e) Capital Contribution of Kaiser. Kaiser shall contribute to the
Company, and the Company shall accept and assume, all the right, title and
interest of Kaiser in and to the following assets primarily relating to the
Business as the same shall exist on the Closing Date (collectively, the
"Kaiser Assets"), in exchange for a 98% Interest in the Company (the
"Kaiser Initial Company Interest"):
(i) subject to Section 2.6, such inventories of raw materials,
work in process, finished products, goods, spare parts, replacement
and component parts, and office and other supplies of Joint Venture
Products, other than the assets sold to Accuride and the Company
pursuant to Sections 2.2(a) and 2.4, respectively, or contributed to
the General Partner by Kaiser pursuant to Section 2.2(b), including
any such assets held at any location controlled by Kaiser or
previously purchased and in transit to Kaiser at such locations, as
has a Fair Market Value of $6.63 million (the "Kaiser Contributed LP
Inventory");
(ii) all machinery, equipment (including computer equipment),
furniture, furnishings, automobiles, trucks, vehicles, tools
(including Kaiser's interest in tooling jointly owned with
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Accuride, if any), dies, molds and parts and similar property
(including, but not limited to, any of the foregoing purchased
subject to any conditional sales or title retention agreement in
favor of any other Person) relating to the Business and set forth
on Schedule 2.2(e)(ii);
(iii) subject to any required consents, all of Kaiser's rights
(other than (A) rights to assert claims and take other rightful
actions in respect of breaches, defaults and other violations
attributable to conduct preceding the Closing and (B) rights to
receive payment for products sold or services rendered by or on behalf
of Kaiser prior to the Closing) under all leases for trucks, computers
and other equipment, all existing metal supply agreements, scrap
tolling agreements, purchase agreements, purchase orders and
commitments, all sales contracts, all agreements with distributors,
agents and sales representatives and all other contracts, leases,
agreements, Commissioned Studies and commitments, in each case
primarily relating to the Business, including without limitation the
contracts, leases, agreements, Commissioned Studies and commitments
listed on Schedule 2.2(e)(iii) (the "Kaiser Contracts," and together
with the Accuride Contracts, the "Assigned Contracts");
(iv) all pricing schedules, marketing brochures and other sales
and marketing materials primarily relating to the Business;
(v) all Intellectual Property and all rights thereunder or in
respect thereof primarily relating to the Business as it is conducted
on the Closing Date, including, but not limited to, rights to sue for
and remedies against infringements thereof, and rights of priority and
protection of interests therein under the laws of any jurisdiction
worldwide and all tangible embodiments thereof, excluding any
trademarks and trade names that incorporate the "Kaiser" name;
(vi) to the extent their transfer is permitted by law, all
Governmental Authorizations, including all applications therefor; and
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(vii) subject to Section 7.1(d), all guarantees, warranties,
indemnities and similar rights in favor of Kaiser with respect to any
Kaiser Asset.
provided, however, subject to Section 7.1(d), Kaiser will retain and not
contribute, and the Company will not accept or assume, Kaiser's right,
title and interest in and to (x) the assets and inventory identified in
Schedule 2.2(e) (the "Kaiser Excluded Assets and Excluded Inventory"; the
inventory identified therein is referred to herein separately as the
"Kaiser Excluded Inventory"), (y) all of Kaiser's rights to Joint Venture
Products sold or leased prior to the Closing (including, but not limited
to, products hereafter returned or repossessed and unpaid sellers' rights
of rescission, replevin, reclamation and rights to stoppage in transit),
and (z) all causes of action, lawsuits, judgments, claims and demands of
any nature available to or being pursued by Kaiser with respect to the
conduct of the Business by Kaiser or the ownership, use, function or value
of any Kaiser Asset, in each case prior to the Closing, whether arising by
way of counterclaim or otherwise. The value of the property contributed by
Kaiser to the Company is set forth on Schedule 2.2 provided that such
values may be adjusted as provided for in Section 2.6.
(f) Company and General Partner Execution of Agreement; Ancillary
Agreements. Each of the Company and the General Partner shall execute and
become party to this Agreement, and the relevant parties shall execute and
deliver each of the Ancillary Agreements and any other agreements which the
parties mutually agree to treat as ancillary agreements. Those agreements
which have been attached hereto as Exhibits shall be executed and delivered
substantially in the respective forms attached to this Agreement and those
agreements which have not been attached hereto as Exhibits shall be in form
and substance reasonably satisfactory to the parties when executed.
2.3 Accuride Sub Purchase of Company Interest. Upon the terms and
subject to the conditions set forth in this Agreement and in reliance upon the
representations, warranties and covenants contained herein, on the Closing Date,
Accuride Sub and Kaiser shall execute and deliver the Interest Purchase
Agreement, and in accordance therewith, Accuride Sub will purchase from Kaiser,
and Kaiser shall
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transfer, sell and deliver to Accuride Sub, 50% of the Kaiser Initial Company
Interest (the "Accuride Purchased Interest"), for a purchase price of
$20,414,079, subject to adjustment as provided for in Section 2.7 (the
"Limited Partnership Interest Purchase Price"), payable in cash on the
Closing Date by wire transfer of immediately available funds to the account
or accounts specified in writing by Kaiser.
2.4 Company Purchase of Kaiser Inventory. Upon the terms and subject
to the conditions set forth in this Agreement and in reliance upon the
representations, warranties and covenants contained herein, on the Closing Date,
subject to Section 2.6, the Company will purchase from Kaiser, and Kaiser shall
transfer, sell and deliver to the Company, all the right, title and interest of
Kaiser in and to such additional inventory, including finished goods, work in
progress, raw material and supplies of Joint Venture Products, other than the
Accuride Purchased Inventory, the Kaiser Contributed GP Inventory and the Kaiser
Contributed LP Inventory (the "Company Purchased Inventory"), for a purchase
price equal to the Fair Market Value thereof, as determined by the Accountant
(the "Company Inventory Purchase Price"), payable within 30 days after the
Closing Date in cash by wire transfer of immediately available funds to the
account or accounts specified in writing by Kaiser.
2.5 Contributions and Transfers. Each contribution, transfer, sale
and delivery referenced herein shall be by delivery of possession and such bills
of sale, assignments and other good and sufficient instruments of sale,
conveyance, transfer and assignment, reasonably acceptable to the transferee, as
shall effectively vest in the transferee marketable title to the transferred
property, free and clear of all Liens, other than Permitted Liens.
2.6 Determination of Fair Market Value of Inventory. The total Fair
Market Value of the Accuride Purchased Inventory, the Kaiser Contributed GP
Inventory, the Kaiser Contributed LP Inventory and the Company Purchased
Inventory is estimated to be $7.5 million. Notwithstanding Sections 2.2(a),
2.2(b), 2.2(e)(i) and 2.4, Kaiser shall not contribute to the General Partner or
the Company or sell to Accuride or the Company, and Accuride and the Company
shall not buy from Kaiser the inventory listed on Schedule 2.2(e). The Fair
Market Value of the Kaiser Included Inventory shall be validated by Arthur
Andersen or another independent accounting firm of recognized national standing
(the "Accountant") acceptable to Accuride and Kaiser by the
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performance of certain procedures mutually agreed upon by Accuride and
Kaiser. Each party will provide all reasonable cooperation and assistance in
order that such procedures may be completed as promptly as practicable. The
Accountant shall, within 10 Business Days following the Closing Date, deliver
to Accuride and Kaiser a report which sets forth the results of its
procedures as to the total Fair Market Value of the Kaiser Included Inventory
as of a date no earlier than two days prior to the Closing Date, and (a) if,
and to the extent that, the Fair Market Value of the Kaiser Included
Inventory exceeds $7.5 million, as determined by the procedures set forth in
this Section 2.6, then such excess amount shall be treated as Company
Purchased Inventory as provided for in Section 2.4 and (b) if, and to the
extent that, the Fair Market Value of the Kaiser Included Inventory is less
than $7.5 million, as determined by the procedures set forth in this Section
2.6, then Kaiser shall pay to Accuride Sub an amount equal to 50% of the
difference between $7.5 million and such lesser amount, provided that each
of Accuride and Kaiser will have a 49% Interest in the Company and the
General Partner shall have a 2% Interest in the Company. Each of Accuride and
Kaiser shall pay one-half of the fees and expenses of the Accountant incurred
in connection with its report. The Accountant's report shall be final and
binding upon Accuride and Kaiser, absent manifest error.
2.7 Employee Related Price Adjustments. The Limited Partnership
Interest Purchase Price shall be reduced by the "Employee Related Price
Adjustment", which shall be equal to 50% of the following:
(i) The Actuarial Present Value of (A) the "Special Retirement
Payment" or "SRP" for each Bargaining Unit Kaiser Employee who is not
eligible to receive the Special Retirement Payment (as defined in Section
6.6) on the Closing Date multiplied by a fraction, the numerator of which
is such Employee's years of service with Kaiser prior to the Closing Date
(as determined under the Bargaining Unit Pension Plan) and the denominator
of which is the sum of such Employee's years of service with Kaiser prior
to the Closing Date (as determined under the Bargaining Unit Pension Plan)
and such Employee's projected years of service with the Company after the
Closing Date as of the Employee's projected retirement date ("Projected
Retirement Date") from the Company as determined in accordance with the
assumptions set forth in Schedule 2.7 (with such service to be determined
under the New Bargaining Unit
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Pension Plan), less (B) the first three months of retirement payments
payable to such Employee under the Bargaining Unit Pension Plan as of
his Projected Retirement Date. The SRP for each Bargaining Unit Kaiser
Employee shall equal the Special Retirement Payment that would have been
payable to such Employee under the Bargaining Unit Pension Plan as of
the Closing Date (assuming the Employee was eligible on such date). The
Special Retirement Payment shall be calculated by applying to the
Employee's wage rates in effect at the Closing Date the salary scale
assumption set forth in Schedule 2.7. In calculating the Special
Retirement Payment, it will be assumed that each Employee will have 2.2
weeks of unused vacation (plus the ten weeks included in the formula) in
the year of retirement or termination. The Actuarial Present Value of
the SRP shall be the Projected Benefit Obligation within the meaning of
FAS 87, calculated in accordance with FAS 87 and on the basis of the
actuarial assumptions and methods set forth in Schedule 2.7.
(ii) The difference between (A) and (B), where:
(A) Equals the sum of the "Actuarial Present Value of the
Benefit Uplift" for all Salaried Kaiser Employees. For this purpose,
the "Actuarial Present Value of the Benefit Uplift" with respect to a
particular Employee is the difference between (i) the "Projected
Benefit Obligation" with respect to such Employee under the KRP as of
the Closing Date and (ii) the "Accumulated Benefit Obligation" with
respect to such Employee under the KRP as of the Closing Date. The
terms "Projected Benefit Obligation" and "Accumulated Benefit
Obligation" shall be given the meanings assigned to them in FAS 87 and
the "Projected Benefit Obligation" and the "Accumulated Benefit
Obligation" shall be calculated in accordance with FAS 87 and on the
basis of the actuarial assumptions and methods set forth in Schedule
2.7.
(B) Equals the sum of the "Actuarial Present Value of the
Benefit Uplift" for all Accuride Employees. For this purpose, the
"Actuarial Present Value of the Benefit Uplift" with respect to a
particular Accuride Employee is the difference between (i) the
"Projected Benefit
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Obligation" with respect to such Employee under the
New Salaried Pension Plan as of the Closing Date and (ii) the
Accumulated Benefit Obligation with respect to such Employee under the
Phelps Dodge Retirement Plan as of the Closing Date. Both the
Projected Benefit Obligation and the Accumulated Benefit Obligation
shall be calculated in accordance with FAS 87 and on the basis of the
actuarial assumptions and methods set forth in Schedule 2.7.
(iii) The difference between (A) the amount of FAS 106 "Accumulated
Postretirement Benefit Obligations" or "APBO" (as such term is defined and
used in FAS 106 for post-retirement medical and life insurance coverage) as
of the Closing Date with regard to (x) Kaiser Employees who would be
eligible, if their service under the KRP or the Bargaining Unit Pension
Plan, as applicable, were terminated on the Closing Date, for
post-retirement medical and life insurance coverage offered by Kaiser (such
coverage, as it may be amended from time to time, shall hereafter be
referred to as "Kaiser Retiree Coverage") but who would be required to
contribute to the cost of Kaiser Retiree Coverage because they don't have,
as of the Closing Date, the requisite age plus years of service to qualify
for Kaiser Retiree Coverage without having to make employee contributions
("Partially Eligible Kaiser Employees") provided such Employees have not
elected Kaiser Retiree Coverage in lieu of medical and life insurance
coverage under the Company's medical and welfare plans, and (y) Kaiser
Employees who would not be eligible, if their service under the KRP or the
Bargaining Unit Pension Plan, as applicable, were terminated on the Closing
Date, for any Kaiser Retiree Coverage, calculated using the assumptions set
forth in Schedule 2.7, and (B) the amount of FAS 106 APBO as of the Closing
Date for all Accuride Employees, calculated using the same assumptions and
on the basis of the post-retirement medical and life insurance coverages
offered by Kaiser (even though such individuals were previously employed by
Accuride);
(iv) The difference between (A) the amount equivalent to the Salaried
Kaiser Employees' vacation earned and accrued in 1996 for use in 1997 plus
vacation earned and accrued in 1997 prior to the Closing Date for use in
1998, reduced by any such earned and accrued vacation taken prior to the
Closing
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Date, calculated using the compensation of such Employees in effect
immediately prior to the Closing Date, and (B) an amount equivalent to
the Accuride Employees' vacation earned and accrued in 1996 for use in
1997 plus vacation earned and accrued in 1997 prior to the Closing Date
for use in 1998, reduced by any such earned and accrued vacation taken
prior to the Closing Date, calculated using the compensation of such
Employees in effect immediately prior to the Closing Date, plus (C)
an amount equivalent to Bargaining Unit Kaiser Employees' earned and
accrued vacation prior to the Closing Date, calculated using the
compensation of such Employees in effect immediately prior to the
Closing Date, in accordance with the provisions contained in Kaiser's
collectivebargaining agreement with the Union applicable to such
Employees in effect immediately prior to the Closing Date, reduced by
any such earned and accrued vacation taken prior to the Closing Date;
(v) An amount equal to 125% of the product of (a) the number of hours
worked with Kaiser during the first 12 of the previous 13 full calendar
months prior to the Closing Date by each Bargaining Unit Kaiser Employee,
multiplied by (b) 23 cents.
For purposes of calculating the Employee Related Price Adjustments
under this Section 2.7, the actuarial assumptions and methods set forth in
Schedule 2.7 shall apply. Schedule 2.7 shall list the Employees as of the
Closing Date. The Employee Related Price Adjustments shall be calculated on an
estimated basis for purposes of the cash transfers under Section 2.3 on the
Closing Date for the individuals listed in Schedule 2.7 and shall assume that
all Partially Eligible and Fully Eligible Kaiser Employees have elected Kaiser
Retiree Coverage for purposes of Section 2.7(iii)(A)(x). The estimated Employee
Related Price Adjustments for each individual listed in Schedule 2.7 are set
forth in Schedule 2.7. The Employee Related Price Adjustments shall be
recalculated after each applicable Measurement Date, using the same actuarial
assumptions and methods set forth in Schedule 2.7, but taking into account only
the Employees on the applicable "Measurement Date" and based on the actual
elections by Partially Eligible and Fully Eligible Kaiser Employees. For
Accuride Employees and Salaried Kaiser Employees, the "Measurement Date" is the
date 90 days following the Closing Date. For Bargaining Unit Kaiser Employees,
the "Measurement Date" is the last day of the period during which such Employees
may be
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transferred back to Kaiser pursuant to any agreement between the Company
or Kaiser and the Union. Promptly after each Measurement Date, the parties
shall agree to such recalculations and Kaiser shall pay Accuride for any
increase, and Accuride shall pay Kaiser for any decrease, in the Employee
Related Price Adjustment.
Kaiser's actuary shall perform all calculations necessary to calculate
the Employee Related Price Adjustments. Accuride's actuary shall have the
opportunity to review any calculations performed by Kaiser's actuary in
connection with the Employee Related Price Adjustments and, if Accuride's
actuary notifies Kaiser within 90 days after such review that it disagrees with
any such calculations, an independent third party actuary, mutually agreed upon
by Kaiser and Accuride, shall be engaged to resolve the dispute. The costs of
such third party actuary shall be borne equally by both Kaiser and Accuride.
2.8 Assumption of Liabilities; Excluded Liabilities. Upon the terms
and subject to the conditions set forth in this Agreement and in reliance upon
the representations, warranties and covenants contained herein, at the Closing,
the Company shall assume and agree to perform, in accordance with their
respective terms, any and all liabilities, obligations and commitments (i)
arising out of the Assigned Contracts, but only to the extent such liabilities,
obligations and commitments are attributable to conduct on and after the Closing
Date, or (ii) listed on Schedule 2.8 attached hereto (collectively, the "Assumed
Liabilities"); provided, however, that notwithstanding the foregoing provisions
of this Section 2.8 or any other provision hereof or any schedule or exhibit
hereto, the Company shall not assume and shall not be liable for any
liabilities, obligations or commitments of Kaiser or Accuride, whether or not
relating to or arising out of the Business or the ownership, possession or use
of the Accuride Assets, the Kaiser Assets, the Kaiser Included Inventory or the
Real Property, whether known or unknown, fixed or contingent, other than the
Assumed Liabilities. Without limiting the foregoing, unless assumed by the
Company pursuant to Article VI or expressly set forth in any Ancillary
Agreement, the Company shall not assume and shall not be liable for any
liabilities, obligations or commitments (i) relating to Employees of either
Accuride or Kaiser (including workers' compensation, benefits and compensation)
to the extent attributable to services or activities preceding the Closing
(including, without limitation, such conditions to the extent shown on the
Medical Examinations) in connection with their employment by
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Accuride or Kaiser, as the case may be, (ii) relating to Taxes payable with
respect to the Business or the ownership of the Kaiser Assets, the Accuride
Assets, the Kaiser Included Inventory or the Real Property that are
attributable to the periods ending prior to the Closing Date, (iii) relating
to any and all existing and future environmental claims, losses and
liabilities, including, without limitation, any clean-up costs at the Real
Property, the Erie Facilities, or any other properties to the extent it is
alleged that contamination of other properties is a result of activities at
the Real Property or the Erie Facilities, in each case except (A) to the
extent such claims, losses and liabilities are solely caused by or solely
arise from any action by the Company or in connection with the conduct of the
Business of the Company, in which case the Company shall be solely
responsible; (B) to the extent that Kaiser can demonstrate that any claims,
losses and liabilities associated with contamination are due solely to the
Company's failure to maintain and use the Pits in accordance with Section 6.3
of this Agreement, in which case Kaiser and the Company shall be responsible
for their appropriate share of such claims, losses and liabilities; or (C) to
the extent that claims, losses and liabilities, other than those associated
with contamination of the Pits, arise from both the actions of the Company
and Kaiser, or the conduct of the Business by either of them, in which case
both the Company and Kaiser shall be responsible for their appropriate share
of such claims, losses and liabilities; (iv) relating to product liability
and warranty claims for products sold or leased by either Accuride or Kaiser
prior to the Closing Date, (v) attributable to the conduct by Kaiser of
businesses other than the Business at its facilities located in Erie,
Pennsylvania, (vi) for the payment for products purchased or services
received pursuant to the Assigned Contracts or arising out of the accounts
payable of either Accuride or Kaiser outstanding at the Closing Date, (vii)
arising out of any breach or asserted breach of any Assigned Contract or
customer relationship, or any related tort claim, in each case attributable
to conduct preceding the Closing Date, (viii) for infringement by either
Accuride or Kaiser of rights of others in the Intellectual Property
attributable to conduct preceding the Closing, (ix) relating to any claims
for severance benefits (constructive or otherwise) by an Employee, (x)
relating to any claims for any benefits payable under the Bargaining Unit
Pension Plan, or (xi) relating to any claims for any post-retirement medical
and life insurance.
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2.9 Excluded Contracts. This Agreement shall not constitute an
agreement to assign, transfer or contribute any interest in any Excluded
Contract, or any claim, right or benefit arising thereunder or resulting
therefrom. Accuride and the Company shall enter into alternative arrangements
to provide that the Company shall receive Accuride's benefits in the Excluded
Contracts, and shall perform Accuride's obligations thereunder, to the extent
relating to the sale of Joint Venture Products thereunder after the Closing
Date.
2.10 Closing. Unless this Agreement shall have been terminated
pursuant to Section 8.1 and subject to the satisfaction or waiver of the
conditions set forth in Article V, the closing of the Transactions (the
"Closing") shall take place at the offices of Debevoise & Plimpton, 875 Third
Avenue, New York, New York 10022 at 10:00 A.M., New York time, on May 1, 1997,
unless another date, time and place shall have been agreed to in writing by the
parties (the "Closing Date"). All actions to be taken and all documents to be
executed and delivered by all parties at the Closing shall be deemed to have
been taken, executed and delivered simultaneously, and no actions shall be
deemed taken nor any documents deemed executed and delivered until all have been
taken, executed and delivered.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF KAISER
Kaiser represents and warrants to Accuride and to the Company:
3.1 Corporate Existence, Power and Authorization. Kaiser is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to execute and deliver this Agreement and the other Ancillary
Agreements to which it is a party, to perform its obligations hereunder and
thereunder and to consummate the Transactions. Kaiser has all requisite
corporate power and authority to conduct its portion of the Business and to own,
lease and operate the properties used by it in the Business as conducted, owned,
leased or operated on the date hereof and on the Closing Date. Kaiser is duly
qualified to do business in each jurisdiction in which the nature of its portion
of the Business or the location of the assets used by it in the Business
requires it to be so qualified, except
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where the failure to be so qualified would not have a Material Adverse
Effect. The execution, delivery and performance of this Agreement and the
other Ancillary Agreements to which Kaiser is a party and the consummation of
the Transactions have been duly authorized by the Board of Directors of
Kaiser. This Agreement has been duly executed and delivered by Kaiser and
constitutes, and on the Closing Date will constitute, the valid and binding
obligation of Kaiser, enforceable against Kaiser in accordance with its
terms, except insofar as enforceability may be limited by bankruptcy,
insolvency, moratorium or other laws which affect creditors' rights and
remedies generally and by principles of equity. Upon the Closing, the other
Ancillary Agreements to which Kaiser is a party (including all instruments of
conveyance and other documents to be executed and delivered by Kaiser) shall
be duly executed and delivered by Kaiser and shall constitute the valid and
binding obligations of Kaiser, enforceable against Kaiser in accordance with
their respective terms, except insofar as enforceability may be limited by
bankruptcy, insolvency, moratorium or other laws which affect creditors'
rights and remedies generally and by principles of equity. Kaiser has
delivered or made available to Accuride and the Company complete and correct
copies of its certificate of incorporation and by-laws, as amended and in
effect on the date hereof. On the date hereof, neither Kaiser nor any of its
Affiliates has, and on the Closing Date neither will have, any equity
interest or investment in any corporation, partnership, joint venture,
association or other business organization involved in the Business other
than as set forth on Schedule 3.1 and as described in the last sentence of
the definition of "Joint Venture Products."
3.2 No Conflicts; Consents and Approvals. (a) Except as set forth in
Schedule 3.2, the execution, delivery and performance of this Agreement and the
other Ancillary Agreements to which it is a party and the consummation of the
Transactions will not result in (i) any conflict with the certificate of
incorporation or by-laws of Kaiser, (ii) any breach or violation of, or default
under, any Applicable Law or any mortgage, agreement, deed of trust, indenture,
lease, contract or any other instrument to which Kaiser is a party or by which
Kaiser or its properties or assets (including without limitation the Kaiser
Assets) are bound, except any breach, violation or default which could not
reasonably be expected (A) to have a Material Adverse Effect or (B) to have a
material adverse effect on the ability of Kaiser to perform its obligations
under this Agreement or (iii) the creation or imposition of any Liens
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on any of the properties or assets of Kaiser (including without limitation
the Kaiser Assets), other than Permitted Liens.
(b) Except as set forth in Schedule 3.2, no consent, approval or
authorization of, or filing with, any Governmental Authority or any other third
party is required on the part of Kaiser in connection with the execution and
delivery by Kaiser of this Agreement or any other Ancillary Agreement to which
it is a party or the consummation by Kaiser of the Transactions, other than any
consents, approvals, authorizations or filings, the failure of which to obtain
would not, individually or in the aggregate, have a Material Adverse Effect or
have a material adverse effect on the ability of Kaiser to perform its
obligations under this Agreement.
3.3 Governmental Authorizations; Compliance with Law. Except as
otherwise set forth in Schedule 3.3, and except with respect to environmental
matters which are covered separately under Section 3.12, all approvals, permits,
certificates, qualifications, authorizations, licenses, franchises, consents,
orders and registrations of all Government Authorities (collectively,
"Governmental Authorizations") which are necessary for the conduct by Kaiser of
its portion of the Business or for the lawful consummation by Kaiser of the
Transactions have been obtained and are in full force and effect, or will be
obtained and will be in full force and effect by the Closing Date, other than
any approvals, permits, certificates, qualifications, authorizations, licenses,
franchises, consents, orders and registrations, the failure of which to obtain
would not, individually or in the aggregate, have a Material Adverse Effect.
All such Governmental Authorizations are listed on Schedules 3.3 attached
hereto. Except as otherwise set forth on Schedule 3.3, and except for
environmental compliance which is covered separately under Section 3.12, Kaiser
has complied in all material respects with all Applicable Laws and Governmental
Authorizations applicable to Kaiser in connection with the conduct of the
Business or relating to any properties or assets used by it in the conduct of
the Business (including without limitation the Kaiser Assets). There are no
proceedings pending, or to the best knowledge of Kaiser, threatened which could
reasonably be expected to result in the revocation, cancellation, suspension or
modification of any Governmental Authorization.
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3.4 Real Property. (a) The real property, together with the
buildings, structures and improvements thereon, that will be leased or licensed
to the Company pursuant to (i) the Erie Lease Agreement (the "Erie Property"),
(ii) the Ultra-Forge Lease Agreement (the "Ultra-Forge Property") and (iii) the
other lease agreements listed on Schedule 3.4 attached hereto (together with the
Ultra-Forge Property, the "Assigned Lease Properties," and together with the
Erie Property and the Ultra-Forge Property, the "Real Property") constitute
substantially all of the real property owned or leased by Kaiser in connection
with the conduct of the Business as currently conducted by Kaiser and, to the
best knowledge of Kaiser, all of the real property necessary or desirable for
the continued conduct of the Business by the Company in accordance with the
Business Plan. The Real Property and the use thereof by Kaiser or its
subsidiaries is not, except as otherwise set forth on Schedule 3.3, 3.12 or 6.3,
in violation of any existing Applicable Law (excluding Environmental Laws which
are covered separately under Section 3.12 but including safety and health,
zoning, land use or building laws), which violation is reasonably expected to
have a material adverse effect on the use and occupancy of the Real Property,
and there is no violation of any restriction, condition, covenant or agreement
applicable to or affecting the Real Property, any part thereof or use thereof,
contained in any deed, subdivision map or other instrument, except for any
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.
(b) The Erie Lease Agreement. Kaiser has delivered to the Company and
to Accuride complete and correct copies of the Deed(s) to the Erie Property,
together with a copy of an "as built" survey of the Erie property, a copy of
Kaiser's fee owner's title policy (and the underlying documents set forth
therein) for the Erie Property, and copies of all permits and licenses relating
to the ownership and operation of the Erie Property. Kaiser has good, valid and
marketable fee simple title to the Erie Property, free and clear of all Liens,
except for (i) Liens and leases set forth on Schedule 3.4(b), (ii) liens for
Taxes not yet due and payable or which are being contested in good faith by
appropriate proceedings and (iii) imperfections of title which are not
substantial in character, amount or extent (in relation to the particular
parcel) and that individually or in the aggregate do not and would not interfere
with the use of the property and assets of the Business as currently used or
contemplated to be used by the Business or otherwise (the
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Liens referred to in clauses (i) through (iii) above being referred to
collectively as "Permitted Real Property Liens"). Kaiser has all easements,
rights of way and similar authorizations required for the ownership and use
of the Erie Property for the purpose of conducting the Business as heretofore
conducted. Upon execution and delivery, the Erie Lease Agreement will be a
valid and legally binding agreement, in full force and effect, that gives the
Company the exclusive right to use and occupy the Erie Property, except as
otherwise set forth in the Erie Lease Agreement, and is enforceable in
accordance with its terms against Kaiser, except insofar as enforceability
may be limited by bankruptcy, insolvency, moratorium or other laws which
affect creditors' rights and remedies generally and by principles of equity.
(c) The Assigned Lease Properties. Kaiser has delivered to the
Company and to Accuride a complete and correct copy of each of the lease
agreements relating to the Assigned Lease Properties, together with copies of
"as built" surveys of such properties, copies of Kaiser's leasehold title
insurance policies (and the underlying documents set forth therein) for such
properties, copies of all permits and licenses relating to the leasing and
operation of such properties, and a legal description of such properties,
including a summary description of the buildings, structures and improvements
thereon. Except as set forth on Schedule 3.4(d), the lease agreements relating
to the Assigned Lease Properties are valid and legally binding agreements, in
full force and effect, that grant Kaiser, and Kaiser currently enjoys, the
exclusive right to use and occupy such properties and are enforceable in
accordance with their terms against each party thereto, except insofar as
enforceability may be limited by bankruptcy, insolvency, moratorium or other
laws which affect creditors' rights and remedies generally and by principles of
equity. The Assigned Lease Properties include all leasehold improvements,
easements, rights of way and similar authorizations necessary to conduct the
Business as presently conducted by Kaiser, and such improvements are free and
clear of Liens, other than Permitted Real Property Liens. Neither Kaiser nor,
to the best of its knowledge, the lessors relating to each such lease, are in
breach or default of any material term of such leases; to the best knowledge of
Kaiser there is no condition which, after the giving of notice or lapse of time
or both, would entitle either Kaiser or such lessors to terminate such leases;
and Kaiser has not received any notice of cancellation, termination or default
thereunder. Upon consummation of the Transactions, the Company will hold good
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and valid leasehold interests, and will be entitled to the exclusive use of, the
Assigned Lease Properties and to all rights and benefits that are currently
enjoyed by Kaiser under such leases with respect thereto.
(d) Structure; Access; Utilities. With respect to each parcel of Real
Property, there are no material structural defects, nor are there any material
repairs needed to any of the buildings or structures located thereon, including,
without limitation, to the roof, the foundations, exterior walls, the heating
and air conditioning systems, plumbing and sprinkler systems, electrical wiring
and fixtures and facilities or other portions of the improvements other than as
set forth in Schedule 3.4(d). Each parcel of Real Property has access to public
roads or valid easements over private streets or private property for ingress to
and egress from all such buildings, structures and yards located thereon. All
utilities (including without limitation water supply, storm and sanitary sewer
facilities, telephone, gas and electrical connections, fire protection and
drainage) necessary in each case for the conduct of the Business as presently
conducted by Kaiser are available at each parcel of Real Property. None of the
Real Property owned or leased in connection with the conduct of the Business by
Kaiser encroaches upon real property of another Person, and no structure of any
other Person encroaches upon such Real Property, except for any encroachments
which, individually or in the aggregate, would not have a Material Adverse
Effect.
3.5 Assets. (a) The Kaiser Assets, the Kaiser Included Inventory and
the Real Property together constitute all of the properties and assets used or
held for use in connection with the manufacture and sale of Joint Venture
Products by Kaiser (except for (x) the Kaiser Excluded Assets, (y) accounts
receivable, inventory sold or consumed, cash disposed of, prepaid expenses
realized, contracts fully performed, and assets replaced by equivalent or
superior assets, in each case in the ordinary course of business, and (z) other
non-material assets sold or disposed of in the ordinary course of business) and,
together with the benefits provided by the Ancillary Agreements, are sufficient
to enable the Joint Venture to conduct the Business as presently conducted by
Kaiser. Except as set forth on Schedule 1 (which reflects the conversion of the
manufacturing operations to a single-spin process) and Schedule 3.5, Kaiser has
the unrestricted power to transfer, sell and deliver the Kaiser Assets and the
Kaiser Included Inventory to the Company and to Accuride, as the case may
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be. Following the Closing, the Company or Accuride, as the case may be, will
have good and marketable title to the same, free and clear of all Liens,
other than Permitted Liens (as hereinafter defined). As used herein, the
term "Permitted Liens" shall mean: (i) Liens for Taxes not yet due and
payable or which are being contested in good faith by appropriate
proceedings, (ii), with respect to each parcel of Real Property, easements,
rights-of-way, restrictions and other similar liens or imperfections of title
which are not substantial in character, amount or extent (in relation to the
particular parcel) and that individually or in the aggregate do not interfere
with the use of the property and assets of the Business as currently used or
contemplated to be used by the Business or otherwise, (iii) liens in respect
of pledges or deposits made in the ordinary course of the Business in
connection with worker's compensation legislation, if the obligations secured
by such liens are not delinquent, or (iv) carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like liens arising in the
ordinary course of the Business, if the obligations secured by such liens are
not delinquent. All of the Kaiser Assets and the Kaiser Included Inventory
(other than inventory in transit to Kaiser) are located on the Real Property.
(b) Except as set forth in Schedule 3.5, Kaiser is the owner of and
has good and marketable title to all of the Kaiser Assets and the Kaiser
Included Inventory, free and clear of all Liens, other than Permitted Liens.
With respect to such assets that are leased by Kaiser, (i) each lease is valid
and binding on Kaiser and in full force and effect, (ii) Kaiser is in peaceable
possession, and enjoys exclusive use, of the property which is subject thereto
and (iii) neither Kaiser, nor, to the best knowledge of Kaiser, the lessor
thereof, is in breach or default of any material term thereof and to the best
knowledge of Kaiser, there is no condition which, after the giving of notice or
lapse of time or both, would entitle either Kaiser or the lessor to terminate
such lease.
(c) Except as set forth on Schedule 3.10 or 3.12, there are no pending
or, to the best knowledge of Kaiser, threatened events, conditions or
developments affecting the Kaiser Assets and the Kaiser Included Inventory which
would (i) materially detract from their value or (ii) materially interfere with
their present use.
(d) The tangible Kaiser Assets are in good operating condition and
repair, have been reasonably maintained
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consistent with standards generally followed in the industry and are suitable
for their present uses and necessary or desirable for the conduct of the
Business, except as would be reasonably discovered by a visual inspection
thereof.
(e) All of the Kaiser Included Inventory is of good, useable and
merchantable quality, not obsolete and, in the case of finished goods, is
saleable in the ordinary course of the Business.
3.6 Material Agreements. Schedule 2.2(e)(iii) contains a complete and
correct list as of the date hereof of (a) all agreements, contracts, and
commitments relating to the Business which require payment by or to Kaiser of
more than $25,000 per annum and (b) all commissioned studies relating to the
operation of the Business (other than such studies as relate to the operation of
the Business on a stand-alone basis by Kaiser) ("Commissioned Studies") that
were prepared during the last 24 months (collectively, "Agreements"), to which
Kaiser is a party, including any Agreement with any Employee, or by which Kaiser
or the properties or assets used by it in the conduct of the Business (including
without limitation the Kaiser Assets) are bound. Assuming the due
authorization, execution and delivery by and capacity of the other parties
thereto, each such Agreement is valid, in full force and effect, and enforceable
against Kaiser, and, to the best knowledge of Kaiser, the other parties thereto
in accordance with its respective terms, except insofar as enforceability may be
limited by bankruptcy, insolvency, moratorium or other laws which effect
creditors' rights and remedies generally and by principles of equity. Kaiser
has performed in all material respects the obligations required to be performed
by it to date under such Agreements, and there does not exist any breach,
default or event or condition which, after notice or lapse of time or both,
would constitute a default thereunder by Kaiser or, to the best knowledge of
Kaiser, by any other party thereto, other than any breaches or events or
conditions which, after notice or lapse of time or both, would constitute a
default, which, individually or in the aggregate, would not have a Material
Adverse Effect.
3.7 Intellectual Property. Schedule 3.7 contains a complete and
correct list of (i) all Intellectual Property that is owned by Kaiser and that
relates to or is used in the Business as conducted by Kaiser (the "Kaiser Owned
Intellectual Property"), and (ii) all written licenses and arrangements,
pursuant to which Kaiser uses Intellectual Property that is owned by another
Person, that relate to or
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are used in the Business as conducted by Kaiser (collectively, the "Kaiser
Intellectual Property Licenses," and together with Kaiser Owned Intellectual
Property, the "Kaiser Intellectual Property"). Immediately after the Closing,
the Company will have the right to use all of the Kaiser Intellectual
Property, other than any Kaiser Intellectual Property that incorporates the
"Kaiser" name, and will own the Kaiser Owned Intellectual Property that is
marked with an asterisk on Schedule 3.7 free and clear of any Liens, other
than Permitted Liens. All Kaiser Intellectual Property Licenses are in full
force and effect in accordance with their terms, and Kaiser is not in default
under any Kaiser Intellectual Property License. There is no claim or demand
of any Person pertaining to, or any proceeding, action, suit or petition
which is pending or, to the best knowledge of Kaiser, threatened, that
challenges the rights of Kaiser in respect of any Kaiser Owned Intellectual
Property, or claims that any default exists under any Kaiser Intellectual
Property License. None of the Kaiser Owned Intellectual Property or, to the
best knowledge of Kaiser, the Kaiser Intellectual Property Licenses is
subject to any outstanding order, ruling, decree, judgment or stipulation by
or with any court, tribunal, arbitrator or other Governmental Authority. To
Kaiser's knowledge, the Kaiser Intellectual Property does not infringe upon
or misappropriate any Intellectual Property of any third party, and does not
contain any matter that violates the property rights of, or contractual or
fiduciary obligations (including but not limited to obligations of
confidentiality) to, any third party. Kaiser has not been notified by any
Person of any claims of infringement or misappropriation of any Intellectual
Property of any third party or of any violation of the property rights of, or
contractual or fiduciary obligations (including but not limited to
obligations of confidentiality) to, any third party.
3.8 Labor Matters. Except as set forth on Schedule 3.8, and except
for Employee Benefit Plans and ERISA which are covered separately under Section
3.9, Kaiser is not a party to or bound by any collective bargaining agreements
or memoranda of understanding covering Employees and there are no labor or
employment unions or other organizations representing, purporting to represent
or attempting to represent any Employees. With respect to the Business, since
January 1, 1995, there has not occurred or been threatened any work stoppage,
slowdown, picketing or concerted refusal to work overtime or other similar labor
or employment activity with regard to any Employees. Except as set forth on
Schedule 3.8, there are no material labor or
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employment disputes currently subject to any grievance proceeding,
litigation, arbitration or other administrative proceeding and there is no
representation petition pending or, to the best knowledge of Kaiser,
threatened with regard to any Employees. Kaiser has complied in all material
respects with all Applicable Laws pertaining to the employment or termination
of employment of the Employees, including, without limitation, all such laws
relating to labor or employment relations, equal employment opportunities,
fair employment practices, prohibited discrimination or distinction and other
similar employment activities.
3.9 Employee Benefit Plans; ERISA. Schedule 3.9 contains a true and
complete list of each "employee benefit plan" as defined in section 3(3) of
ERISA and each bonus, incentive or deferred compensation, severance,
termination, retention, stock option, stock purchase or other employee benefit
or compensation plan, program or arrangement, agreement, policy or understanding
(the "Plans"), whether written or unwritten, that provides or may provide
benefits or compensation in respect of any Kaiser Employee that is or has been
maintained by Kaiser or any other trade or business, whether or not
incorporated, which together with Kaiser, is or would have been at any date of
determination treated as a single employer under Section 414 of the Code
("Related Persons") or to which Kaiser or any Related Person contributes or is
required to contribute. Kaiser has not communicated to any Kaiser Employee any
intention or commitment to modify any Plan or to establish or implement any
other employee benefit or compensation arrangement in any way that could have a
Material Adverse Effect on the Business of the Company. The Kaiser 401(k) Plan
and the Bargaining Unit 401(k) Plan are intended to be qualified under Section
401(a) of the Code and the related trusts have received favorable determination
letters from the IRS as to their qualification and to the effect that each such
trust is exempt from taxation under Section 501(a) of the Code, and nothing has
occurred since the date of such determination letter that would adversely affect
each such qualification or tax exempt status. Each of the Kaiser 401(k) Plan
and the Bargaining Unit 401(k) Plan has been operated and administered in all
respects in accordance with Applicable Laws. None of the assets of the Business
are or are expected to be liable for any material amount pursuant to Section
4062, 4063, 4064, 4069, 4212 or otherwise pursuant to Title I or IV of ERISA or
the penalty, excise or joint
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and several liability provisions of the Code relating to employee benefits
plans. Except as otherwise disclosed, the consummation of the Transactions
will not result in an increase in the amount of compensation or benefits or
accelerate the vesting or timing of any compensation or benefits payable to
or in respect of any employee in any way that could have a Material Adverse
Effect on the Business of the Company. Except as otherwise disclosed,
entitlement by Kaiser Employees to post-employment benefits of any kind by
reason of employment with Kaiser, including, without limitation, death or
medical benefits and deferred compensation will not have a Material Adverse
Effect on the Business of the Company.
3.10 Litigation. Except as set forth in Schedule 3.10, as of the date
hereof there are no pending or, to the best knowledge of Kaiser, threatened
judicial or administrative actions, proceedings or investigations which
(i) would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on the Business as currently conducted by Kaiser or have
a material adverse effect on the ability of Kaiser to consummate the
Transactions or (ii) question the validity of this Agreement, any other
Ancillary Agreement to which Kaiser is a party or any action taken or to be
taken by Kaiser in connection herewith or therewith.
3.11 Taxes. There are no Taxes payable by the Company, the General
Partner, Accuride Sub or Accuride with respect to the Business as conducted by
Kaiser through the Closing Date or the Kaiser Assets, the Kaiser Included
Inventory or the Real Property that are attributable to the periods (or portions
thereof) ending before the Closing Date. None of the Kaiser Assets and the
Kaiser Included Inventory is subject to any tax lien, other than any lien
described in clause (i) of the definition of Permitted Liens.
3.12 Environmental Matters. (a) Except as set forth on
Schedule 3.12, with respect to the Business as conducted by Kaiser and to the
Real Property and the Erie Facilities:
(i) To the best knowledge of Kaiser, since January 1, 1992 through the
date hereof, no notice of violation, request for information, citation,
summons, complaint or order has been issued, no complaint has been filed,
no penalty has been assessed and no in-
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vestigation is pending or threatened by any Governmental Authority with
respect to any (A) alleged violation by Kaiser of any existing
Environmental Law or liability thereunder, (B) Regulated Activity or (C)
Release of Hazardous Substances;
(ii) To the best knowledge of Kaiser, since January 1, 1992 there have
been no Releases of Hazardous Substances by Kaiser required to be reported
under any Environmental Law, except for such Releases that, individually or
in the aggregate, are not reasonably expected to have a Material Adverse
Effect;
(iii) To the best knowledge of Kaiser, as of the date hereof, there
are, as defined in applicable Environmental Laws, (A) no above-ground or
underground storage tanks, surface impoundments, lagoons or other
containment facilities for the temporary or permanent storage, treatment or
disposal of Hazardous Substances, (B) any open or closed landfill or solid
waste disposal area, (C) any friable asbestos-containing material, or (D)
any polychlorinated biphenyls located at, on, in, under, immediately
adjacent to or over the Real Property or the Erie Facilities;
(iv) Kaiser (A) is not subject to any consent or judicial decree or
administrative order in connection with the Business or with respect to any
Environmental Law associated with the facilities or operations on the Real
Property or the Erie Facilities, (B) has not received during the last five
years notice under any citizen suit provision of any Environmental Law in
connection with the Business, the Real Property or the Erie Facilities, or
any facilities or operations on such properties;
(v) In the last five years, Kaiser has not (A) reported a Release to
a Governmental Authority as required by an Environmental Law or (B) filed a
notice with any Governmental Authority as required pursuant to an
Environmental Law reporting a violation thereof;
(vi) To the best knowledge of Kaiser, the Real Property, the Erie
Facilities, and any property to which Kaiser has, directly or indirectly,
transported or arranged for the transportation of any Hazardous Substances
generated at the Real Property or the Erie Facilities is not listed or, to
the best knowledge of Kaiser, proposed for listing, on the National
Priori-
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ties List promulgated pursuant to CERCLA, on CERCLIS (as defined in
CERCLA) or on any similar federal or state list of sites requiring similar
investigation or clean-up;
(vii) Except as otherwise set forth on Schedule 3.12, all Governmental
Authorizations with respect to environmental matters, which are necessary
for the conduct by Kaiser of its portion of the Business or for the lawful
consummation by Kaiser of the Transactions, have been obtained and are in
full force and effect;
(viii) To the best knowledge of Kaiser, except as otherwise set forth
on Schedule 3.12, all operations and conditions at the Real Property and
the Erie Facilities which could be expected to have a Material Adverse
Effect are in compliance with Environmental Laws;
(ix) To the best knowledge of Kaiser, there are not presently any
areas of soil or groundwater contamination at, on, in, under, or
immediately adjacent to the Real Property, where, if the remediation of
such area(s) and the Erie Facility was required by any Governmental
Authority, such remediation could reasonably be expected to have a Material
Adverse Effect.
(b) Except as previously disclosed to Accuride, there has been no
environmental investigation, study, audit, test, review or other analysis by or
on behalf of Kaiser in relation to the Business, any Real Property or the Erie
Facilities which has not been delivered to Accuride prior to the date hereof.
With respect to the Erie Facilities, all of the foregoing representations
contained in Section 3.12 are limited to those matters that can reasonably be
expected to have a Material Adverse Effect.
3.13 Insurance. Schedule 3.13 contains a complete and correct list of
all insurance policies and bonds of Kaiser that relate in any way to the
ownership or use of the Kaiser Assets or the operation of the Business, all
claims filed under such insurance policies and bonds since January 1, 1993 and
all loss-runs with respect to such insurance policies and bonds since January 1,
1993. All such policies are in full force and effect, all premiums due thereon
have been paid and Kaiser has complied with the provisions of such policies.
Since January 1, 1990, no in-
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surance carrier has refused any application for insurance by Kaiser with
respect to any of the Kaiser Assets.
3.14 Brokers. All negotiations relating to this Agreement, the other
Ancillary Agreements and the Transactions have been carried out without the
intervention of any Person acting on behalf of Kaiser in such manner as to give
rise to any valid claim against Kaiser for any brokerage or finder's commission,
fee or similar compensation.
3.15 Customers and Suppliers. Schedule 3.15 contains a complete and
correct list of all of the names and addresses of all customers (other than
Accuride) and suppliers of Kaiser which purchased or sold goods and services in
connection with the conduct by Kaiser of the Business, including without
limitation Joint Venture Products, with an aggregate value of $25,000 or more in
1995 or 1996 and the amount for which each such customer was invoiced during
such period.
3.16 Disclosure. No representation, warranty or statement by Kaiser
in this Agreement, any other Ancillary Agreement or any exhibit or schedule
furnished or to be furnished by Kaiser pursuant hereto or thereto, or in
connection with the Transactions, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements contained herein and therein not misleading.
3.17 Product Liability. Except as disclosed in Schedule 3.17 hereto,
Kaiser has no knowledge of any claim against Kaiser since January 1, 1992, or
the basis of any claim since January 1, 1992, for damage or injury to any Person
or property suffered as a result of the manufacture, warehousing, storage,
distribution and/or sale of any product or material or the performance of any
service by Kaiser relating to the Business, including any claim arising out of
the defective or unsafe nature, or allegedly defective or unsafe nature, of any
such product, material or service.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF ACCURIDE
Accuride represents and warrants to Kaiser and the Company as follows:
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4.1 Corporate Existence, Power and Authorization. Accuride is, and
prior to the Closing Date Accuride Sub will be, a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware, and Accuride has, and prior to the Closing Date Accuride
Sub will have, all requisite corporate power and authority to execute and
deliver this Agreement and the other Ancillary Agreements to which it is a
party, to perform its obligations hereunder and thereunder and to consummate
the Transactions. Accuride has all requisite corporate power and authority to
conduct its portion of the Business and to own, lease or operate the
properties used by it in the Business as conducted, owned, leased or operated
on the date hereof and on the Closing Date. Accuride is duly qualified to do
business in each jurisdiction in which the nature of its portion of the
Business or the location of the assets used by it in the Business requires it
to be so qualified, except where the failure to be so qualified would not
have a Material Adverse Effect. The execution, delivery and performance of
this Agreement and the other Ancillary Agreements to which it is a party and
the consummation of the Transactions have been, or prior to the Closing Date
will have been, duly authorized by the Boards of Directors of Accuride and
Accuride Sub. This Agreement has been duly executed and delivered by
Accuride and constitutes, and on the Closing Date will constitute, the valid
and binding obligation of Accuride enforceable against Accuride in accordance
with its terms, except insofar as enforceability may be limited by
bankruptcy, insolvency, moratorium or other laws which affect creditors'
rights and remedies generally and by principles of equity. Upon the Closing,
the other Ancillary Agreements to which Accuride or Accuride Sub is a party
(including all instruments of conveyance and other documents to be executed
and delivered by Accuride and Accuride Sub) shall be duly executed and
delivered by Accuride and Accuride Sub and shall constitute the valid and
binding obligations of Accuride and Accuride Sub, enforceable against
Accuride and Accuride Sub in accordance with their respective terms, except
insofar as enforceability may be limited by bankruptcy, insolvency,
moratorium or other laws which affect creditors' rights and remedies
generally and by principles of equity. Accuride has delivered or made
available to Kaiser complete and correct copies of its certificate of
incorporation and by-laws, as amended and in effect on the date hereof. On
the date hereof, neither Accuride nor any of its Affiliates has, and on the
Closing Date neither will have, any equity interest or investment in any
corporation, partnership, joint ven-
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ture, association or other business organization involved in the Business
other than as set forth on Schedule 4.1.
4.2 No Conflicts; Consents and Approvals. (a) Except as set forth in
Schedule 4.2, the execution, delivery and performance of this Agreement and the
other Ancillary Agreements to which it is a party and the consummation of the
Transactions will not result in (i) any conflict with the certificate of
incorporation or by-laws of Accuride or Accuride Sub, (ii) any breach or
violation of, or default under, any Applicable Law or any mortgage, agreement,
deed of trust, indenture, lease, contract or other instrument to which Accuride
or Accuride Sub is a party or by which Accuride or Accuride Sub or any of their
respective properties or assets (including without limitation the Accuride
Assets) are bound, except any breach, violation or default which could not
reasonably be expected (A) to have a Material Adverse Effect or (B) to have a
material adverse effect on the ability of Accuride to perform its obligations
under this Agreement or (iii) the creation or imposition of any Liens on any of
the properties or assets of Accuride or Accuride Sub (including without
limitation the Accuride Assets) other than Permitted Liens.
(b) Except as set forth in Schedule 4.2, no consent, approval or
authorization of, or filing with, any Governmental Authority or any other third
party is required on the part of Accuride or Accuride Sub in connection with the
execution and delivery of this Agreement or any other Ancillary Agreement to
which it is a party or the consummation of the Transactions, other than any
consents, approvals, authorizations or filings, the failure of which to obtain
would not, individually or in the aggregate, have a Material Adverse Effect or
have a material adverse effect on the ability of Accuride to perform its
obligations under this Agreement.
4.3 Governmental Authorizations; Compliance with Law. Except as
otherwise set forth in Schedule 4.3, all Governmental Authorizations which are
necessary for the conduct by Accuride of its portion of the Business or for the
lawful consummation by Accuride or Accuride Sub of the Transactions have been
obtained and are in full force and effect, or will be obtained and will be in
full force and effect by the Closing Date, other than any approvals, permits,
certificates, qualifications, authorizations, licenses, franchises, consents,
orders and registrations, the failure of which to obtain would not, individually
or in the aggregate, have a Material Adverse Effect. All such
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Governmental Authorizations and all such Governmental Authorizations are
listed on Schedule 4.3 attached hereto. Except as otherwise set forth on
Schedule 4.3, Accuride has complied in all material respects with all
Applicable Laws and Governmental Authorizations applicable to Accuride in
connection with the conduct of the Business or relating to any properties or
assets used by it in the conduct of the Business (including without
limitation the Accuride Assets). There are no proceedings pending, or to the
best knowledge of Accuride, threatened which could reasonably be expected to
result in the revocation, cancellation, suspension or modification of any
Governmental Authorization.
4.4 Assets. (a) The Accuride Assets constitute all assets used or held
for use in connection with the sale of the Joint Venture Products (except for
(w) the Accuride Excluded Contracts, (x) the Accuride Retained Inventory,
(y) accounts receivable, inventory sold or consumed, cash disposed of, prepaid
expenses realized, contracts fully performed, and assets replaced by equivalent
or superior assets, in each case in the ordinary course of business, and
(z) other non-material assets sold or disposed of in the ordinary course of
business), and together with the benefits provided by the Ancillary Agreements,
are sufficient to enable the Joint Venture to conduct the Business as presently
conducted by Accuride. Accuride has the complete and unrestricted power to
transfer, sell and deliver the Accuride Assets to the Company. Except as set
forth on Schedule 4.4, Accuride is the owner of and has good and marketable
title to all of the Accuride Assets, free and clear of all Liens, other than
Permitted Liens. Following the Closing, the Company will have good and
marketable title to the same, free and clear of all Liens, other than Permitted
Liens.
(b) Except as set forth on Schedule 4.4, there are no pending or, to
the best knowledge of Accuride, threatened events, conditions or developments
affecting the Accuride Assets which would (i) materially detract from their
value or (ii) materially interfere with their present use. The tangible
Accuride Assets are in good operating condition and repair, have been reasonably
maintained consistent with standards generally followed in the industry and are
suitable for their present uses and necessary or desirable for the conduct of
the Business, except as would be reasonably discovered by a visual inspection
thereof. All of the inventory included in the Accuride Assets is of good,
useable and merchantable quality, not obsolete and, in
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the case of finished goods, is saleable in the ordinary course of the
Business.
4.5 Material Agreements. Schedule 2.2(d) contains a complete and
correct list as of the date hereof of all Agreements relating to Speedline and
all Agreements to which Accuride is a party, including any Agreement with any
Employee, or by which it or the property or assets used by it in the conduct of
the Business (including without limitation the Accuride Assets) are bound.
Assuming the due authorization, execution and delivery by and capacity of the
other parties thereto, each such Agreement is valid, in full force and effect,
and enforceable against Accuride and, to the best knowledge of Accuride, the
other parties thereto in accordance with its respective terms, except insofar as
enforceability may be limited by bankruptcy, insolvency, moratorium or other
laws which affect creditors' rights and remedies generally and by principles of
equity. Accuride has performed in all material respects the obligations
required to be performed by it to date under such Agreements, and there does not
exist any breach, default or event or condition which, after notice or lapse of
time or both, would constitute a default thereunder by Accuride or, to the best
knowledge of Accuride, by any other party thereto, other than any breaches,
defaults or events or conditions which, after notice or lapse of time or both,
would constitute a default, which individually or in the aggregate, would not
have a Material Adverse Effect.
4.6 Intellectual Property. Schedule 4.6 contains a complete and
correct list of (i) all Intellectual Property that is owned by Accuride and that
relates to or is used in the Business as conducted by Accuride (the "Accuride
Owned Intellectual Property") and (ii) all written licenses and arrangements,
pursuant to which Accuride uses Intellectual Property that is owned by another
Person, that relate to or are used in the Business as conducted by Accuride
(collectively, the "Accuride Intellectual Property Licenses," and together with
Accuride Owned Intellectual Property, the "Accuride Intellectual Property").
Upon execution of the Accuride License Agreement, the Company will have the
exclusive right to use all of the Accuride Contributed Intellectual Property and
the non-exclusive right to use all of the Accuride Licensed Intellectual
Property. All Accuride Intellectual Property Licenses are in full force and
effect in accordance with their terms, and Accuride is not in default under any
Accuride Intellectual Property License. There is no claim or demand of any
Person pertaining to, or any proceeding, action, suit or petition
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which is pending or, to the best knowledge of Accuride, threatened, that
challenges the rights of Accuride in respect of any Accuride Owned
Intellectual Property, or claims that any default exists under any Accuride
Intellectual Property License. None of the Accuride Owned Intellectual
Property or, to the best knowledge of Accuride, the Accuride Intellectual
Property Licenses is subject to any outstanding order, ruling, decree,
judgment or stipulation by or with any court, tribunal, arbitrator or other
Governmental Authority. To Accuride's knowledge, the Accuride Contributed
Intellectual Property and the Accuride Licensed Intellectual Property does
not infringe upon or misappropriate any Intellectual Property of any third
party, and does not contain any matter that violates the property rights of,
or contractual or fiduciary obligations (including but not limited to
obligations of confidentiality) to, any third party. Accuride has not been
notified by any Person of any claims of infringement or misappropriation of
any Intellectual Property of any third party or of any violation of the
property rights of, or contractual or fiduciary obligations (including but
not limited to obligations of confidentiality) to, any third party.
4.7 Litigation. Except as set forth in Schedule 4.7, as of the date
hereof there are no pending or, to the best knowledge of Accuride, threatened
judicial or administrative actions, proceedings or investigations which
(i) would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on the Business as currently conducted by Accuride or
have a material adverse effect on the ability of Accuride to consummate the
Transactions or (ii) question the validity of this Agreement, any other
Ancillary Agreement to which Accuride or Accuride Sub is a party or any action
taken or to be taken by Accuride or Accuride Sub in connection herewith or
therewith.
4.8 Taxes. There are no Taxes payable by the Company, the General
Partner or Kaiser with respect to the Business as conducted by Accuride through
the Closing Date or the Accuride Assets that are attributable to the periods (or
portions thereof) ending before the Closing Date. None of the Accuride Assets
is subject to any tax lien, other than any lien described in clause (i) of the
definition of Permitted Liens.
4.9 Employee Benefit Plans; ERISA. The Phelps Dodge 401(k) Plan is
intended to be qualified under Section 401(a) of the Code and the related trust
has received a
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favorable determination letter from the IRS as to its qualification and to
the effect that such trust is exempt from taxation under Section 501(a) of
the Code, and nothing has occurred since the date of such determination
letter that would adversely affect such qualification or tax-exempt status.
The Phelps Dodge 401(k) Plan has been operated and administered in all
material respects in accordance with applicable laws. None of the assets of
the Business are or are expected to be liable for any material amount
pursuant to Section 4062, 4063, 4064, 4069, 4212 or any other liability under
or pursuant to Title I or IV of ERISA or the penalty, excise or joint and
several liability provisions of the Code relating to employee benefit plans.
Except as otherwise disclosed, the consummation of the Transactions will not
result in an increase in the amount of compensation or benefits or accelerate
the vesting or timing of any compensation or benefits payable to or in
respect of any Accuride Employee.
4.10 Insurance. Schedule 4.10 contains a complete and correct list of
all insurance policies and bonds of Accuride that relate in any way to the
ownership or use of the Accuride Assets or the operation of the Business, all
claims filed under such insurance policies and bonds since January 1, 1993 and
all loss-runs with respect to such insurance policies and bonds since January 1,
1993. All such policies are in full force and effect, all premiums due thereon
have been paid and Accuride has complied with the provisions of such policies.
Since January 1, 1990, no insurance carrier has refused any application for
insurance by Accuride with respect to any of the Accuride Assets.
4.11 Brokers. All negotiations relating to this Agreement, the other
Ancillary Agreements and the Transactions have been carried out without the
intervention of any Person acting on behalf of Accuride in such manner as to
give rise to any valid claim against Accuride for any brokerage or finder's
commission, fee or similar compensation.
4.12 Product Liability. Except as disclosed in Schedule 4.12 hereto,
Accuride has no knowledge of any claim against Accuride since January 1, 1992,
or the basis of any claim since January 1, 1992, for damage or injury to any
Person or property suffered as a result of the manufacture, warehousing,
storage, distribution and/or sale of any product or material or the performance
of any service by Accuride relating to the Business, including any claim arising
out of the defective or unsafe nature, or allegedly
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defective or unsafe nature, of any such product, material or service.
4.13 Disclosure. No representation, warranty or statement by Accuride
or Accuride Sub in this Agreement, any other Ancillary Agreement or any exhibit
or schedule furnished or to be furnished by Accuride or Accuride Sub pursuant
hereto or thereto, or in connection with the Transactions, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
a material fact necessary to make the statements contained herein or therein not
misleading.
ARTICLE V.
CONDITIONS
5.1 Conditions to Obligations of All Parties. The obligations of the
parties to consummate the Transactions shall be subject to the fulfillment (or
waiver by the parties hereto) on or prior to the Closing Date of each of the
following conditions:
(a) No Injunction. There shall not be in effect any injunction,
restraining order or other similar order issued by any court or
Governmental Authority of competent jurisdiction restraining or prohibiting
the consummation of the Transactions and no such action shall be pending or
threatened.
(b) Consents, etc. All Governmental Authorizations and all
authorizations, consents, permits and approvals from any other third party
required to be obtained or made by Kaiser, Accuride or Accuride Sub in
connection with the consummation of the Transactions, including, without
limitation, the consents required under the Assigned Contracts or listed on
Schedules 3.2 and 4.2, shall have been obtained, other than (i) any
authorizations, consents, permits or approvals, the failure of which to
obtain would not, individually or in the aggregate, have a Material Adverse
Effect or a material adverse effect on the ability of such party to perform
its obligations under this Agreement and (ii) as set forth on Schedule 6.3.
Complete and correct copies of all such approvals and consents shall have
been delivered to each of Kaiser and Accuride.
(c) Ultra-Forge Agreements. The Ultra-Forge Convertor Contract, as
amended to extend the term
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thereof, and the Ultra-Forge Lease Agreement shall have been assigned to
the Company.
(d) Organization of the Company and General Partner. The Company
shall have been duly organized and shall be validly existing as a Delaware
limited partnership; the General Partner shall have been duly organized and
shall be validly existing as a Delaware limited liability company; and
Accuride, through Accuride Sub, and Kaiser shall have (i) duly and validly
executed and delivered the Limited Liability Company Agreement and the
Limited Partnership Agreement, (ii) caused the executive officers appointed
in accordance with the Limited Liability Company Agreement to be duly
appointed, and (iii) caused the Company to become a party to this
Agreement.
(e) Business Plan. Each party shall have agreed on the final version
of the Business Plan for 1997.
(f) No Material Adverse Change. Since the date hereof, no events
shall have occurred that have had, or could be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Business.
(g) Insurance. Appropriate levels of insurance as have been mutually
agreed upon by Accuride and Kaiser prior to Closing shall have been
obtained on or before the Closing Date and shall be in full force and
effect on the Closing Date, and Accuride and Kaiser shall have received a
certificate of an independent insurance broker or other evidence, dated the
Closing Date, setting forth the insurance obtained in accordance therewith
and stating that such insurance is in full force and effect and that all
premiums then due thereon have been paid (or arrangements satisfactory to
Accuride and Kaiser have been made for such payment).
(h) Support Arrangements. Each of Accuride and Kaiser shall be
satisfied that other than those explicitly provided for in this Agreement
and the Ancillary Agreements, no additional material support or management
agreements covering resources, services, facilities or utilities required
for the Company to reasonably function after Closing need to be and have
not been provided for.
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(i) Labor and Employment Matters. Each of Accuride and Kaiser shall
be satisfied in all material respects with arrangements for the
commencement of the Company's operations, although the Company and its
authorized officers, agents and representatives shall be exclusively
responsible for said arrangements, including (i) the preparation of
facilities at such locations to a degree sufficient for the Company to
commence and maintain its operation of the Business, (ii) the determination
of basic compensation, benefits, hours and working conditions for salaried
and hourly employees of the Company and (iii) the Company's extension of
employment offers to salaried and hourly employees and the acceptance of
such offers by a number of salaried and hourly employees sufficient for the
Company to commence and maintain its operation of the Business.
5.2 Conditions to Obligations of Accuride. The obligations of
Accuride to consummate the Transactions shall be subject to the fulfillment (or
waiver by Accuride) on or prior to the Closing Date of each of the following
additional conditions:
(a) Representations and Warranties. The representations and
warranties of Kaiser contained in Article III of this Agreement and in any
other Ancillary Agreement to which Kaiser is a party shall be true and
correct in all material respects, at and as of the date hereof and at and
as of the Closing Date with the same effect as though made at and as of the
Closing Date. Kaiser shall have duly performed and complied in all
material respects with all agreements and conditions required by this
Agreement and all other Ancillary Agreements to be performed or complied
with by Kaiser prior to or on the Closing Date. Kaiser shall have
delivered to Accuride a certificate, dated the Closing Date and signed by a
duly authorized officer, to the foregoing effect.
(b) Proceedings. All corporate proceedings of Kaiser required in
connection with this Agreement, the other Ancillary Agreements and the
Transactions, including without limitation all bills of sale and other
documents or instruments of transfer, that, in the judgment of Accuride and
its counsel, are required to effect the Transactions, shall be reasonably
satisfactory in substance and form to Accuride and its counsel, and
Accuride and its counsel shall have received all
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such documents or instruments evidencing such proceedings, certified if
requested, and all such bills of sale and other documents or instruments
of transfer, as they shall have reasonably requested.
(c) Execution and Delivery of Other Ancillary Agreements. Each of the
other Ancillary Agreements shall have been duly executed and delivered by
all parties thereto other than Accuride and Accuride Sub.
(d) Opinion of Counsel. Accuride shall have received from Kramer,
Levin, Naftalis & Frankel, counsel for Kaiser, or from the general counsel
of Kaiser, an opinion in form and substance reasonably satisfactory to
Accuride and its counsel.
(e) FIRPTA. Kaiser shall have furnished to the Company a certificate,
dated as of the Closing Date and sworn to under penalty of perjury, that
sets forth the name, address and federal tax identification number of
Kaiser, states that it is not a "foreign person" within the meaning of
Section 1445 of the Code, and is otherwise in the form set forth in the
Treasury Regulations thereunder.
(f) Compliance with OSHA. Accuride shall be reasonably satisfied that
Kaiser has taken all actions necessary to bring the Real Property and the
facilities located thereon into compliance with "confined space"
regulations under the Occupational Health and Safety Act of 1970, as
amended.
5.3 Conditions to Obligations of Kaiser. The obligations of Kaiser to
consummate the Transactions shall be subject to the fulfillment (or waiver by
Kaiser) on or prior to the Closing Date of each of the following additional
conditions:
(a) Representations and Warranties. The representations and
warranties of Accuride contained in Article IV of this Agreement or in any
other Ancillary Agreement to which Accuride or Accuride Sub is a party
shall be true and correct in all material respects, at and as of the date
hereof and at and as of the Closing Date with the same effect as though
made at and as of the Closing Date. Accuride or Accuride Sub shall have
duly performed and complied in all material respects with all agreements
and conditions required by this Agreement and all other Ancillary
Agreements to be per-
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formed or complied with by them prior to or on the Closing Date. Accuride
shall have delivered to Kaiser a certificate, dated the Closing Date and
signed by a duly authorized officer, to the foregoing effect.
(b) Proceedings. All corporate proceedings of Accuride and Accuride
Sub required in connection with this Agreement, the other Ancillary
Agreements and the Transactions, including without limitation all bills of
sale and other documents or instruments of transfer, that, in the judgment
of Kaiser and its counsel, are required to effect the Transactions, shall
be reasonably satisfactory in substance and form to Kaiser and its counsel,
and Kaiser and its counsel shall have received all such documents or other
instruments evidencing such proceedings, certified if requested, and all
such bills of sale and other documents or instruments of transfer, as they
shall have reasonably requested.
(c) Execution and Delivery of Other Ancillary Agreements. Each of the
other Ancillary Agreements shall have been duly executed and delivered by
all parties thereto other than Kaiser.
(d) Opinion of Counsel. Kaiser shall have received from Debevoise &
Plimpton, counsel for Accuride, or from the general counsel of Phelps Dodge
Corporation, an opinion in form and substance reasonably satisfactory to
Kaiser and its counsel.
(e) Union Negotiations. Kaiser shall have concluded, to its
satisfaction, the "effects" negotiations with the Union with respect to
the Transactions.
ARTICLE VI.
COVENANTS
6.1 Covenants of Accuride and Kaiser. Each of Accuride and Kaiser
covenants as follows:
(a) Obligations of Accuride and Kaiser. Each of Accuride and Kaiser
shall apply for and diligently prosecute all applications for, and shall
use its best efforts to obtain, or cause to be obtained, such Governmental
Authorizations and consents, authorizations and approvals from third
parties, and file such notices, as shall be necessary to permit the
consumma-
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tion of the Transactions and operations of the Business and shall use its
best efforts to bring about the satisfaction as soon as practicable of all
the conditions contained in Article V and to effect the consummation of the
Transactions.
(b) Publicity. No party shall issue, or shall permit any Affiliate to
issue, any press releases or make any public statement concerning this
Agreement or any of the Transactions without the prior approval of each
other party, such approval not to be unreasonably withheld. Such approval
shall not be required if, based on the advice of counsel, a party
reasonably believes that issuing such press release or making such
statement is necessary in order to comply with Applicable Law (but such
party shall give each other party a reasonable opportunity to comment
thereon, if possible).
(c) Conduct of Business. From the date hereof until the Closing,
except as otherwise contemplated by this Agreement, each of Accuride and
Kaiser covenants and agrees:
(i) to conduct its portion of the Business in the ordinary course
in substantially the same manner in which it previously has been
conducted and to use all reasonable efforts to preserve its present
business organization and its relationships with employees, customers,
suppliers and others having material business dealings with respect to
the Business;
(ii) to maintain the books of account and records of its portion
of the Business in the ordinary course, consistent with past practice
and applicable accounting standards;
(iii) not to (A) assume, incur or guarantee any obligation for
borrowed money, except in the ordinary course of business, (B) cancel
or compromise, except for compromises of current or former trade debt
in the ordinary course of business consistent with past practice, any
debts owed to it, (C) waive or release any rights of material value,
or (D) close any material facilities, in each case in connection with
the conduct of its portion of the Business;
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(iv) not to (A) sell, transfer, lease or otherwise dispose of any
of the property or assets to be transferred or leased by it to any
other party or the Company pursuant to this Agreement or any other
Ancillary Agreement, (B) create or permit to exist any new material
Lien on any of the properties or assets used by it in the Business, or
(C) directly or indirectly solicit, initiate or participate in any way
in discussions or negotiations with, or provide any information or
assistance to (including, but not limited to, affording access to the
properties, books and records of Accuride or Kaiser, as the case may
be, or any of their respective Affiliates), or enter into any
agreement with any Person or group of Persons concerning any
acquisition, merger, consolidation, liquidation, dissolution,
disposition of assets, joint venture, partnership or other transaction
(except in connection with fundamental corporate transactions, such as
mergers, spin-offs and sales of substantially all of the capital stock
or assets of Kaiser or Accuride or the parent corporations of either
of Accuride or Kaiser) that is contemplated by the Company or that
would result in (1) the transfer by either party of any assets,
technology or non-public information relating to the manufacturing of
the Joint Venture Products or (2) any direct or indirect equity
interest by either party in any part of the business or assets of any
Person engaged in the manufacturing or sale of tire molds or aluminum
wheels of the type and size contemplated by the Joint Venture Products
(each a "Venture Proposal"), or assist or participate in, facilitate
or encourage any effort or attempt by any other Person to do or seek
to do any of the foregoing; each party shall promptly notify the other
party of any inquiry from any other Person relating to a Venture
Proposal and will promptly communicate to the other party the terms of
any Venture Proposal that to its knowledge it or any of its directors,
officers, partners, employees, agents and advisors may receive; or (D)
enter into any other new material arrangement for the conduct of the
Business; in each case except in the ordinary course of business or as
contemplated by this Agreement;
(v) not to enter into any lease of real property in connection
with the Business;
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(vi) not to purchase inventory outside of the ordinary course of
business in connection with the Business;
(vii) not to enter into any noncompetition agreement which
restricts the operations of the Business, except as contemplated
herein or in any other Ancillary Agreement;
(viii) not to enter into any agreement or assume or incur any
liability with respect to any Employees, except as contemplated herein
or in any other Ancillary Agreement or as required by law; and
(ix) not to agree to take any action prohibited by this Section
6.1(c).
(d) Access and Information. Accuride and Kaiser shall give each other
reasonable access during normal business hours, upon notice and in such
manner as will not unreasonably interfere with the conduct of their
respective businesses, to the properties, books and records of the Business
as conducted by it and furnish such information and documents in its
possession relating to the Business as the other may reasonably request.
Each party shall promptly notify each other of any change or event having,
or which could reasonably be foreseen to have, a material adverse effect on
the value of the property or assets to be transferred or leased to each
other or to the Company pursuant to this Agreement and any other Ancillary
Agreement.
(e) Taxes. Each of Accuride and Kaiser shall be responsible for, and
shall pay or discharge when due, all Taxes that are or may become payable
by the Company or its Limited Partners or chargeable as a Lien upon the
property or assets to be transferred or leased to the Company by it or on
its behalf and that are attributable to any period (or portion thereof)
ending or event occurring prior to the Closing Date, provided that Kaiser
shall be responsible for any and all such Taxes relating to the Kaiser
Included Inventory.
6.2 Covenants of Kaiser - Employee Matters. With respect to employee
matters, Kaiser covenants as follows:
(a) Active Medical and Life Insurance. Fully Eligible Kaiser
Employees and Partially Eligible Kaiser
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Employees who elect Kaiser Retiree Coverage in lieu of medical and life
insurance coverage under the Company's medical and welfare plans shall
commencing on the effective date of their election and during the
remainder of their employment with the Company, participate in the Kaiser
Retiree Coverage Program.
(b) Post-Retirement Medical and Life Insurance Benefits.
Notwithstanding any other provision in this Agreement or any Ancillary
Agreement, Kaiser Employees who as of the Closing Date have the requisite
age plus years of service to qualify for Kaiser Retiree Coverage without
having to make employee contributions ("Fully Eligible Kaiser Employees")
shall, upon retirement from the Company, be entitled to Kaiser Retiree
Coverage. In addition, Partially Eligible Kaiser Employees who elect
Kaiser Retiree Coverage in lieu of medical and life insurance coverage
under the Company's medical and welfare plans shall, upon retirement from
the Company, be entitled to Kaiser Retiree Coverage.
(c) Pension Benefits. (i) Eligibility for Benefits. Effective as of
the Closing Date, Kaiser shall amend its Bargaining Unit Pension Plan to
provide that upon a Bargaining Unit Kaiser Employee's retirement under the
New Bargaining Unit Pension Plan for purposes of determining such
Employee's eligibility for benefits under the Bargaining Unit Pension Plan,
events or conditions (e.g., disability or layoff) occurring while an
employee of the Company and all periods of service with the Company shall
be counted; provided, however, in no event shall such Bargaining Unit
Kaiser Employee be entitled to (x) a Special Retirement Payment, (y)
commence benefits prior to retirement from the Company under the New
Bargaining Unit Pension Plan, or (z) Kaiser Retiree Coverage, on account of
counting such Company service or considering such events or conditions.
Also, in no event shall such service with the Company be considered in
determining the amount of benefits such Bargaining Unit Kaiser Employee
shall be entitled to under the Bargaining Unit Pension Plan.
(ii) Special Disability Supplements. Effective as of the Closing
Date, Kaiser shall amend its Bargaining Unit Pension Plan to provide that
the amount of any disability supplement payable to a Bargaining Unit Kaiser
Employee as a result of retiring under Section 2.2 of the Bargaining Unit
Pension Plan shall be equal to the disability supplement determined under
the
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Kaiser Bargaining Unit Pension Plan, as in effect on the Closing Date,
multiplied by a fraction, the numerator of which is the Bargaining Unit
Kaiser Employee's years of service with Kaiser prior to the Closing Date
(as determined under the Bargaining Unit Pension Plan) and the denominator
of which is the Employee's years of service with Kaiser prior to the
Closing Date (as determined under the Bargaining Unit Pension Plan) and the
Company after the Closing Date (as determined under the New Bargaining Unit
Pension Plan before giving effect to the last sentence in Section
6.6(a)(i)). Kaiser shall provide the Company with such information
concerning a Bargaining Unit Kaiser Employee's eligibility for such
disability supplements as may be reasonably requested by the Company to
determine such Employee's eligibility for and amount of the supplements
payable under the Bargaining Unit Pension Plan.
(iii) Special Retirement Payment. Effective as of the Closing Date,
Kaiser shall amend its Bargaining Unit Pension Plan to provide that each
Bargaining Unit Kaiser Employee who, as of the Closing Date, is not
eligible to receive the Special Retirement Payment and (i) subsequently
qualifies for a Special Retirement Payment from the New Bargaining Unit
Pension Plan upon retirement from the Company, and (ii) also qualifies for
a pension from the Bargaining Unit Pension Plan, shall be eligible to
receive from the Bargaining Unit Pension Plan upon his retirement from the
Company the first three monthly pension payments paid in a lump sum.
6.3 Covenants of Kaiser - Environmental Matters. With respect to
environmental matters, Kaiser covenants as follows:
(a) Kaiser shall be solely responsible for all expenditures set forth
in the Environmental Compliance Plan attached as Schedule 6.3 (the
"Environmental Compliance Plan"). In the event that any expenditures are
required in excess of the amounts set forth in the Environmental Compliance
Plan, the Company shall be solely responsible for any such excess amounts.
(b) To the extent that any capital expenditures relating to wastewater
pretreatment are necessary after the Closing Date to cause any properties
or assets used
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in the conduct of the Business to be in compliance with any and all
requirements of Environmental Laws, existing and future, Kaiser shall
be solely responsible for such capital expenditures, except to the
extent that: (i) Kaiser can demonstrate that any capital expenditures will
be increased by the operations of the Business above the level of such
capital expenditures that would otherwise be required because of Kaiser's
remaining operations at the Erie Facilities, in which case the Company will
be responsible for any additional capital expenditures; or (ii) such
capital expenditures are incurred in connection with construction on or
about the Real Property, in which case the Company will be solely
responsible for such expenditures.
(c) To the extent that expenditures are necessary after the Closing
Date to remove and dispose of asbestos containing material existing prior
to the Closing Date at, on, under or in the Real Property or the Erie
Facilities, Kaiser shall be solely responsible for such expenditures to the
extent such expenditures are necessary to bring the Real Property and the
Erie Facilities into compliance with Environmental Laws ("ACM
Expenditures"), and to the extent such expenditures are not incurred as a
result of construction, renovation or demolition activities undertaken by
or on behalf of the Company.
(d) Kaiser will notify the Company upon obtaining knowledge of the
following environmentally related events at the Erie Facilities: (i) any
Releases of Hazardous Substances required to be reported under any
Environmental Law where such a Release could reasonably be expected to have
a Material Adverse Effect on the Erie Property; or (ii) changes in
operations that could materially increase the likelihood of a Release of
Hazardous Substances to the Erie Property.
(e) With respect to environmental matters, Kaiser covenants that
before the Closing Date, it will inspect the Pits, implement any necessary
repairs to ensure their integrity, and develop an operations and
maintenance plan for maintaining their integrity, subject to the Company's
approval; such operations and maintenance plan will be attached hereto as
Schedule 6.3(a).
6.4 Covenants of Kaiser - Phase I Improvements:
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With respect to the Phase I Improvements, Kaiser shall be solely responsible for
the payment of any and all amounts due to complete the Phase I Improvements set
forth on Schedule 1 (regardless of the costs set forth on the attachments
thereto) including (a) capital expenditures plus (b) all compensation costs
incurred by the Company in connection with the use of employees of the Company
to install and de-bug such improvements, and shall pay such amounts promptly
upon receipt of appropriate documentation of expenditures for the Phase I
Improvements from the Company.
6.5 Covenants of the Company - Environmental Matters. With respect to
environmental matters, the Company covenants as follows:
(a) To the extent that construction, renovation or demolition
activities undertaken by or on behalf of the Company result in ACM
Expenditures, the Company shall be solely responsible for them.
(b) The Company will notify Kaiser upon obtaining knowledge of the
following environmentally related events arising in connection with the
Business: (i) any Releases of Hazardous Substances required to be reported
under any Environmental Law where such a Release could reasonably be
expected to have a Material Adverse Effect on the Erie Facilities or the
Erie Property; or (ii) changes in operations of the Business that could
materially increase the likelihood of a Release of Hazardous Substances to
the Erie Facilities or the Erie Property.
(c) The Company will comply with the operations and maintenance plan
for the Pits as set forth in Schedule 6.3(a).
(d) The Company will use its best efforts to comply with and
implement, under the direction of Kaiser, the Environmental Compliance
Plan. The Company will provide Kaiser with copies of all invoices,
notices, reports and records relating to its compliance with, and
implementation of, the Environmental Compliance Plan and shall not take any
action with respect to such compliance or implementation to which Kaiser
shall reasonably object.
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6.6 Covenants of the Company - Employee Matters. The Company
covenants as follows:
(a) Pension Plan - Bargaining Unit Kaiser Employees.
(i)(1) General. Effective on the Closing Date, each Bargaining Unit
Kaiser Employee who is a participant in the Kaiser Aluminum Erie Pension
Plan (the "Bargaining Unit Pension Plan") shall cease to be an active
participant in such Plan and shall commence participation in a defined
benefit-type plan intended to satisfy the requirements of Section 401(a) of
the Code established by the Company (the "New Bargaining Unit Pension
Plan"), the terms of which will be substantially similar to those in the
Bargaining Unit Pension Plan as of the date hereof, including, without
limiting the foregoing, a pension factor of $24 per month per year of
service. Except as otherwise provided in this Section 6.6(a), the New
Bargaining Unit Pension Plan will recognize the service of each Bargaining
Unit Kaiser Employee with Kaiser prior to the Closing Date to the extent
credited under the terms of the Bargaining Unit Pension Plan as in effect
on the date hereof solely for purposes of determining the Employee's
eligibility to participate in the New Bargaining Unit Pension Plan and
eligibility for a particular benefit available under such Plan but not for
purposes of calculating the amount of benefits for such Employees.
(ii) Special Retirement Payment.
(x) Eligible on the Closing Date. Any Bargaining Unit Kaiser
Employee who is eligible on the Closing Date to retire under the
Bargaining Unit Pension Plan and receive a special retirement payment,
calculated as described in Section 2.7 of the Bargaining Unit Pension
Plan (such special retirement pension payment from the Bargaining Unit
Pension Plan and a similar payment from the New Bargaining Unit
Pension Plan, but based on rates of vacation pay in effect on or about
retirement from the Company shall be referred to as the "Special
Retirement Payment") in effect on the Closing Date, and who elects to
receive such Special Retirement Payment at any time prior to
retirement from the Company either shall not
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receive a Special Retirement Payment from the New Bargaining Unit
Pension Plan or shall receive a Special Retirement Payment that is
reduced by the amount of the Special Retirement Payment received
from the Bargaining Unit Pension Plan plus interest, as provided in
the New Bargaining Unit Pension Plan. If such Bargaining Unit
Kaiser Employee does not elect to receive such Special Retirement
Payment from the Bargaining Unit Pension Plan prior to retirement
from the Company, then he shall be entitled to a Special Retirement
Payment from the New Bargaining Unit Pension Plan and the
Bargaining Unit Pension Plan upon his retirement from the Company
after the Closing Date. The Special Retirement Payment due from
the New Bargaining Unit Pension Plan shall equal the amount
determined under the New Bargaining Unit Pension Plan using the
Employee's wage rates in effect at retirement from the Company less
sum of (i) the amount payable from the Bargaining Unit Pension
Plan, plus (ii) interest if the Special Retirement Payment from the
Bargaining Unit Pension Plan was made more than three months before
the Special Retirement Payment from the New Bargaining Unit Pension
Plan, as provided in the New Bargaining Unit Pension Plan.
(y) Not Eligible on the Closing Date. Any Bargaining Unit
Kaiser Employee who is not eligible on the Closing Date to retire
under the Bargaining Unit Pension Plan and receive the Special
Retirement Payment and who, upon his retirement from the Company, is
eligible for a Special Retirement Payment under the New Bargaining
Unit Pension Plan, shall receive a Special Retirement Payment from the
New Bargaining Unit Retirement Plan less the lump sum amount referred
to in Section 6.2(c)(iii).
(iii) Special Disability Supplements. Notwithstanding any other
provision in the Agreement, the amount of any special disability
supplements payable to any Bargaining Unit Kaiser Employee under the New
Bargaining Unit Pension Plan as a result of retiring under a provision
similar to Section 2.2 of the Bargaining Unit Pension Plan in effect on the
Closing Date shall be equal to the disability supplement determined under
the New Bargaining Unit Pension Plan multiplied by a fraction the numerator
of which is the Bargaining Unit
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Kaiser Employee's years of service with the Company after the Closing
Date (as determined under the New Bargaining Unit Pension Plan before
giving effect to the last sentence in Section 6.6(a)(i)) and the
denominator of which is the Employee's years of service with the Company
after the Closing Date and Kaiser before the Closing Date (as determined
under the applicable Plan and, in the case of the New Bargaining Unit
Pension Plan, before giving effect to the last sentence in Section
6.6(a)(i)).
(b) Pension Plan - Salaried Employees. Effective on the Closing
Date, each Salaried Kaiser Employee who is a participant in the Kaiser
Aluminum Salaried Employees Retirement Plan (the "KRP") and each Accuride
Employee who is a participant in the Phelps Dodge Retirement Plan (the
"Phelps Dodge Retirement Plan") shall cease to be an active participant in
such Plan and shall be eligible to commence participation in a defined
benefit-type plan, intended to qualify under Section 401(a) of the Code
established by the Company (the "New Salaried Pension Plan"), the terms of
which (but not the form) will be substantially similar to those in the KRP
as of the date hereof provided, however, that the special 70/80 benefit
contained in the Phelps Dodge Retirement Plan shall be included in the New
Salaried Pension Plan and the "full early retirement" provision will only
apply to Kaiser Employees. The New Salaried Pension Plan will recognize
the service of each Salaried Employee with Kaiser and Accuride, as the case
may be, prior to the Closing Date, to the extent such service was
recognized under the terms of the KRP and the Phelps Dodge Retirement Plan,
for all purposes, including eligibility to participate, eligibility for
benefits and calculating the amount of benefits subject to any applicable
non-discrimination requirements of the Code. Notwithstanding the
foregoing, the amount of any benefit payable to a Salaried Employee from
the New Salaried Pension Plan shall be reduced by the amount of any benefit
payable to such Employee from the KRP or the Accuride Pension Plan, as the
case may be.
(c) 401(k) Plan - Bargaining Unit Employees. Effective on the
Closing Date, each Bargaining Unit Kaiser Employee who is a participant in
the Kaiser Aluminum Hourly Employee Savings Plan (the "Bargaining Unit
401(k) Plan") shall cease to be an active participant in the Bargaining
Unit 401(k) Plan and, within
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90 days following the Closing Date, shall be eligible to commence
participation in a plan intended to qualify under Sections 401(a) and
401(k) of the Code, to be established by the Company (the "New
Bargaining Unit 401(k) Plan"), the terms of which will be substantially
similar to those of the Bargaining Unit 401(k) Plan as in effect on the
date hereof, including the same investment options available under the
Bargaining Unit 401(k) Plan on the date hereof. As soon as practicable
after the Closing Date, Kaiser shall have its Bargaining Unit 401(k)
Plan transfer, in one or more transfers, an amount in cash equal to the
account balances of the Bargaining Unit Kaiser Employees in such plan to
the New Bargaining Unit 401(k) Plan in accordance with the legal
requirements of ERISA. In the event any Bargaining Unit Kaiser Employee
has an outstanding loan under the Bargaining Unit 401(k) Plan on the
Closing Date, upon receipt of the appropriate payroll authorization
form, the Company shall deduct from the monthly pay of such Employee,
until the transfer of such loan is completed, the amount of the loan
payment and transmit such monthly payment to the Bargaining Unit 401(k)
Plan. In the event any Bargaining Unit Kaiser Employee returns to
Kaiser, the Company shall have its New Bargaining Unit 401(k) Plan
transfer, in one or more transfers, an amount in cash equal to the
account balances of such Employee in the New Bargaining Unit 401(k) Plan
to the Bargaining Unit 401(k) Plan in accordance with the legal
requirements of ERISA. All matching or other contributions to the
Bargaining Unit Kaiser Employees' accounts under the Bargaining Unit
401(k) Plan required to be made by Kaiser on account of the period
through the Closing Date shall be made by Kaiser within the time
prescribed by law.
(d) 401(k) Plan - Salaried Employees. Effective on the Closing Date,
each Salaried Kaiser Employee who is a participant in the Kaiser Aluminum
Supplemental Savings and Retirement Plan (the "Kaiser 401(k) Plan") and
each Accuride Employee who is a participant in the Phelps Dodge Employee
Savings Plan (the "Phelps Dodge 40l(k) Plan") shall cease to be an active
participant in such Plans and, within 90 days following the Closing Date,
shall commence participation in a defined contribution-type plan, intended
to qualify under Section 401(a) and 401(k) of the Code, established by the
Company (the "New 401(k) Plan"), the substantive features of which are
substantially similar to the
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substantive features of the Kaiser 401(k) Plan as in effect on the date
hereof, including the same investment options and matching contribution
formula. As soon as practicable after the Closing Date, Kaiser shall
have its Kaiser 401(k) Plan transfer (in one or more transfers including
subsequent transfers of matching contributions, if any, promptly after
they have been contributed to the Kaiser 401(k) Plan) an amount in cash
equal to the account balances of the Salaried Kaiser Employees in such
plan to the New 401(k) Plan in accordance with the legal requirements of
ERISA. As soon as practicable after the Closing Date, Accuride shall
have the Phelps Dodge 401(k) Plan transfer (in one or more transfers
including subsequent transfers of matching contributions, if any,
promptly after they have been contributed to the Phelps Dodge 401(k)
Plan) an amount in cash equal to the account balances of those Accuride
Employees in such plan who elect a transfer to the New 401(k) Plan, in
accordance with the legal requirements of ERISA. In the event any
Kaiser Salaried Employee or Accuride Employee has an outstanding loan
under the Kaiser 401(k) Plan or the Phelps Dodge 401(k) Plan on the
Closing Date upon receipt of the appropriate payroll deduction form, the
Company shall deduct from the monthly pay of such Employee each month,
until the transfer of such loan is completed, the amount of the loan
payment and transmit such monthly payment to the applicable plan. All
matching or other contributions to the Salaried Employees' accounts
under the Kaiser 40l(k) Plan and the Accuride 401(k) Plan required to be
made by Kaiser or Accuride, as the case may be, on account of the period
through the Closing Date shall be made by Kaiser or Accuride, as the
case may be, within the time prescribed by law.
(e) Welfare Benefits - Bargaining Unit Kaiser Employees. Coverage
for the Bargaining Unit Kaiser Employees under the welfare and fringe
benefits plans or programs maintained by Kaiser, including but not limited
to life insurance, medical and dental plans, shall continue until the
Closing Date and shall be the responsibility of Kaiser until such date.
Except as provided in Section 6.6(g) of this Agreement, effective on the
Closing Date, the Bargaining Unit Kaiser Employees (other than the Fully
Eligible Kaiser Employees and the Partially Eligible Kaiser Employees who
have elected Kaiser Retiree Coverage in lieu of coverage under the
Company's medical and life insurance
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plans) shall participate in medical, dental, and life insurance plans
maintained by the Company, providing comparable coverage to that in
effect under Kaiser's plans on the date hereof. Notwithstanding the
foregoing, and whether or not such Employee has elected Kaiser Retiree
Coverage, each Bargaining Unit Kaiser Employee shall, effective as of
the Closing Date, participate (i) in a dental plan maintained by the
Company providing comparable coverage to the dental plan in effect under
Kaiser's dental plan on the date hereof, and (ii) in the medical and
life insurance plans maintained by the Company referred to in this
Section 6.6(e) until the effective date of their election for Kaiser
Retiree Coverage. Notwithstanding the foregoing, Kaiser shall be
responsible for the payment of benefits under applicable worker's
compensation laws for claims for continuing treatment which are incurred
on or after the Closing Date in respect of any accident or illness which
initially occurred prior to the Closing Date.
(f) Welfare Benefits - Salaried Employees. Coverage for the Salaried
Employees under the welfare and fringe benefit plans or programs maintained
by Kaiser and Accuride, including but not limited to life insurance,
severance, medical, dental, vision and long-term disability, shall continue
until the Closing Date, and shall be the responsibility of Kaiser and
Accuride, as the case may be, until such date. Except as provided in
Section 6.6(g) of the Agreement, effective on the Closing Date, the
Salaried Employees shall participate in welfare and fringe benefit plans
maintained by the Company providing substantially comparable coverage to
that in effect under the Kaiser Plans as of the date hereof, provided,
however, that the Company shall not be required to establish a flexible
benefits plan. Notwithstanding the foregoing, Kaiser and Accuride shall be
responsible for the payment of benefits based on occurrences prior to the
Closing Date except that the Company shall be responsible for the payment
of benefits for claims for continuing treatment which are incurred on or
after the Closing Date in respect of any accident or illness, which
initially occurred prior to the Closing Date other than workmen's
compensation laws.
(g) Post-Retirement Medical and Life Insurance Benefits. (i)
Notwithstanding any other provision in this Agreement or any Ancillary
Agreement, the Company
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shall provide post-retirement medical and life insurance coverages, in a
manner and form substantially similar to the Kaiser Retiree Coverage in
effect as of the Closing Date, to all Kaiser Employees other than Fully
Eligible Kaiser Employees and Partially Eligible Kaiser Employees who
have elected Kaiser Retiree Coverage in lieu of coverage under the
Company's medical and life insurance plans. In addition, the Company
shall recognize for all purposes under such post-retirement medical and
life insurance coverages all service of each such Kaiser Employee with
Kaiser prior to the Closing Date to the extent credited under the Kaiser
Retiree Coverage program as of the Closing Date. In the event there is
ever a question as to whether such Company provided post-retirement
medical coverage is primary or secondary to any Kaiser Retiree Coverage
that may be available, such Company provided post-retirement medical
coverage shall always be considered primary unless the individual
elected Kaiser Retiree Coverage in lieu of coverage under the Company's
medical and life insurance plans.
(ii) All Fully Eligible Kaiser Employees (who have not elected Kaiser
Retiree Coverage) shall, upon their retirement from the Company, cease
participation in the Company's medical and welfare plans, except as
otherwise required by law.
(h) Effective on the Closing Date, each Bargaining Unit Kaiser
Employee who is a participant in the Kaiser Aluminum Erie SUB Plan ("Kaiser
SUB Plan") shall cease to be a participant in the Kaiser SUB Plan and shall
commence participation in a supplemental unemployment benefits plan
established by the Company (the "Company SUB Plan"), the substantive
provisions of which shall be identical to the substantive provisions of the
Kaiser SUB Plan as in effect on the date hereof except as noted in the next
sentence. The Company agrees that (i) the initial Maximum Benefit Limit
under the Company SUB Plan shall be the product of the hours worked
determined under Section 2.7(v)(a) multiplied by 23 cents, (ii) the
Available Benefit Limit for the first month for which the SUB Plan is in
effect shall equal the amount determined under Section 2.7(v), and (iii)
the Available Benefit Limit under the Company SUB Plan for subsequent
months after the Closing Date shall be adjusted as provided in the Company
SUB Plan. Hours worked for Kaiser shall be considered to be hours worked
for the Company in calculating the Maximum
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Benefit Limit and Available Benefit Limit under the SUB Plan.
(i) Effective on the Closing Date, each Salaried Kaiser Employee and
each Accuride Employee shall cease to be a participant in the Kaiser
Aluminum Termination Payment and Benefits Plan Continuation Policy (the
"Kaiser Severance Plan") and the Accuride Corporation Separation Pay Plan
(the "Accuride Severance Plan"), respectively, and shall commence
participation in a severance plan established by the Company (the "Company
Severance Plan"), the provisions of which shall be substantially the same
as the provisions of the Kaiser Severance Plan in effect on the date
hereof. Such Company Severance Plan shall recognize for all purposes the
service of each Kaiser Salaried Employee with Kaiser and of each Accuride
Employee with Accuride to the extent such service was recognized, as of the
Closing Date, under the terms of the Kaiser severance plan or the Accuride
severance plan, as applicable.
(j) Vacation. The Company shall establish vacation programs for
Kaiser and Accuride Employees with provisions substantially the same as
Kaiser's vacation programs in effect on the date hereof. The Company and
its vacation programs shall have full responsibility for paying all
vacation benefits referred to in Section 2.7(iv) to each such Employee to
the extent of vacation not taken prior to the Closing Date. Such Company
vacation programs shall recognize for all purposes the service of each
Kaiser Employee with Kaiser and of each Accuride Employee with Accuride to
the extent such service was recognized, as of the Closing Date, under the
Kaiser vacation programs or the Accuride vacation program, as applicable.
(k) Fees and Disbursements. The Company and not Accuride or Kaiser
shall be responsible for the fees and disbursements of Seyfarth, Shaw,
Fairweather & Geraldson relating to the negotiations with the Union in
connection with the transactions contemplated herein.
(l) Kaiser Retiree Coverage Payment. The Company shall pay Kaiser on
the tenth day following the end of each month an amount equal to (i)
Kaiser's cost for such month of providing Kaiser Retiree Coverage to each
Fully Eligible Kaiser Employee and each Partially Eligible Kaiser Employee
who has elected Kaiser Retiree
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Coverage in lieu of medical and life insurance coverage under the
Company's medical and welfare plans, less (ii) any employee
contributions received by Kaiser from each such Employee relating to
Kaiser Retiree Coverage for such month. Such payments by the Company
for each such Employee shall be made to Kaiser commencing for the month
in which the Employee's election of Kaiser Retiree Coverage first
becomes effective and continuing each month thereafter until and
including the month in which each such Employee retires from the Company
under the terms of the New Bargaining Unit Pension Plan, irrespective of
when such Employee elects his pension under the New Bargaining Unit
Pension Plan to commence, or dies. For the purposes of this Section
6.6(l), Kaiser's "cost" shall be determined on the same basis as the
"cost" of any other hourly Kaiser retiree who retired from the Erie
location with the same level of coverage.
6.7 Speedline Agreements. As soon as practicable, but in no event
later than 30 days following the Closing, Accuride shall use its best efforts to
cause Speedline Alumina S.p.A. ("Speedline") to authorize Accuride to transfer
and assign all of its right, title and interest in and to the Speedline
Agreements to the Company on commercially reasonable terms (the "Assignment").
A representative of the Company selected by Kaiser shall be entitled to
participate in all discussions between Accuride and Speedline relating to the
Assignment and the Speedline Agreements. If Speedline does not authorize the
Assignment, Accuride shall terminate the Speedline Agreements at the first
opportunity available to it under the terms of the Speedline Agreements,
provided that the Company at that time has the capacity to manufacture or to
arrange for the manufacture of cast aluminum wheels on a commercially reasonable
basis at a level provided to Accuride under the Speedline Agreements; provided,
however, that at the time of any such opportunity to terminate Kaiser and
Accuride shall reconsider the requirements imposed by this sentence in light of
the current business plans of the Company. If Speedline authorizes the
Assignment, Accuride and the Company shall enter into a separate agreement to
set forth their respective rights and obligations relating to the Assignment,
which shall include such terms and conditions as the Company and Accuride shall
reasonably and in good faith determine, taking into consideration, among other
factors, the rights and obligations associated with Accuride's
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interest in the Speedline Agreements; it being understood that any such
agreement shall provide for the reimbursement to Accuride of the amount of
the Advance Payment (as defined in the letter, dated June 1, 1996, between
Speedline and Accuride (the "Speedline Letter")) remaining to be paid under
the Speedline Letter and any Bonus (as defined in the Speedline Letter) paid
by Speedline thereunder, as such amounts are paid by Speedline from time to
time. Any determination by the Company to accept the Assignment shall be
subject to the sole approval of Kaiser. If Kaiser determines the Company
shall not accept the Assignment, Accuride shall be entitled to maintain its
relationship with Speedline upon terms and conditions no more favorable than
those offered and available to the Company pursuant to the Assignment;
provided, however, that nothing herein shall prevent Accuride from fulfilling
its contractual obligations under the Speedline Agreements. Until a transfer
of the Speedline Agreements to the Company, (a) to the extent prohibited by
the Speedline Agreements, the Company shall not design, manufacture, market
or sell cast aluminum wheels and (b) Accuride shall be permitted to fulfill
its contractual obligations under the Speedline Agreement. Subject to the
foregoing provisions of this Section 6.7, the Company shall permit Accuride
to use, at no cost or charge of any kind to Accuride, the Accuride
Intellectual Property contributed or licensed to the Company pursuant to this
Agreement and the Accuride License Agreement for the purpose of marketing,
selling or leasing Joint Venture Products manufactured and sold pursuant to
the Speedline Agreements.
6.8 Accuride Excluded Contracts. With respect to each of the Accuride
Excluded Contracts and the Accuride Contracts, Accuride covenants as follows:
(a) Accuride shall not amend, modify, terminate or waive any of the
terms or conditions of any of the Accuride Excluded Contracts or any of the
Accuride Contracts, insofar as such terms or conditions relate to aluminum
wheels or to the extent that any amendment, modification, termination or
waiver of any terms or conditions of any Accuride Excluded Contract or
Accuride Contact relating to steel wheels could affect the relevant terms
and conditions relating to aluminum wheels, without, in each case, the
prior approval of the General Partner pursuant to Section 6.4 of the
Limited Liability Company Agreement.
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(b) (i) Any renewal or extension following the Closing Date of any of
the Accuride Excluded Contracts or the Accuride Contracts shall be
negotiated and entered into between the Joint Venture and the relevant
contracting party and (ii) any new contract, arrangement or agreement
entered into following the Closing Date with respect to aluminum wheels
shall be negotiated and entered into between the Joint Venture and the
relevant contracting party.
(c) Accuride shall use its best efforts to transfer to the Joint
Venture by December 31, 1997 (i) the Comprehensive Supply Agreement dated
as of May 1, 1996 between Accuride and Navistar International
Transportation Corporation ("Navistar") and (ii) the Three Year Service
Agreement dated as of September 25, 1996 between Accuride and Navistar.
Accuride shall transfer all of the other Accuride Excluded Contracts other
than the Speedline Agreements, and all of its remaining right, title and
interest in, to and under the Accuride Contracts to the Joint Venture no
later than December 31, 1997.
ARTICLE VII.
INDEMNIFICATION
7.1 Indemnification. (a) Kaiser shall indemnify and hold harmless
each of the Company, Accuride, Accuride Sub and their respective control persons
(as such term is defined in the Securities Act of 1933, as amended, and the
rules and regulations thereunder), directors, officers, employees and agents,
and the successors and assigns of each of the foregoing, from and against any
and all losses, liabilities, damages, claims, costs and expenses whatsoever
(including without limitation legal and consultant fees and expenses and any
court costs), as incurred, whether or not resulting from third party claims
(each, a "Claim," and collectively, "Claims"), arising out of, resulting from or
attributable to (i) the conduct of the Business by Kaiser, and the ownership,
possession and use of the Kaiser Assets, the Kaiser Included Inventory, the
Kaiser Excluded Assets and Excluded Inventory and the Real Property, prior to
the Closing Date (other than an Assumed Liability), including without limitation
(A) all Claims relating to Kaiser Employees (including workers' compensation,
benefits and
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compensation), to the extent attributable to services or activities
preceding the Closing in connection with their employment by Kaiser (including,
without limitation, such conditions to the extent shown on the Medical
Examinations), except to the extent of the liabilities underlying the Claims
assumed by the Company or its benefit plans pursuant to Article VI hereof,
(B) all Taxes payable with respect to the Business as conducted by Kaiser prior
to the Closing or the ownership of the Kaiser Assets, the Kaiser Included
Inventory, the Kaiser Excluded Inventory or the Real Property that are
attributable to the periods ending prior to the Closing, (C) subject to clause
(d) below, all product liability and warranty claims for products sold by Kaiser
prior to the Closing Date, (D) all obligations for the payment for products
purchased, or services received, prior to the Closing Date, pursuant to the
Kaiser Contracts or arising out of the accounts payable of Kaiser outstanding at
the Closing Date, (E) all Claims arising out of any breach or asserted breach of
any Kaiser Contract or customer relationship, or any related tort claim, in each
case attributable to conduct preceding the Closing, and (F) all Claims for
infringement by Kaiser of rights of others in the Kaiser Intellectual Property
attributable to conduct preceding the Closing; (ii) any and all existing and
future environmental Claims including, without limitation, any costs of clean-up
associated with the Real Property or the Erie Facilities, or any costs of
cleanup associated with other properties to the extent it is alleged that
contamination of other properties is a result of activities at the Real Property
or the Erie Facilities, (A)(1) except to the extent such claims, losses and
liabilities are solely caused by or solely arise from any action by the Company
or in connection with the conduct of the Business of the Company, in which case
the Company shall be solely responsible; or (2) except to the extent that Kaiser
can demonstrate that any claims, losses and liabilities associated with
contamination are due solely to the Company's failure to maintain and use the
Pits in accordance with Section 6.3 of this Agreement, in which case Kaiser and
the Company shall be responsible for their appropriate share of such claims,
losses and liabilities; or (3) except to the extent that claims, losses and
liabilities, other than those associated with contamination of the Pits, arise
from both the actions of the Company and Kaiser, or the conduct of the Business
by either of them, in which case both the Company and Kaiser shall be
responsible for their appropriate share of such claims, losses and liabilities;
or (B) to the extent that any fines or penalties are assessed or threatened
against the Company during the period in which the Environmental
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Compliance Plan is being implemented, Kaiser shall indemnify the Company for
such fines or penalties, including any associated legal and consultant fees
and expenses and any court costs, in an amount not to exceed $1,000,000;
(iii) all Claims relating to (A) severance benefits (constructive or
otherwise) by a Kaiser Employee arising out of or in connection with the
Transactions; (B) any Claims for the Special Retirement Payments under the
Bargaining Unit Pension Plan; (C) any Claims for Kaiser Retiree Coverage by a
Fully Eligible Kaiser Employee or a Partially Eligible Kaiser Employee who
elected Kaiser Retiree Coverage in lieu of coverage under the Company's
medical and life insurance plans for active employees; (iv) all Claims
attributable to the Kaiser Excluded Assets and Excluded Inventory; (v) all
Claims attributable to the conduct by Kaiser of businesses other than the
Business at the Erie Property and the Erie Facilities; (vi) any breach by
Kaiser of any of its covenants or obligations contained in this Agreement or
in any of the other Ancillary Agreements to which it is a party; and (vii)
any breach by Kaiser of, or any inaccuracy in, any representation or warranty
made by Kaiser in this Agreement or in any of the other Ancillary Agreements
to which it is a party; provided that Kaiser shall not be responsible for any
Claims pursuant to clause (ii) of this Section 7.1(a) which arise out of,
result from or are attributable to any breach under the Erie Lease Agreement
by the Company.
(b) Accuride shall indemnify and hold harmless each of the Company,
Kaiser and their respective control persons (as such term is defined in the
Securities Act of 1933, as amended, and the rules and regulations thereunder),
directors, officers, employees and agents, and the successors and assigns of
each of the foregoing, from and against any and all Claims arising out of,
resulting from or attributable to (i) the conduct of the Business by Accuride,
and the ownership, possession and use of the Accuride Assets and the Accuride
Retained Inventory prior to the Closing Date (other than an Assumed Liability),
including without limitation (A) all Claims relating to Employees of Accuride
(including workers' compensation, benefits and compensation), to the extent
attributable to services or activities preceding the Closing in connection with
their employment by Accuride, except those Claims assumed by the Company
pursuant to Article VI hereof, (B) all Taxes payable with respect to the
Business as conducted by Accuride prior to the Closing or the ownership of the
Accuride Assets or the Accuride Retained Inventory that are attributable to the
periods ending prior to the Closing, (C) subject to clause
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(d) below, all product liability and warranty claims for products sold by
Accuride prior to the Closing Date, (D) all obligations for the payment for
products purchased or services received pursuant to the Accuride Contracts or
arising out of the accounts payable of Accuride outstanding at the Closing
Date, (E) all Claims arising out of any breach or asserted breach of any
Accuride Contract or customer relationship, or any related tort claim, in
each case attributable to conduct preceding the Closing and (F) all Claims
for infringement by Accuride of rights of others in the Accuride Intellectual
Property attributable to conduct preceding the Closing; (ii) any breach by
Accuride of any of its covenants or obligations contained in this Agreement
or in any of the other Ancillary Agreements to which it is a party; and (iii)
any breach by Accuride of, or any inaccuracy in, any representation or
warranty made by Accuride in this Agreement or in any of the other Ancillary
Agreements to which it is a party.
(c) The Company shall indemnify and hold harmless Kaiser, Accuride,
Accuride Sub and their respective control persons (as such term is defined in
the Securities Act of 1933, as amended, and the rules and regulations
thereunder), directors, officers, employees and agents, and the successors and
assigns of each of the foregoing, from and against any and all Claims arising
out of, resulting from or attributable to (i) the conduct of the Business by the
Company on and after the Closing Date; (ii) any breach by the Company of any of
its covenants or obligations contained in this Agreement or in any of the other
Ancillary Agreements to which it is a party; and (iii) any breach by the Company
of, or any inaccuracy in, any representation or warranty made by the Company in
any of the Ancillary Agreements to which it is a party.
(d) Notwithstanding the foregoing, all product liability and warranty
Claims arising out of, resulting from or attributable to Joint Venture Products
sold by Kaiser and Accuride prior to the Closing Date shall be apportioned
between Accuride and Kaiser in accordance with the Amended and Restated Aluminum
Supply Agreement, dated as of October 30, 1995, between Kaiser and Accuride (the
"Amended and Restated Aluminum Supply Agreement").
7.2 Indemnification Procedures. For purposes of this Section 7.2, the
party seeking indemnification shall be known as the "Indemnified Party" and the
party from whom indemnification is sought shall be known as the "Indemnifying
Party." As soon as reasonably practicable after receipt by
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an Indemnified Party of notice of any Claim in respect of which an
Indemnifying Party may be liable under Section 7.1, the Indemnified Party
shall give notice thereof to the Indemnifying Party, setting forth in
reasonable detail the facts and circumstances pertaining thereto, but the
failure to give such notice shall not relieve the Indemnifying Party of its
obligations under this Article 7 unless and to the extent that the
Indemnifying Party is prejudiced by such failure. In the event that the
Claim arises out of or results from a claim by any third party, the
Indemnified Party shall permit the Indemnifying Party, at its option and
expense, to assume the defense of, and subject to the consent of the
Indemnified Party, which shall not be unreasonably withheld, in each case
settle or otherwise dispose of such claim by counsel reasonably satisfactory
to the Indemnified Party, provided that the Indemnified Party may participate
in such defense by counsel of its own choice, but the fees, expenses and
other charges of such counsel will be solely for the account of the
Indemnified Party, unless: (a) the employment of counsel by the Indemnified
Party has been authorized in writing by the Indemnifying Party, (b) there is
a conflict or potential conflict (based on advice of counsel to the
Indemnified Party reasonably acceptable to the Indemnifying Party) between
the Indemnified Party and the Indemnifying Party, or (c) the Indemnifying
Party has not in fact employed counsel to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, and provided, further, that the Indemnified Party shall be entitled
to control such defense jointly with the Indemnifying Party in the case of
any litigation referred to in clause (b) of the immediately preceding proviso
to this sentence. Without the prior written consent of each Indemnified
Party (or of each Indemnifying Party if the Indemnified Party is defending
such third party claim), which consent shall not be unreasonably withheld,
the Indemnifying Party (or Indemnified Party, as the case may be) shall not
consent to the entry of any judgment or enter into any settlement that does
not include an unconditional release of each Indemnified Party (or
Indemnifying Party) from all liabilities in respect of such Claims. The
Indemnifying Party shall pay for any Claim promptly in cash once its
responsibility has been established.
7.3 Third-Party Beneficiaries. Any Indemnified Party not party to
this Agreement shall be a third-party beneficiary of this Agreement for purposes
of this Article VII.
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ARTICLE VIII.
MISCELLANEOUS
8.1 Termination. This Agreement may be terminated at any time prior
to the Closing:
(i) By the written agreement of Accuride and Kaiser;
(ii) By either Accuride or Kaiser upon notice to each other party if
the Closing has not occurred on or prior to May 1, 1997, or such later date
as may be approved by Accuride and Kaiser;
(iii) By either Accuride or Kaiser after written notice to the party
in breach if there has been a material breach of any representation,
warranty, covenant or agreement on the part of such party in this Agreement
or in any other Ancillary Agreement which is material to the Transactions
and, if it is susceptible of cure, it is not cured within 45 days.
Upon any termination of this Agreement, the parties hereto shall have
no liability to each other except for liabilities accrued on or prior to the
date of such termination; provided that if such termination shall result from
the breach by a party of the representations, warranties, covenants or
agreements of such party, such party shall be fully liable for any and all
damages, costs and expenses (including reasonable counsel fees) sustained or
incurred by the other parties to this Agreement and provided, further, that the
provisions contained in Articles VII and VIII hereof shall survive any
termination of this Agreement.
8.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
8.3 Arbitration. (a) Any dispute, controversy or claim arising out
of, relating to or in connection with, this Agreement or the breach, validity or
termination thereof shall be finally settled by arbitration. The arbitration
shall be conducted in accordance with the American Arbitration Association's
commercial arbitration rules in effect at the time of arbitration, except as
modified herein or by mutual agreement of the parties. The seat of the
arbitration shall be New York, New York; provided that the arbitrators
74
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may hold hearings in such other locations as the arbitrators determine to be
most convenient and efficient for all the parties under the circumstances.
Notwithstanding anything to the contrary in Section 8.2, the arbitration
shall be governed by the Federal Arbitration Act.
(b) The arbitration shall be conducted by three arbitrators. One
arbitrator shall be appointed by each of the parties hereto that is party to the
dispute, provided that if only two such parties are party to the dispute, then
the two arbitrators so selected shall appoint the third arbitrator, and further
provided that if any party to the dispute fails to make a timely appointment, or
if the initial two arbitrators cannot agree on the third arbitrator within ten
days of their appointment, any party hereto may request the American Arbitration
Association to appoint such arbitrator(s).
(c) Any award rendered by the arbitrators shall be in writing, state
the reasons for the award and be final and binding upon the parties. The award
may include an award of costs, including reasonable attorneys' fees and
disbursements. Judgment upon the award rendered may be entered in any court
having jurisdiction thereof or having jurisdiction over the relevant parties or
their assets.
8.4 Survival. The representations and warranties of the parties
hereto contained in this Agreement or in any other Ancillary Agreement, or
otherwise made in writing in connection with the Transactions, shall survive
until three years after the Closing, provided that the representations and
warranties contained in Sections 3.9, 3.11, 4.8 and 4.9 shall survive until 90
days after the expiration of the applicable statute of limitations, and the
representations and warranties contained in Section 3.12 shall survive
indefinitely. Any due diligence or investigation conducted by or on behalf of
any party hereto, or information furnished by such party or representative
thereof in connection therewith shall not limit or in any way prejudice the
right of such party to rely on the representations and warranties set forth in
Articles III and IV.
8.5 Entire Agreement; Amendment; Assignment, etc. This Agreement,
together with all of the other Ancillary Agreements, embodies the entire
agreement and understanding between the parties relating to the subject matter
hereof and thereof, and supersedes any prior oral or written agreements,
commitments or terms, other than Section 13 of the letter, dated September 17,
1996, from Accuride to Kaiser,
75
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regarding the Joint Venture. Neither this Agreement nor any of the terms
hereof may be amended, modified or waived, supplemented or terminated other
than by a document in writing, signed by the party or parties against which
the enforcement of such amendment, modification, waiver, supplement or
termination is sought. This Agreement shall be binding upon the respective
successors and permitted assigns of the parties hereto. This Agreement shall
not be assignable or otherwise transferable by any party without the prior
written consent of the other parties and any attempt to so assign or transfer
this Agreement without such consent shall be void and of no effect.
8.6 Notices. Any notice or other communication required or permitted
to be given hereunder or for the purposes hereof to any party shall be in
writing and shall be sufficiently given if (i) delivered personally, (ii) mailed
by certified or registered mail, postage prepaid, (iii) transmitted by facsimile
(and confirmed by mail) or (iv) sent by next-day or overnight mail or delivery
to:
(a) Accuride at:
Accuride Corporation
2315 Adams Lane/P.O. Box 40
Henderson, Kentucky 42420
Attention: William P. Greubel
Tel: (502) 826-5000
Fax: (502) 827-7601
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Attention: James C. Scoville, Esq.
Tel: (212) 909-6655
Fax: (212) 909-6836
(b) Kaiser at:
Kaiser Aluminum & Chemical Corporation
26957 Northwestern Highway Drive
Suite 200
Southfield, MI 48034
Attn: Jack A. Hockema
Tel: (810) 352-4630
Fax: (810) 352-4635
76
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with a copy to each of:
Kaiser Aluminum & Chemical Corporation
5847 San Felipe
Suite 2600
Houston, Texas 77057
Attn: General Counsel
Tel: (713) 267-3777
Fax: (713) 267-3702
and
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
Attention: Howard A. Sobel, Esq.
Tel: (212) 715-9100
Fax: (212) 715-8000
(c) the Company at:
AKW L.P.
c/o AKW General Partner L.L.C.
1015 E. 12th Street
Erie, PA 16503
Tel: (814) 454-4571
Fax: (814) 452-0809
or at such other address or to such other person's attention as the party to
whom such notice is to be given shall have last notified the party giving the
same in the manner provided in this Section. Any notice so delivered to the
party to whom it is addressed shall be deemed to have been given and received
(a) if by personal delivery, on the day of such delivery, (b) if by certified
or registered mail, on the seventh day after mailing thereof, (c) if by
facsimile, the day on which such facsimile was sent or (d) if by next-day or
overnight mail delivery, on the day delivered, provided that if any such day
is not a Business Day then the notice shall be deemed to have been given and
received on the Business Day next following such day.
8.7 Expenses. (a) Except as provided in Section 2.6 and clause (b) of
this Section 8.7, each party hereto shall pay all its own costs and expenses
incident to this Agreement and the transactions contemplated hereby, including
legal and accounting fees and disbursements.
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(b) Kaiser or Accuride, as applicable, shall pay all sale, transfer
and other similar Taxes in connection with the sale, transfer or assignment of
assets by Kaiser or Accuride, as applicable, to the General Partner or the
Company pursuant to this Agreement and file all Tax Returns relating thereto,
provided that Kaiser shall pay all such Taxes relating to the Kaiser Included
Inventory. The parties shall cooperate with the other parties in obtaining any
exemption or reduction of such Taxes available under applicable tax law and in
preparing and filing such Tax Returns.
8.8 Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, the invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that provision, in any
other competent jurisdiction.
8.9 No Third-Party Beneficiaries. Nothing in this Agreement will be
construed as giving any Person, other than the parties hereto and their
successors and permitted assigns, any right, remedy or claim under or in respect
of this Agreement or any provision hereof, except as specifically provided for
herein.
8.10 Section Headings; Counterparts; etc. The section headings of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument.
8.11 Further Assurances. Each party hereto shall execute and deliver
such additional documents and perform such acts as are reasonably requested by
the other parties in order fully to effect the intent of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
ACCURIDE CORPORATION
By /s/ William P. Greubel
---------------------------
Name: William P. Greubel
Title: President
KAISER ALUMINUM & CHEMICAL CORPORATION
By /s/ Daniel J. Rinkenberger
------------------------------
Name: Daniel J. Rinkenberger
Title: Assistant Treasurer
AKW General Partner L.L.C.
By /s/ William J. Curtin
---------------------------
Name: William J. Curtin
Title: Vice President
ACCEPTED AND AGREED:
AKW L.P.
By: AKW General Partner L.L.C.,
its General Partner
By /s/ William J. Curtin
-----------------------------
Name: William J. Curtin
Title: Vice President
Date:
<PAGE>
EXHIBIT 10.10
LIMITED PARTNERSHIP AGREEMENT OF
AKW L.P.
among
AKW GENERAL PARTNER L.L.C.,
ACCURIDE VENTURES, INC.,
ACCURIDE CORPORATION, in its capacity
as guarantor of Accuride Ventures, Inc.,
and
KAISER ALUMINUM & CHEMICAL CORPORATION
Dated as of May 1, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 FORMATION OF PARTNERSHIP . . . . . . . . . . . . . . . . . . . 9
2.1 Formation. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2 Partnership Name . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Principal Business Office, Registered Office and
Registered Agent . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Business Purposes. . . . . . . . . . . . . . . . . . . . . . . 9
2.5 The Certificate, Etc.. . . . . . . . . . . . . . . . . . . . . 9
2.6 Term of Partnership. . . . . . . . . . . . . . . . . . . . . . 10
2.7 Qualification in Other Jurisdictions . . . . . . . . . . . . . 10
2.8 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 3 CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Capital Contributions. . . . . . . . . . . . . . . . . . . . . 10
3.2 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Capital Account Maintenance. . . . . . . . . . . . . . . . . . 12
3.4 Withdrawals. . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 4 ALLOCATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.1 Allocations of Profit and Loss . . . . . . . . . . . . . . . . 12
4.2 Tax Allocations. . . . . . . . . . . . . . . . . . . . . . . . 12
4.3 Special Allocations. . . . . . . . . . . . . . . . . . . . . . 13
4.4 Restorative Allocations. . . . . . . . . . . . . . . . . . . . 14
4.5 Section 754 Election . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 5 DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Withholding. . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 Restricted Distributions . . . . . . . . . . . . . . . . . . . 16
ARTICLE 6 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.1 Management of the Partnership. . . . . . . . . . . . . . . . . 16
6.2 Limitations on Limited Partners. . . . . . . . . . . . . . . . 16
6.3 Duty of Good Faith . . . . . . . . . . . . . . . . . . . . . . 16
6.4 Environmental and Health and Safety Audits . . . . . . . . . . 17
6.5 Implementation; Further Assurances . . . . . . . . . . . . . . 17
ARTICLE 7 BOOKS; ACCOUNTING; TAX MATTERS; REPORTS. . . . . . . . . . . . 17
7.1 Books and Records. . . . . . . . . . . . . . . . . . . . . . . 17
7.2 Financial Statements . . . . . . . . . . . . . . . . . . . . . 17
7.3 Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.4 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . 18
7.5 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.6 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 8 RIGHTS AND OBLIGATIONS OF PARTNERS . . . . . . . . . . . . . . 21
8.1 Limited Liability. . . . . . . . . . . . . . . . . . . . . . . 21
8.2 Access to Information; Records . . . . . . . . . . . . . . . . 21
8.3 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . 21
<PAGE>
8.4 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 9 TRANSFERS OF INTERESTS; RIGHTS OF FIRST OFFER. . . . . . . . . 22
9.1 General Restriction. . . . . . . . . . . . . . . . . . . . . . 22
9.2 Right of First Offer . . . . . . . . . . . . . . . . . . . . . 22
9.3 Buy/Sell Option. . . . . . . . . . . . . . . . . . . . . . . . 23
9.4 Transfers to Affiliates. . . . . . . . . . . . . . . . . . . . 24
9.5 Substitution of a Limited Partner. . . . . . . . . . . . . . . 24
9.6 Nonrecognition of Certain Transfers. . . . . . . . . . . . . . 25
ARTICLE 10 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . 25
10.1 Events of Dissolution. . . . . . . . . . . . . . . . . . . . . 25
10.2 Liability for Wrongful Dissolution . . . . . . . . . . . . . . 26
10.3 Distributions to Partners. . . . . . . . . . . . . . . . . . . 26
10.4 Application of Assets. . . . . . . . . . . . . . . . . . . . . 26
10.5 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 11 CONFIDENTIAL INFORMATION; COVENANT NOT TO COMPETE. . . . . . . 27
11.1 Confidential Information . . . . . . . . . . . . . . . . . . . 27
11.2 Covenant Not To Compete. . . . . . . . . . . . . . . . . . . . 27
ARTICLE 12 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 28
12.1 Waiver, Amendment, Etc.. . . . . . . . . . . . . . . . . . . . 28
12.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.3 Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12.4 Word Meanings. . . . . . . . . . . . . . . . . . . . . . . . . 30
12.5 Binding Provisions . . . . . . . . . . . . . . . . . . . . . . 30
12.6 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . 30
12.7 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . 30
12.8 Separability of Provisions . . . . . . . . . . . . . . . . . . 31
12.9 Table of Contents; Headings. . . . . . . . . . . . . . . . . . 31
12.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 31
12.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 31
12.13 Survival of Certain Provisions . . . . . . . . . . . . . . . . 31
12.14 Specific Performance . . . . . . . . . . . . . . . . . . . . . 32
SCHEDULES
Schedule A Capital Contributions
Exhibit A Business Plan
- ii -
<PAGE>
AKW L.P.
LIMITED PARTNERSHIP AGREEMENT
LIMITED PARTNERSHIP AGREEMENT OF AKW L.P. (the "PARTNERSHIP"),
dated as of May 1, 1997, among AKW GENERAL PARTNER L.L.C., a Delaware limited
liability company (the "GENERAL PARTNER"), ACCURIDE VENTURES, INC., a Delaware
corporation ("ACCURIDE SUB") and wholly-owned subsidiary of Accuride
Corporation, a Delaware corporation ("ACCURIDE"), ACCURIDE CORPORATION, in its
capacity as guarantor of Accuride Sub, and KAISER ALUMINUM & CHEMICAL
CORPORATION, a Delaware corporation ("KAISER") (Accuride Sub and Kaiser are
sometimes hereinafter referred to individually as a "LIMITED PARTNER" and
collectively as "LIMITED PARTNERS").
W I T N E S S E T H:
WHEREAS, the General Partner, Accuride Sub and Kaiser desire to
form and capitalize the Partnership in order to engage in the Business (as
hereinafter defined);
WHEREAS, the Partnership is to be formed under the Delaware Revised
Uniform Limited Partnership Act, Del. Code Ann tit. 6, Sections 17-101 ET SEQ.
(as from time to time amended and including any successor statute of similar
import, the "ACT"), pursuant to a Certificate of Limited Partnership to be filed
with the office of the Secretary of State of the State of Delaware;
WHEREAS, the General Partner, Accuride and Kaiser have entered into
a Contribution Agreement, dated the date hereof (the "CONTRIBUTION AGREEMENT"),
pursuant to which the General Partner, Accuride (on behalf of Accuride Sub) and
Kaiser have agreed to contribute certain assets to capitalize the Partnership;
WHEREAS, Accuride Sub and Kaiser have entered into an Interest
Purchase Agreement, dated the date hereof (the "INTEREST PURCHASE AGREEMENT"),
pursuant to which Kaiser will sell a portion of its Interest (as hereinafter
defined) in the Partnership to Accuride Sub so that upon consummation of such
sale, each of Accuride Sub and Kaiser will have a 49% Interest in the
Partnership;
WHEREAS, the General Partner, Accuride Sub and Kaiser desire to set
forth their agreement as to the management of the Partnership, transfers of
Interests in the Partnership and certain other matters relating to the
Partnership;
NOW, THEREFORE, in consideration of the mutual covenants, and
subject to the terms and conditions, contained
<PAGE>
herein, in the Limited Liability Company Agreement between Accuride Sub and
Kaiser (the "LIMITED LIABILITY COMPANY AGREEMENT") and in the Contribution
Agreement, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings
set forth below or in the Section of this Agreement referred to below:
"ACCOUNTING PERIOD" means the period beginning on the day following
any Adjustment Date (or, in the case of the first Accounting Period, beginning
on the day of formation of the Partnership) and ending on the next succeeding
Adjustment Date.
"ACCURIDE" has the meaning given in the first paragraph hereof.
"ACCURIDE EXCLUDED CONTRACTS" has the meaning given in the
Contribution Agreement.
"ACCURIDE SUB" has the meaning given in the first paragraph hereof.
"ACT" has the meaning given in the recitals.
"ADJUSTMENT DATE" means (I) the last day of each Fiscal Year,
(II) the day before the date of admission of any substituted or additional
Partner, (III) the day before the date any Capital Contribution which is not
proportionate to the Partners' Interests is made or deemed to be made, (IV) the
day before the date a Partner ceases to be a partner of the Partnership, (V) the
day before the date of any distribution made or deemed to be made by the
Partnership which is not proportionate to the Partners' Interests or (VI) any
other date determined by the Partners as appropriate for a closing of the
Partnership's books.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with,
such Person. Control of any Person shall consist of the power to direct the
management and policies of such Person whether through the ownership of voting
securities or by contract or otherwise and shall be deemed to exist upon the
ownership of securities entitling the holder thereof to exercise more than 50%
of the voting power in the election of directors of such Person.
- 2 -
<PAGE>
"AGREEMENT" means this Limited Partnership Agreement, as it may be
amended, restated or supplemented from time to time as herein provided.
"ANCILLARY AGREEMENTS" means this Agreement, the Certificate, the
Contribution Agreement, the Interest Purchase Agreement and all other agreements
which are included in the definition of "Ancillary Agreements" in the
Contribution Agreement.
"BANKRUPTCY" means, with respect to any Partner, (i) the filing by
that Partner of a voluntary petition seeking liquidation, reorganization,
arrangement or readjustment, in any form, of its debts under Title 11 of the
United States Code or any other Federal or state insolvency law, or a Partner's
filing an answer consenting to or acquiescing in any such petition, (ii) the
making by that Partner of any assignment for the benefit of his creditors or
(iii) the expiration of 60 days after the filing of an involuntary petition
under Title 11 of the United States Code, an application for the appointment of
a receiver, trustee or custodian for the assets of that Partner, or an
involuntary petition seeking liquidation, reorganization, arrangement or
readjustment of its debts under any other Federal or state insolvency law,
provided that the same shall not have been vacated, set aside or stayed within
such 60-day period.
"BID" has the meaning given in Section 9.3.
"BOOK GAIN OR BOOK LOSS" means the gain or loss, as the case may
be, recognized by the Partnership for book purposes in any Accounting Period by
reason of any sale or other disposition (including any distribution to a
Partner) of any of the assets of the Partnership, computed by reference to the
Book Value of such assets as of the date of any such sale or other disposition
(including any such distribution), rather than by reference to the tax basis of
such assets as of such date, and each reference herein to "gain" or "loss" shall
be deemed to refer to Book Gain or Book Loss, rather than to tax gain or tax
loss, unless the context specifically requires otherwise.
"BOOK VALUE", as of any date, means the value at which the asset is
reflected on the books and records of the Partnership as of such date, the
initial Book Value of each asset being its cost to the Partnership, unless such
asset is contributed to the Partnership by a Partner in which case the initial
Book Value shall be the Fair Value of such asset, in all cases, with such Book
Value thereafter adjusted for Depreciation with respect to such asset (rather
than for the cost recovery deductions to which the Partnership is entitled for
federal income tax purposes with respect thereto), PROVIDED that the Book Value
of such asset shall not be reduced below zero. The Book Values of all assets of
the Partnership shall be adjusted in accordance with Section 1.704-
1(b)(2)(iv)(f) of the Treasury Regulations.
- 3 -
<PAGE>
"BUSINESS" has the meaning given in Section 2.4.
"BUSINESS DAY" means any calendar day other than a Saturday or
Sunday or a day on which either state or national banks in the States of
Pennsylvania, Arizona, California, Kentucky, Ohio or New York are not open for
the conduct of normal banking business.
"BUSINESS PLAN" means the definitive business plan for the
Partnership substantially in the form of Exhibit A hereto, and any subsequent
plan approved by the General Partner.
"BUY-SELL NOTICE" has the meaning given in Section 9.3.
"CAPITAL ACCOUNT" has the meaning given in Section 3.2, as adjusted
pursuant to the provisions of this Agreement.
"CAPITAL CONTRIBUTION" means, as to any Partner, at any time, the
aggregate of the amount of any cash and the initial Book Value of any property
(net of the amount of any liability which is assumed by the Partnership in
connection with such contribution or secured by such property) contributed to
the Partnership by such Partner pursuant to Section 3.1 of this Agreement.
Notwithstanding anything to the contrary in this Agreement or the Contribution
Agreement, none of the amounts that Kaiser pays to or on behalf of the
Partnership pursuant to Section 6.3 or 6.4 of the Contribution Agreement shall
be treated as capital contributions for any purpose of this Agreement.
"CERTIFICATE" means the Certificate of Limited Partnership of the
Partnership as provided for pursuant to the Act, as filed with the office of the
Secretary of State of the State of Delaware, as amended and restated from time
to time pursuant to this Agreement or otherwise.
"CLAIM" has the meaning given in Section 8.3.
"CLOSING DATE" has the meaning given in the Contribution Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor act thereto, and, to the extent applicable, any
Treasury Regulations promulgated thereunder.
"CONTRIBUTION AGREEMENT" has the meaning given in the recitals.
"DEPRECIATION" means, with respect to a specified asset, for any
Accounting Period, any depreciation, depletion, amortization or other cost
recovery deduction allowable with respect to such asset for such Accounting
Period, PROVIDED that if the Book Value of such asset differs from its adjusted
basis for federal income tax purposes at the beginning of such
- 4 -
<PAGE>
Accounting Period, Depreciation shall be an amount that bears the same
relationship to the Book Value of such asset as the depreciation, depletion,
amortization or other cost recovery deduction computed for such tax purposes
with respect to such asset for such Accounting Period bears to the adjusted tax
basis of such asset at the beginning of such Accounting Period, or if such asset
has a zero adjusted tax basis, Depreciation shall be an amount determined under
any reasonable method selected by the General Partner.
"EFFECTIVE DATE" has the meaning given in Section 2.1.
"FAIR VALUE" means, with respect to any specified asset, its value
as determined by the General Partner or by appraisal (as directed or requested
by the General Partner), PROVIDED that the Fair Value of each asset contributed
to the Partnership pursuant to the Contribution Agreement shall be the value as
set forth in Schedule 2.2 to the Contribution Agreement.
"FISCAL YEAR" means the fiscal year of the Partnership and shall be
the same as its taxable year, which shall be the calendar year unless otherwise
required by the Code. Each Fiscal Year shall commence on the day immediately
following the last day of the immediately preceding Fiscal Year, except that the
initial Fiscal Year shall begin on the Closing Date.
"GAAP" has the meaning given in Section 7.1.
"GENERAL PARTNER" has the meaning given in the first paragraph
hereof.
"INDEMNIFIED PERSONS" has the meaning given in Section 8.3.
"INITIAL OFFER" has the meaning given in Section 9.3.
"INITIATING LIMITED PARTNER" has the meaning given in Section 9.3.
"INTEREST" means, with respect to a Partner, the entire interest of
such Partner in the Partnership at any time, which interest, except as otherwise
provided in the second succeeding sentence, shall be proportionate to its
Capital Contribution, PROVIDED that if, at any time after the Closing Date, a
Partner or Partners make any Capital Contribution to the Partnership that is not
in proportion to the Partners' respective Interests immediately prior to such
Capital Contribution, then unless otherwise determined by the General Partner
(I) the aggregate values of the Interests of all Partners prior to such Capital
Contribution shall be adjusted to their Fair Values, (II) the Book Values of the
assets of the Partnership shall be adjusted accordingly, and (III) a Partner's
Interest after such Capital Contribution shall be equal to (X) the sum of the
Fair Value of such Partner's Interest prior to such Capital Contribution and
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the amount of such Capital Contribution made by such Partner (Y) divided by the
aggregate Fair Values of the Interests of all Partners prior to such Capital
Contribution and the aggregate amount of such Capital Contributions made by all
Partners at such time. A Partner's Interest shall include the right of such
Partner to any and all benefits to which a Partner may be entitled as provided
in this Agreement, together with the obligations of such Partner to comply with
the terms of this Agreement. Upon completion of the transactions contemplated by
the Contribution Agreement and the Interest Purchase Agreement, the General
Partner shall initially hold an Interest equal to 2% of the total Interests of
the Partners and each of Accuride Sub and Kaiser shall initially hold an
Interest equal to 49% of the total Interests of the Partners, subject in each
instance to adjustment from time to time pursuant to the applicable provisions
of this Agreement.
"INTEREST PURCHASE AGREEMENT" has the meaning given in the
recitals.
"JOINT VENTURE PRODUCTS" means (I) aluminum wheels 16" in diameter
and larger primarily for light, medium and heavy duty trucks, trailers and buses
(classes 1-8), although certain of such wheels may also be sold into the
automotive original equipment manufacturer market; (II) tire molds for
automotive and light-medium-heavy truck applications, as to each of clauses (i)
and (ii) above, produced by forging, fabricating or casting for marketing and
sale worldwide, including without limitation in the original equipment
manufacturer market, after-market and repair and replacement markets; and (III)
such additional or different products as the General Partner may approve.
Notwithstanding the foregoing, Joint Venture Products shall not include, without
Kaiser's written consent, motorcycle wheels and wheel parts, wheel centers for
any applications, forged one piece wheel blanks sold to other wheel
manufacturers and finished wheels for the automotive aftermarket produced or
being contemplated for production by Kaiser.
"KAISER" has the meaning given in the first paragraph hereof.
"KAISER EXCLUDED INVENTORY" has the meaning given in the
Contribution Agreement.
"LIMITED LIABILITY COMPANY AGREEMENT" has the meaning given in the
recitals.
"LIMITED PARTNER" means either Accuride Sub or Kaiser, or any
Person who becomes a Limited Partner as herein provided and who is listed as a
limited partner of the Partnership in the books and records of the Partnership,
in such Person's capacity as a limited partner of the Partnership.
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"NONRECOURSE DEDUCTIONS" has the meaning given in Section 1.704-
2(b)(1) of the Treasury Regulations.
"OFFER" has the meaning given in Section 9.2(a).
"OFFER NOTICE" has the meaning given in Section 9.2(a).
"OFFERED INTEREST" has the meaning given in Section 9.2(a).
"OFFERED LIMITED PARTNERS" has the meaning given in Section 9.2(a).
"OFFERING LIMITED PARTNER" has the meaning given in Section 9.2(a).
"PARTNER NONRECOURSE DEBT" has the meaning given in Section
1.704-2(b)(4) of the Treasury Regulations.
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning given in
Section 1.704-2(i)(2) of the Treasury Regulations.
"PARTNER NONRECOURSE DEDUCTIONS" has the meaning given in
Section 1.704-2(i)(1) of the Treasury Regulations.
"PARTNER" means the General Partner or any Limited Partner.
"PARTNERSHIP" means AKW L.P., a Delaware limited partnership.
"PARTNERSHIP MINIMUM GAIN" has the meaning given in Section
1.704-2(b)(2) of the Treasury Regulations.
"PERSON" means any individual, corporation, partnership,
association, public body, governmental authority or other entity.
"PROFIT" or "LOSS" means for any Accounting Period the net income
or net loss of the Partnership for such Accounting Period, including any items
that are separately stated for purposes of Section 702(a) of the Code, as
determined in accordance with federal income tax accounting principles, with the
following adjustments:
(a) any income of the Partnership that is exempt from federal
income tax shall be included as income;
(b) any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as such Section 705(a)(2)(B)
expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the
Treasury Regulations shall be treated as current expenses;
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(c) Book Gain or Book Loss shall be taken into account in lieu of
any tax gain or tax loss recognized by the Partnership;
(d) in lieu of depreciation, amortization, depletion, and other
cost recovery deductions taken into account in computing the
taxable income or loss of the Partnership, there shall be taken
into account Depreciation for such period, computed as provided in
this Agreement;
(e) if any asset of the Partnership is distributed in kind during
such Accounting Period, the Partnership shall be deemed to have
realized Profit or Loss thereon in the same manner as if the
Partnership had sold such asset for an amount equal to the greater
of (I) the Fair Value of such asset or (II) the amount of any debt
to which such asset is then subject; and
(f) notwithstanding any other provisions of this definition, any
items which are specially allocated pursuant to Section 4.3 shall
not be taken into account.
"RECEIVING LIMITED PARTNER" has the meaning given in Section 9.3.
"RESPONSE" has the meaning given in Section 9.3.
"SPEEDLINE AGREEMENTS" means, collectively, the Cast Aluminum Wheel
Supply Agreement, dated as of December 1, 1995, between Accuride and Speedline
Aluminia, S.p.A. ("Speedline"); the Memorandum of Agreement re: Cast Aluminum
Wheel Venture, dated as of December 1, 1995, between Accuride and Speedline; and
the Letter Agreement, dated June 1, 1996, between Accuride and Speedline.
"STRATEGIC PLAN" has the meaning given in Section 6.4 of the
Limited Liability Company Agreement.
"SUBSTITUTED LIMITED PARTNER" has the meaning given in Section 9.5.
"TAX MATTERS PARTNER" has the meaning given in Section 7.5(a).
"TIRE MOLD BUSINESS" has the meaning set forth in 11.2(b).
"TRANSFER" has the meaning given in Section 9.1.
"TREASURY REGULATIONS" means the federal income tax regulations,
including any temporary or proposed regulations,
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promulgated under the Code, as such may be amended from time to time.
ARTICLE 2
FORMATION OF PARTNERSHIP
1 FORMATION. By execution of this Agreement, each of the Partners,
or their designees, is hereby authorized to execute and file the Certificate
pursuant to the Act with the Secretary of State of the State of Delaware to be
effective upon the date filed (the "EFFECTIVE DATE"), and upon the occurrence of
the Effective Date, the Partnership will be formed as a Delaware limited
partnership.
2 PARTNERSHIP NAME. The name of the Partnership shall be AKW L.P.
The Business of the Partnership shall be conducted under such name or such other
names as the General Partner shall from time to time approve.
3 PRINCIPAL BUSINESS OFFICE, REGISTERED OFFICE AND REGISTERED
AGENT. The Partnership shall maintain its principal business office, initially,
at 1015 East 12th Street, Erie, Pennsylvania 16503 and shall move such principal
business office to Akron, Ohio (at such time as shall be determined by the
Members Committee) or to such other location as may hereafter be determined by
the General Partner. The address of the registered office of the Partnership in
the State of Delaware is Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801, and the name of the Partnership's
registered agent at such address is The Corporation Trust Company. The
principal business office, the registered office and the registered agent of the
Partnership may be changed by the General Partner from time to time in
accordance with the then applicable provisions of the Act and any other
applicable laws.
4 BUSINESS PURPOSES. The purposes of the Partnership are to
design, manufacture (by forging, fabricating casting or as otherwise determined
by the General Partner), market and sell Joint Venture Products (the
"BUSINESS"), and to engage in all actions necessary, convenient or incidental to
the foregoing, including without limitation acquiring, holding, managing,
operating, financing, selling, leasing, licensing and otherwise disposing of all
kinds and classes of real and personal property, tangible and intangible, and
borrowing funds (and securing the same by mortgage, deed of trust, or otherwise)
and executing such instruments as may be necessary or appropriate to accomplish
its business purposes, subject to the terms and conditions hereof.
5 THE CERTIFICATE, ETC. The Partners hereby agree to, and, as
appropriate, to cause the Partnership to, execute, file and record all such
certificates and documents, including amendments to the Certificate, and to do
such other acts as may
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be appropriate in the reasonable judgment of the General Partner to comply with
all requirements for the formation, continuation and operation of the
Partnership as a limited partnership, and the ownership of property and the
conduct of the Business by the Partnership, under the laws of the State of
Delaware and any other jurisdiction in which the Partnership may own property or
conduct business.
6 TERM OF PARTNERSHIP. The term of the Partnership will commence
on the Effective Date, and shall continue until dissolution occurs by operation
of law, the written consent of the Partners or otherwise in accordance with
Section 10.1(a) and the liquidation and winding up thereof is complete as
provided in Section 10.5.
7 QUALIFICATION IN OTHER JURISDICTIONS. The General Partner shall
cause the Partnership to be qualified and registered as a limited partnership
doing business in such jurisdictions, if any, as the General Partner, with the
advice of counsel, from time to time shall determine is appropriate. The
General Partner shall execute, file and publish all such certificates, notices,
statements or other instruments necessary to permit the Partnership to conduct
business as a limited partnership in all jurisdictions where the Partnership
elects to do business.
8 POWERS. In furtherance of its purposes, but subject to all of
the provisions of this Agreement, the Partnership shall have the power and is
hereby authorized to do such things and engage in such activities related to the
foregoing as may be necessary, convenient or advisable with respect to the
conduct of the Business of the Partnership and have and exercise all of the
powers and rights conferred upon limited partnerships formed pursuant to the
Act.
ARTICLE 3
CAPITALIZATION
1 CAPITAL CONTRIBUTIONS. On the Closing Date, each of the General
Partner, Accuride (through Accuride Sub) and Kaiser shall make the Capital
Contribution of cash or property as agreed upon by the General Partner, Accuride
Sub and Kaiser in the Contribution Agreement and, upon the consummation of the
transactions contemplated by the Contribution Agreement, each of the General
Partner's, Accuride Sub's and Kaiser's Capital Contribution shall be as set
forth opposite its name on Schedule A hereto. Thereafter, the Partners shall
make Capital Contributions in proportion to their respective Interests from time
to time in such amounts and on such dates as may unanimously be agreed by the
Partners. Subject to the approval of the General Partner, the Partners may
satisfy their Capital Contributions by contributing cash or other property.
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2 CAPITAL ACCOUNTS. A separate capital account (a "CAPITAL
ACCOUNT") shall be established and maintained for each Partner and shall be
adjusted as of the close of business on each Adjustment Date as follows:
(a) Each Partner's Capital Account shall be credited with such
Partner's Capital Contribution, such Partner's distributive
share of Profit and any items in the nature of income or
gain which are specially allocated pursuant to Section 4.3,
and the amount of any Partnership liabilities that are
assumed by such Partner or that are secured by any property
distributed to such Partner by the Partnership, in each case
during the Accounting Period ending on such Adjustment Date.
(b) Each Partner's Capital Account shall be debited with the
amount of cash and the Book Value of any property
distributed to such Partner by the Partnership pursuant to
any provision of this Agreement, such Partner's distributive
share of Loss and any items in the nature of expenses or
losses which are specially allocated pursuant to Section
4.3, and the amount of any liabilities of such Partner that
are assumed by the Partnership or that are secured by any
property contributed by such Partner to the Partnership, in
each case during the Accounting Period ending on such
Adjustment Date.
(c) If at any time after the Effective Date, the Book Value of
any asset of the Partnership is adjusted pursuant to the
last sentence of the definition of Book Value set forth in
Article 1 (including pursuant to the proviso to the first
sentence of the definition of Interest set forth in Article
1), the Capital Accounts of all Partners shall be adjusted
simultaneously to reflect the aggregate net adjustments as
if the Partnership had recognized Profit or Loss equal to
the respective amounts of such aggregate net adjustments.
(d) In the event all or a portion of an Interest in the
Partnership is transferred in accordance with the terms of
this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the
transferred Interest (Accuride Sub and Kaiser agree for the
avoidance of doubt that immediately after the consummation
of the transactions contemplated by the Interest Purchase
Agreement, each of Accuride Sub and Kaiser shall have the
same amount of a Capital Account).
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3 CAPITAL ACCOUNT MAINTENANCE. The method by which the Capital
Accounts are maintained is intended to comply with Section 704(b) of the Code
and the Treasury Regulations thereunder and shall be interpreted and applied in
a manner consistent therewith.
4 WITHDRAWALS. Except as authorized by the General Partner, no
Partner shall be entitled to withdraw any part of its Capital Account or to
receive any distributions from the Partnership except as provided in Articles 5
and 10, or to make any loan or Capital Contribution to the Partnership except as
expressly provided in this Agreement.
ARTICLE 4
ALLOCATIONS
1 ALLOCATIONS OF PROFIT AND LOSS. Except as otherwise provided in
this Article 4, the Profit and Loss of the Partnership for each Accounting
Period shall be determined as of the end of each such Accounting Period and
shall be allocated among the Partners in proportion to their respective
Interests.
2 TAX ALLOCATIONS. (a) Except as provided in Section 4.2(b) below,
the income, gains, losses, credits and deductions recognized by the Partnership
shall be allocated among the Partners, for federal, state and local income tax
purposes, to the extent permitted under the Code and the Treasury Regulations,
in the same manner that each such item affected the Partners' Capital Accounts.
(b) In accordance with Section 704(c) of the Code and the Treasury
Regulations thereunder, any income, gain, loss, credit and deduction with
respect to any asset contributed to the capital of the Partnership by any
Partner shall, solely for federal income tax purposes, be allocated among the
Partners so as to take account of any variation between the adjusted basis of
such asset to the Partnership for federal income tax purposes and its initial
Book Value (determined in accordance with the definition of Book Value set forth
in Article 1). The method of allocating such income, gain, loss, credit and
deduction shall be such method set forth in Section 1.704-3(b) of the Treasury
Regulations. In the event the Book Value of any asset of the Partnership is
subsequently adjusted in accordance with the last sentence of such definition of
Book Value, subsequent allocations of any income, gain, loss, credit and
deduction with respect to such asset shall take account of any variation between
the adjusted tax basis of the asset to the Partnership and its Book Value in the
same manner as under Section 1.704-3(d) of the Treasury Regulations.
3 SPECIAL ALLOCATIONS. (a) NONRECOURSE DEDUCTIONS. Nonrecourse
Deductions for any Accounting Period shall be
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allocated to the Partners in proportion to their respective Interests.
(b) MINIMUM GAIN CHARGEBACK. Except as otherwise provided in
Section 1.704-2(f) of the Treasury Regulations, notwithstanding any other
provision of this Article 4, in the event there is a net decrease in Partnership
Minimum Gain during any Accounting Period, each Partner at the end of such
Accounting Period shall be specially allocated items of income and gain for such
Accounting Period (and, if necessary, subsequent Accounting Periods) in an
amount equal to such Partner's share of the net decrease in Partnership Minimum
Gain as determined in accordance with Section 1.704- 2(g)(1) of the Treasury
Regulations. The items to be so allocated shall be determined in accordance
with Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the Treasury Regulations. This
Section 4.3(b) is intended to comply with the minimum gain chargeback
requirement of Section 1.704- 2(f) of the Treasury Regulations and shall be
interpreted and applied in a manner consistent therewith.
(c) PARTNER NONRECOURSE DEDUCTIONS. Any Partner
Nonrecourse Deductions for any Accounting Period shall be specially allocated to
the Partner who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable
in accordance with Section 1.704-2(i)(1) of the Treasury Regulations. If more
than one Partner bears the economic risk of loss with respect to a Partner
Nonrecourse Debt, the Partner Nonrecourse Deductions attributable thereto shall
be allocated between or among such Partners in accordance with the ratios in
which they share such economic risk of loss.
(d) PARTNER MINIMUM GAIN CHARGEBACK. Except as otherwise provided
in Section 1.704-2(i)(4) of the Treasury Regulations, notwithstanding any other
provision of this Article 4, if there is a net decrease in Partner Nonrecourse
Debt Minimum Gain during any Accounting Period, each Partner who has a share of
the Partner Nonrecourse Debt Minimum Gain shall be specially allocated items of
income and gain for such Accounting Period (and, if necessary, subsequent
Accounting Periods) in an amount equal to such Partner's share of the net
decrease in Partner Nonrecourse Debt Minimum Gain determined in accordance with
Section 1.704- 2(i)(4) of the Treasury Regulations. The items to be so
allocated shall be determined in accordance with Sections 1.704-2(i)(4) and
1.704-2(j)(2) of the Treasury Regulations. This Section 4.3(d) is intended to
comply with the minimum gain chargeback requirement in Section 1.704-2(i)(4) of
the Treasury Regulations and shall be interpreted and applied in a manner
consistent therewith.
(e) QUALIFIED INCOME OFFSET. No allocation shall be made pursuant
to this Article 4 to the extent it shall cause or increase a deficit in any
Partner's Capital Account (in excess of
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such Partner's obligation, including any obligation under the Treasury
Regulations, if any, to restore a deficit in its Capital Account) as of the end
of the Accounting Period to which such allocation is related. In making the
foregoing determination, a Partner's Capital Account shall be reduced by the
amounts described in Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the
Treasury Regulations. In the event any Partner unexpectedly receives an
adjustment, allocation or distribution described in
Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury Regulations, items
of income and gain shall be specially allocated to each such Partner in an
amount and manner sufficient to eliminate, to the extent required by the
Treasury Regulations, such deficit as quickly as possible, provided that an
allocation pursuant to this Section 4.3(e) shall be made only if and to the
extent such Partner would have a deficit in its Capital Account after all other
allocations provided for in this Article 4 have been made as if this Section
4.3(e) were not in the Agreement. This Section 4.3(e) is intended to comply
with the alternate test for economic effect set forth in
Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations and shall be
interpreted and applied in a manner consistent therewith.
4 RESTORATIVE ALLOCATIONS. The allocations set forth in Section
4.3 are intended to comply with certain requirements of Sections 1.704-1(b) and
1.704-2 of the Treasury Regulations. Notwithstanding any other provision of
this Agreement, the allocations pursuant to Section 4.3 shall be taken into
account in allocating Profit, Loss and items of income, gain, loss and deduction
among the Partners so that, insofar as possible, the net amount of the
allocations of Profit, Loss, and other items and the allocations pursuant to
Section 4.3 to each Partner shall be equal to the net amount that would have
been allocated to each Partner had the allocations provided for in Section 4.3
not occurred.
5 SECTION 754 ELECTION. The Partnership shall elect, pursuant to
Section 754 of the Code, to adjust the basis of property of the Partnership as
permitted and provided in Sections 734 and 743 of the Code. Such election shall
be effective solely for federal (and, if applicable, state and local) income tax
purposes and (except as provided in Section 1.704-1(b)(2)(iv)(m) of the Treasury
Regulations) shall not result in any adjustment to the Book Value of any asset
of the Partnership or to the Partners' Capital Accounts or in the determination
or allocation of Profit or Loss for purposes other than such tax purposes. Each
Partner, and not the Tax Matters Partner, shall be responsible for preparing any
schedules resulting from the Section 754 election that are relevant to the
computation of such Partner's federal income tax liability, PROVIDED that the
other Partners shall provide the Partner preparing such schedules with the
information necessary for preparing such schedules and readily available from
the books and accounts of such other Partners.
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ARTICLE 5
DISTRIBUTIONS
1 DISTRIBUTIONS. Distributions may be made in accordance with the
Partners' respective Interests at the time of distribution at such times and in
such amounts as the General Partner shall determine. Notwithstanding the
foregoing, if any Partner is in default or delinquent in respect of any
obligation to the Partnership, no distribution shall be made to the defaulting
or delinquent Partner until such default is cured or such delinquent obligation
is paid, PROVIDED that, notwithstanding the foregoing, for each Fiscal Year the
Partnership shall distribute to each Partner in cash an amount equal to such
Partner's distributive share of the Partnership's taxable income for such Fiscal
Year, multiplied by the highest marginal corporate income tax rate under the
Code in effect for such Fiscal Year.
2 WITHHOLDING.
(a) Each Partner shall, to the fullest extent permitted by
applicable law, indemnify and hold harmless each Person who is or who is deemed
to be the responsible withholding agent for federal, state or local income tax
purposes against all claims, liabilities and expenses of whatever nature (other
than any claims, liabilities and expenses in the nature of penalties and accrued
interest thereon that result from such Person's fraud, willful misfeasance, bad
faith or gross negligence) relating to such Person's obligation to withhold and
to pay over, or otherwise pay, any withholding or other taxes payable by the
Partnership or as a result of such Partner's participation in the Partnership.
(b) The Partnership shall withhold and pay over, or otherwise
pay, any withholding or other taxes payable by the Partnership with respect to
such Partner or as a result of such Partner's participation in the Partnership
pursuant to any applicable tax law. If and to the extent that the Partnership
shall be required to withhold or pay any such taxes, such Partner shall be
deemed for all purposes of this Agreement to have received a payment from the
Partnership as of the time such withholding or tax is required to be paid, which
payment shall be deemed to be a distribution with respect to such Partner's
Interest in the Partnership to the extent that the Partner (or any successor to
such Partner's Interest in the Partnership) is then entitled to receive a
distribution and shall reduce the amount of distributions to be made to such
Partner pursuant to this Article 5. To the extent that the aggregate of such
payments to a Partner for any period exceeds the distributions to which such
Partner is entitled for such period, such Partner shall make a prompt payment to
the Partnership of such excess.
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(c) If the Partnership makes a distribution in kind and such
distribution is subject to withholding or other taxes payable by the Partnership
on behalf of any Partner, such Partner shall make a prompt payment to the
Partnership of the amount so withheld.
3 RESTRICTED DISTRIBUTIONS. Notwithstanding any provision to the
contrary contained in this Agreement, the Partnership shall not make a
distribution to any Partner on account of its interest in the Partnership if
such distribution would violate Section 17-607 of the Act or other applicable
law.
ARTICLE 6
MANAGEMENT
1 MANAGEMENT OF THE PARTNERSHIP. The overall management and
control of the business and affairs of the Partnership shall be vested in the
General Partner. Except as otherwise expressly provided in this Agreement, all
decisions with respect to any matter set forth in this Agreement or otherwise
affecting or arising out of the conduct of the business of the Partnership shall
be made by the General Partner. With respect to all of its rights, powers and
responsibilities under this Agreement, the General Partner is authorized to
execute and deliver, in the name and on behalf of the Partnership, all such
agreements, documents and other instruments as it deems proper, all on such
terms and conditions as it deems necessary or appropriate for the purposes of
the Partnership.
2 LIMITATIONS ON LIMITED PARTNERS. Except as specifically set
forth in this Agreement, no Limited Partner, in its capacity as a Limited
Partner, shall (a) be permitted to take part in the management or control of the
business or affairs of the Partnership, or (b) have the authority or power to
act as agent for or on behalf of the Partnership or any other Partner, to do any
act that would be binding on the Partnership or any other Partner or to incur
any expenditures on behalf of or with respect to the Partnership.
3 DUTY OF GOOD FAITH. The General Partner shall perform its
management duties in good faith, in a manner the General Partner reasonably
believes to be in the Partnership's best interests, and with such care as an
ordinary prudent person in a similar position would use under similar
circumstances and conditions. The General Partner shall not be liable to the
Partnership for any loss or damage arising in connection with the performance of
its management duties unless the loss or damage was the result of gross
negligence or willful misconduct. This Section 6.3 shall not be construed as
providing rights or benefits for any third parties.
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4 ENVIRONMENTAL AND HEALTH AND SAFETY AUDITS. The General Partner
shall be responsible for performing, or engaging a Limited Partner or a
third-party at the Partnership's expense to perform, environmental and health
and safety audits of the Partnership's facilities and operations; PROVIDED,
HOWEVER, that each Limited Partner, at such Limited Partner's expense, has the
right to perform, or cause to be performed, environmental or health and safety
audits of the Partnership at reasonable times, and the Partnership shall give
such Limited Partner full access and cooperation in connection with any such
audit.
5 IMPLEMENTATION; FURTHER ASSURANCES. Each Partner shall take such
actions as may be required under applicable law, including actions with respect
to the execution of documents and performance of other ministerial acts, to give
full effect to, and to implement, all decisions of the General Partner,
including any amendments and supplements to the Business Plan.
ARTICLE 7
BOOKS; ACCOUNTING; TAX MATTERS; REPORTS
1 BOOKS AND RECORDS. At all times during the continuance of the
Partnership, the Partnership shall maintain books of account for the Partnership
that shall show a true and accurate record of all costs and expenses incurred,
all charges made, all credits made and received and all income derived in
connection with the operation of the Business in accordance with generally
accepted accounting principles consistently applied ("GAAP"). Each Partner
shall have full access to such books of account for the Partnership and to all
financial, legal and business records of the Partnership. Such books of
account, financial, legal and business records of the Partnership, together with
a copy of this Agreement and of the Certificate, shall at all times be
maintained at the principal place of business of the Partnership and shall be
open to inspection, examination and copying at reasonable times during normal
business hours by each Partner and its duly authorized representatives for any
purpose reasonably related to such Partner's Interest in the Partnership. Such
books of account, financial, legal and business records of the Partnership shall
be retained during the term of this Agreement and for seven years thereafter.
Partners shall be entitled to discuss the matters recorded in such books and
records with the independent certified accountants retained by the Partnership
and with any officers of the General Partner. A Partner shall bear all expenses
incurred in any examination made for such Partner's account.
2 FINANCIAL STATEMENTS. Within 60 days after the close of each
Fiscal Year there shall be prepared and submitted to each Partner the following
financial statements of the Partnership, which shall be prepared on an accrual
basis in
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accordance with GAAP and accompanied by the report thereon of the independent
certified public accountants for the Partnership:
(a) a balance sheet as at the end of such Fiscal Year;
(b) a statement of profit or loss for such Fiscal Year;
(c) a statement of cash flows for such Fiscal Year; and
(d) a statement of the Partners' Capital Accounts and changes
therein for such Fiscal Year.
3 AUDIT. The independent certified public accountant of the
Partnership shall be Arthur Andersen, unless the General Partner shall determine
otherwise. The General Partner shall cause Arthur Andersen or such other
independent certified public accountant as the General Partner may determine to
conduct an annual audit of the Partnership, which shall be performed in
accordance with generally accepted auditing standards, and to accompany such
audit with a report containing such accountant's opinion. The cost of such
audits shall be a direct expense of the Partnership. A copy of any such audited
financial statements and accountant's report will be distributed to the Partners
pursuant to Section 7.2 above. Each Partner shall have the right to have the
audit papers of the Partnership reviewed by such Partner's internal and external
auditors, at such Partner's sole cost and expense.
4 BANK ACCOUNTS. The Partnership shall maintain one or more
accounts in a bank or banks selected by the General Partner, which accounts
shall be used for the payment of the expenditures incurred in connection with
the business of the Partnership and in which shall be deposited any and all cash
receipts of the Partnership. All such amounts shall be and remain the property
of the Partnership. There shall not be deposited in any of said accounts any
funds other than funds belonging to the Partnership and no other funds shall in
any way be commingled with such funds. Withdrawals shall be made only in the
regular course of business on such signature or signatures as the General
Partner may determine.
5 TAX MATTERS.
(a) The General Partner shall act as the tax matters partner (the
"TAX MATTERS PARTNER") within the meaning of Section 6231(a)(7) of the Code (and
any similar capacity under applicable state or local tax law).
(b) The Partners hereby authorize the Tax Matters Partner to
take any and all actions (including preparing, executing and filing Internal
Revenue Service Form 8832 with the
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Internal Revenue Service) necessary to treat the Partnership as a partnership
for purposes of federal and, to the extent permitted by applicable law, state
and local income tax and other taxes. Immediately after the formation of the
Partnership but in no event later than 75 days after the Effective Date, the Tax
Matters Partner shall prepare Internal Revenue Service Form 8832 (together with
all information required by such form) and shall execute and file such form
(together with such required information) with the Internal Revenue Service,
effective immediately upon the occurrence of the Effective Date. The Tax
Matters Partner shall also prepare and timely file any state, local and other
forms, reports or statements that are necessary to treat the Partnership as a
partnership for purposes of state and local income tax or other taxes. Except
as otherwise required by applicable law, the Partners hereby agree to treat (and
to cause their respective Affiliates to treat) the Partnership as a partnership
for purposes of federal, state and local income tax or other taxes, and not to
take (and cause their respective Affiliates not to take) any position or make
any election in a tax return or otherwise inconsistent with the foregoing. Each
Partner shall indemnify and hold harmless the Partnership and the other Partners
against all Claims (including state or local income tax or other tax
liabilities) arising out of, resulting from or attributable to any breach by
such Partner of this Section 7.5(b).
(c) The Tax Matters Partner shall cause all required federal,
state and local income, franchise, property or other tax returns, including
information returns with respect to the Partnership or its business or assets,
to be timely prepared and filed with the appropriate office of the Internal
Revenue Service or any other relevant taxing jurisdiction at the Partnership's
expense. The Tax Matters Partner may cause the Partnership to retain, at the
Partnership's expense, the independent certified public accountants of the
Partnership to prepare or review the necessary federal income tax returns and
information returns for the Partnership. As promptly as practicable, and in any
event in sufficient time to permit timely preparation and filing by each Partner
of its respective income or other tax returns, the Partnership shall deliver to
each Partner a copy of each income tax return or tax report filed by the
Partnership and any required information, reports and schedules.
(d) Each Partner shall provide such information to the Tax
Matters Partner, if any, as may be reasonably needed by the Partnership for
purposes of preparing any required tax return or information return, PROVIDED
that such information is readily available from such Partner's books and
records.
(e) At least forty-five days prior to the filing of any tax
return referred to in Section 7.5(c) on or measured by net or gross income or
net or gross profits or at least fifteen days prior to the filing of any other
tax return referred to in Section 7.5(c), the Tax Matters Partner shall
distribute or cause
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to be distributed to each Partner a final draft of any such tax return and any
Partner wishing to do so may consult with any officer of the General Partner
with respect to the contents of such tax return. Any Partner may protest to the
General Partner or question the manner in which an item is reported or
characterized on the Partnership tax return. If the General Partner shall so
determine, adjustments shall be made to the relevant tax return of the
Partnership.
(f) The Tax Matters Partner shall represent the Partnership in
connection with any tax audit, examination or other administrative or judicial
proceedings involving the tax matters of the Partnership and, in connection
therewith, shall cause the Partnership to retain at the Partnership's expenses,
counsel and other advisors selected by the General Partner. Each Partner shall
have the right to participate in any such audit, examination or other
administrative or judicial proceedings. The Tax Matters Partner shall not
extend (or agree to extend) any applicable statute of limitations, make any
election, settle any issue or take any other action binding on the Partnership
or any other Partner in connection with any such tax audit, examination or other
administrative or judicial proceedings without the prior written consent of all
Partners. Any disagreement among the Partners arising in connection with any
such tax audit, examination or other administrative or judicial proceedings
shall be resolved by the General Partner. The Tax Matters Partner shall
promptly deliver to each Partner copies of all notices and communications with
respect to the tax matters of the Partnership received from the Internal Revenue
Service or any other taxing authority. Section 7.5(e) shall apply MUTATIS
MUTANDIS with respect to any written submission to be filed with the Internal
Revenue Service or any other taxing authority. Neither the Tax Matters Partner
nor the Partnership shall be liable for any additional tax, interest or
penalties payable by a Partner or any fees or expense of separate counsel or
other advisors retained by such Partner to represent such Partner in any tax
audit, examination or other administrative or judicial proceedings relating to
the tax items of the Partnership.
(g) The provisions of this Section 7.5 shall survive the
termination of the Partnership or the termination of any Partner's Interest and
shall remain binding on the Partners for as long a period of time as is
necessary to resolve with the Internal Revenue Service any and all matters
regarding the federal income taxation of the Partnership or the Partners.
6 RESERVES. The General Partner may from time to time in its
discretion establish reasonable cash or cash equivalent reserves.
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ARTICLE 8
RIGHTS AND OBLIGATIONS OF PARTNERS
1 LIMITED LIABILITY. (a) Each Limited Partner's liability with
respect to the Partnership and any subsidiary of the Partnership shall be
limited as provided in the Act, this Agreement or any applicable law. A Limited
Partner shall not be personally liable for any debts, obligations, liabilities
or losses of the Partnership, or of any subsidiary of the Partnership, as the
case may be, whether arising in contract, tort or otherwise, beyond its
respective Capital Contribution to the Partnership and its pro rata portion of
the Partnership's undistributed profits, except as may otherwise be provided for
by law. No Partner shall have any liability for the restoration of the deficit
of such Partner's Capital Account and the return of the Capital Contribution of
any other Partner unless otherwise provided in this Agreement.
(b) The Partners shall not be required to lend any funds to the
Partnership. Each Partner shall only be liable to make payment of its
respective Capital Contributions as and when due hereunder or as agreed by all
of the Partners. If and to the extent a Partner's Capital Contributions shall
be fully paid, such Partner shall not, except as required by the express
provisions of the Act regarding repayment of sums wrongfully distributed to
Partners, be required to make any further contributions to the Partnership or
any subsidiary thereof.
2 ACCESS TO INFORMATION; RECORDS. Each Partner has the right to
obtain from the Partnership from time to time, upon demand for any purpose
related to the Partner's interest as a Partner of the Partnership, information
regarding the status of the Partnership's Business and financial condition, a
copy of any written Partnership agreement or other document, and any information
required to be provided under this Agreement or the Act.
3 INDEMNIFICATION. (a) The Partnership shall, to the fullest
extent permitted by law, indemnify and hold harmless each Partner and its
Affiliates, each agent of the Partnership, and any control person (as such term
is defined in the Securities Act of 1933, as amended, and the rules and
regulations thereunder), director, officer, employee, member and agent of each
Partner and its Affiliates (collectively, the "INDEMNIFIED PERSONS"), from and
against any and all losses, liabilities, damages, claims, costs and expenses
whatsoever (including without limitation fees and expenses and any court costs)
("CLAIMS") arising out of, resulting from or attributable to any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Partnership after the date hereof and in a manner reasonably believed to be
within the scope of the authority conferred on it by this Agreement, PROVIDED
that no indemnity shall be payable hereunder with respect to any liability
incurred by such
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Indemnified Person by reason of its gross negligence or willful misconduct, or
in the case of a Partner, breach of such Partner's obligations under this
Agreement or any Ancillary Agreement.
(b) Expenses incurred by an Indemnified Person in defense or
settlement of any Claim that may be subject to a right of indemnification
hereunder may be advanced by the Partnership prior to the final disposition
thereof upon receipt of an undertaking by or on behalf of the Indemnified Person
to repay such amount if it shall ultimately be determined that the Indemnified
Person is not entitled to be indemnified by the Partnership.
(c) The Partnership shall make all indemnification provided for
pursuant to this Section 8.3 solely out of and to the extent of Partnership
assets and no Partner shall have personal liability on account thereof.
4 INSURANCE. The Partnership may purchase and maintain insurance,
to the extent and in such amounts as the Partners shall deem reasonable, on
behalf of Indemnified Persons and such other Persons as the Partners shall
determine, against any liability that may be asserted against or expenses that
may be incurred by any such Person in connection with the activities of the
Partnership or such indemnities, regardless of whether the Partnership would
have the power to indemnify such Person against such liability under the
provisions of this Agreement.
ARTICLE 9
TRANSFERS OF INTERESTS;
RIGHTS OF FIRST OFFER
1 GENERAL RESTRICTION. No Limited Partner may, directly or
indirectly, sell, transfer, encumber or otherwise dispose of (any such act, a
"TRANSFER"), its Interest to any Person without the written consent of each
other Partner, except as permitted by this Article 9 and in accordance with
applicable law. A Limited Partner shall provide prior written notice to each
other Partner of any such proposed Transfer. The General Partner may not
transfer its Interest.
2 RIGHT OF FIRST OFFER. (a) If, after the second anniversary of
the Closing Date, a Limited Partner (the "OFFERING LIMITED PARTNER") desires to
Transfer all (but not less than all) of its Interest (collectively, the "OFFERED
INTEREST"), the Offering Limited Partner shall deliver to each of the other
Limited Partners (the "OFFERED LIMITED PARTNERS") a written notice (the "OFFER
NOTICE") specifying all of the material terms of the proposed Transfer (the
"OFFER"), including the consideration for which the Offering Limited Partner
proposes to Transfer the Offered Interest and any copies of any agreement or
documents to be executed or delivered in connection with the
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proposed Transfer. Thereafter, the Offered Limited Partners shall have the
exclusive right for a period of 60 days after receipt of the Offer Notice to
purchase all, but not less than all, of the Offered Interest upon the terms and
conditions contained in the Offer Notice.
(b) Each Offered Limited Partner shall have 60 days from the date
the Offer Notice is given in which to notify the Offering Limited Partner
whether it elects to purchase the Offered Interest set forth in such Offer. In
the event some but not all of the Offered Limited Partners accept the Offer, the
Offering Limited Partner shall retransmit the Offer with respect to such
remaining Offered Interest to those Offered Limited Partners electing to accept
the Offer. Within 10 days from the date such second offer is made, each such
Offered Limited Partner will notify the other Offered Limited Partners whether
it elects to purchase some or all of the remaining Offered Interest, it being
understood that if such other Offered Limited Partners together indicate an
intention to purchase such portion of the Offered Interest greater than the
entire Offered Interest, then such Offered Interest shall be allocated PRO RATA
among such of the Offered Limited Partners as accepted such second offer, in the
same proportion that each of their respective Interests bears to the aggregate
Interests held by such Offered Limited Partners.
(c) After the completion of the procedures in Section 9.2(a) and
(b), if the Offered Limited Partners elect not to purchase all of the Offered
Interest within the 60-day period described in Section 9.2(a), the Offering
Limited Partner shall have the right during the ensuing 120-day period to
Transfer its Interest to a third party, on terms no more favorable to such third
party than the terms set forth in the Offer Notice.
(d) Upon consummation of any sale to a third party by an Offering
Limited Partner pursuant to this Section 9.2, the Offering Limited Partner shall
promptly notify the other Limited Partners as to the circumstances thereof,
including the date of the sale, the price, the identity of the purchaser and the
identity of the ultimate beneficial owner.
(e) No Limited Partner shall offer or transfer its Interest
pursuant to this Section 9.2 to any Offered Limited Partners or other Person
without concurrently offering and transferring all of such Limited Partner's
interest in the General Partner to the same Offered Limited Partners or other
Person in accordance with Section 9.2 of the Limited Liability Company
Agreement.
3 BUY/SELL OPTION. At any time after the second anniversary of the
Closing Date, any Limited Partner (the "INITIATING LIMITED PARTNER") may deliver
to the other Limited Partner a written bid (the "BID") which sets forth a cash
price at which it would either (i) sell all, but not less than all, of its then
current Interest to the other Limited Partner or
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(ii) purchase all, but not less than all, of the other Limited Partner's
Interest, which price shall be an amount at least equal to five times the
average EBITDA as shown in the Strategic Plan of the Partnership (approved by
the General Partner in accordance with Section 6.4(i) of the Limited Liability
Company Agreement) for each of the next succeeding three years times the
percentage of the total Interests in the Partnership held by the Limited Partner
whose Interest is to be sold or purchased, as applicable, unless otherwise
agreed by the Limited Partner receiving such Bid. The first Bid so delivered
shall control. If two Bids are delivered at the same time, the higher Bid shall
control. Within 25 days after receipt of the Bid, the Limited Partner to which
the Bid was delivered must give the Initiating Limited Partner written notice
(the "BUY-SELL NOTICE") that it is either selling all of its Interest at such
price or purchasing all of the Initiating Limited Partner's Interest at such
price. Failure to give a Buy-Sell Notice within the required time shall be
deemed an election by the Limited Partner receiving the Bid not to purchase the
Initiating Limited Partner's Interest and to agree to sell all of its Interest
to the Initiating Party. No Limited Partner shall deliver a Bid to the other
Limited Partner or sell to, or purchase from, the other Limited Partner its
Interest pursuant to this Section 9.3 without concurrently delivering a bid and
either selling all of its interest in the General Partner to, or purchasing all
of the other Limited Partner's interest in the General Partner from, the other
Limited Partner in accordance with Section 9.3 of the Limited Liability Company
Agreement.
4 TRANSFERS TO AFFILIATES. A Limited Partner may Transfer all (but
not less than all) of its Interest to an Affiliate if prior to such Transfer (A)
such Limited Partner gives notice of the proposed Transfer to each of the other
Partners, identifying the facts that make it an Affiliate of such Limited
Partner, and (B) the proposed transferee furnishes an assumption agreement or
agreements to the Partnership in accordance with Section 9.5 of this Agreement.
No Transfer by a Limited Partner to an Affiliate shall release or discharge, or
be deemed or construed as releasing or discharging, such Limited Partner from
any of its covenants, agreements, duties or obligations hereunder regardless of
whether such covenants, agreements, duties or obligations are required to be
performed before or after the effective date of such Transfer. No Limited
Partner shall transfer its Interest to an Affiliate pursuant to this Section 9.4
without concurrently transferring all of such Limited Partner's interest in the
General Partner to the same Affiliate in accordance with Section 9.4 of the
Limited Liability Company Agreement.
5 SUBSTITUTION OF A LIMITED PARTNER. No Transfer of an Interest
pursuant to Section 9.2 or 9.4 of this Agreement shall be effective until the
transferee has delivered to each of the other Partners a written instrument
reasonably satisfactory to counsel for such Partners, whereby it (I) accepts,
and agrees to be bound by, the terms and provisions of this Agreement, (II)
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assumes all of the liabilities and obligations of the transferor as a Limited
Partner hereunder theretofore or thereafter incurred pursuant to this Agreement
and attributable to the Interest transferred to it, and (III) represents and
warrants that it has the capability and authorizations necessary to satisfy all
of the obligations hereunder being assumed by it, financial and otherwise. Upon
effectiveness of the transfer, the transferee shall become a "SUBSTITUTED
LIMITED PARTNER" and a party to this Agreement, the respective Interest of the
transferor shall be reduced accordingly, and the transferor shall be relieved of
all liabilities and obligations as a Partner hereunder attributable to the
acquired Interest of the transferee.
6 NONRECOGNITION OF CERTAIN TRANSFERS. Notwithstanding any other
provision of this Agreement, any Transfer in contravention of any of the
provisions of this Agreement shall be void and ineffective, and shall not bind,
or be recognized by, the Partnership or any Partner.
ARTICLE 10
TERMINATION
1 EVENTS OF DISSOLUTION. (a) In accordance with Section 17-801 of
the Act, the Partnership shall be dissolved and the affairs of the Partnership
wound up upon the occurrence of any of the following events:
(i) the Bankruptcy, dissolution, withdrawal, or resignation
of a Partner or the occurrence of any other event which
terminates the continued membership of a Partner in the
Partnership, unless, if there is at least one remaining
Limited Partner, all of the remaining Partners consent to
continuing the business of the Partnership within 90 days
following the occurrence of any such event;
(ii) the entry of a decree of judicial dissolution under
Section 17-802 of the Act;
(iii) the unanimous consent of the Partners to dissolve the
Partnership;
(iv) if a Partner shall attempt to Transfer any Interests
other than as permitted pursuant to Article 9, upon the
election of all of the other Limited Partners; and
(v) upon the sale of all or substantially all of the assets
of the Partnership.
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(b) Dissolution of the Partnership shall be effective on the day on
which the event occurs giving rise to the dissolution, but the Partnership shall
not terminate until the assets of the Partnership shall have been distributed as
provided herein and a certificate of cancellation of the Certificate has been
filed with the Secretary of State of the State of Delaware.
2 LIABILITY FOR WRONGFUL DISSOLUTION. If a Partner causes a
dissolution of the Partnership pursuant to the provisions of Section 10.1(a)(i),
it shall be deemed to have wrongfully dissolved the Partnership and be liable
for any damages caused to the Partners that were not responsible for the event
causing dissolution, and in addition to any other remedies the Partnership or a
Partner may have against any such wrongfully defaulting Partner, the entire cost
and expense of conducting any proceeding to dissolve, liquidate and terminate
the affairs of the Partnership, including the cost of any judicial or
arbitration proceeding, and in each case all other direct out-of-pocket costs
and expenses of the Partnership resulting from such dissolution and liquidation,
shall be borne by such wrongfully defaulting Partner. The Partnership
may offset the amount of all such costs and expenses from amounts which the
Partnership owes any such wrongfully defaulting Partner.
3 DISTRIBUTIONS TO PARTNERS. In a dissolution, the Partners shall
take such actions as are necessary to liquidate the Partnership and cause its
dissolution as soon as possible and shall each be entitled to receive an amount
of the net proceeds from such liquidation as provided in Section 10.4. A
dissolution shall not relieve or release any Partner or its guarantor from any
liability arising from a breach or default of any of its obligations under this
Agreement or any of the other Ancillary Agreements.
4 APPLICATION OF ASSETS. Unless otherwise specified herein, in the
event of a termination or dissolution, the General Partner shall conduct only
such activities as are necessary to wind up its affairs (including the sale in
an orderly manner of the assets of the Partnership), and the assets of the
Partnership shall be applied in the manner and in the order of priority set
forth as follows: (I) first, to creditors of the Partnership, including Partners
who are creditors, to the extent otherwise permitted by law, in satisfaction of
the liabilities of the Partnership (whether by payment or the making of
reasonable provision for payment thereof); and (II) second, to the Partners in
proportion to, and to the extent of, the positive balances of the Capital
Accounts of the Partners (after reflecting in such Capital Accounts all
adjustments and allocations thereto required to be made under this Agreement).
It is understood and agreed that all payments under this Section 10.4
shall be made as soon as reasonably practicable and in any event by the end of
the Fiscal Year in which such
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winding up occurs or, if later, within 90 days after the date of such winding
up.
5 TERMINATION. Upon completion of the foregoing, the General Partner
or the liquidating trustee shall execute, acknowledge and cause to be filed a
certificate of cancellation of the Partnership with the Secretary of State of
the State of Delaware as required by the Act, and upon such certificate of
cancellation becoming effective, the Partnership shall be terminated.
ARTICLE 11
CONFIDENTIAL INFORMATION;
COVENANT NOT TO COMPETE
1 CONFIDENTIAL INFORMATION. During the existence of the Partnership,
each Partner (I) shall maintain, and shall use its best efforts to cause its
Affiliates, officers, directors, employees, accountants, counsel and agents to
maintain, the confidentiality of any confidential information concerning the
Joint Venture Products, the Partnership, the Business of the Partnership or any
Partner that is not otherwise generally available to the public and (II) without
the prior consent of the Partnership or of any Partner that would be affected,
shall not use or disclose to any third party (other than their respective
financial advisors, attorneys and other agents and representatives) such
confidential information, except (A) in a manner expressly provided for in any
of the Ancillary Agreements, (B) after receipt of a binding order of
confidentiality, if available, in enforcing its rights under this Agreement or
any Ancillary Agreement before a court, governmental agency, or arbitrator of
competent jurisdiction, (C) to a prospective purchaser of any of its Interest,
PROVIDED such purchaser first executes a confidentiality agreement in form and
substance reasonably satisfactory to the other Partners, and (D) to any
governmental agency if it believes in good faith that such disclosure is
required by applicable law or by governmental policy, PROVIDED that prior to
making any such disclosure such Partner shall, unless prohibited by such
governmental agency, give written notice (identifying such agency and describing
the general nature of such disclosure) to, and consult with, the other Partners.
2 COVENANT NOT TO COMPETE. Each Partner agrees that during the
existence of the Partnership neither it nor any of its Affiliates (except in
connection with fundamental corporate transactions, such as mergers, spin-offs
and sales of substantially all of the capital stock or assets of either Accuride
or Kaiser or any of their respective parent corporations) will (and Accuride Sub
agrees to cause Accuride not to), directly or indirectly, manufacture or sell,
or participate whether by ownership interest or otherwise in the manufacturing
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or sale of, any Joint Venture Products, other than Joint Venture Products
manufactured by and sold through the Partnership, except that (I) Accuride shall
be permitted to sell Joint Venture Products manufactured and sold pursuant to
the Speedline Agreements to the extent set forth in Section 6.7 of the
Contribution Agreement, (II) Kaiser shall be permitted to sell the Kaiser
Excluded Inventory,(iii) Accuride shall be permitted to sell the Accuride
Retained Inventory and (iv) subject to Section 6.8 of the Contribution
Agreement, Accuride shall be permitted to perform its obligations under the
Accuride Excluded Contracts, PROVIDED that for the purposes of this Section 11.2
only, the term "Joint Venture Products" shall include any wheels of the size and
type described in clause (i) of the definition of Joint Venture Products in
Article 1 manufactured from non-ferrous materials (other than thermal plastics
and thermal sets). Notwithstanding the foregoing, if at any time a Limited
Partner or Accuride or any of their respective Affiliates wishes to manufacture
or sell Joint Venture Products that at the time are not being manufactured and
sold by the Partnership, it shall be free to do so if (I) it first gives written
notice to the Partnership of its desire to manufacture or sell such Joint
Venture Products and (II) the Partnership does not elect to undertake such
business within 180 days of the date upon which such notice is given (which need
not be on the same terms as set forth in such notice, but may include
alternative arrangements appropriate to the Partnership), PROVIDED that in
determining whether or not the Partnership shall undertake such business,
Accuride or the Limited Partner proposing to undertake such business shall vote
in favor of the Partnership's undertaking such business.
ARTICLE 12
MISCELLANEOUS
1 WAIVER, AMENDMENT, ETC. This Agreement may not be amended or
supplemented, and no waivers of or consents to departures from the provisions
hereof shall be effective, unless set forth in a writing signed by, and
delivered to, each Partner. No failure or delay of any Partner in exercising
any power or right under this Agreement will operate as a waiver thereof, nor
will any single or partial exercise of any right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.
2 NOTICES. Any notice or other communication required or permitted to
be given hereunder or for the purposes hereof to any party shall be in writing
and shall be sufficiently given if (I) delivered personally, (II) mailed by
certified or registered mail, postage prepaid, (III) transmitted by facsimile
(and confirmed by certified or registered mail) or (IV) sent by next-day or
overnight mail or delivery to:
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(a) Accuride Sub at:
Accuride Corporation
2315 Adams Lane/P.O. Box 40
Henderson, Kentucky 42420
Attention: William P. Greubel
Tel: (502) 826-5000
Fax: (502) 827-7601
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Attention: James C. Scoville, Esq.
Tel: (212) 909-6655
Fax: (212) 909-6836
(b) Kaiser at:
Kaiser Aluminum & Chemical Corporation
26957 Northwestern Highway, Suite 200
Southfield, Michigan 48034
Attention: Jack A. Hockema
Tel: (810) 352-4630
Fax: (810) 352-4635
with a copy to:
Kaiser Aluminum & Chemical Corporation
5847 San Felipe, Suite 2600
Houston, Texas 77257
Attention: General Counsel
Tel: (713) 267-3777
Fax: (713) 267-3702
and,
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
Attention: Howard A. Sobel, Esq.
Tel: (212) 715-9100
Fax: (212) 715-8000
(c) the Partnership at:
AKW General Partner L.L.C.
c/o AKW L.P.
1015 East 12th Street
Erie, Pennsylvania 16503
Attention: Bill Curtin
Tel: (814) 454-4571
Fax: (814)452-0809
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or at such other address or to such other person's attention as the party to
whom such notice is to be given shall have last notified the party giving the
same in the manner provided in this Section. Any notice so delivered to the
party to whom it is addressed shall be deemed to have been given and received
(1) if by personal delivery, on the day of such delivery, (2) if by certified or
registered mail, on the seventh day after mailing thereof, (3) if by facsimile,
the day on which such facsimile was sent or (4) if by next-day or overnight mail
delivery, on the day delivered, PROVIDED that if any such day is not a Business
Day then the notice shall be deemed to have been given and received on the
Business Day next following such day.
3 MATERIALS. All written materials relating to the business of the
Partnership, including, without limitation, press releases and marketing
materials prepared by the Partnership or any Partner shall be approved by the
General Partner prior to use, provided that written materials required by law or
the rules of any stock exchange to be filed by any Partners shall not require
such approval.
4 WORD MEANINGS. The words such as "herein", "hereinafter", "hereof"
and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires.
The singular shall include the plural and the masculine gender shall include the
feminine and neuter, and vice versa, unless the context otherwise requires.
5 BINDING PROVISIONS. The covenants and agreements contained herein
shall be binding upon, and inure to the benefit of, the heirs, legal
representatives, successors and assigns of the respective parties hereto.
6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (OTHER THAN ANY CONFLICT OF
LAWS RULE WHICH MIGHT RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER
JURISDICTION). IN THE EVENT OF A CONFLICT BETWEEN ANY PROVISION OF THIS
AGREEMENT AND ANY NON-MANDATORY PROVISION OF THE ACT, THE PROVISION OF THIS
AGREEMENT SHALL CONTROL AND TAKE PRECEDENCE.
7 ARBITRATION. (a) Any dispute, controversy or claim arising out of
or relating to this Agreement or the breach, validity or termination thereof
shall be finally settled by arbitration. The arbitration shall be conducted in
accordance with the American Arbitration Association's commercial arbitration
rules in effect at the time of arbitration, except as modified herein or by
mutual agreement of the parties. The seat of the arbitration shall be New York,
New York, PROVIDED that the arbitrators may hold hearings in such other
locations as the arbitrators determine to be most convenient and efficient for
all
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the parties under the circumstances. Notwithstanding anything to the contrary
in Section 12.6, the arbitration shall be governed by the Federal Arbitration
Act. The appointing authority shall be the American Arbitration Association.
The arbitration shall be conducted by three arbitrators.
(b) Any award rendered by the arbitrators shall be in writing and
shall be final and binding upon the parties, and may include an award of costs,
including reasonable attorneys' fees and disbursements. Judgment upon the award
rendered may be entered in any court having jurisdiction thereof or having
jurisdiction over the parties or their assets.
8 SEPARABILITY OF PROVISIONS. Each provision of this Agreement shall
be considered separable and if for any reason any provision or provisions herein
are determined to be invalid, unenforceable or illegal under any existing or
future law, such invalidity, unenforceability or illegality shall not impair the
operation of or affect those portions of this Agreement which are valid,
enforceable and legal. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
9 TABLE OF CONTENTS; HEADINGS. The table of Contents and headings in
this Agreement are for descriptive purposes only and shall not control or alter
the meaning of this Agreement as set forth in the text.
10 FURTHER ASSURANCES. The Partners shall execute and deliver such
further instruments and do such further acts and things as may be required to
carry out the intents and purposes of this Agreement.
11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original of this Agreement.
12 ENTIRE AGREEMENT. This Agreement, together with the Contribution
Agreement and the other Ancillary Agreements, embodies the entire agreement and
understanding between the parties relating to the subject matter hereof and
thereof, and supersedes any prior oral or written agreements, commitments or
terms, other than Section 13 of the letter, dated September 17, 1996, as
amended, from Accuride to Kaiser, regarding the Joint Venture, except for the
penultimate paragraph of such Section 13.
13 SURVIVAL OF CERTAIN PROVISIONS. The obligations of the Partnership
and of each Partner pursuant to Sections 6.3 and 7.5 and Articles 8, 10 and 11
shall survive the termination or expiration of this Agreement.
14 SPECIFIC PERFORMANCE. The parties hereto agree that any damages
available at law for a breach of this Agreement
- 31 -
<PAGE>
would not be an adequate remedy. Therefore, the provisions hereof and the
obligations of the parties hereunder shall be enforceable in a court of equity,
or other tribunal having jurisdiction, by a decree of specific performance, and
appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies and all other remedies provided for in this Agreement
shall, however, be cumulative and not exclusive and shall be in addition to any
other remedies which any party may have under this Agreement or otherwise.
- 32 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
ACCURIDE VENTURES, INC.
By: /s/ William Greubel
--------------------------
Name: William Greubel
Title: President
KAISER ALUMINUM & CHEMICAL
CORPORATION
By: /s/ Daniel J. Rinkenberger
--------------------------
Name: Daniel J. Rinkenberger
Title: Assistant Treasurer
AKW GENERAL PARTNER L.L.C.
By: /s/ William J. Curtin
--------------------------
Name: William J. Curtin
Title: Vice President
ACCEPTED AND AGREED:
AKW L.P.
By: AKW GENERAL PARTNER L.L.C.,
its General Partner
By: /s/ William J. Curtin
----------------------------
Name: William J. Curtin
Title: Vice President
- 33 -
<PAGE>
In order to induce the parties to enter
into this Agreement, the undersigned,
Accuride Corporation, a Delaware corporation,
being the sole stockholder of Accuride Sub,
hereby jointly and severally unconditionally
guarantees the performance by Accuride Sub of
all of its obligations under the foregoing
Agreement strictly in accordance with the
terms thereof. This guarantee shall be
effective despite any renewal, modification
or waiver by the parties hereto of Accuride
Sub's obligations under this Agreement, and
no such modification, renewal or waiver
shall operate to limit, defeat, modify or
otherwise affect this guaranty.
ACCURIDE CORPORATION
By: /s/ William P. Greubel
----------------------------
Name: William P. Greubel
Title: President
Dated as of May 1, 1997
- 34 -
<PAGE>
SCHEDULE A
CAPITAL
PARTNER CONTRIBUTION INTEREST
- ------- ------------ --------
General Partner:
AKW General Partner L.P.
Limited Partners:
Accuride Ventures, Inc.
Kaiser Aluminum & Chemical
Corporation
<PAGE>
EXHIBIT 10.11
LIMITED LIABILITY COMPANY AGREEMENT OF
AKW GENERAL PARTNER L.L.C.
among
ACCURIDE VENTURES, INC.,
ACCURIDE CORPORATION, in its capacity as
guarantor of Accuride Ventures, Inc.,
and
KAISER ALUMINUM & CHEMICAL CORPORATION
Dated as of May 1, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 FORMATION OF LIMITED LIABILITY COMPANY . . . . . . . . . . . . . 8
2.1 Formation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Company Name . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Principal Business Office, Registered Office and
Registered Agent . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Business Purposes. . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 The Certificate, Etc.. . . . . . . . . . . . . . . . . . . . . . 9
2.6 Term of Company. . . . . . . . . . . . . . . . . . . . . . . . . 9
2.7 Qualification in Other Jurisdictions . . . . . . . . . . . . . . 9
2.8 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 3 CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Capital Contributions. . . . . . . . . . . . . . . . . . . . . . 10
3.2 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3 Capital Account Maintenance. . . . . . . . . . . . . . . . . . . 11
3.4 Withdrawals. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 4 ALLOCATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1 Allocations of Profit and Loss . . . . . . . . . . . . . . . . . 11
4.2 Tax Allocations. . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Special Allocations. . . . . . . . . . . . . . . . . . . . . . . 12
4.4 Restorative Allocations. . . . . . . . . . . . . . . . . . . . . 13
4.5 Section 754 Election . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 5 DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.1 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.2 Withholding. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.3 Restricted Distributions . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 6 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.2 Members Committee. . . . . . . . . . . . . . . . . . . . . . . . 15
6.3 Appointment and Removals . . . . . . . . . . . . . . . . . . . . 16
6.4 Action by Members Committee, Officers and Other
Persons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.5 Disinterested Majority; Transactions with Members and
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.6 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.7 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.8 Notice; Agendas. . . . . . . . . . . . . . . . . . . . . . . . . 20
6.9 Chief Executive Officer. . . . . . . . . . . . . . . . . . . . . 21
6.10 Other Officers . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.11 Duty of Good Faith . . . . . . . . . . . . . . . . . . . . . . . 22
6.12 Implementation; Further Assurances . . . . . . . . . . . . . . . 22
ARTICLE 7 BOOKS; ACCOUNTING; TAX MATTERS; REPORTS. . . . . . . . . . . . . 22
7.1 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . 22
7.2 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 23
<PAGE>
7.3 Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.4 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.5 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.6 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 8 RIGHTS AND OBLIGATIONS OF MEMBERS. . . . . . . . . . . . . . . . 26
8.1 Limited Liability. . . . . . . . . . . . . . . . . . . . . . . . 26
8.2 Access to Information; Records . . . . . . . . . . . . . . . . . 26
8.3 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 26
8.4 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 9 TRANSFERS OF INTERESTS; RIGHTS OF FIRST OFFER. . . . . . . . . . 27
9.1 General Restriction. . . . . . . . . . . . . . . . . . . . . . 27
9.3 Buy/Sell Option. . . . . . . . . . . . . . . . . . . . . . . . . 28
9.4 Transfers to Affiliates. . . . . . . . . . . . . . . . . . . . . 29
9.5 Substitution of a Member . . . . . . . . . . . . . . . . . . . . 29
9.6 Nonrecognition of Certain Transfers. . . . . . . . . . . . . . . 30
ARTICLE 10 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.1 Events of Dissolution. . . . . . . . . . . . . . . . . . . . . . 30
10.2 Liability for Wrongful Dissolution . . . . . . . . . . . . . . . 31
10.3 Distributions to Members . . . . . . . . . . . . . . . . . . . . 31
10.4 Application of Assets. . . . . . . . . . . . . . . . . . . . . . 31
10.5 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 11 CONFIDENTIAL INFORMATION; COVENANT NOT TO COMPETE. . . . . . . . 32
11.1 Confidential Information . . . . . . . . . . . . . . . . . . . . 32
11.2 Covenant Not To Compete. . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 12 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.1 Waiver, Amendment, Etc.. . . . . . . . . . . . . . . . . . . . . 33
12.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.3 Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.4 Word Meanings. . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.5 Binding Provisions . . . . . . . . . . . . . . . . . . . . . . . 35
12.6 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.7 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.8 Separability of Provisions . . . . . . . . . . . . . . . . . . . 36
12.9 Table of Contents; Headings. . . . . . . . . . . . . . . . . . . 36
12.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 36
12.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 36
12.13 Survival of Certain Provisions . . . . . . . . . . . . . . . . . 37
12.14 Specific Performance . . . . . . . . . . . . . . . . . . . . . . 37
Schedules
Schedule A Capital Contributions
Schedule B Initial Representatives and Alternates
Exhibit A Business Plan
ii
<PAGE>
AKW GENERAL PARTNER L.L.C.
LIMITED LIABILITY COMPANY AGREEMENT
LIMITED LIABILITY COMPANY AGREEMENT OF AKW GENERAL PARTNER L.L.C.
(the "COMPANY"), dated as of May 1, 1997, among ACCURIDE VENTURES, INC., a
Delaware corporation ("ACCURIDE SUB") and wholly-owned subsidiary of Accuride
Corporation, a Delaware corporation ("ACCURIDE"), ACCURIDE CORPORATION, in its
capacity as guarantor of Accuride Sub, and KAISER ALUMINUM & CHEMICAL
CORPORATION, a Delaware corporation ("KAISER"), each of whom shall be a member
of the Company.
W I T N E S S E T H:
WHEREAS, Accuride Sub and Kaiser desire to form and capitalize the
Company in order to serve as the general partner of AKW L.P., a Delaware limited
partnership (the "LIMITED PARTNERSHIP");
WHEREAS, the Company is to be formed under the Delaware Limited
Liability Company Act, Del. Code Ann tit. 6, Sections 18-101 ET SEQ. (as from
time to time amended and including any successor statute of similar import, the
"ACT"), pursuant to a Certificate of Formation of Limited Liability Company to
be filed with the office of the Secretary of State of the State of Delaware;
WHEREAS, the Company, as general partner, has entered into a
Limited Partnership Agreement, dated the date hereof (the "LIMITED PARTNERSHIP
AGREEMENT"), with Accuride Sub and Kaiser;
WHEREAS, the Company, Accuride, Kaiser and the Limited Partnership
(as hereinafter defined) have entered into a Contribution Agreement, dated the
date hereof (the "CONTRIBUTION AGREEMENT"), pursuant to which Accuride (on
behalf of Accuride Sub) and Kaiser have agreed, among other things, to
contribute certain assets to capitalize the Company and the Company, Accuride
(through Accuride Sub) and Kaiser have agreed to capitalize the Limited
Partnership;
WHEREAS, Accuride Sub and Kaiser desire to set forth their
agreement as to the management of the Company and the Limited Partnership,
transfers of Interests (as hereinafter defined) in the Company and certain other
matters relating to the Company;
NOW, THEREFORE, in consideration of the mutual covenants, and
subject to the terms and conditions, contained herein, in the Limited
Partnership Agreement and in the Contribution Agreement, the parties hereto
agree as follows:
<PAGE>
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings
set forth below or in the Section of this Agreement referred to below:
"ACCOUNTING PERIOD" means the period beginning on the day following
any Adjustment Date (or, in the case of the first Accounting Period, beginning
on the day of formation of the Company) and ending on the next succeeding
Adjustment Date.
"ACCURIDE" has the meaning given in the first paragraph hereof.
"ACCURIDE EXCLUDED CONTRACTS" has the meaning given in the
Contribution Agreement.
"ACCURIDE SUB" has the meaning given in the first paragraph hereof.
"ACT" has the meaning given in the recitals.
"ADJUSTMENT DATE" means (I) the last day of each Fiscal Year,
(II) the day before the date of admission of any substituted or additional
Member, (III) the day before the date any Capital Contribution which is not
proportionate to the Members' Interests is made or deemed to be made, (IV) the
day before the date a Member ceases to be a member of the Company, (V) the day
before the date of any distribution made or deemed to be made by the Company
which is not proportionate to the Members' Interests or (VI) any other date
determined by the Members as appropriate for a closing of the Company's books.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with,
such Person. Control of any Person shall consist of the power to direct the
management and policies of such Person whether through the ownership of voting
securities or by contract or otherwise and shall be deemed to exist upon the
ownership of securities entitling the holder thereof to exercise more than 50%
of the voting power in the election of directors of such Person.
"AGREEMENT" means this Limited Liability Company Agreement, as it
may be amended, restated or supplemented from time to time as herein provided.
"ANCILLARY AGREEMENTS" means this Agreement, the Certificate of
Formation, the Contribution Agreement and all other agreements which are
included in the definition of "Ancillary Agreements" in the Contribution
Agreement.
- 2 -
<PAGE>
"BANKRUPTCY" means any occurrence described in clauses (a)(1)
through (a)(6) and (b) of Section 18-304 of the Act.
"BID" has the meaning given in Section 9.3.
"BOOK GAIN OR BOOK LOSS" means the gain or loss, as the case may
be, recognized by the Company for book purposes in any Accounting Period by
reason of any sale or other disposition (including any distribution to a Member)
of any of the assets of the Company, computed by reference to the Book Value of
such assets as of the date of any such sale or other disposition (including any
such distribution), rather than by reference to the tax basis of such assets as
of such date, and each reference herein to "gain" or "loss" shall be deemed to
refer to Book Gain or Book Loss, rather than to tax gain or tax loss, unless the
context specifically requires otherwise.
"BOOK VALUE", as of any date, means the value at which the asset is
reflected on the books and records of the Company as of such date, the initial
Book Value of each asset being its cost to the Company, unless such asset is
contributed to the Company by a Member in which case the initial Book Value
shall be the Fair Value of such asset, in all cases, with such Book Value
thereafter adjusted for Depreciation with respect to such asset (rather than for
the cost recovery deductions to which the Company is entitled for federal income
tax purposes with respect thereto), PROVIDED that the Book Value of such asset
shall not be reduced below zero. The Book Values of all assets of the Company
shall be adjusted in accordance with Section 1.704- 1(b)(2)(iv)(f) of the
Treasury Regulations.
"BUSINESS DAY" means any calendar day other than a Saturday or
Sunday or a day on which either state or national banks in the States of
Pennsylvania, Arizona, California, Kentucky, Ohio or New York are not open for
the conduct of normal banking business.
"BUSINESS PLAN" means the definitive business plan for the Limited
Partnership substantially in the form of Exhibit A to the Limited Partnership
Agreement, and any subsequent plan approved by the Members Committee pursuant to
Section 6.4.
"BUY-SELL NOTICE" has the meaning given in Section 9.3.
"CAPITAL ACCOUNT" has the meaning given in Section 3.2, as adjusted
pursuant to the provisions of this Agreement.
"CAPITAL CONTRIBUTION" means, as to any Member, at any time, the
aggregate of the amount of any cash and the initial Book Value of any property
(net of the amount of any liability which is assumed by the Company in
connection with such contribution or secured by such property) contributed to
the Company by such Member pursuant to Section 3.1 of this Agreement.
- 3 -
<PAGE>
"CERTIFICATE OF FORMATION" means the Certificate of Formation of
Limited Liability Company of the Company as provided for pursuant to the Act, as
filed with the office of the Secretary of State of the State of Delaware, as
amended and restated from time to time pursuant to this Agreement or otherwise.
"CERTIFICATE OF LIMITED PARTNERSHIP" has the meaning given in the
Limited Partnership Agreement.
"CHIEF EXECUTIVE OFFICER" has the meaning given in Section 6.9.
"CLAIM" has the meaning given in Section 8.3.
"CLOSING DATE" has the meaning given in the Contribution Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor act thereto, and, to the extent applicable, any
Treasury Regulations promulgated thereunder.
"COMPANY" has the meaning given in the first paragraph hereof.
"COMPANY BUSINESS" has the meaning given in Section 2.4.
"CONTRIBUTION AGREEMENT" has the meaning given in the recitals.
"DEPRECIATION" means, with respect to a specified asset, for any
Accounting Period, any depreciation, depletion, amortization or other cost
recovery deduction allowable with respect to such asset for such Accounting
Period, PROVIDED that if the Book Value of such asset differs from its adjusted
basis for federal income tax purposes at the beginning of such Accounting
Period, Depreciation shall be an amount that bears the same relationship to the
Book Value of such asset as the depreciation, depletion, amortization or other
cost recovery deduction computed for such tax purposes with respect to such
asset for such Accounting Period bears to the adjusted tax basis of such asset
at the beginning of such Accounting Period, or if such asset has a zero adjusted
tax basis, Depreciation shall be an amount determined under any reasonable
method selected by the Members Committee.
"EFFECTIVE DATE" has the meaning given in Section 2.1.
"FAIR VALUE" means, with respect to any specified asset, its value
as determined by the Members Committee or by appraisal (as directed or requested
by the Members Committee), PROVIDED that the Fair Value of each asset
contributed to the Company pursuant to the Contribution Agreement shall be the
value
- 4 -
<PAGE>
as set forth in Schedule 2.2 to the Contribution Agreement.
"FISCAL YEAR" means the fiscal year of the Company and shall be the
same as its taxable year, which shall be the calendar year unless otherwise
required by the Code. Each Fiscal Year shall commence on the day immediately
following the last day of the immediately preceding Fiscal Year, except that the
initial Fiscal Year shall begin on the Closing Date.
"GAAP" has the meaning given in Section 7.1.
"INDEMNIFIED PERSONS" has the meaning given in Section 8.3.
"INITIAL OFFER" has the meaning given in Section 9.3.
"INITIATING MEMBER" has the meaning given in Section 9.3.
"INTEREST" means, with respect to a Member, the entire interest of
such Member in the Company at any time, which interest, except as otherwise
provided in the second succeeding sentence, shall be proportionate to its
Capital Contribution, PROVIDED that if, at any time after the Closing Date, a
Member or Members make any Capital Contribution to the Company that is not in
proportion to the Members' respective Interests immediately prior to such
Capital Contribution, then unless otherwise determined by the Members Committee,
(I) the aggregate values of the Interests of all Members prior to such Capital
Contribution shall be adjusted to their Fair Values, (II) the Book Values of the
assets of the Company shall be adjusted accordingly, and (III) a Member's
Interest after such Capital Contribution shall be equal to (X) the sum of the
Fair Value of such Member's Interest prior to such Capital Contribution and the
amount of such Capital Contribution made by such Member (Y) divided by the
aggregate Fair Values of the Interests of all Members prior to such Capital
Contribution and the aggregate amount of such Capital Contributions made by all
Members at such time. A Member's Interest shall include the right of such Member
to any and all benefits to which a Member may be entitled as provided in this
Agreement, together with the obligations of such Member to comply with the terms
of this Agreement. Upon completion of the transactions contemplated by the
Contribution Agreement, each of Accuride Sub and Kaiser shall initially hold an
Interest equal to 50% of the total Interests of the Members of the Company,
subject in each instance to adjustment from time to time pursuant to the
applicable provisions of this Agreement.
"JOINT VENTURE PRODUCTS" means (I) aluminum wheels 16" in diameter
and larger primarily for light, medium and heavy duty trucks, trailers and buses
(classes 1-8), although certain of such wheels may also be sold into the
automotive original equipment manufacturer market; (II) tire molds for
automotive and light-medium-heavy truck applications, as to each of clauses (i)
- 5 -
<PAGE>
and (ii) above, produced by forging, fabricating or casting for marketing and
sale worldwide, including without limitation in the original equipment
manufacturer market, after-market and repair and replacement markets; and (III)
such additional or different products as the Members Committee may approve
pursuant to Section 6.4. Notwithstanding the foregoing, Joint Venture Products
shall not include, without Kaiser's written consent, motorcycle wheels and wheel
parts, wheel centers for any applications, forged one piece wheel blanks sold to
other wheel manufacturers and finished wheels for the automotive aftermarket
produced or being contemplated for production by Kaiser.
"KAISER" has the meaning given in the first paragraph hereof.
"KAISER EXCLUDED INVENTORY" has the meaning given in the
Contribution Agreement.
"LIMITED PARTNERSHIP" has the meaning given in the recitals.
"LIMITED PARTNERSHIP AGREEMENT" has the meaning given in the
recitals.
"LIMITED PARTNERSHIP BUSINESS" means the design, manufacture (by
forging, fabricating, casting or as otherwise determined by the Members),
marketing and sale of Joint Venture Products.
"MEMBER" means either Accuride Sub or Kaiser, or any Person who
becomes a Member as herein provided and who is listed as a member of the Company
in the books and records of the Company, in such Person's capacity as a member
of the Company.
"MEMBERS COMMITTEE" has the meaning given in Section 6.2(a).
"NONRECOURSE DEDUCTIONS" has the meaning given in Section 1.704-
2(b)(1) of the Treasury Regulations.
"OFFER" has the meaning given in Section 9.2(a).
"OFFER NOTICE" has the meaning given in Section 9.2(a).
"OFFERED INTEREST" has the meaning given in Section 9.2(a).
"OFFERED MEMBERS" has the meaning given in Section 9.2(a).
"OFFERING MEMBER" has the meaning given in Section 9.2(a).
"OFFICERS" has the meaning given in Section 6.10.
- 6 -
<PAGE>
"PARTNER" means the general partner or any limited partner of the
Limited Partnership.
"PARTNER NONRECOURSE DEBT" has the meaning given in Section
1.704-2(b)(4) of the Treasury Regulations.
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" has the meaning given in
Section 1.704-2(i)(2) of the Treasury Regulations.
"PARTNER NONRECOURSE DEDUCTIONS" has the meaning given in
Section 1.704-2(i)(1) of the Treasury Regulations.
"PARTNERSHIP MINIMUM GAIN" has the meaning given in Section
1.704-2(b)(2) of the Treasury Regulations.
"PERSON" means any individual, corporation, partnership,
association, public body, governmental authority or other entity.
"PROFIT" or "LOSS" means for any Accounting Period the net income
or net loss of the Company for such Accounting Period, including any items that
are separately stated for purposes of Section 702(a) of the Code, as determined
in accordance with federal income tax accounting principles, with the following
adjustments:
(a) any income of the Company that is exempt from federal income
tax shall be included as income;
(b) any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as such Section 705(a)(2)(B)
expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the
Treasury Regulations shall be treated as current expenses;
(c) Book Gain or Book Loss shall be taken into account in lieu
of any tax gain or tax loss recognized by the Company;
(d) in lieu of depreciation, amortization, depletion, and other
cost recovery deductions taken into account in computing the
taxable income or loss of the Company, there shall be taken into
account Depreciation for such period, computed as provided in this
Agreement;
(e) if any asset of the Company is distributed in kind during
such Accounting Period, the Company shall be deemed to have
realized Profit or Loss thereon in the same manner as if the
Company had sold such asset for an amount equal to the greater of
(I) the Fair Value of such asset or (II) the amount of any debt to
which such asset is then subject; and
- 7 -
<PAGE>
(f) notwithstanding any other provisions of this definition, any
items which are specially allocated pursuant to Section 4.3 shall
not be taken into account.
"RECEIVING MEMBER" has the meaning given in Section 9.3.
"REPRESENTATIVE" has the meaning given in Section 6.2(a).
"RESPONSE" has the meaning given in Section 9.3.
"SPEEDLINE AGREEMENTS" means, collectively, the Cast Aluminum Wheel
Supply Agreement, dated as of December 1, 1995, between Accuride and Speedline
Aluminia, S.p.A. ("Speedline"); the Memorandum of Agreement re: Cast Aluminum
Wheel Venture, dated as of December 1, 1995, between Accuride and Speedline; and
the Letter Agreement, dated June 1, 1996, between Accuride and Speedline.
"STRATEGIC PLAN" has the meaning given in Section 6.4.
"SUBSTITUTED MEMBER" has the meaning given in Section 9.5.
"TAX MATTERS MEMBER" has the meaning given in Section 7.5(a).
"TIRE MOLD BUSINESS" has the meaning set forth in Section 11.2(b).
"TRANSFER" has the meaning given in Section 9.1.
"TREASURY REGULATIONS" means the federal income tax regulations,
including any temporary or proposed regulations, promulgated under the Code, as
such may be amended from time to time.
ARTICLE 2
FORMATION OF LIMITED LIABILITY COMPANY
2.1 FORMATION. By execution of this Agreement, each of Accuride
Sub and Kaiser, or their designees, is hereby authorized to execute and file the
Certificate of Formation pursuant to the Act with the Secretary of State of the
State of Delaware to be effective upon the date filed (the "EFFECTIVE DATE"),
and upon the occurrence of the Effective Date, the Company will be formed as a
Delaware limited liability company.
2.2 COMPANY NAME. The name of the Company shall be AKW General
Partner L.L.C. The business of the Company shall be
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conducted under such name or such other names as the Members Committee shall
from time to time approve.
2.3 PRINCIPAL BUSINESS OFFICE, REGISTERED OFFICE AND REGISTERED
AGENT. The Company shall maintain its principal business office, initially, at
1015 East 12th Street, Erie, Pennsylvania 16503 and shall move such principal
business office to Akron, Ohio (at such time as shall be determined by the
Members Committee) or to such other location as may hereafter be determined by
the Members Committee. The address of the registered office of the Company in
the State of Delaware is Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801 and the name of the Company's
registered agent at such address is The Corporation Trust Company. The
principal business office, the registered office and the registered agent of the
Company may be changed by the Members Committee from time to time in accordance
with the then applicable provisions of the Act and any other applicable laws.
2.4 BUSINESS PURPOSES. The purposes of the Company are to
manage, and to invest in, hold and realize upon partnership interests in, the
Limited Partnership (the "Company Business") and to engage in all actions
necessary, convenient or incidental to the foregoing.
2.5 THE CERTIFICATE, ETC. The Members hereby agree to, and, as
appropriate, to cause the Company to, execute, file and record all such
certificates and documents, including amendments to the Certificate of
Formation, and to do such other acts as may be appropriate in the reasonable
judgment of the Members Committee to comply with all requirements for the
formation, continuation and operation of the Company as a limited liability
company, and the ownership of property and the conduct of the Company Business,
under the laws of the State of Delaware and any other jurisdiction in which the
Company may own property or conduct business.
2.6 TERM OF COMPANY. The term of the Company will commence on
the Effective Date, and shall continue until dissolution occurs by operation of
law, the written consent of the Members or otherwise in accordance with Section
10.1(a) and the liquidation and winding up thereof is complete as provided in
Section 10.5.
2.7 QUALIFICATION IN OTHER JURISDICTIONS. The Members shall
cause the Company to be qualified and registered as a limited liability company
doing business in such jurisdictions, if any, as the Members Committee, with
the advice of counsel, from time to time shall determine is appropriate. The
Members Committee shall execute, file and publish all such certificates,
notices, statements or other instruments necessary to permit the Company to
conduct business as a limited liability company in all jurisdictions where the
Company elects to do business and to maintain the limited liability of the
Members.
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2.8 POWERS. In furtherance of its purposes, but subject to all
of the provisions of this Agreement, the Company shall have the power and is
hereby authorized to do such things and engage in such activities related to the
foregoing as may be necessary, convenient or advisable with respect to the
conduct of the Company Business, and have and exercise all of the powers and
rights conferred upon limited liability companies formed pursuant to the Act.
ARTICLE 3
CAPITALIZATION
3.1 CAPITAL CONTRIBUTIONS. On the Closing Date, each of Accuride
(through Accuride Sub) and Kaiser shall make the Capital Contribution of cash or
property as agreed upon by Accuride and Kaiser in the Contribution Agreement
and, upon the consummation of the transactions contemplated by the Contribution
Agreement, each of Accuride Sub's and Kaiser's Capital Contribution shall be as
set forth opposite its name on Schedule A hereto. Thereafter, the Members shall
make Capital Contributions in proportion to their respective Interests from time
to time in such amounts and on such dates as may unanimously be agreed by the
Members. Subject to the approval of the Members Committee, the Members may
satisfy their Capital Contributions by contributing cash or other property.
3.2 CAPITAL ACCOUNTS. A separate capital account (a "CAPITAL
ACCOUNT") shall be established and maintained for each Member and shall be
adjusted as of the close of business on each Adjustment Date as follows:
(a) Each Member's Capital Account shall be credited with such
Member's Capital Contribution, such Member's distributive
share of Profit and any items in the nature of income or
gain which are specially allocated pursuant to Section 4.3,
and the amount of any Company liabilities that are assumed
by such Member or that are secured by any property
distributed to such Member by the Company, in each case
during the Accounting Period ending on such Adjustment Date.
(b) Each Member's Capital Account shall be debited with the
amount of cash and the Book Value of any property
distributed to such Member by the Company pursuant to any
provision of this Agreement, such Member's distributive
share of Loss and any items in the nature of expenses or
losses which are specially allocated pursuant to Section
4.3, and the amount of any liabilities of such Member that
are assumed by the Company or that are secured by any
property contributed by such Member to the
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Company, in each case during the Accounting Period ending on such
Adjustment Date.
(c) If at any time after the Effective Date, the Book Value of
any asset of the Company is adjusted pursuant to the last
sentence of the definition of Book Value set forth in
Article 1 (including pursuant to the proviso to the first
sentence of the definition of Interest set forth in Article
1), the Capital Accounts of all Members shall be adjusted
simultaneously to reflect the aggregate net adjustments as
if the Company had recognized Profit or Loss equal to the
respective amounts of such aggregate net adjustments.
(d) In the event all or a portion of an Interest in the Company
is transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the
transferred Interest.
3.3 CAPITAL ACCOUNT MAINTENANCE. The method by which the Capital
Accounts are maintained is intended to comply with Section 704(b) of the Code
and the Treasury Regulations thereunder and shall be interpreted and applied in
a manner consistent therewith.
3.4 WITHDRAWALS. Except as otherwise agreed to by the Members,
no Member shall be entitled to withdraw any part of its Capital Account or to
receive any distributions from the Company except as provided in Articles 5 and
10, or to make any loan or Capital Contribution to the Company except as
expressly provided in this Agreement.
ARTICLE 4
ALLOCATIONS
4.1 ALLOCATIONS OF PROFIT AND LOSS. Except as otherwise provided
in this Article 4, the Profit and Loss of the Company for each Accounting Period
shall be determined as of the end of each such Accounting Period and shall be
allocated among the Members in proportion to their respective Interests.
4.2 TAX ALLOCATIONS. (a) Except as provided in Section 4.2(b)
below, the income, gains, losses, credits and deductions recognized by the
Company shall be allocated among the Members, for federal, state and local
income tax purposes, to the extent permitted under the Code and the Treasury
Regulations, in the same manner that each such item affected the Members'
Capital Accounts.
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(b) In accordance with Section 704(c) of the Code and the Treasury
Regulations thereunder, any income, gain, loss, credit and deduction with
respect to any asset contributed to the capital of the Company by any Member
shall, solely for federal income tax purposes, be allocated among the Members so
as to take account of any variation between the adjusted basis of such asset to
the Company for federal income tax purposes and its initial Book Value
(determined in accordance with the definition of Book Value set forth in Article
1). The method of allocating such income, gain, loss, credit and deduction
shall be such method set forth in Section 1.704-3(b) of the Treasury
Regulations. In the event the Book Value of any asset of the Company is
subsequently adjusted in accordance with the last sentence of such definition of
Book Value, subsequent allocations of any income, gain, loss, credit and
deduction with respect to such asset shall take account of any variation between
the adjusted tax basis of the asset to the Company and its Book Value in the
same manner as under Section 1.704-3(d) of the Treasury Regulations.
4.3 SPECIAL ALLOCATIONS. (a) NONRECOURSE DEDUCTIONS.
Nonrecourse Deductions for any Accounting Period shall be allocated to the
Members in proportion to their respective Interests.
(b) MINIMUM GAIN CHARGEBACK. Except as otherwise provided in
Section 1.704-2(f) of the Treasury Regulations, notwithstanding any other
provision of this Article 4, in the event there is a net decrease in Partnership
Minimum Gain during any Accounting Period, each Member at the end of such
Accounting Period shall be specially allocated items of income and gain for such
Accounting Period (and, if necessary, subsequent Accounting Periods) in an
amount equal to such Member's share of the net decrease in Partnership Minimum
Gain as determined in accordance with Section 1.704- 2(g)(1) of the Treasury
Regulations. The items to be so allocated shall be determined in accordance
with Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the Treasury Regulations. This
Section 4.3(b) is intended to comply with the minimum gain chargeback
requirement of Section 1.704- 2(f) of the Treasury Regulations and shall be
interpreted and applied in a manner consistent therewith.
(c) PARTNER NONRECOURSE DEDUCTIONS. Any Partner
Nonrecourse Deductions for any Accounting Period shall be specially allocated to
the Member who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable
in accordance with Section 1.704-2(i)(1) of the Treasury Regulations. If more
than one Member bears the economic risk of loss with respect to a Partner
Nonrecourse Debt, the Partner Nonrecourse Deductions attributable thereto shall
be allocated between or among such Members in accordance with the ratios in
which they share such economic risk of loss.
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(d) PARTNER MINIMUM GAIN CHARGEBACK. Except as otherwise provided
in Section 1.704-2(i)(4) of the Treasury Regulations, notwithstanding any other
provision of this Article 4, if there is a net decrease in Partner Nonrecourse
Debt Minimum Gain during any Accounting Period, each Member who has a share of
the Partner Nonrecourse Debt Minimum Gain shall be specially allocated items of
income and gain for such Accounting Period (and, if necessary, subsequent
Accounting Periods) in an amount equal to such Member's share of the net
decrease in Partner Nonrecourse Debt Minimum Gain determined in accordance with
Section 1.704-2(i)(4) of the Treasury Regulations. The items to be so allocated
shall be determined in accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2)
of the Treasury Regulations. This Section 4.3(d) is intended to comply with the
minimum gain chargeback requirement in Section 1.704-2(i)(4) of the Treasury
Regulations and shall be interpreted and applied in a manner consistent
therewith.
(e) QUALIFIED INCOME OFFSET. No allocation shall be made pursuant
to this Article 4 to the extent it shall cause or increase a deficit in any
Member's Capital Account (in excess of such Member's obligation, including any
obligation under the Treasury Regulations, if any, to restore a deficit in its
Capital Account) as of the end of the Accounting Period to which such allocation
is related. In making the foregoing determination, a Member's Capital Account
shall be reduced by the amounts described in Section 1.704-1(b)(2)(ii)(d)(4),
(5) and (6) of the Treasury Regulations. In the event any Member unexpectedly
receives an adjustment, allocation or distribution described in
Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury Regulations, items
of income and gain shall be specially allocated to each such Member in an amount
and manner sufficient to eliminate, to the extent required by the Treasury
Regulations, such deficit as quickly as possible, provided that an allocation
pursuant to this Section 4.3(e) shall be made only if and to the extent such
Member would have a deficit in its Capital Account after all other allocations
provided for in this Article 4 have been made as if this Section 4.3(e) were not
in the Agreement. This Section 4.3(e) is intended to comply with the alternate
test for economic effect set forth in Section 1.704-1(b)(2)(ii)(d) of the
Treasury Regulations and shall be interpreted and applied in a manner consistent
therewith.
4.4 RESTORATIVE ALLOCATIONS. The allocations set forth in
Section 4.3 are intended to comply with certain requirements of
Sections 1.704-1(b) and 1.704-2 of the Treasury Regulations. Notwithstanding
any other provision of this Agreement, the allocations pursuant to Section 4.3
shall be taken into account in allocating Profit, Loss and items of income,
gain, loss and deduction among the Members so that, insofar as possible, the net
amount of the allocations of Profit, Loss, and other items and the allocations
pursuant to Section 4.3 to each Member shall be equal to the net amount that
would have been
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allocated to each Member had the allocations provided for in Section 4.3 not
occurred.
4.5 SECTION 754 ELECTION. The Company shall, upon the written
request of any Member and the approval of the Members Committee, elect, pursuant
to Section 754 of the Code, to adjust the basis of property of the Company as
permitted and provided in Sections 734 and 743 of the Code. Such election shall
be effective solely for federal (and, if applicable, state and local) income tax
purposes and (except as provided in Section 1.704-1(b)(2)(iv)(m) of the Treasury
Regulations) shall not result in any adjustment to the Book Value of any asset
of the Company or to the Members' Capital Accounts or in the determination or
allocation of Profit or Loss for purposes other than such tax purposes. Each
Member, and not the Tax Matters Member, shall be responsible for preparing any
schedules resulting from the Section 754 election that are relevant to the
computation of such Member's federal income tax liability, PROVIDED that the
other Members shall provide the Member preparing such schedules with the
information necessary for preparing such schedules and readily available from
the books and accounts of such other Members.
ARTICLE 5
DISTRIBUTIONS
5.1 DISTRIBUTIONS. Distributions may be made in accordance with
the Members' respective Interests at the time of distribution at such times and
in such amounts as the Members Committee shall determine. Notwithstanding the
foregoing, if any Member is in default or delinquent in respect of any
obligation to the Company, no distribution shall be made to the defaulting or
delinquent Member until such default is cured or such delinquent obligation is
paid, PROVIDED that, notwithstanding the foregoing, for each Fiscal Year the
Company shall distribute to each Member in cash an amount equal to such Member's
distributive share of the Company's taxable income for such Fiscal Year,
multiplied by the highest marginal corporate income tax rate under the Code in
effect for such Fiscal Year.
5.2 WITHHOLDING. (a) Each Member shall, to the fullest extent
permitted by applicable law, indemnify and hold harmless each Person who is or
who is deemed to be the responsible withholding agent for federal, state or
local income tax purposes against all claims, liabilities and expenses of
whatever nature (other than any claims, liabilities and expenses in the nature
of penalties and accrued interest thereon that result from such Person's fraud,
willful misfeasance, bad faith or gross negligence) relating to such Person's
obligation to withhold and to pay over, or otherwise pay, any withholding or
other taxes payable by the Company or as a result of such Member's participation
in the Company.
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(b) The Company shall withhold and pay over, or otherwise pay, any
withholding or other taxes payable by the Company with respect to such Member or
as a result of such Member's participation in the Company pursuant to any
applicable tax law. If and to the extent that the Company shall be required to
withhold or pay any such taxes, such Member shall be deemed for all purposes of
this Agreement to have received a payment from the Company as of the time such
withholding or tax is required to be paid, which payment shall be deemed to be a
distribution with respect to such Member's Interest in the Company to the extent
that the Member (or any successor to such Member's Interest in the Company) is
then entitled to receive a distribution and shall reduce the amount of
distributions to be made to such Member pursuant to this Article 5. To the
extent that the aggregate of such payments to a Member for any period exceeds
the distributions to which such Member is entitled for such period, such Member
shall make a prompt payment to the Company of such excess.
(c) If the Company makes a distribution in kind and such
distribution is subject to withholding or other taxes payable by the Company on
behalf of any Member, such Member shall make a prompt payment to the Company of
the amount so withheld.
5.3 RESTRICTED DISTRIBUTIONS. Notwithstanding any provision to
the contrary contained in this Agreement, the Company shall not make a
distribution to any Member on account of its interest in the Company if such
distribution would violate Section 18-607 of the Act or other applicable law.
ARTICLE 6
MANAGEMENT
6.1 MANAGEMENT. The Members shall have all of the management
authority of the Company. No delegation of authority to a Representative,
Officer, employee or other Person shall constitute a delegation of the Members'
ultimate management authority. No Member, Representative or officer or employee
of a Member will have authority to act for and to assume any obligations or
responsibilities on behalf of the Company except in accordance with instructions
by the Members Committee. The Company shall not have "managers" within the
meaning of the Act.
6.2 MEMBERS COMMITTEE. (a) In order for the Members to be able to
manage the affairs and conduct the business of the Company, there is hereby
appointed a Members Committee (the "MEMBERS COMMITTEE") comprised of one or more
representatives (each, a "REPRESENTATIVE", and collectively, the
"REPRESENTATIVES") appointed by each Member. The Representative or
Representatives, collectively, designated by each Member shall exercise voting
power proportionate to such Member's then current Interest. Each Representative
will act solely as agent on behalf
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of the designating Member. The initial Representatives shall be as set forth in
Schedule B.
(b) Each Member, upon written notice to the other may designate an
alternate to act for its Representative and in the absence of such
Representative, such alternate shall have full power and authority to act in the
place of the Representative for whom he or she has been designated an alternate.
The initial alternates shall be as set forth in Schedule B. Each Representative
shall have the right to give his or her proxy to any other Representative (or
any alternate who is acting in place of such Representative) to exercise his or
her vote at any meeting of the Members Committee. The Representatives (and the
alternates designated to act in the place of Representatives) shall serve for
indefinite terms at the pleasure of the designating Member. Each designation of
a Representative (or an alternate) by a Member shall remain in effect until the
Member making such designation shall notify the Company and the other Members of
a change in such designation. Notwithstanding anything to the contrary herein,
Representatives and alternates must be officers, directors or employees of the
designating Member or its Affiliates.
(c) The Members Committee shall have a Chairman of the Board,
who shall preside at all meetings of the Members Committee and shall have such
other powers and duties as may be prescribed from time to time by the Members.
The first Chairman of the Board shall be a person designated by Accuride Sub,
subject to the approval of Kaiser, and shall hold office for a term ending
December 31, 1998 or until his or her successor is duly selected. Thereafter,
the Chairman of the Board shall hold office for a term of one year or until his
or her successor is duly selected. At the expiration of each Chairman of the
Board's term, the Members Committee will select one of its members as the next
succeeding Chairman of the Board, PROVIDED that such member shall not be the
immediately preceding Chairman of the Board or a person representing such
preceding Chairman of the Board's Member. The Chairman of the Board shall be
subject to removal by the Members Committee.
6.3 APPOINTMENT AND REMOVALS. Each Member may replace any
Representative whom it has appointed to the Members Committee, or any alternate
therefor, at any time and for any reason, upon seven days' prior written notice
thereof to the Company and each Representative.
6.4 ACTION BY MEMBERS COMMITTEE, OFFICERS AND OTHER PERSONS. All
actions and decisions by the Members Committee shall be made at a duly convened
meeting of the Members Committee by the vote of a majority of the voting power
of the Members as provided in Section 6.2, except that none of the following
actions, with respect to the Company and the Limited Partnership (by the Company
acting in its capacity as general partner of the Limited Partnership), shall be
taken by the Members Committee or
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any Officer or other Person, without the unanimous approval of all
Representatives:
(i) adoption of the annual capital expenditure and
operating budgets, three-year capital expenditure plans
and five-year strategic plans with respect to the
Limited Partnership (each, a "STRATEGIC PLAN"), or such
budgets or plans for such other periods as may
unanimously be agreed upon by the Members, and approval
of any deviation therefrom which would result in an
expenditure in excess of $1 million, other than as
contemplated by this Agreement and the Limited
Partnership Agreement (which expenditures shall be
supported by a detailed appropriation request);
(ii) amendment, repeal or reinstatement of the Certificate
of Formation or the Certificate of Limited Partnership
and amendment of this Agreement or the Limited
Partnership Agreement;
(iii) dissolution, winding up or liquidation of, or filing of
any petition in bankruptcy by, the Company or the
Limited Partnership, other than as a result of the
bankruptcy, insolvency, dissolution, withdrawal or
resignation of a Member or a Partner, as the case may
be;
(iv) approval of annual financial statements and allocations
or distributions of earnings other than in accordance
with this Agreement, the Limited Partnership Agreement,
the Contribution Agreement, or a previously agreed-upon
allocation or distribution policy as contemplated by
this Agreement or the Limited Partnership Agreement;
(v) merger or consolidation involving the Company or the
Limited Partnership, sale of all or substantially all
of the assets of the Company or the Limited
Partnership, purchase or sale of any assets (other than
in the ordinary course of business) or business for an
amount in excess of $1 million, in a single transaction
or series of related transactions, and entry into joint
ventures, partnerships or similar arrangements between
the Company or the Limited Partnership and any third
party;
(vi) incurrence of any indebtedness greater than $1 million
in a single transaction or a series of related
transactions, other than as contemplated by this
Agreement or the Limited Partnership Agreement;
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(vii) creation of any mortgage, lien, pledge, charge or other
encumbrance securing an obligation greater than $1
million in a single transaction or a series of related
transactions, other than as contemplated by this
Agreement or the Limited Partnership Agreement;
(viii) any substantial change of tax or accounting methods or
policies or auditing practices, and the approval of an
independent auditing firm;
(ix) amendment or termination of the Contribution Agreement
or any other Ancillary Agreement;
(x) admission of any new Members hereunder or limited
partners under the Limited Partnership Agreement, as
the case may be, or issuance of any additional
Interests or limited partnership interests in the
Limited Partnership, as the case may be, to, or
incurrence of any indebtedness from, a Member or a
limited partner, as the case may be, other than as
contemplated by this Agreement or the Limited
Partnership Agreement;
(xi) an election by the Company or the Limited Partnership
to be treated as a corporation for federal, state or
local income tax purposes;
(xii) amendment of the Ultra-Forge Convertor Contract (as
defined in the Contribution Agreement) or entry into
any agreement with Ultra-Forge Incorporated;
(xiii) conduct by the Company of any business unrelated to the
Company Business or by the Limited Partnership of any
business unrelated to the Limited Partnership Business;
(xiv) execution, modification or early termination of
services agreements by the Limited Partnership;
execution, modification or early termination by the
Limited Partnership of supply, purchase and other
material contracts having (A) an original term in
excess of three years or (B) covering the purchase or
sale of products or materials in excess of $5 million;
and approval of any amendment, modification,
termination or waiver of any of the terms or conditions
of any of the Accuride Excluded Contracts or any of the
Accuride Contracts, insofar as such terms or conditions
relate to aluminum wheels or to the extent that any
amendment, modification, termination or waiver of any
terms or conditions of any Accuride Excluded Contract
or Accuride Contract relating to
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steel wheels could affect the relevant terms and
conditions relating to aluminum wheels;
(xv) any loans or guarantees (other than accounts payable in
the ordinary course of business);
(xvi) the adoption of any, and any changes to or deviation
from the policies on, and the creation of systems of
control of, hedging and futures contracts and similar
commitments;
(xvii) the adoption of any, and any changes to or deviations
from the policies on, customer credit exposure
limitations;
(xviii) the adoption, approval, implementation or amendment of
any collective bargaining agreement, employee benefit
plan, employee health and welfare plan or management
incentive program;
(xix) termination (other than as provided herein) and
compensation of executive officers;
(xx) the conduct of legal actions, proceedings and
settlements, other than in the ordinary course of
business (but otherwise including actions, proceedings
and settlements in excess of $50,000);
(xxi) the purchase or lease of any Real Property;
(xxii) subject to Section 6.9 and 6.10, establishment of an
appropriate management structure for operating the
Limited Partnership, including, but not limited to, the
establishment of executive offices and the election of
individuals to fill such offices; and
(xxiii) the undertaking or modification of legal obligations,
other than as provided in clauses (ii)-(xxii) of this
Section, that could reasonably be expected to result in
expenditures or loans to the Company or the Limited
Partnership in excess of $250,000.
Any dollar thresholds set forth above may be modified by agreement of all of the
Members. Prior to voting on any matter, each Representative will disclose any
conflict of interest of the Member that appointed such Representative with
respect to such matter.
6.5 DISINTERESTED MAJORITY; TRANSACTIONS WITH MEMBERS AND
AFFILIATES. Notwithstanding anything to the contrary contained herein,
transactions or agreements (including amendments or waivers with respect to such
transactions or
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agreements), between the Company, the Limited Partnership or any subsidiary of
the Company or the Limited Partnership, on the one hand, and any Member or any
Affiliate of any Member, on the other hand, and any other action to be taken by
the Members Committee as to which any Member has a conflict of interest will
(I) require the approval of the Representatives (or alternates) of disinterested
Members and (II) be effected on an arm's length basis on terms no less favorable
to the Company or its subsidiary than would be available to any unaffiliated
third party.
6.6 MEETINGS. Regular meetings of the Members Committee shall be
convened at least quarterly at the corporate headquarters of the Company (or
such other place as the Representatives shall agree). Special meetings may be
convened by any Member or its Representative (or alternate) upon giving seven
Business Days' prior written notice to each of the other Representatives or
their designated alternates at the address set forth on Schedule B, which notice
shall specify the purpose of the meeting (unless such notice requirement is
waived by all of the Representatives). Meetings shall be held at such times,
dates and places as may be established from time to time by the Members
Committee. The Members Committee may meet by telephone conference call or by
such other means of communications as may be permitted by the Act, and may take
action by unanimous written consent. Minutes of the meetings of the Members
Committee shall be kept by the Secretary, shall reflect all action taken and
shall promptly be reduced to writing, signed and delivered to the Members. The
Members Committee may adopt resolutions without a formal meeting if each
Representative consents to such resolutions in writing. The Members Committee,
by unanimous approval, may make such further rules and regulations and establish
such procedures for the conduct of its meetings and the discharge of its
responsibilities, consistent with the provisions of this Agreement, as it may
consider necessary or advisable.
6.7 QUORUM. The presence of Representatives (or alternates) of each
Member, in person or by proxy, shall constitute a quorum for the transaction of
business at meetings of the Members Committee.
6.8 NOTICE; AGENDAS. The Chief Executive Officer shall prepare an
agenda for each regular meeting of the Members Committee. Such agenda shall
specify any matters requiring approval of the Representatives in accordance with
the terms of this Agreement. The Chief Executive Officer shall give to the
Representatives not less than ten Business Days' notice of the place, date, and
time of each regular meeting of the Members Committee. This notice shall be
accompanied by the agenda. Members of the Members Committee may waive notice of
any meeting.
6.9 CHIEF EXECUTIVE OFFICER. The Company shall have a Chief
Executive Officer, who shall be the chief executive officer of the Company and,
subject to Section 6.4, this Section 6.9 and the direction and oversight of the
Members Committee,
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shall be authorized to implement the Business Plan and shall have such other
powers and duties as may be prescribed from time to time by the Members. The
first Chief Executive Officer shall be a person designated by Accuride Sub,
subject to the approval of Kaiser. Thereafter, the Members Committee will
select the Chief Executive Officer. The Chief Executive Officer shall hold
office for a term designated by the Members Committee or until his or her death,
resignation or removal in accordance with this Section 6.9. The Chief Executive
Officer may be removed (I) for reasons of gross mismanagement or failure to meet
performance measures established in writing by the Members Committee (which
shall substantially be based on the then-current Business Plan), in each case
except as a result of a material adverse change in general market or industry
conditions, by any Member, and (II) for any other reason, with the unanimous
agreement of the Members. In case of removal of the Chief Executive Officer
initiated by a Member pursuant to clause (i) of the preceding sentence, the
succeeding Chief Executive Officer shall be a person designated by the other
Member, subject to the approval of the initiating Member. In case of the death,
resignation or removal of the Chief Executive Officer, the Vice President of
Operations shall act as acting Chief Executive Officer until a successor to the
Chief Executive Officer has been designated.
6.10 OTHER OFFICERS. In addition to the Chief Executive Officer,
the officers of the Company (together with the Chief Executive Officer, the
"OFFICERS") shall be the Controller, the Vice President of Operations, the
Director of Sales and Marketing, the Director of Research and Development, the
Director of Human Resources and such other Officers as may be deemed appropriate
by the Members Committee. The Members Committee may from time to time prescribe
the powers and duties of the Officers appointed pursuant to this Section 6.10.
Accuride Sub shall appoint the initial Director of Sales and Marketing, Director
of Research and Development and Director of Human Resources, and Kaiser shall
appoint the initial Controller and Vice President of Operations, in each case
subject to the approval of the other Member. Except for the Officers initially
appointed by Accuride Sub and Kaiser, the Officers appointed pursuant this
Section 6.10 shall be elected from nominees designated by the Chief Executive
Officer, subject to the consent of each of the Members, which shall not be
unreasonably withheld. Each Officer shall hold office for a term designated by
the Chief Executive Officer (subject to the approval of each of the Members,
which shall not be unreasonably withheld) or until his or her death, resignation
or removal. Officers may be removed (I) for reasons of gross mismanagement or
failure to meet any performance measures established in writing by the Members
Committee, in each case except as a result of general market or industry
conditions, by any Member or (II) for any reason, with the unanimous agreement
of the Members. With the unanimous approval of the Members, any two or more
offices may be held by the same person.
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6.11 DUTY OF GOOD FAITH. The Members, Representatives (or
alternates) and Officers shall perform their management duties in good faith, in
a manner such Members, Representatives (or alternates) and Officers reasonably
believe to be in the Company's best interests, and with such care as ordinary
prudent persons in similar positions would use under similar circumstances and
conditions. No Member, Representative (or alternate) or Officer shall be liable
to the Company for any loss or damage arising in connection with the performance
of their management duties unless the loss or damage was the result of gross
negligence or willful misconduct. This Section 6.11 shall not be construed as
providing rights or benefits for any third parties.
6.12 IMPLEMENTATION; FURTHER ASSURANCES. Each Member shall take
such actions as may be required under applicable law, including actions with
respect to the execution of documents and performance of other ministerial acts,
to give full effect to, and to implement, all decisions of the Members
Committee, including any amendments and supplements to the Business Plan.
ARTICLE 7
BOOKS; ACCOUNTING; TAX MATTERS; REPORTS
7.1 BOOKS AND RECORDS. At all times during the continuance of the
Company, the Company shall maintain books of account for the Company that shall
show a true and accurate record of all costs and expenses incurred, all charges
made, all credits made and received and all income derived in connection with
the operation of the Company Business in accordance with generally accepted
accounting principles consistently applied ("GAAP"). Each Member shall have
full access to such books of account for the Company and to all financial, legal
and business records of the Company. Such books of account, financial, legal
and business records of the Company, together with a copy of this Agreement and
of the Certificate of Formation, shall at all times be maintained at the
principal place of business of the Company and shall be open to inspection,
examination and copying at reasonable times during normal business hours by each
Member and its duly authorized representatives for any purpose reasonably
related to such Member's Interest in the Company. Such books of account,
financial, legal and business records of the Company shall be retained during
the term of this Agreement and for seven years thereafter. Members shall be
entitled to discuss the matters recorded in such books and records with the
independent certified accountants retained by the Company and with any Officers.
A Member shall bear all expenses incurred in any examination made for such
Member's account.
7.2 FINANCIAL STATEMENTS. Within 60 days after the close of each
Fiscal Year there shall be prepared and submitted to each Member the following
financial statements of the Company,
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which shall be prepared on an accrual basis in accordance with GAAP and
accompanied by the report thereon of the independent certified public
accountants for the Company:
(a) a balance sheet as at the end of such Fiscal Year;
(b) a statement of profit or loss for such Fiscal Year;
(c) a statement of cash flows for such Fiscal Year; and
(d) a statement of the Members' Capital Accounts and changes
therein for such Fiscal Year.
7.3 AUDIT. The independent certified public accountant of the
Company shall be Arthur Andersen, unless the Members Committee shall determine
otherwise. The Members Committee shall cause Arthur Andersen or such other
independent certified public accountant as the Members Committee may determine
to conduct an annual audit of the Company, which shall be performed in
accordance with generally accepted auditing standards, and to accompany such
audit with a report containing such accountant's opinion. The cost of such
audits shall be a direct expense of the Company. A copy of any such audited
financial statements and accountant's report will be distributed to the Members
pursuant to Section 7.2 above. Each Member shall have the right to have the
audit papers of the Company reviewed by such Member's internal and external
auditors, at such Member's sole cost and expense.
7.4 BANK ACCOUNTS. The Company may maintain one or more accounts in
a bank or banks selected by the Members Committee, which accounts shall be used
for the payment of the expenditures incurred in connection with the business of
the Company and in which shall be deposited any and all cash receipts of the
Company. All such amounts shall be and remain the property of the Company.
There shall not be deposited in any of said accounts any funds other than funds
belonging to the Company and no other funds shall in any way be commingled with
such funds. Withdrawals shall be made only in the regular course of business on
such signature or signatures as the Members Committee may determine.
7.5 TAX MATTERS. (a) Kaiser shall act as the tax matters partner
of the Company (the "TAX MATTERS MEMBER") within the meaning of
Section 6231(a)(7) of the Code (and any similar capacity under applicable state
or local tax law). In addition, when the Company acts as the tax matters
partner of the Limited Partnership in its capacity as the general partner
thereof, Kaiser shall act on behalf of the Company as such tax matters partner
and shall comply with Section 7.5 of the Limited Partnership Agreement.
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(b) The Members hereby authorize the Tax Matters Member to take any
and all actions (including preparing, executing and filing Internal Revenue
Service Form 8832 with the Internal Revenue Service) necessary to treat the
Company as a partnership for purposes of federal and, to the extent permitted by
applicable law, state and local income tax and other taxes. Immediately after
the formation of the Company but in no event later than 75 days after the
Effective Date, the Tax Matters Member shall prepare Internal Revenue Service
Form 8832 (together with all information required by such form) and shall
execute and file such form (together with such required information) with the
Internal Revenue Service, effective immediately upon the occurrence of the
Effective Date. The Tax Matters Member shall also prepare and timely file any
state, local and other forms, reports or statements that are necessary to treat
the Company as a partnership for purposes of state and local income tax or other
taxes. Except as otherwise required by applicable law, the Members hereby agree
to treat (and to cause their respective Affiliates to treat) the Company as a
partnership for purposes of federal, state and local income tax or other taxes,
and not to take (and cause their respective Affiliates not to take) any position
or make any election in a tax return or otherwise inconsistent with the
foregoing. Each Member shall indemnify and hold harmless the Company and the
other Members against all Claims (including state or local income tax or other
tax liabilities) arising out of, resulting from or attributable to any breach by
such Member of this Section 7.5(b).
(c) The Tax Matters Member shall cause all required federal, state
and local income, franchise, property or other tax returns, including
information returns with respect to the Company or its business or assets, to be
timely prepared and filed with the appropriate office of the Internal Revenue
Service or any other relevant taxing jurisdiction at the Company's expense. The
Tax Matters Member may cause the Company to retain, at the Company's expense,
the independent certified public accountants of the Company to prepare or review
the necessary federal income tax returns and information returns for the
Company. As promptly as practicable, and in any event in sufficient time to
permit timely preparation and filing by each Member of its respective income or
other tax returns, the Company shall deliver to each Member a copy of each
income tax return or tax report filed by the Company and any required
information, reports and schedules.
(d) Each Member shall provide such information to the Tax Matters
Member, if any, as may be reasonably needed by the Company for purposes of
preparing any required tax return or information return, PROVIDED that such
information is readily available from such Member's books and records.
(e) At least forty-five days prior to the filing of any tax return
referred to in Section 7.5(c) on or measured by net or gross income or net or
gross profits or at least fifteen
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days prior to the filing of any other tax return referred to in Section 7.5(c),
the Tax Matters Member shall distribute or cause to be distributed to each
Member a final draft of any such tax return and any Member wishing to do so may
consult with any Officer with respect to the contents of such tax return. Any
Member may protest to the Members Committee or question the manner in which an
item is reported or characterized on the Company tax return. Any Representative
may request a meeting of the Members Committee to discuss the issues raised by
such protest or question in an attempt to resolve such issues. If the Members
Committee shall so determine, adjustments shall be made to the relevant tax
return of the Company.
(f) The Tax Matters Member, under the overall direction and control
of the Members Committee, shall represent the Company in connection with any tax
audit, examination or other administrative or judicial proceedings involving
the tax matters of the Company and, in connection therewith, shall cause the
Company to retain at the Company's expenses, counsel and other advisors selected
by the Members Committee. Each Member shall have the right to participate in
any such audit, examination or other administrative or judicial proceedings.
The Tax Matters Member shall not extend (or agree to extend) any applicable
statute of limitations, make any election, settle any issue or take any other
action binding on the Company or any other Member in connection with any such
tax audit, examination or other administrative or judicial proceedings without
the prior written consent of all Members. Any disagreement among the Members
arising in connection with any such tax audit, examination or other
administrative or judicial proceedings shall be resolved by the Members
Committee. The Tax Matters Member shall promptly deliver to each Member copies
of all notices and communications with respect to the tax matters of the Company
received from the Internal Revenue Service or any other taxing authority.
Section 7.5(e) shall apply MUTATIS MUTANDIS with respect to any written
submission to be filed with the Internal Revenue Service or any other taxing
authority. Neither the Tax Matters Member nor the Company shall be liable for
any additional tax, interest or penalties payable by a Member or any fees or
expense of separate counsel or other advisors retained by such Member to
represent such Member in any tax audit, examination or other administrative or
judicial proceedings relating to the tax items of the Company.
(g) The provisions of this Section 7.5 shall survive the termination
of the Company or the termination of any Member's Interest and shall remain
binding on the Members for as long a period of time as is necessary to resolve
with the Internal Revenue Service any and all matters regarding the federal
income taxation of the Company or the Members.
7.6 RESERVES. The Members Committee may from time to time in its
discretion establish reasonable cash or cash equivalent reserves.
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ARTICLE 8
RIGHTS AND OBLIGATIONS OF MEMBERS
8.1 LIMITED LIABILITY. (a) Each Member's liability with respect to
the Company and any subsidiary of the Company shall be limited as provided in
the Act, this Agreement or any applicable law. A Member shall not be personally
liable for any debts, obligations, liabilities or losses of the Company, or of
any subsidiary of the Company, as the case may be, whether arising in contract,
tort or otherwise, beyond its respective Capital Contribution to the Company and
its pro rata portion of the Company's undistributed profits, except as may
otherwise be provided for by law. No Member shall have any liability for the
restoration of the deficit of such Member's Capital Account and the return of
the Capital Contribution of any other Member unless otherwise provided in this
Agreement.
(b) The Members shall not be required to lend any funds to the
Company. Each Member shall only be liable to make payment of its respective
Capital Contributions as and when due hereunder or as agreed by all of the
Members. If and to the extent a Member's Capital Contributions shall be fully
paid, such Member shall not, except as required by the express provisions of the
Act regarding repayment of sums wrongfully distributed to Members, be required
to make any further contributions to the Company or any subsidiary thereof.
8.2 ACCESS TO INFORMATION; RECORDS. Each Member has the right to
obtain from the Company from time to time, upon demand for any purpose related
to the Member's interest as a Member of the Company, information regarding the
status of the Company's Business and financial condition, a copy of any written
Company agreement or other document, and any information required to be provided
under this Agreement or the Act.
8.3 INDEMNIFICATION. (a) The Company shall, to the fullest extent
permitted by law, indemnify and hold harmless each Member and its Affiliates,
each Officer, Representative (and alternate) and agent of the Company, and any
control person (as such term is defined in the Securities Act of 1933, as
amended, and the rules and regulations thereunder), director, officer, employee
and agent of each Member and its Affiliates (collectively, the "INDEMNIFIED
PERSONS"), from and against any and all losses, liabilities, damages, claims,
costs and expenses whatsoever (including without limitation fees and expenses
and any court costs) ("CLAIMS") arising out of, resulting from or attributable
to any act or omission performed or omitted by such Indemnified Person in good
faith on behalf of the Company after the date hereof and in a manner reasonably
believed to be within the scope of the authority conferred on it by this
Agreement, PROVIDED that no indemnity shall be payable hereunder with
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respect to any liability incurred by such Indemnified Person by reason of its
gross negligence or willful misconduct, or in the case of a Member, breach of
such Member's obligations under this Agreement or any Ancillary Agreement.
(b) Expenses incurred by an Indemnified Person in defense or
settlement of any Claim that may be subject to a right of indemnification
hereunder may be advanced by the Company prior to the final disposition thereof
upon receipt of an undertaking by or on behalf of the Indemnified Person to
repay such amount if it shall ultimately be determined that the Indemnified
Person is not entitled to be indemnified by the Company.
(c) The Company shall make all indemnification provided for pursuant
to this Section 8.3 solely out of and to the extent of Company assets and no
Member shall have personal liability on account thereof.
8.4 INSURANCE. The Company may purchase and maintain insurance, to
the extent and in such amounts as the Members shall deem reasonable, on behalf
of Indemnified Persons and such other Persons as the Members shall determine,
against any liability that may be asserted against or expenses that may be
incurred by any such Person in connection with the activities of the Company or
such indemnities, regardless of whether the Company would have the power to
indemnify such Person against such liability under the provisions of this
Agreement.
ARTICLE 9
TRANSFERS OF INTERESTS;
RIGHTS OF FIRST OFFER
9.1 GENERAL RESTRICTION. No Member may, directly or indirectly,
sell, transfer, encumber or otherwise dispose of (any such act, a "TRANSFER"),
its Interest to any Person without the written consent of each other Member,
except as permitted by this Article 9 and in accordance with applicable law. A
Member shall provide prior written notice to each other Member of any such
proposed Transfer.
9.2 RIGHT OF FIRST OFFER. (a) If, after the second anniversary of
the Closing Date, a Member (the "OFFERING MEMBER") desires to Transfer all (but
not less than all) of its Interest (the "OFFERED INTEREST"), the Offering Member
shall deliver to each of the other Members (the "OFFERED MEMBERS") a written
notice (the "OFFER NOTICE") specifying all of the material terms of the proposed
Transfer (the "OFFER"), including the consideration for which the Offering
Member proposes to Transfer the Offered Interest and any copies of any agreement
or documents to be executed or delivered in connection with the proposed
Transfer. Thereafter, the Offered Members shall have the exclusive right for a
period of 60 days after receipt of the
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Offer Notice to purchase all, but not less than all, of the Offered Interest
upon the terms and conditions contained in the Offer Notice.
(b) Each Offered Member shall have 60 days from the date the Offer
Notice is given in which to notify the Offering Member whether it elects to
purchase the Offered Interest set forth in such Offer. In the event some but
not all of the Offered Members accept the Offer, the Offering Member shall
retransmit the Offer with respect to such remaining Offered Interest to those
Offered Members electing to accept the Offer. Within 10 days from the date such
second offer is made, each such Offered Member will notify the other Offered
Members whether it elects to purchase some or all of the remaining Offered
Interest, it being understood that if such other Offered Members together
indicate an intention to purchase such portion of the Offered Interest greater
than the entire Offered Interest, then such Offered Interest shall be allocated
PRO RATA among such of the Offered Members as accepted such second offer, in the
same proportion that each of their respective Interests bears to the aggregate
Interests held by such Offered Members.
(c) After the completion of the procedures in Section 9.2(a) and (b),
if the Offered Members elect not to purchase all of the Offered Interest within
the 60-day period described in Section 9.2(a), the Offering Member shall have
the right during the ensuing 120-day period to Transfer to a third party, on
terms no more favorable to such third party than the terms set forth in the
Offer Notice.
(d) Upon consummation of any sale to a third party by an Offering
Member pursuant to this Section 9.2, the Offering Member shall promptly notify
the other Members as to the circumstances thereof, including the date of the
sale, the price, the identity of the purchaser and the identity of the ultimate
beneficial owner.
(e) No Member shall offer or transfer its Interest pursuant to this
Section 9.2 to any Member or other Person without concurrently offering and
transferring all of such Member's interest in the Limited Partnership to the
other Members or other Person in accordance with Section 9.2 of the Limited
Partnership Agreement.
9.3 BUY/SELL OPTION. At any time after the second anniversary of the
Closing Date, any Member (the "INITIATING MEMBER") may deliver to the other
Member a written bid (the "BID") which sets forth a cash price at which it would
either
(i) sell all, but not less than all, of its Interest to the other Member or (ii)
purchase all, but not less than all, of the other Member's Interest, which price
shall be an amount at least equal to (a) five times the average EBITDA as shown
in the Strategic Plan of the Limited Partnership (approved in accordance with
Section 6.4(i)) for each of the next succeeding three years times
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the percentage of the total interest in the Limited Partnership held by the
Company multiplied by (b) the percentage of the total Interest in the Company
held by the Member whose Interest is to be sold or purchased, as applicable,
unless otherwise agreed by the Member receiving such Bid. The first Bid so
delivered shall control. If two Bids are delivered at the same time, the higher
Bid shall control. Within 25 days after receipt of the Bid, the Member to which
the Bid was delivered must give the Initiating Member written notice (the
"BUY-SELL NOTICE") that it is either selling all of its Interest at such price
or purchasing all of the Initiating Member's Interest at such price. Failure to
give a Buy-Sell Notice within the required time shall be deemed an election by
the Member receiving the Bid not to purchase the Initiating Member's Interest
and to agree to sell all of its Interest to the Initiating Party. No Member
shall deliver a Bid to the other Member or sell to, or purchase from, the other
Member its Interest pursuant to this Section 9.3 without concurrently delivering
a bid and either selling all of its interest in the Limited Partnership to, or
purchasing all of the other Member's interest in the Limited Partnership from,
the other Member in accordance with Section 9.3 of the Limited Partnership
Agreement.
9.4 TRANSFERS TO AFFILIATES. A Member may Transfer all (but not
less than all) of its Interest to an Affiliate if prior to such Transfer (A)
such Member gives notice of the proposed Transfer to each of the other Members,
identifying the facts that make it an Affiliate of such Member, and (B) the
proposed transferee furnishes an assumption agreement or agreements to the
Company in accordance with Section 9.5 of this Agreement. No Transfer by a
Member to an Affiliate shall release or discharge, or be deemed or construed as
releasing or discharging, such Member from any of its covenants, agreements,
duties or obligations hereunder regardless of whether such covenants,
agreements, duties or obligations are required to be performed before or after
the effective date of such Transfer.
No Member shall transfer its Interest to an Affiliate pursuant to this Section
9.4 without concurrently transferring all of such Member's interest in the
Limited Partnership to the same Affiliate in accordance with Section 9.4 of the
Limited Partnership Agreement.
9.5 SUBSTITUTION OF A MEMBER. No Transfer of an Interest pursuant
to Section 9.2 or 9.4 of this Agreement shall be effective until the transferee
has delivered to each of the other Members a written instrument reasonably
satisfactory to counsel for such Members, whereby it (I) accepts, and agrees to
be bound by, the terms and provisions of this Agreement, (II) assumes all of the
liabilities and obligations of the transferor as a Member hereunder theretofore
or thereafter incurred pursuant to this Agreement and attributable to the
Interest transferred to it, and (III) represents and warrants that it has the
capability and authorizations necessary to satisfy all of the obligations
hereunder being assumed by it,
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financial and otherwise. Upon effectiveness of the transfer, the transferee
shall become a "SUBSTITUTED MEMBER" and a party to this Agreement, the
respective Interest of the transferor shall be reduced accordingly, and the
transferor shall be relieved of all liabilities and obligations as a Member
hereunder attributable to the acquired Interest of the transferee.
9.6 NONRECOGNITION OF CERTAIN TRANSFERS. Notwithstanding any other
provision of this Agreement, any Transfer in contravention of any of the
provisions of this Agreement shall be void and ineffective, and shall not bind,
or be recognized by, the Company or any Member.
ARTICLE 10
TERMINATION
10.1 EVENTS OF DISSOLUTION. (a) In accordance with Section 18-801
of the Act, the Company shall be dissolved and the affairs of the Company wound
up upon the occurrence of any of the following events:
(i) the bankruptcy (as defined in Section 18-304 of the Act),
dissolution, withdrawal, or resignation of a Member or the
occurrence of any other event which terminates the continued
membership of a Member in the Company, unless, if there is
more than one remaining Member, all of the remaining Members
consent to continuing the business of the Company within 90
days following the occurrence of any such event;
(ii) the entry of a decree of judicial dissolution under Section
18-802 of the Act;
(iii) the unanimous consent of the Members to dissolve the Company;
(iv) if a Member shall attempt to Transfer any Interests other than
as permitted pursuant to Article 9, upon the election of all
of the other Members; and
(v) upon the sale of all or substantially all of the assets of the
Company.
(b) Dissolution of the Company shall be effective on the day on which
the event occurs giving rise to the dissolution, but the Company shall not
terminate until the assets of the Company shall have been distributed as
provided herein and a certificate of cancellation of the Certificate of
Formation has been filed with the Secretary of State of the State of Delaware.
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10.2 LIABILITY FOR WRONGFUL DISSOLUTION. If a Member causes a
dissolution of the Company pursuant to the provisions of Section 10.1(a)(i), it
shall be deemed to have wrongfully dissolved the Company and be liable for any
damages caused to the Members that were not responsible for the event causing
dissolution, and in addition to any other remedies the Company or a Member may
have against any such wrongfully defaulting Member, the entire cost and expense
of conducting any proceeding to dissolve, liquidate and terminate the affairs of
the Company, including the cost of any judicial or arbitration proceeding, and
in each case all other direct out-of-pocket costs and expenses of the Company
resulting from such dissolution and liquidation, shall be borne by such
wrongfully defaulting Member. The Company may offset the amount of all such
costs and expenses from amounts which the Company owes any such wrongfully
defaulting Member.
10.3 DISTRIBUTIONS TO MEMBERS. In a dissolution, the Members shall
take such actions as are necessary to liquidate the Company and cause its
dissolution as soon as possible and shall each be entitled to receive an amount
of the net proceeds from such liquidation as provided in Section 10.4. A
dissolution shall not relieve or release any Member or its guarantor from any
liability arising from a breach or default of any of its obligations under this
Agreement or any of the other Ancillary Agreements.
10.4 APPLICATION OF ASSETS. Unless otherwise specified herein, in
the event of a termination or dissolution, the Members Committee shall conduct
only such activities as are necessary to wind up its affairs (including the sale
in an orderly manner of the assets of the Company), and the assets of the
Company shall be applied in the manner and in the order of priority set forth as
follows: (I) first, to creditors of the Company, including Members who are
creditors, to the extent otherwise permitted by law, in satisfaction of the
liabilities of the Company (whether by payment or the making of reasonable
provision for payment thereof); and (II) second, to the Members in proportion
to, and to the extent of, the positive balances of the Capital Accounts of the
Members (after reflecting in such Capital Accounts all adjustments and
allocations thereto required to be made under this Agreement).
It is understood and agreed that all payments under this Section 10.4
shall be made as soon as reasonably practicable and in any event by the end of
the Fiscal Year in which such winding up occurs or, if later, within 90 days
after the date of such winding up.
10.5 TERMINATION. Upon completion of the foregoing, the Members
Committee or the liquidating trustee shall execute, acknowledge and cause to be
filed a certificate of cancellation of the Company with the Secretary of State
of the State of
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Delaware as required by the Act, and upon such certificate of cancellation
becoming effective, the Company shall be terminated.
ARTICLE 11
CONFIDENTIAL INFORMATION;
COVENANT NOT TO COMPETE
11.1 CONFIDENTIAL INFORMATION. During the existence of the Company,
each Member (I) shall maintain, and shall use its best efforts to cause its
Representatives, Affiliates, officers, directors, employees, accountants,
counsel and agents to maintain, the confidentiality of any confidential
information concerning the Joint Venture Products, the Company, the business of
the Company or any Member that is not otherwise generally available to the
public and (II) without the prior consent of the Company or of any Member that
would be affected, shall not use or disclose to any third party (other than
their respective financial advisors, attorneys and other agents and
representatives) such confidential information, except (A) in a manner expressly
provided for in any of the Ancillary Agreements, (B) after receipt of a binding
order of confidentiality, if available, in enforcing its rights under this
Agreement or any Ancillary Agreement before a court, governmental agency, or
arbitrator of competent jurisdiction, (C) to a prospective purchaser of any of
its Interest, PROVIDED such purchaser first executes a confidentiality agreement
in form and substance reasonably satisfactory to the other Members, and (D) to
any governmental agency if it believes in good faith that such disclosure is
required by applicable law or by governmental policy, PROVIDED that prior to
making any such disclosure such Member shall, unless prohibited by such
governmental agency, give written notice (identifying such agency and describing
the general nature of such disclosure) to, and consult with, the other Members.
11.2 COVENANT NOT TO COMPETE. Each Member agrees that during the
existence of the Company neither it nor any of its Affiliates (except in
connection with fundamental corporate transactions, such as mergers, spin-offs
and sales of substantially all of the capital stock or assets of Accuride or
Kaiser or any of their respective parent corporations) will (and Accuride Sub
agrees to cause Accuride not to), directly or indirectly, manufacture or sell,
or participate whether by ownership interest or otherwise in the manufacturing
or sale of, any Joint Venture Products, other than Joint Venture Products
manufactured by and sold through the Company, except that (I) Accuride shall be
permitted to sell Joint Venture Products manufactured and sold pursuant to the
Speedline Agreements to the extent set forth in Section 6.7 of the Contribution
Agreement, (II) Kaiser shall be permitted to sell the Kaiser Excluded Inventory,
(iii) Accuride shall be permitted to sell the Accuride Retained Inventory and
(iv) subject to Section 6.8 of the
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Contribution Agreement, Accuride shall be permitted to perform its obligations
under the Accuride Excluded Contracts, PROVIDED that for the purposes of this
Section 11.2 only, the term "Joint Venture Products" shall include any wheels of
the size and type described in clause (i) of the definition of Joint Venture
Products in Article 1 manufactured from non-ferrous materials (other than
thermal plastics and thermal sets). Notwithstanding the foregoing, if at any
time a Member or Accuride or any of their respective Affiliates wishes to
manufacture or sell Joint Venture Products that at the time are not being
manufactured and sold by the Company, it shall be free to do so if (I) it first
gives written notice to the Company of its desire to manufacture or sell such
Joint Venture Products and (II) the Company does not elect to undertake such
business within 180 days of the date upon which such notice is given (which need
not be on the same terms as set forth in such notice, but may include
alternative arrangements appropriate to the Company), PROVIDED that in
determining whether or not the Company shall undertake such business, Accuride
or the Member proposing to undertake such business shall vote in favor of the
Company's undertaking such business.
ARTICLE 12
MISCELLANEOUS
12.1 WAIVER, AMENDMENT, ETC. This Agreement may not be amended or
supplemented, and no waivers of or consents to departures from the provisions
hereof shall be effective, unless set forth in a writing signed by, and
delivered to, each Member. No failure or delay of any Member in exercising any
power or right under this Agreement will operate as a waiver thereof, nor will
any single or partial exercise of any right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.
12.2 NOTICES. Any notice or other communication required or
permitted to be given hereunder or for the purposes hereof to any party shall be
in writing and shall be sufficiently given if (I) delivered personally,
(II) mailed by certified or registered mail, postage prepaid, (III) transmitted
by facsimile (and confirmed by certified or registered mail) or (IV) sent by
next-day or overnight mail or delivery to:
(a) Accuride Sub at:
Accuride Corporation
2315 Adams Lane/P.O. Box 40
Henderson, Kentucky 42420
Attention: William P. Greubel
Tel: (502) 826-5000
Fax: (502) 827-7601
- 33 -
<PAGE>
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Attention: James C. Scoville, Esq.
Tel: (212) 909-6655
Fax: (212) 909-6836
(b) Kaiser at:
Kaiser Aluminum & Chemical Corporation
26957 Northwestern Highway, Suite 200
Southfield, Michigan 48034
Attention: Jack A. Hockema
Tel: (810) 352-4630
Fax: (810) 352-4635
with a copy to:
Kaiser Aluminum & Chemical Corporation
5847 San Felipe, Suite 2600
Houston, Texas 77257
Attention: General Counsel
Tel: (713) 267-3777
Fax: (713) 267-3702
and,
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
Attention: Howard A. Sobel, Esq.
Tel: (212) 715-9100
Fax: (212) 715-8000
(c) the Company at:
AKW L.P.
1015 East 12th Street
Erie, Pennsylvania 16503
Attention: Bill Curtin
Tel: (814) 454-4571
Fax: (814)452-0809
or at such other address or to such other person's attention as the party to
whom such notice is to be given shall have last notified the party giving the
same in the manner provided in this Section. Any notice so delivered to the
party to whom it is addressed shall be deemed to have been given and received
(1) if by personal delivery, on the day of such delivery, (2) if by certified or
registered mail, on the seventh day after mailing thereof, (3) if by facsimile,
the day on which such facsimile was
- 34 -
<PAGE>
sent or (4) if by next-day or overnight mail delivery, on the day delivered,
PROVIDED that if any such day is not a Business Day then the notice shall be
deemed to have been given and received on the Business Day next following such
day.
12.3 MATERIALS. All written materials relating to the business of
the Company, including, without limitation, press releases and marketing
materials prepared by the Company or any Member shall be approved by the Members
Committee prior to use, provided that written materials required by law or the
rules of any stock exchange to be filed by any Members shall not require such
approval.
12.4 WORD MEANINGS. The words such as "herein", "hereinafter",
"hereof" and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires.
The singular shall include the plural and the masculine gender shall include the
feminine and neuter, and vice versa, unless the context otherwise requires.
12.5 BINDING PROVISIONS. The covenants and agreements contained
herein shall be binding upon, and inure to the benefit of, the heirs, legal
representatives, successors and assigns of the respective parties hereto.
12.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (OTHER THAN ANY
CONFLICT OF LAWS RULE WHICH MIGHT RESULT IN THE APPLICATION OF THE LAWS OF ANY
OTHER JURISDICTION). IN THE EVENT OF A CONFLICT BETWEEN ANY PROVISION OF THIS
AGREEMENT AND ANY NON-MANDATORY PROVISION OF THE ACT, THE PROVISION OF THIS
AGREEMENT SHALL CONTROL AND TAKE PRECEDENCE.
12.7 ARBITRATION. (a) Any dispute, controversy or claim arising out
of or relating to this Agreement or the breach, validity or termination thereof
shall be finally settled by arbitration. The arbitration shall be conducted in
accordance with the American Arbitration Association's commercial arbitration
rules in effect at the time of arbitration, except as modified herein or by
mutual agreement of the parties. The seat of the arbitration shall be New York,
New York, PROVIDED that the arbitrators may hold hearings in such other
locations as the arbitrators determine to be most convenient and efficient for
all the parties under the circumstances. Notwithstanding anything to the
contrary in Section 12.6, the arbitration shall be governed by the Federal
Arbitration Act. The appointing authority shall be the American Arbitration
Association. The arbitration shall be conducted by three arbitrators.
(b) Any award rendered by the arbitrators shall be in writing and
shall be final and binding upon the parties, and may include an award of costs,
including reasonable attorneys' fees and disbursements. Judgment upon the award
rendered may be
- 35 -
<PAGE>
entered in any court having jurisdiction thereof or having jurisdiction over the
parties or their assets.
12.8 SEPARABILITY OF PROVISIONS. Each provision of this Agreement
shall be considered separable and if for any reason any provision or provisions
herein are determined to be invalid, unenforceable or illegal under any existing
or future law, such invalidity, unenforceability or illegality shall not impair
the operation of or affect those portions of this Agreement which are valid,
enforceable and legal. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
12.9 TABLE OF CONTENTS; HEADINGS. The table of Contents and headings
in this Agreement are for descriptive purposes only and shall not control or
alter the meaning of this Agreement as set forth in the text.
12.10 FURTHER ASSURANCES. The Members shall execute and deliver such
further instruments and do such further acts and things as may be required to
carry out the intents and purposes of this Agreement.
12.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original of this Agreement.
12.12 ENTIRE AGREEMENT. This Agreement, together with the
Contribution Agreement and the other Ancillary Agreements, embodies the entire
agreement and understanding between the parties relating to the subject matter
hereof and thereof, and supersedes any prior oral or written agreements,
commitments or terms, other than Section 13 of the letter, dated September 17,
1996, as amended, from Accuride to Kaiser, regarding the Joint Venture, except
for the penultimate paragraph of such Section 13.
12.13 SURVIVAL OF CERTAIN PROVISIONS. The obligations of the Company
and of each Member pursuant to Sections 6.11 and 7.5 and Articles 8, 10 and 11
shall survive the termination or expiration of this Agreement.
12.14 SPECIFIC PERFORMANCE. The parties hereto agree that any
damages available at law for a breach of this Agreement would not be an adequate
remedy. Therefore, the provisions hereof and the obligations of the parties
hereunder shall be enforceable in a court of equity, or other tribunal having
jurisdiction, by a decree of specific performance, and appropriate injunctive
relief may be applied for and granted in connection therewith. Such remedies
and all other remedies provided for in this Agreement shall, however, be
cumulative and not exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.
- 36 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
ACCURIDE VENTURES, INC.
By: /s/ William Greubel
-----------------------------
Name: William Greubel
Title: President
KAISER ALUMINUM & CHEMICAL CORPORATION
By: /s/ Daniel J. Rinkenberger
-----------------------------
Name: Daniel J. Rinkenberger
Title: Assistant Treasurer
ACCEPTED AND AGREED:
AKW GENERAL PARTNER L.L.C.
By: /s/ William J. Curtin
------------------------
Name: William J. Curtin
Title: Vice President
- 37 -
<PAGE>
In order to induce the parties to enter
into this Agreement, the undersigned,
Accuride Corporation, a Delaware corporation,
being the sole stockholder of Accuride Sub
hereby jointly and severally unconditionally
guarantees the performance by Accuride Sub of
all of its obligations under the foregoing
Agreement and strictly in accordance with the terms
thereof. This guarantee shall be effective despite
any renewal, modification or waiver by the parties
hereto of Accuride Sub's obligations under this
Agreement, and no such modification, renewal or waiver
shall operate to limit, defeat, modify or otherwise
affect this guaranty.
ACCURIDE CORPORATION
By: /s/ William P. Greubel
-------------------------
Name: William P. Greubel
Title: President
Dated as of May 1, 1997
- 38 -
<PAGE>
SCHEDULE A
CAPITAL
MEMBER CONTRIBUTION INTEREST
- ------ ------------ --------
Accuride Ventures, Inc.
Kaiser Aluminum & Chemical
Corporation
<PAGE>
SCHEDULE B
INITIAL REPRESENTATIVES
NAME ADDRESS
- ---- -------
Kaiser:
Accuride:
INITIAL ALTERNATES
NAME ADDRESS
- ---- -------
Kaiser:
Accuride:
<PAGE>
Exhibit A Business Plan
<PAGE>
Exhibit 10.12
LEASE AGREEMENT
between
KAISER ALUMINUM & CHEMICAL CORPORATION,
as Landlord,
and
AKW L.P.,
as Tenant
Dated as of May 1, 1997
Premises:
Buildings 11, 22, 26 and 16
1015 East 12th Street
Erie, Pennsylvania 16503
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 Premises - Term ................................................ 1
ARTICLE 2 Basic Rent - Additional Rent ................................... 3
ARTICLE 3 Condition of Premises; Landlord's Work ......................... 5
ARTICLE 4 Payment of Taxes ............................................... 6
ARTICLE 5 Insurance ...................................................... 7
ARTICLE 6 Utilities and Other Property-Related Services .................. 9
ARTICLE 7 Changes and Alterations - Surrender of Demised Premises
and Personal Property .......................................... 10
ARTICLE 8 Repairs and Maintenance ........................................ 13
ARTICLE 9 Compliance with Orders, Ordinances, Etc. ....................... 14
ARTICLE 10 Mechanic's Liens ............................................... 14
ARTICLE 11 Inspection of Premises by the Landlord ......................... 14
ARTICLE 12 Right to Perform Covenants of the Tenant........................ 15
ARTICLE 13 Damage or Destruction .......................................... 15
ARTICLE 14 Condemnation ................................................... 16
ARTICLE 15 Defaults and Remedies; Events of Termination ................... 17
ARTICLE 16 Cumulative Remedies - No Waiver ................................ 19
ARTICLE 17 Subordination: Fee Mortgages ................................... 19
ARTICLE 18 Quiet Enjoyment ................................................ 20
ARTICLE 19 Notices ........................................................ 20
ARTICLE 20 Certificates ................................................... 21
ARTICLE 21 Use ............................................................ 21
i
<PAGE>
ARTICLE 22 Transfer; Assignment and Subletting ............................ 22
ARTICLE 23 Invalidity of Particular Provisions ............................ 22
ARTICLE 24 Allocation of Expenses ......................................... 22
ARTICLE 25 Broker ......................................................... 24
ARTICLE 26 Indemnity ...................................................... 24
ARTICLE 27 Covenants to Bind and Benefit Respective Parties; Modification;
Waiver of Trial by Jury; Exculpation; Unavoidable Delay ........ 25
ARTICLE 28 Arbitration .................................................... 27
ARTICLE 29 Hazardous Substances Environmental Laws ........................ 27
EXHIBIT "A-1" ............................................................. 30
Demised Premises and Licensed Premises .................................... 30
EXHIBIT "A-2" ............................................................. 31
Personal Property ......................................................... 31
EXHIBIT "B" ............................................................... 32
Separation Work ........................................................... 32
EXHIBIT "C" ............................................................... 33
Initial Expense Allocation ................................................ 33
SCHEDULE 8.1 .............................................................. 34
Personal Property Maintenance Schedules and Procedures .................... 34
ii
<PAGE>
LEASE AGREEMENT
THIS LEASE (the "Lease"), dated as of May 1, 1997, between KAISER
ALUMINUM & CHEMICAL CORPORATION, a Delaware corporation (the "Landlord"), and
AKW L.P., a Delaware limited partnership, having an address at 1015 E. 12th
Street, Erie, Pennsylvania 16503 (the "Tenant").
W I T N E S S E T H:
WHEREAS, Landlord, Accuride Corporation (collectively, the
"Contributing Parties"), Tenant and AKW General Partner L.L.C., a Delaware
limited liability company, have entered into a Contribution Agreement, dated as
of May 1, 1997 (the "Contribution Agreement", pursuant to which, inter alia, the
Contributing Parties agreed to contribute or otherwise cause to be transferred
to Tenant certain assets and rights necessary to permit Tenant to engage in the
Business (as defined in the Contribution Agreement); and
WHEREAS, Landlord is the owner of certain improved real property
located at 1015 E. 12th Street, Erie, Pennsylvania (the "Plant") at which
Landlord has conducted certain businesses, including without limitation, certain
aspects of the Business; and
WHEREAS, pursuant to the Contribution Agreement, Landlord and Tenant
agreed to enter into this Lease in order to provide for the leasing by Landlord
to Tenant of certain portions of the Plant used in connection with the Business,
all on the terms and conditions provided herein.
NOW, THEREFORE, in consideration of the mutual covenants, and
subject to the terms and conditions, contained herein, the parties hereto agree
as follows:
ARTICLE 1
Premises - Term
Section 1.1 (a) (i) The Landlord, for and in consideration of the
rents, covenants and agreements contained in this Lease to be paid, kept and
performed by the Tenant, demises and leases to the Tenant, and the Tenant does
hereby take and hire, upon and subject to the covenants, terms, conditions and
agreements in this Lease, which the Tenant agrees to keep and perform, certain
portions of the Plant which are described below and are shown on Exhibit "A-1"
attached hereto and made a part hereof as constituting the "Demised Premises"
(collectively, the "Demised Premises"):
<PAGE>
(1) Building 11 - an approximately 26,650 square foot building used for
the storage of raw materials, billet preparation and storage for maintenance and
production supplies;
(2) Building 22 - an approximately 52,650 square foot building which
houses the hydraulic presses used to forge and extrude aluminum products, and
also houses the hydraulic pumps and contains office space and a maintenance
area;
(3) Building 26 - an approximately 33,750 square foot building used for
receiving production and maintenance supplies, shipping products and spinning
and heat treating products;
(4) Building 16 - an approximately 2,500 square foot building which houses
certain employee lockers; and
(5) The eastern portion of the second floor of the Administration
Building.
(ii) The Landlord also hereby grants to the Tenant, its agents, employees,
vendors and contractors a license to use, during the Term, on a non-exclusive
basis, the roadways, sidewalks, designated parking lots and other areas as
generally shown on Exhibit "A-1" attached hereto and made a part hereof as the
"Licensed Premises" (the "Licensed Premises" and together with the Demised
Premises, the "Premises") for purposes of access to and parking in the vicinity
of the Demised Premises. Landlord may, at its option, at any time during the
Term after reasonable prior notice to Tenant (except in the event of an
emergency), relocate all or a portion of Licensed Premises to other areas in the
Plant, provided that such alternative Licensed Premises provide reasonable
access to, and parking in the vicinity of, the Demised Premises. The Tenant
shall use the Premises in accordance with the terms and conditions set forth in
this Lease and in Section 6.4 of the Contribution Agreement. Tenant acknowledges
and agrees that the privileges granted Tenant under this Section 1.1(a)(ii)
shall merely constitute a license and shall not be deemed to grant Tenant a
leasehold or other real property interest in the Licensed Premises. This license
shall automatically terminate and expire upon the expiration or earlier
termination of this Lease and the termination of such license shall be
self-operative and no further instrument shall be required to effect such
termination.
(iii) The Demised Premises and the Licensed Premises shall specifically
exclude any and all steam tunnels at the Plant and the emergency generator room
located between Buildings 11 and 26 housing the diesel generator which provides
emergency lighting for the east end of the Plant (collectively, the "Prohibited
Areas"), irrespective of whether such Prohibited Areas or access thereto lies
within or beneath any portion of the land or improvements comprising the
Premises.
(b) The Landlord hereby leases to the Tenant the items of personal
property set forth on Exhibit "A-2" annexed hereto and made a part hereof (the
"Personal Property").
2
<PAGE>
Section 1.2 (a) This Lease shall have an initial term of ten (10)
years (the "Initial Term"), which Initial Term shall commence on the date hereof
(the "Commencement Date") and shall expire on the day (the "Expiration Date")
immediately preceding the tenth (10th) anniversary of the date hereof, unless
the Initial Term shall be extended or sooner terminated as hereinafter provided
(the Initial Term, as the same may be extended from time to time, the "Term").
(b) Provided that this Lease is in full force and effect and that
the Tenant is not then in default hereunder beyond any applicable grace periods,
the Tenant shall have the right to renew this Lease for three (3) periods of
five (5) years each (each, a "Renewal Period"), exercisable by delivery of a
written notice ("Tenant's Renewal Notice") received by Landlord no later than
one hundred eighty (180) days prior to the expiration of the then-current Term.
Each Renewal Period shall commence on the day following the expiration date of
the Initial Term or the immediately preceding Renewal Period, as the case may
be, and shall end on the fifth (5th) anniversary of such expiration date. Upon
the exercise by the Tenant from time to time of its right to renew as aforesaid,
this Lease shall be deemed extended through the last day of the applicable
Renewal Period upon the terms and conditions herein set forth except that the
Basic Rent (as hereinafter defined) payable during the Renewal Period shall be
fixed in accordance with the provisions of Section 2.1 (b) below.
(c) The Tenant shall have the right to terminate this Lease at any
time during the Term by giving the Landlord at least one hundred eighty (180)
days' prior written notice of such termination, which notice shall specify the
termination date. In the event of such termination, all Basic Rent and
Additional Rent shall be apportioned as of the termination date set forth in
Tenant's termination notice.
ARTICLE 2
Basic Rent - Additional Rent
Section 2.1 (a) The Tenant shall pay to the Landlord during the
Initial Term an annual basic rent (the "Basic Rent") equal to One Dollar per
annum, which Basic Rent shall be payable in advance on January 2 of each year
during the Initial Term.
(b) If the Term is extended from time to time for any Renewal
Period, as provided in Section 1.2 (b) above, the Basic Rent for such Renewal
Period (the "Renewal Rent") shall be determined as provided in this Section 2.1
(b). Upon receipt of Tenant's Renewal Notice, the Landlord and the Tenant shall
attempt for thirty (30) days to agree upon the Renewal Rent, which the parties
agree shall be the fair market rental value of the Demised Premises, taking into
account the Personal Property, the obligation of the Tenant to pay Taxes
(hereinafter defined) and other expenses allocated to the Demised Premises as
provided elsewhere in this Lease. Should the Landlord and the Tenant be unable
to agree on the Renewal Rent within such thirty (30) day period, the Tenant
shall, at its own cost, appoint a disinterested real estate broker licensed in
the State of Pennsylvania involved in the rental of similar space in the area in
which the Plant is located for at least five (5) years (a
3
<PAGE>
"Qualified Broker") to serve as an appraiser on its behalf and shall give
notice thereof to the Landlord within sixty (60) days after the Landlord's
receipt of the Tenant's Renewal Notice. The Landlord shall, at its own cost,
within thirty (30) days after receiving said notice appoint a second Qualified
Broker to serve as appraiser on its behalf and shall give written notice thereof
to the Tenant. The Qualified Brokers shall independently, within thirty (30)
days after their appointment, render in writing to the Landlord and the Tenant
their independent appraisals of what the annual fair market rental value of the
Demised Premises would be for the applicable Renewal Period. If Landlord and the
Tenant or the two (2) Qualified Brokers cannot, within thirty (30) days
thereafter, agree on what the annual fair market rental value of the Demised
Premises would be for the applicable Renewal Period, the two (2) Qualified
Brokers theretofore appointed shall appoint a third Qualified Broker. The third
Qualified Broker shall then promptly select the amount set forth in one or the
other of the two appraisals theretofore prepared which such Broker believes most
closely approximates the annual fair market value of the Demised Premises, and
same shall be the Renewal Rent for the applicable Renewal Period. The
determination of the Qualified Broker(s) shall conclusively be and be deemed to
be the Renewal Rent and shall be binding on Landlord and Tenant. In rendering
their determination, the Qualified Brokers shall have no power to modify or in
any manner alter or reform any of the provisions of this Lease. The cost of the
third Qualified Broker shall be shared equally by Landlord and Tenant. If, for
any reason whatsoever, the Renewal Rent has not been determined on or prior to
the commencement of the applicable Renewal Period, Tenant shall pay to the
Landlord on account of Basic Rent (subject to adjustment once the Basic Rent is
determined) one hundred ten (110%) percent of the Basic Rent payable by the
Tenant immediately prior to the commencement of the applicable Renewal Period.
Section 2.2 (a) In addition to the Basic Rent, the Tenant shall pay
and discharge, as additional rent (the "Additional Rent"), any and all other
amounts, liabilities, charges, obligations and other payments which the Tenant,
under any of the provisions of this Lease, is now or hereafter obligated to pay
or discharge, as more particularly described in this Lease. In the event of any
failure on the part of the Tenant to pay all or any part of the Additional Rent
when due, the Landlord shall have the same rights and remedies provided for
herein or by applicable law or otherwise in the case of the nonpayment of the
Basic Rent.
(b) It is intended that the Basic Rent be net to the Landlord and
that the Tenant shall pay, as Additional Rent, all Taxes, utilities, and other
costs and expenses relating to the Demised Premises (other than those
environmental costs which Landlord shall pay pursuant to Section 6.3 of the
Contribution Agreement) and an equitable portion of such Taxes, utilities,
insurance and other costs and expenses relating to the Licensed Premises, all as
reasonably determined by the Landlord and the Tenant pursuant to the provisions
of this Lease, including, without limitation, Articles 4, 5, 6, 8 and 24 hereof.
The Landlord and the Tenant have agreed upon a preliminary allocation of certain
of these items as set forth in Exhibit "C" attached hereto and made a part
hereof (the "Initial Expense Allocations"), and as referenced below in Section
24.4.
4
<PAGE>
Section 2.3 During the term of this Lease, if the Tenant shall fail
to pay any installment of the Basic Rent or any of the Additional Rent due or
payable hereunder or in connection herewith, within 10 days after Landlord
notifies Tenant in writing that any such amount is due or payable, in addition
to all of the other rights and remedies of the Landlord hereunder, the Tenant
shall pay to the Landlord, in addition to all other payments required to be made
under this Lease, the amount not paid when due, together with interest thereon,
at a rate (the "Interest Rate") equal to the lower of (i) 3% over the prime rate
publicly announced from time to time by Morgan Guaranty Trust Company of New
York and (ii) the highest rate permitted by applicable law, from the due date
until the date of payment. All amounts payable to the Landlord pursuant to this
Section 2.3 shall be constitute Additional Rent.
ARTICLE 3
Condition of Premises; Landlord's Work
Section 3.1 Except as otherwise provided in Section 3.2 below,
Tenant has inspected the Premises and the Personal Property and agrees to take
the same "as is", where is, and with all faults, and Landlord shall have no
obligation to prepare the Premises or the Personal Property for Tenant's
occupancy.
Section 3.2 Landlord agrees to perform the following work
("Landlord's Work"):
(a) work necessary to segregate the Demised Premises from the rest
of the Plant, to segregate certain parking lots for Tenant's use from the
parking lots for the Plant, and to secure and provide for the independent use
and operation of the same (collectively, the "Separation Work"), including
without limitation, installing or causing to be installed, if possible, separate
metering devices for utilities serving the Demised Premises, installing new
locks and fences within and outside of the Demised Premises, and providing a new
above-ground storage tank containment area, all as more particularly described
in Exhibit "B" attached hereto and made a part hereof;
(b) the Phase 1 Improvements (as defined in the Contribution
Agreement), to the extent the same affect or relate to the Demised Premises; and
(c) the work (the "Environmental Work") described in the
Environmental Compliance Plan (as defined in the Contribution Agreement), to the
extent the same affects or relates to the Demised Premises.
Section 3.3 Landlord shall use its reasonable efforts to complete
Landlord's Work in a timely manner (subject to Unavoidable Delays (hereinafter
defined)); provided, however that Landlord shall have no obligation to employ
contractor or labor at so-called overtime or other premium pay rates or to incur
any other overtime costs or expenses whatsoever. Landlord shall be under no
penalty or liability to Tenant whatsoever by reason of any delay in such
performance and this Lease shall not be affected thereby. Landlord's
5
<PAGE>
Work shall be performed on a timely basis and in such a manner so as to minimize
interference with the operation of the Business by the Tenant. Landlord shall
have the right to enter the Demised Premises subsequent to the Commencement Date
to perform Landlord's Work and the payment of Basic Rent and Additional Rent
shall not be affected thereby.
Section 3.4 The Tenant shall pay, or shall reimburse the
Landlord for, all reasonable costs and expenses incurred in connection with the
performance of the Separation Work. The cost of performing the Phase I
Improvements and the Environmental Work shall be borne by the party or parties
responsible therefor under Sections 2.2 (g) and 6.3 of the Contribution
Agreement.
Section 3.5 The Tenant shall comply with the operations and
maintenance plan for the Pits (as defined in the Contribution Agreement) as set
forth in Schedule 6.3(a) to the Contribution Agreement and for the Personal
Property.
ARTICLE 4
Payment of Taxes
Section 4.1 Subject to the provisions of Section 4.2 and Article 24
below, Tenant shall pay (prior to the addition or imposition of any fine,
penalty, interest, cost or expense in respect of the nonpayment thereof, if
applicable), all real estate taxes, personal property taxes, occupancy taxes,
assessments, water and sewer rents and charges, vault charges, license and
permit fees and other governmental levies and charges, of any kind or nature
(collectively, "Taxes"), which are assessed, levied, confirmed, imposed or which
may become a lien upon all or any portion of the Demised Premises, or shall
become payable, during and with respect to the Term: provided, that any Taxes
relating to a fiscal period of the taxing or imposing authority, a part of which
period is included in a period of time before the Commencement Date or the
Expiration Date, shall (whether or not such Taxes shall be assessed, levied,
confirmed, imposed or become a lien upon the Demised Premises or the Personal
Property, or shall become payable, during the Term) be adjusted between the
Landlord and the Tenant as of the Commencement Date or the last day of the Term,
as the same may have been renewed, extended or terminated early by Tenant
pursuant to Section 1.2 (c) hereof (the "Expiration Date"), as applicable. The
Tenant, on or before the date any installment of Taxes shall become delinquent,
shall furnish the Landlord with evidence of payment of such Taxes, in form
reasonably satisfactory to the Landlord. Tenant shall be responsible for any
fine, penalty, interest, cost or expense imposed upon the Demised Premises in
respect of the nonpayment or late payment of Taxes.
Section 4.2 In the event that any Taxes are billed pursuant to a tax
or other billing scheme that incorporates property owned by the Landlord other
than the Demised Premises and the Personal Property, then, notwithstanding the
other provisions of this Article 4, all such Taxes respecting the Demised
Premises and/or the Personal Property shall be paid by the Landlord, and the
Landlord shall thereafter bill the Tenant for the Tenant's pro rata
6
<PAGE>
share of such Taxis as shall be reasonably determined by the Landlord and the
Tenant. In addition to the payment of Taxes attributable to the Demised Premises
and the Personal Property, the Tenant shall pay a pro rata share of Taxes
attributable to the Licensed Premises. The determination of Tenant's pro rata
share of Taxes shall be made by the Landlord and the Tenant in accordance with
Article 24 below and as set forth on Exhibit "C" attached hereto. All amounts
payable by the Tenant under this Section 4.2 shall be treated as Additional Rent
hereunder and shall be due and payable thirty (30) days after delivery of such
bill to the Tenant and otherwise in accordance with the terms of this Lease.
Section 4.3 Nothing in this Lease shall require the Tenant to pay
any franchise, corporate, estate, inheritance, succession, capital levy, income,
profits, revenue or transfer tax imposed upon the Landlord, nor shall any tax,
assessment, charge or levy of the character above in this Section 4.3 be deemed
to constitute Taxes, except if such taxes are customarily payable by the Tenant
in substitution of any item of Taxes.
ARTICLE 5
Insurance
Section 5.1 At all times during the term of this Lease the Tenant
shall maintain workers' compensation insurance in the amount required by
applicable law and employer's liability insurance to a limit of not less than
$1,000,000; and keep the Demised Premises and the Personal Property insured
against:
(1) loss or damage by fire, and such other risks as may be included
in the standard form of extended coverage insurance policy in an amount not less
than 100% of the replacement value of the Demised Premises and the Personal
Property, with reasonable deductibles not exceeding $100,000; and further
provided that the amount of such insurance is at all times sufficiently large
and the amount of such deductibles are sufficiently small, to prevent the
Landlord from becoming a co-insurer within the terms of the applicable policies;
(2) loss or damage by explosion of high pressure steam boilers, air
conditioning equipment, pressure vessels, motors or similar apparatus, now or
hereafter installed in the Demised Premises, if applicable, in such limits with
respect to any one accident as may reasonably be required by the Landlord; and
(3) such other insurance and increased policy limits with respect to
the Demised Premises or the Personal Property as may be reasonably required from
time to time by the Landlord.
Section 5.2 The Tenant shall also maintain a policy of Commercial
General Liability Insurance naming the Tenant as insured and the Landlord as
additional insured against claims by third parties arising from the Tenant's use
and occupancy of the Premises and the Personal Property. Such insurance shall
provide amounts of insurance of not less than $5,000,000 per occurrence for
bodily injury including death and for property damage.
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Section 5.3 All insurance provided to be maintained under this Lease
shall be effected under valid enforceable policies issued by insurers of
recognized responsibility, having a Best's rating of not less than A/VIII. Upon
the execution of this Lease, certificates thereof shall be delivered to the
Landlord and, if requested by the Landlord, certificates of such insurance shall
be delivered to the holder of any Fee Mortgage (as hereinafter defined). Not
later than fifteen (15) days after the expiration date of any policy, the
original renewal policy for such insurance or certificate thereof shall be
delivered to the Landlord. All such policies shall contain agreements by the
insurers that such policies shall not be cancelled except upon at least 30 days'
prior written notice to each named insured, additional insured and loss payee
and the coverage afforded thereby shall not be affected by the performance of
any work by the Tenant, or its agents or contractors on its behalf in or about
the Premises.
Section 5.4 All policies of insurance required under Section 5.1
above shall name the Landlord as an additional insured and the holder of any Fee
Mortgage as loss payee with respect to the Demised Premises and the Improvements
(hereinafter defined), as their respective interests may appear, pursuant to a
standard mortgagee clause or endorsement. For purposes of this Lease, the term
"Improvements" shall mean alterations, installations, improvements, additions or
other physical changes in or about the Demised Premises.
Section 5.5 Landlord shall obtain and keep in full force and effect:
(a) insurance against loss or damage by fire and other casualty to the Demised
Premises and the Plant (exclusive of any alterations made by Tenant and any of
Tenant's personal property), each as may be from time to time in effect and as
are standard and customary in the normal course of Landlord's business in the
context of market conditions. Tenant shall be named as a loss payee as its
interests may appear in respect of the Demised Premises as an additional named
insured in respect of the Demised Premises under such policies and Landlord will
provide, or have its insurance broker provide, Tenant with evidence of such
insurance, in a form reasonably satisfactory to Tenant, on or before the
Commencement Date, and at such other times as Tenant may reasonably request. In
lieu of maintaining the insurance described above, Landlord may self insure
against such risks, provided that such self-insurance program is not
inconsistent with prudent business practices with respect to insuring such
risks. Landlord shall deliver to Tenant evidence of such self-insurance, in a
form reasonably acceptable to Tenant, on or before the Commencement Date and at
such other times as Tenant may reasonably request. Tenant shall cooperate with
Landlord and Landlord's insurance companies in the adjustment of any claims for
any damage to the Demised Premises.
Section 5.6 The parties hereto shall procure an appropriate clause
in, or endorsement on, any fire or extended coverage insurance covering the
Demised Premises, the Plant and Personal Property, fixtures and equipment
located thereon or therein, pursuant to which the insurance companies waive
subrogation or consent to a waiver of right of recovery and having obtained such
clauses or endorsements of waiver of subrogation or consent to a waiver of right
of recovery, will not make any claim against or seek to recover from the other
for any loss or damage to its property or the property or others resulting from
fire or other hazards covered by such fire and extended coverage insurance,
provided, however, that release, discharge, exoneration and covenant not to sue
herein contained shall be limited by
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and be in coexistence with the terms and provisions of the waiver of subrogation
clause or endorsements or clauses or endorsements consenting to a waiver of
right to recovery. If the payment of an additional premium is required for the
inclusion of such waiver of subrogation provision, each party shall advise the
other of the amount of any such additional premiums and the other party at its
own election may, but shall not be obligated to, pay the same. If such other
party shall not elect to pay such additional premium, the first party shall not
be required to obtain such waiver of subrogation provision. If either party
shall be unable to obtain the inclusion of such clause even with the payment of
an additional premium, then such party shall attempt to name the other party as
an additional insured (but not a loss payee) under the policy. If the payment of
an additional premium is required for naming the other party as an additional
insured (but not a loss payee), each party shall advise the other of the amount
of any such additional premium and the other party at its own election may, but
shall not be obligated to, pay the same. If such other party shall not elect to
pay such additional premium or if it shall not be possible to have the other
party named as an additional insured (but not loss payee), even with the payment
of, an additional premium, then (in either event) such party shall so notify the
first party and the first party shall not have the obligation to name the other
party as an additional insured. Tenant acknowledges that Landlord shall not
carry insurance on and shall not be responsible for damage to any alterations
performed by Tenant or Tenant's personal property, and that Landlord shall not
carry insurance against, or be responsible for any loss suffered by Tenant due
to, interruption of Tenant's business.
ARTICLE 6
Utilities and Other Property-Related Services
Section 6.1 The Tenant shall, prior to delinquency, pay or cause to
be paid all charges for heat, cooling, air, steam, water, sewer, gas,
electricity, light, telephone, or any other utility service rendered or supplied
to the Demised Premises throughout the Term (if and to the extent the same are
billed directly to the Tenant), and shall indemnify the Landlord and hold the
Landlord harmless against any liability or damages on such account.
Section 6.2 In the event any utilities or other services payable
pursuant to this Article 6 are billed pursuant to a billing scheme that
incorporates property other than the Demised Premises, then, notwithstanding the
other provisions of this Article 6, such utilities or other property-related
services respecting the Demised Premises shall be paid by the Landlord, and the
Landlord shall thereafter bill the Tenant for the Tenant's proportionate share
of such utilities or other property-related services, as reasonably determined
by the Landlord and the Tenant. In addition to the payment of utilities and
services attributable to the Demised Premises, the Tenant shall pay a pro raw
share of utilities and services attributable to the Licensed Premises. The
determination of Tenant's proportionate share of utilities and services shall be
made by the Landlord and the Tenant in accordance with Article 24 below and
Exhibit "C" attached hereto. All amounts payable by the Tenant under this
Section 6.2 shall be treated as Additional Rent hereunder and shall be due and
payable on the thirtieth (30th) day following delivery of any such bill to the
Tenant.
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Section 6.3 The Landlord and the Tenant shall cooperate with each
other to the extent reasonably necessary to enable the Tenant to obtain utility
and other services at the Demised Premises, which may include sharing such
utilities and services; provided, however, that the Landlord shall not be
required to furnish any services or facilities to the Demised Premises, nor
shall the Landlord be responsible for any interruption of services to the
Demised Premises unless caused by the gross negligence or willful misconduct of
the Landlord or its agents, servants or employees.
ARTICLE 7
Changes and Alterations - Surrender of
Demised Premises and Personal Property
Section 7.1 The Tenant shall not make any alterations, decorations,
installations, additions, improvements, repairs, replacements or removals
(collectively, "Alterations") to the Demised Premises, to any of the
Improvements or any part thereof or any equipment or appurtenance thereto (each,
an "Alteration"), unless the Tenant shall comply with the following
requirements:
(a) Any Alteration shall be made promptly in a first class,
workerlike manner, in compliance with all applicable legal requirements
("Requirements");
(b) No Alteration shall be made which would substantially
change the general character or use of the Improvements;
(c) Such Alteration shall be effected under the supervision of
the registered or licensed architect reasonably satisfactory to the
Landlord (the "Architect");
(d) Prior to the commencement of any proposed structural
Alteration, the Tenant shall furnish the Landlord complete plans and
specifications for the proposed Alteration prepared by the Architect,
which plans and specifications shall meet with the approval of the
Landlord, which, except with respect to Alterations to the roof, the
foundations or the exterior walls of any of the buildings comprising the
Demised Premises, shall not be unreasonably withheld, together with the
approval thereof by any governmental board, bureau or department then
exercising jurisdiction, which plans and specifications shall be and
become the property of the Landlord in the event that for any reason this
Lease shall be terminated or shall expire;
(e) If, as a result of any Alterations performed by or on
behalf of Tenant, any alterations, installations, improvements additions
or other physical changes are required to be performed or made to any
portion of the Plant other than the Demised Premises in order to comply
with any Requirement(s), Landlord, at Tenant's sole cost and expense, may
perform or make such alterations, installations,
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improvements, additions or other physical changes and take such actions as
Landlord shall deem reasonably necessary;
(f) If, as a result of any Alteration by or on behalf of the
Tenant, any asbestos containing material ("ACM") is required to be removed
and disposed of, Tenant shall pay for all such removal and disposal costs,
including air monitoring and health and safety costs associated with such
removal, and shall remove and dispose of, or cause to be removed and
disposed of, such ACM in accordance with all applicable Environmental
Laws;
(g) The Demised Premises and the Personal Property shall at
all time be free of liens for labor and materials supplied or claimed to
have been supplied in connection with any Alteration and, if any
mechanic's lien is filed against the Premises, the Plant or the Land
(hereinafter defined) for work claimed to have been done for, or materials
claimed to have been furnished to Tenant, such lien shall be discharged by
Tenant within thirty (30) days after Tenant shall have received notice
thereof, at Tenant's expense, by payment or filing the bond required by
law or otherwise;
(h) The Tenant shall prosecute and complete, or cause to be
prosecuted and completed, any Alteration in compliance with the approved
plans and specifications and with all applicable laws and regulations and
all insurance policies and all orders and requirements of any insurance
underwriting or other similar body covering or applicable to the Demised
Premises. No Alteration shall be undertaken until the Tenant shall have
procured and paid for, so far as they may be required, from time to time,
all municipal and other governmental permits and authorizations of the
various municipal departments and governmental subdivisions having
jurisdiction over the Demised Premises or the business or activities
conducted thereon, and the Landlord agrees, at the sole cost and expense
of the Tenant, to join in the application for such permits or
authorizations whenever such action is necessary (so long as such joining
does not impose any personal liability upon the Landlord in respect of any
such Alteration). No plans and/or specifications required to be filed by
the Tenant with any governmental authority shall be filed or submitted
unless such plans and/or specifications are based upon and consistent with
the plans and specifications approved by the Landlord. The Landlord's
approval of any plans and specifications may be withdrawn if the Tenant
fails to obtain any required governmental approval or if the Tenant
otherwise fails to fulfill any obligation contained in this Article 7;
(i) At all times when an Alteration is in process, the Tenant,
at the Tenant's sole cost and expense, shall obtain and keep in full force
and effect, or cause to be obtained and kept in full force and effect: (1)
workers' compensation insurance covering all persons employed in
connection with such Alteration and with respect to death or personal
injury or bodily injury claims which could be asserted against the
Landlord, the Tenant or the Demised Premises; (2) general liability and
property damage insurance (which insurance may be effected by endorsement,
if obtainable, on the insurance required to be carried pursuant to this
Lease shall contain a
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completed operations endorsement); and (3) builder's risk insurance,
completed value form, covering all physical loss, in an amount reasonably
satisfactory to the Landlord. The Landlord and the holder of any Fee
Mortgage or other party which the Landlord may designate shall be named in
all such insurance. The Tenant shall deliver to the Landlord policies or
certificates evidencing such insurance, and evidence of the payment of the
premiums therefor, prior to the commencement of any Alteration. Such
insurance shall be in addition to the insurance provided for in Article 5
and shall otherwise be subject to the provisions of Article 5;
(j) Promptly following the completion of any structural
Alteration, the Tenant shall deliver to the Landlord two complete sets of
"as-built" plans and specifications therefor, certified to by the
Architect as being accurate and complete; and
(k) Upon completion of any Alteration, the Tenant shall obtain
and deliver to the Landlord originals of all certificates of occupancy (or
equivalents), if any, or amendments thereof and of all certificates from
governmental authorities, the Board of Fire Underwriters and such other
certificates as are required or customarily obtained from any bureau or
department having jurisdiction.
Section 7.2 On the Expiration Date, the Tenant shall surrender and
deliver the Demised Premises and the Personal Property, broom clean, to the
possession and use of the Landlord, in substantially similar order, condition
and repair as upon the Commencement Date, reasonable wear and tear and casualty
for which the Tenant is not responsible for hereunder excepted, and free and
clear of all tenancies and occupancies and free and clear of all liens and
encumbrances hereafter affecting the Demised Premises or the Personal Property.
All equipment, furniture and furnishings installed in, or placed upon, the
Demised Premises by, or on behalf of, Tenant which Tenant, at Tenant's option,
did not remove on or prior to the Expiration Date shall become the property of
the Landlord. Tenant may not remove any fixtures or Alterations without the
prior written consent of the Landlord, except to replace them with items of
greater or equal value. Tenant shall restore and repair, in a good and
workerlike manner, to good condition any damage to the Premises or the Plant
caused by such removal.
Section 7.3 The provisions of this Article 7 shall survive the
expiration or earlier termination of this Lease.
ARTICLE 8
Repairs and Maintenance
Section 8.1 The Tenant, at its sole cost and expense, shall take
good care of and maintain the Demised Premises and the Personal Property,
including following the maintenance schedules and procedures identified on
Schedule 8.1 hereto and Schedule 6.3(a) to the Contribution Agreement and such
other maintenance schedules and procedures as shall
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be mutually agreed upon by the parties hereto, and shall keep the Demised
Premises and the Personal Property in good order, condition and repair
throughout the Term and shall, in a good and workerlike manner, make all repairs
therein and thereon, interior and exterior, structural and non-structural,
necessary to keep the same in good order and condition, whether or not
necessitated by obsolescence or wear and tear; provided, however, that the
Landlord shall be responsible for making all structural repairs and replacements
relating to the roof, the foundations or the exterior walls of any of the
buildings comprising the Demised Premises other than (a) those structural
repairs made in connection with routine and ordinary maintenance of the Demised
Premises; and (b) those repairs made in connection with damage or injury caused
by or resulting from Tenant's Alterations, or from carelessness, omission,
neglect or improper conduct of Tenant, Tenant's agents, employees, invitees or
licensees. Tenant shall give Landlord prompt notice of any defective condition
that Landlord is required to repair and Landlord shall make all such repairs as
soon as practicable.
Section 8.2 The Landlord shall, at the Tenant's cost and expense,
cause to be kept clean and free from dirt, snow, ice, rubbish, obstructions and
encumbrances, the sidewalks, passageways, grounds, parking areas, walks, alleys
and curbs within the Demised Premises; provided, however, that in lieu of paying
or reimbursing the Landlord for the Tenant's proportionate share of the cost of
such services, as reasonably determined by the Landlord and the Tenant, the
Tenant may hire and pay for outside contractors to perform the same. The
Landlord shall maintain, keep clean and free from dirt, snow, ice, rubbish,
obstructions and encumbrances, the sidewalks, passageways, grounds, parking
areas, walks, alleys and curbs within the Licensed Premises, and the Tenant
shall pay to the Landlord, as Additional Rent, a pro rata share of the cost
thereof, as reasonably determined by the Landlord and the Tenant in accordance
with Article 24 hereof and Exhibit "C" attached hereto. All amounts payable by
the Tenant under this Section 8.2 shall be treated as Additional Rent hereunder.
Section 8.3 The Tenant shall be responsible for repairing and
maintaining the Personal Property in accordance with the Landlord's
specifications as provided to the Tenant from time to time.
ARTICLE 9
Compliance with Orders, Ordinances, Etc.
Section 9.1 Except as otherwise expressly set forth in Section 6.3
of the Contribution Agreement, during the Term, the Tenant shall comply, at its
sole cost and expense, with all applicable laws and regulations, and with all
requirements of all insurance policies and insurers under the policies required
hereunder which may be applicable to the Demised Premises or the Personal
Property, irrespective of the nature of the work required to be performed and
irrespective of whether or not such work shall be required on account of any
particular manner of use relating to or affecting the Demised Premises or the
Personal Property.
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Section 9.2 Notwithstanding the foregoing, except as otherwise set
forth in any other agreements between the parties, Landlord hereby releases
Tenant from any liability for compliance with all applicable laws and
regulations and with all Insurance Requirements existing on the Commencement
Date ("Pre-Existing Laws") with respect to the Demised Premises or the Personal
Property; provided, however, that Tenant shall comply with those Pre-Existing
Laws applicable to the making of any Alteration by Tenant or the result of the
making thereof. From and after the Commencement Date, Tenant shall be liable for
compliance with new or revised laws, regulations and Insurance Requirements to
the extent set forth above.
ARTICLE 10
Mechanic's Liens
Section 10.1 The Tenant shall not suffer or permit any mechanics'
liens to be filed against the Demised Premises by reason of work, labor,
services or materials supplied or claimed to have been supplied to the Tenant.
If any such mechanics' lien shall at any time be filed against the Demised
Premises, the Tenant shall, within 30 days of the filing thereof, cause such
lien to be discharged of record by payment, deposit, bond, order of a court of
competent jurisdiction or otherwise.
ARTICLE 11
Inspection of Premises by the Landlord
Section 11.1 The Landlord and its authorized representatives shall
have the right to enter the Demised Premises at all reasonable times, on
reasonable prior notice, for the purpose of (a) inspecting or surveying the
Demised Premises and the Personal Property, (b) making any necessary repairs or
repairs required or permitted hereby to the Demised Premises and the Personal
Property, (c) gaining access to, and entering, the Prohibited Areas, and (d)
performing any other act permitted under this Lease.
ARTICLE 12
Right to Perform Covenants of the Tenant
Section 12.1 If the Tenant shall at any time fail to make any
payment or perform any other act on its part to be made or performed under this
Lease, or diligently proceed to perform any such act, the Landlord, after not
less than fifteen (15) days' notice to the Tenant (except in case of emergency,
in which event no notice need be given), may, but shall not be obligated to,
make such payment or perform such other act. All amounts so paid by the Landlord
in connection therewith shall constitute Additional Rent hereunder and shall be
payable to the Landlord on the first day of the next succeeding month, together
with
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interest thereon at the Interest Rate from the date the Landlord incurred such
amount until the date of payment by the Tenant.
ARTICLE 13
Damage or Destruction
Section 13.1 If the Demised Premises or the Personal Property or any
part thereof are damaged or destroyed in whole or in part by any casualty, the
Tenant shall give the Landlord immediate notice thereof, and the Tenant shall,
at its own cost and expense, whether or not such damage or destruction shall
have been insured and whether or not insurance proceeds, if any, shall be
sufficient for such purpose, promptly repair, alter, restore, replace and
rebuild the Demised Premises or the Personal Property (each, a "Restoration") at
least to the extent of the value and as nearly as practicable, to the character,
quality, scope and size of the Demised Premises or the Personal Property
existing immediately prior to such occurrence subject to and in accordance with
the terms and provisions of Section 7.1 hereof. Landlord shall in no event be
called upon to do or perform any Restoration, nor to pay for any of the costs or
expenses thereof. Notwithstanding the provisions of the preceding sentence, if
the Demised Premises are damaged and destroyed to the extent that they cannot
reasonably be used for the conduct of the Business, and if the reasonably
estimated time to complete the Restoration exceeds 180 days, the Tenant may
terminate this Lease by notice to Landlord not later than thirty (30) days after
such damage or destruction, provided that such termination shall only be
effective if the Tenant pays or causes to be paid to the Landlord an amount
equal to the greater of: (a) the amount of insurance proceeds received by the
Tenant; or (b) the reasonably estimated cost of restoring the Demised Premises
at least to the extent of the value and, as nearly as practicable, to the
character, quality, scope and size the Demised Premises or the Personal Property
existing immediately prior to such occurrence.
Section 13.2 Unless this Lease is cancelled by the Tenant as
provided above, this Lease shall not be affected in any manner by reason of
total or partial damage or destruction of the Premises or any part thereof or by
reason of the untenantability of the Demised Premises or any part thereof, for
any reason, and the Tenant, notwithstanding any law or statute present or
future, waives any and all rights to quit or surrender the Demised Premises or
any part thereof. The Tenant's obligations hereunder shall continue as though
none of such events had occurred and without abatement, suspension, diminution
or reduction of any kind. The foregoing notwithstanding, if the Demised Premises
shall be damaged by fire or other casualty during any Renewal Period, and if
Tenant shall give prompt notice thereof to Landlord, the Basic Rent and any
Additional Rent shall be reduced in the proportion by which the area of the part
of the Premises which is not usable by Tenant, as reasonably determined by
Landlord, bears to the total area of the Premises immediately prior to such
casualty until such repairs which are required to be performed by Tenant
(excluding Long Lead Work) shall be substantially completed. The Restoration
shall be performed in a workerlike, diligent manner and Tenant shall use its
best efforts to complete the Restoration as expeditiously as possible. If Tenant
shall fail to perform the Restoration in a diligent and
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expeditious manner, then the Basic Rent and Additional Rent shall recommence on
the date that the Restoration would have been completed but for the Tenant's
failure. For purposes of this Lease, the term "Long lead Work" shall mean any
item which is not a stock item and must be specially manufactured, fabricated or
installed or is of such an unusual, delicate or fragile nature that there is a
substantial risk that
(i) there will be a delay in its manufacture, fabrication, delivery
or installation, or
(ii) after delivery, such item will need to be reshipped or
redelivered or repaired
so that in Landlord's reasonable judgement the item in question cannot be
completed when the standard items are completed even though the item of Long
Lead Work in question is (1) ordered together with the other items required and
(2) installed or performed (after the manufacture or fabrication thereof) in
order and sequence that such Long Lead Work and other items are normally
installed or performed in accordance with good construction practice. In
addition, "Long Lead Work" shall include any standard item which in accordance
with good construction practice should be completed after the completion of any
item of work in the nature of the items described in the immediately preceding
sentence.
ARTICLE 14
Condemnation
Section 14.1 In the event that the Premises, or any part thereof,
shall be taken in condemnation proceedings, or by exercise of any right of
eminent domain (any such taking or conveyance, a "Taking"), the Landlord shall
be entitled to collect from any condemnor the entire award for the Demised
Premises (an "Award"); provided, that the Tenant shall be permitted to make
application of an Award for the cost of its property and assets; provided,
further, that such application does not reduce the amount of the Award
potentially recoverable by the Landlord and that there shall first be deducted
there from the Landlord's reasonable expenses of collection, including without
limitation, attorneys' and experts' fees and disbursements. The Tenant agrees to
execute any and all documents that may be required in order to facilitate
collection by the Landlord of any such Awards. The Tenant and the holder of any
Fee Mortgage in cooperation with the Landlord shall have the right to
participate in any condemnation or eminent domain proceedings and be represented
by counsel for the purpose of protecting their respective interests thereunder.
Section 14.2 (a) If at any time during the Term a Taking of all or
substantially all of the Demised Premises shall occur, or a Taking of less than
substantially all of the Demised Premises that nevertheless, in the Landlord's
and the Tenant's reasonable judgment, materially impairs the Tenant's ability to
conduct its business thereon or access thereto, such taking shall be deemed to
have caused this Lease to terminate and expire on the date of such Taking or
determination, as appropriate. In such event, the Basic Rent and all Additional
Rent required to be paid by the Tenant under this Lease shall be paid up to the
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date of such Taking and the Tenant shall, in all other respects, keep, observe
or perform all the terms, covenants, agreements, provisions, conditions and
limitations of this Lease on the Tenant's part to be kept, observed or
performed, through the date of such Taking.
(b) Notwithstanding anything to the contrary contained herein,
if by reason of a taking of a portion of the Plant, Tenant no longer has
reasonable means of access to, or sufficient parking in the vicinity of, the
Demised Premises, then Landlord shall use reasonable efforts to provide
alternative means of access to the Demised Premises; provided, however, that if
no alternative means of access are available, then the provisions of Section
14.2(a) shall apply hereto.
Section 14.3 If, at any time during the Term, less than
substantially all of the Demised Premises shall be Taken as provided above in
this Article 14, and provided that any such Taking shall not, in the Landlord's
and the Tenant's reasonable judgment, impair the Tenant's ability to conduct its
business or have access to the Demised Premises, then, in such event, this Lease
and the Term shall continue in full force and effect. In the event of any Taking
referred to above, the Tenant shall give prompt notice thereof to the Landlord
and shall proceed, with reasonable diligence, to perform any necessary repairs,
restorations, alterations or replacements to the Demised Premises at the
Tenant's sole cost and expense. All Awards payable as a result of any such
Taking shall be paid to the Landlord; provided, that the Tenant shall be
permitted to make application for an Award for the cost of its property Taken so
long as the Landlord and the Tenant each agree that such application is
reasonable and such application does not reduce the amount of the Award
potentially recoverable by the Landlord and that there shall first be deducted
therefrom the Landlord's reasonable expenses of collection, including without
limitation, attorneys' and experts' fees and disbursements.
ARTICLE 15
Defaults and Remedies; Events of Termination
Section 15.1 The occurrence of any one or more of the following
events shall constitute an "Event of Default" under this Lease by the Tenant:
(a) The "abandonment" of the Demised Premises by the Tenant
(for purposes of this Section 15.1(a), the term "abandonment" shall mean
that Tenant shall (i) have vacated the Demised Premises with no intention
to return; and (ii) not be maintaining the Premises in accordance with
good business practice).
(b) The failure by the Tenant to make any payment of Basic
Rent, Additional Rent or any other payment required to be made by the
Tenant under this Lease within ten (10) days after receiving written
notice from Landlord that any such amount is due and payable.
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(c) The failure by the Tenant to observe or perform any of the
covenants, conditions or provisions of this Lease to be observed or
performed by the Tenant, other than described in Section 15.1(b) above,
where such failure shall continue for a period of thirty (30) days after
notice thereof by the Landlord to the Tenant; provided, that if the nature
of the Tenant's default is such that more than thirty (30) days are
reasonably required for its cure, then there shall not occur an Event of
Default hereunder if the Tenant commences such cure within such thirty
(30) day period and thereafter diligently prosecutes such cure to
completion.
(d)(i) The making by the Tenant of any general assignment or
general arrangement for the benefit of creditors; (ii) the filing by or
against the Tenant of a petition to have the Tenant adjudged a bankrupt or
a petition for reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of a petition filed against the Tenant,
such petition is stayed or dismissed within 60 days); (iii) the
appointment of a trustee or receiver to take possession of substantially
all of the Tenant's assets located at the Demised Premises or of the
Tenant's interest in this Lease, where possession is not restored to the
Tenant within sixty (60) days; or (iv) the attachment, execution or other
judicial seizure of substantially all of the Tenant's assets located at
the Demised Premises or of the Tenant's interest in this Lease, where such
seizure is not discharged within sixty (60) days.
Section 15.2 (a) In the event of any Event of Default, the Landlord
shall have the right, at the Landlord's option, to elect to terminate the
Tenant's right to possession of the Demised Premises and the Personal Property
and the Landlord may re-enter, take possession of the Demised Premises and
Personal Property and remove any persons or property by legal action.
(b) The foregoing remedies shall not be exclusive but shall be
in addition to all other remedies and rights provided under applicable law,
including without limitation, the right to all compensatory and consequential
damages suffered by the Landlord, and election to pursue one remedy shall not
preclude resort to another concurrent remedy.
(c) No action of the Landlord, other than express written
notice of termination pursuant to the provisions of this Lease, shall terminate
this Lease.
Section 15.3 The Tenant hereby waives the service of notice of
intention to re-enter the Demised Premises or to institute legal proceedings
with respect to such re-entry. The Tenant hereby further waives any and all
rights of redemption granted by or under any present or future applicable laws
in the event of the Tenant being evicted or dispossessed for any cause, or in
the event of the Landlord obtaining possession of the Demised Premises and the
Personal Property, by reason of the violation by the Tenant of any of the
covenants and conditions of this Lease or otherwise.
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ARTICLE 16
Cumulative Remedies - No Waiver
Section 16.1 Subject to the limitations contained in Section 27.1
below, the specific remedies to which the Landlord or the Tenant may resort
under the terms of this Lease are cumulative and are not intended to be
exclusive of any other remedies or means of redress to which they may be
lawfully entitled in case of any breach or threatened breach by either of them
of any provision of this Lease. The failure of either party hereunder to insist
in any one or more cases upon the strict performance of any of the covenants of
this Lease, or to exercise any option contained herein, shall not be construed
as a waiver or relinquishment for the future of such covenant or option. The
receipt by the Landlord of Basic Rent or Additional Rent with knowledge of the
breach of any covenant of this Lease shall not be deemed a waiver of such breach
and no provision of this Lease shall be deemed to have been waived by the
Landlord unless such waiver is in writing and executed by the Landlord. No act
or thing done by the Landlord or the Landlord's agents during the Term shall be
deemed an acceptance of a surrender of the Demised Premises and no agreement to
accept such surrender shall be valid unless in writing executed by the Landlord.
In addition to the other remedies in this Lease, the Landlord and the Tenant
shall be entitled to restraint by injunction of the violation, or attempted
or threatened violation, of any of the covenants, conditions or provisions of
this Lease or to a decree compelling performance of any of such covenants,
conditions or provisions.
ARTICLE 17
Subordination; Fee Mortgages
Section 17.1 Provided that the holder of any mortgages or deeds of
trust (each, a "Fee Mortgage") covering the Landlord's fee interest in the
Demised Premises, the Licensed Premises or any portion thereof shall execute and
deliver to Tenant a non-disturbance and attornment agreement in form and
substance reasonably satisfactory to the Tenant, this Lease shall be subject and
subordinate at all times to the lien of such Fee Mortgage (other than the
mortgage set forth in Item 2 of Schedule 3.4(b) to the Contribution Agreement
which shall be subordinate to the Lease pursuant to a subordination agreement to
be entered into by Landlord and the mortgagor). The Tenant will execute and
deliver such further instrument or instruments subordinating this Lease to the
lien of any such Fee Mortgage as shall be desired by the holder thereof. Tenant
shall not do anything that would constitute a default under any Fee Mortgage of
which Tenant has prior notice, or omit to do anything that Tenant is obligated
to do under the terms of this Lease so as to cause Landlord to be in default
thereunder. If, in connection with a financing secured in part by the land on
which the Plant stands (the "Land"), the Plant, or any buildings of the Plant,
any lending institution shall request reasonable modifications of this Lease,
Tenant shall not unreasonably withhold or delay its consent to such
modifications.
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Section 17.2 On or prior to the Commencement Date, Landlord shall
obtain all necessary consents to the Lease.
ARTICLE 18
Quiet Enjoyment
Section 18.1 So long as the Tenant shall not be in default of its
obligations under this Lease beyond any applicable grace periods, the Tenant
shall and may peaceably and quietly hold, occupy and enjoy the Demised Premises,
and, on a non-exclusive basis, the Licensed Premises, during the Term, subject
to the terms, conditions and provisions of this Lease.
ARTICLE 19
Notices
Section 19.1 All notices, demands and requests which may or are
required to be given by either party to the other shall be in writing. All
notices, demands and requests by the Landlord to the Tenant shall be deemed to
have been properly given if served in person by service by a national overnight
courier such as Federal Express, or if sent by United States registered or
certified mail, return receipt requested, postage prepaid. addressed to the
Tenant at its address set forth above, Attention: Bill Curtin, or at such other
place as the Tenant may from time to time designate in a written notice to the
Landlord. A copy of each such notice, demand or request shall be dent to Kaiser
Aluminum & Chemical Corporation, 26913 Northwestern Highway, Suite 520,
Southfield, Michigan 48034. All notices, demands and requests by the Tenant to
the Landlord shall be deemed to have been properly given if served in person by
service by a national overnight courier such as Federal Express, or sent by
United States registered or certified mail, return receipt requested, postage
prepaid, addressed to the Landlord at the address first above written,
Attention: President, Engineered Components, or at such other place as the
Landlord may from time to time designate in a written notice to the Tenant. A
copy of each such notice, demand or request shall be sent to Kaiser Aluminum &
Chemical Corporation, 5847 San Felipe, Suite 2600, Houston, Texas 77057,
Attention: General Counsel and to Kramer, Levin, Naftalis & Frankel, 919 Third
Avenue, New York, New York 10019, Attention: Howard A. Sobel, Esq.
ARTICLE 20
Certificates
Section 20.1 Each party hereto shall, at any time and from time to
time upon not less than 10 days' prior notice by the other party, execute,
acknowledge and deliver to
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such other party a statement in writing certifying, if true, that this Lease is
unmodified and in full force and effect (or if there have been modifications
that the Lease is in full force and effect as modified and stating the
modifications) and the dates to which the Basic Rent and other charges have been
paid in advance, and stating whether or not, to the best knowledge of the signer
of such statement, the other party is in default in keeping, observing or
performing any term, covenant, agreement, provision, condition or limitation
contained in this Lease and, if so, specifying each such default.
ARTICLE 21
Use
Section 21.1 The Tenant shall use the Premises and the Personal
Property solely for the production of Joint Venture Products (as defined in the
Contribution Agreement) in connection with the conduct of the Business and for
no other purpose. The provisions of this Section 21.1 shall not prohibit any new
uses which become part of the Business, provided that the same: (a) are of the
same nature as the current uses of the Demised Premises and the Personal
Property; (b) are permitted under the certificate of occupancy (or the
certificate of occupancy is amended to permit such use); and (c) are approved by
the Landlord, such approval not to be unreasonably withheld or delayed. Tenant
shall not use, treat, or dispose of any Hazardous Substances (as defined in the
Contribution Agreement) in connection with the use of the Premises for the
production of Joint Venture Products without first obtaining the prior consent
of the Landlord, which consent shall not be unreasonably withheld or delayed.
Section 21.2 Pursuant to the Contribution Agreement, the Landlord
may have transferred to, or made available for use by, the Tenant, certain
Governmental Authorizations (as defined in the Contribution Agreement) required
for the use and occupancy of, and conduct of the Business at, the Demised
Premises. The Tenant shall obtain (to the extent not transferred or made
available to the Tenant as provided above) and thereafter shall maintain in full
force and effect, any permit, approval or license which is required by any
governmental or nongovernmental agency or insurance regulatory body for the
operation and maintenance of the Demised Premises and the use thereof in
connection with the Business (including, without limitation, the Governmental
Authorizations transferred to or made available to the Tenant pursuant to the
Contribution Agreement), and shall promptly furnish the Landlord with a copy of
same. The Tenant shall not use or allow the Premises or any part thereof to be
used or occupied for any unlawful purpose.
Section 21.3 In furtherance and not in limitation of the foregoing,
the Tenant's use of the Premises and the Personal Property shall at all times be
subject to the Landlord's reasonable health, safety and operating regulations
and guidelines from time to time which are applicable to the Premises, the
Personal Property and/or the Tenant's use thereof, to the extent the same have
been furnished to the Tenant by the Landlord.
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ARTICLE 22
Transfer; Assignment and Subletting
Section 22.1 The Tenant shall not assign, sublet, transfer, sell or
otherwise convey the whole or any part of its interest in this Lease.
Section 22.2 The Landlord may assign or transfer its interest in the
Lease or the Premises or Personal Property at any time during the Term
hereof, provided that any transferee expressly assumes the liabilities of the
Landlord hereunder. Notwithstanding such assignment and assumption, the Landlord
shall not be released from liability hereunder without the consent of the
Tenant, which consent shall not be unreasonably withheld if the assignee or
transferee has a net worth on the date of the assignment which is reasonably
adequate for the performance by the Landlord of its obligations hereunder.
Landlord shall notify Tenant of any such proposed assignment or transfer at
least six (6) months prior to the effective date of such assignment or transfer.
The foregoing provisions of this Section 22.2 shall not apply to the creation of
any security interest, mortgage or lien by Landlord on its interest in the Lease
of the Premises or Personal Property in connection with its existing primary
credit facility or any replacement or extension thereof.
ARTICLE 23
Invalidity of Particular Provisions
Section 23.1 If any term or provision of this Lease or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Lease shall be valid and be enforced to the fullest
extent permitted by law.
ARTICLE 24
Allocation of Expenses
Section 24.1 The Tenant and the Landlord agree that (i) all costs
and expenses solely attributable to the Demised Premises, the Personal Property
and the use thereof are to be borne by the Tenant (other than the costs of
certain structural repairs to be borne by the Landlord as provided in Section
8.1 hereof), (ii) all costs and expenses solely attributable to the portion of
the Plant used and occupied exclusively by the Landlord or any party other than
the Tenant (collectively, "Landlord's Premises") are to be borne by the
Landlord, and (iii) all costs and expenses relating to the Licensed Premises are
to be equitably apportioned between the Tenant and the Landlord.
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Section 24.2 The Landlord and the Tenant shall cooperate with each
other to arrange for Taxes, utilities and services exclusively relating to or
serving the Demised Premises to be separately assessed, metered or contracted
for, to the extent reasonably practicable and unless the Landlord and the Tenant
otherwise mutually agree (e.g. for the purpose of achieving cost savings). The
cost and expense of any Separation Work performed in connection therewith shall
be borne by the Tenant, as provided in Article 3 above.
Section 24.3 The Landlord and the Tenant agree that the
apportionment of costs or expenses (including Taxes, utilities and services)
relating partially to Landlord's Premises or a portion thereof, and partially to
the Demised Premises or a portion thereof, shall generally be made in accordance
with the ratio of the interior square footage of buildings lying within the
Demised Premises (or such portion thereof) to the square footage of buildings
lying within the Landlord's Premises (or portion thereof). Similarly,
apportionment of Licensed Area expenses shall generally be made in accordance
with the ratio of the interior square footage of all buildings lying within the
entire Demised Premises to the interior square footage of all buildings lying
within the entire Landlord's Premises. Notwithstanding the foregoing, if the
method of apportionment described in the preceding two sentences would be
inequitable in any material respect (e.g., because the benefit from the service
in question, the use of the utilities in question, or the value of the
properties in question is disproportionate), then a more equitable basis of
allocation shall be used.
Section 24.4 Attached hereto as Exhibit "C" is a schedule of Initial
Expense Allocations pursuant to which the Landlord and the Tenant have attempted
to identify, and equitably apportion between the Landlord and the Tenant,
certain costs and expenses relating to the Demised Premises and/or the Licensed
Areas.
Section 24.5 If any item of cost or expense paid, payable or
incurred by either the Landlord or the Tenant is to be apportioned pursuant to
this Lease, the party to whom such cost or expense is billed or by whom it is
paid shall promptly notify the other party of the mount of such cost or expense,
and such other party's proportionate share thereof and the basis upon which such
proportionate share was determined. Such notice shall be accompanied by
reasonable documentation relating to such cost or expense. The party so billed
shall pay the billing party the amount requested within fifteen (15) business
days of receiving such bill. If the party billed disputes the amount, such
payment may be made under protest and the dispute shall be settled in the manner
provided in Section 24.6 below. Following resolution of the dispute, any
overpayment shall be refunded to the billed party, and any underpayment shall be
paid to the billing party, in each case together with interest thereon at a rate
equal to 2% above the rate of interest publicly announced by Citibank, N.A. from
time to time as its "base rate" (unless such interest is waived by the party
entitled to receive the same).
Section 24.6 In the event any party disputes the amount of any bill
submitted to it for payment pursuant to Section 24.5 above, it shall immediately
notify the other parry in writing, which notice shall set forth the nature of
the dispute with reasonable specificity and shall include any documentation
reasonably required to evaluate such dispute. Each party shall appoint a
representative who shall attempt to resolve the dispute. The
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representatives shall use the provisions of this paragraph and, if applicable,
the methodology employed by the parties in arriving at the Initial Expense
Allocations set forth in Exhibit "C" as guidelines in attempting to resolve the
dispute. If such representatives are unable to resolve the dispute within thirty
(30) days, they shall submit the dispute to arbitration in accordance with
Article 28 hereof.
ARTICLE 25
Broker
Section 25.1 Each party represents that it has not dealt with any
broker in connection with this Lease. The Landlord and the Tenant shall
indemnify and hold each other harmless from and against any and all loss,
claims, liabilities, damages and expenses, including without limitation,
attorneys' fees and expenses and court costs arising out of or in connection
with any breach or alleged breach of the above representation or any claim by
any person or entity for brokerage commissions or other compensation in
connection with this Lease. The provisions of this Article 25 shall survive the
expiration or sooner termination of this Lease.
ARTICLE 26
Indemnity
Section 26.1 Except as otherwise provided herein or in the
Contribution Agreement, the Tenant shall indemnify and hold harmless the
Landlord against and from any and all liability, fines, suits, claims, demands,
expenses (including without limitation, attorneys' fees and disbursements) and
actions of any kind or nature arising by reason of injury to person or property
occurring on or about the Premises from and after the date hereof and occasioned
in whole or in part by any act or omission of the Tenant, or of any person on
the Premises or any other part of the Plant by the license or permission of the
Tenant, expressed or implied, or by any use of the Premises or the Personal
Property, or any breach, violation or non-performance of any covenant in this
Lease on the part of the Tenant to be observed or performed.
Section 26.2 Except as otherwise provided herein or in the
Contribution Agreement, Landlord shall indemnify and hold harmless the Tenant
from and against all claims against Tenant arising from any direct damage to the
Demised Premises and any bodily injury to Tenant's employees, agents or invitees
resulting from the negligence or willful misconduct of Landlord or its agents.
This indemnity and hold harmless agreement shall include indemnity from and
against any and all liability, fines, suits, claims, demands and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
incurred in or in connection with any such claim or proceeding brought thereon,
but shall be limited to the extent any insurance proceeds collectible by Tenant
or such injured party with respect to such damage or injury are insufficient to
satisfy same. Landlord shall have no
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liability for any consequential damages suffered either by Tenant or by any
party claiming through Tenant.
Section 26.3 If any claim, action or proceeding is made or brought
against either party, which claim, action or proceeding the other party shall be
obligated to indemnify such first party against pursuant to the terms of this
Lease, then, upon demand by the indemnified party, the indemnifying party, at
its sole cost and expense, shall resist or defend such claim, action or
proceeding in the indemnified party's name, if necessary, by such attorneys as
the indemnified party shall approve, which approval shall not be unreasonably
withheld. Attorneys for the indemnifying party's insurer are hereby deemed
approved for purposes of this Section 26.3. Notwithstanding the foregoing, an
indemnified party may retain its own attorneys to defend or assist in defending
any claim, action or proceeding involving potential liability of Five Million
Dollars ($5,000,000) or more, and the indemnifying party shall pay the
reasonable fees and disbursements of such attorneys. The provisions of this
Article 26 shall survive the expiration or earlier termination of this Lease.
ARTICLE 27
Covenants to Bind and Benefit
Respective Parties; Modification;
Waiver of Trial by Jury;
Exculpation; Unavoidable Delay; Conflict
Section 27.1 The covenants and agreements herein contained shall
bind and inure to the benefit of the Landlord and the Tenant. The term
"Landlord" means a landlord or lessor, and as used in this Lease means only the
owner, or the mortgagee in possession, for the time being of the Demised
Premises, or the owner of this Lease of the Demised Premises, so that in the
event of any transfer of the Demised Premises or of this Lease, the Landlord
shall be and hereby is entirely freed and relieved of all covenants and
obligations of the Landlord hereunder, and it shall be deemed and construed
without further agreement between the parties, or between the parties and the
purchaser, at the time of any such transfer, that the purchaser of the Demised
Premises of the Landlord's interest in this Lease has assumed and agreed to
carry out any and all covenants and obligations of the Landlord hereunder.
Section 27.2 The terms and provisions of this Lease may not be
altered, modified, waived or terminated except by an agreement in writing signed
by the party to be charged.
Section 27.3 It is mutually agreed by and between the Landlord and
the Tenant that the respective parties hereto shall and they hereby do waive
trial by jury in any action, proceeding or counterclaim brought by either of the
parties hereto against the other on any matters whatsoever arising out of or in
any way connected with the Lease, the relationship of the Landlord and the
Tenant, the Tenant's use of or occupancy of the Premises or the Personal
Property, and any emergency or any other statutory remedy. It is
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further mutually agreed that in the event the Landlord commences any summary
proceeding for possession of the Demised Premises and the Personal Property, the
Tenant will not interpose any counterclaim of whatever nature or description in
such proceeding.
Section 27.4 Notwithstanding anything herein or in any rule, law or
statute to the contrary, the Tenant hereby acknowledges and agrees that to the
extent that the Landlord shall at any time have any liability under, pursuant to
or in connection with this Lease, none of the Tenant, its officers, directors,
partners, associates, employees, agents, guests, licensees or invitees (or any
other party claiming through or on behalf of the Tenant) shall seek to enforce
any personal or money judgment against the Landlord except against the equity
interest of the Landlord in the Plant. In addition to and not in limitation of
the foregoing, the Tenant further hereby acknowledges and agrees that, in no
event and under no circumstances, shall the Landlord or any director indirect
partner, officer, director, employee, agent or principal (disclosed or
undisclosed) of the Landlord have any personal liability or monetary or other
obligation of any kind under or pursuant to this Lease, except that the Landlord
may be held liable to the extent of its equity interest in the Land and the
Building. Any attempt by the Tenant or any officer, director, direct or indirect
partner, associate, employee, agent, guest, licensee or invitee of the Tenant
(or any other party claiming through or on behalf of the Tenant) to seek to
enforce any such personal liability or monetary or other obligation shall be and
be deemed to be in material violation by the Tenant of the terms of the tenancy
created hereby and shall, in addition to and not limitation of the Landlord's
other rights, powers, privileges and remedies under the terms and provisions of
this Lease or otherwise afforded by applicable law in respect thereof,
immediately vest the Landlord with the unconditional right and option to cancel
this Lease on five (5) days' notice to the Tenant.
Section 27.5 This Lease and the obligation of Tenant to pay Basic
Rent and Additional Rent hereunder and perform all of the other covenants and
agreements hereunder on the part of Tenant to be performed shall in no wise be
affected, impaired or excused because Landlord is unable to fulfill any of its
obligations under this Lease expressly or implied to be performed by Landlord or
because Landlord is unable to make, or is delayed in making any repairs,
additions, alterations, improvements or decorations or is unable to supply or is
delayed in supplying any equipment or fixtures, if Landlord is prevented or
delayed from so doing by reason of strikes or labor troubles or by accident, or
by any cause whatsoever beyond Landlord's control, including, but not limited
to, laws, governmental preemption in connection with a national emergency or by
reason of any Requirements of any governmental authority, or by reason of the
conditions of supply and demand which have been or are affected by war or other
emergency ("Unavoidable Delays").
Section 27.6 In the event of any inconsistency between the terms and
provisions of this Lease and the terms and provisions of the Contribution
Agreement, the terms and provisions of the Contribution Agreement shall control.
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ARTICLE 28
Arbitration
Section 28.1 In such cases where this Lease expressly provides for
the settlement of a dispute or question by arbitration, and only in such cases,
either Landlord or Tenant may demand arbitration. Upon such demand, and except
where other provisions of this Lease have special provisions therefor, the
dispute or question shall be determined by arbitration in accordance with the
provisions of Section 8.3 of the Contribution Agreement.
ARTICLE 29
Hazardous Substances; Environmental Laws
Section 29.1 Compliance with Environmental Laws. Except as
specifically set forth or contemplated by Section 6.3(a), 6.3(b), 6.3(c) and
7.1(a)(ii) of the Contribution Agreement, Tenant represents, covenants and
agrees that in conducting its business operations and/or its occupancy at the
Premises, it shall (i) comply with all applicable Environmental Laws (as that
term is defined in the Contribution Agreement), (ii) it shall not in any manner
cause the emission, discharge, issuance, release or distribution of any
Hazardous Substances (as that term is defined in the Contribution Agreement) in
violation of any Environmental Law, and (iii) it shall comply with the terms and
conditions of any permit issued to Landlord which relates in whole or in part to
Tenant's use or occupancy of the Premises, including but not limited to the
wastewater discharge permit and stormwater permit.
Section 29.2 Copies of Submissions. Upon the prior reasonable
written request of Landlord, Tenant shall supply Landlord with copies of any
notices, reports, correspondence and submissions made by Tenant to the United
States Environmental Protection Agency ("EPA"), the Pennsylvania Department of
Environmental Protection, the Ohio Department of Environmental Protection, the
United States Occupational Safety and Health Administration or any other local,
state or federal authority which requires submissions by Tenant of any
information concerning environmental matters or Hazardous Substances pursuant to
any Environmental Law. Tenant's obligation under this paragraph shall not apply
to attorney-client privileged communications or the attorney work product
doctrine or to any confidential business information submitted to local, state
or federal authorities under confidentiality protection to which Landlord would
not otherwise be entitled under the Contribution Agreement.
Section 29.3 Tenant's Remediation. Except as contemplated by Section
29.1 Section 7.1(a)(ii) of the Contribution Agreement, in the event of any
spill, discharge, or release of any Hazardous Substances at, under or about, the
Premises solely caused by Tenant or relating to the operations of Tenant's
business and/or Tenant's occupancy at the Premises (hereinafter collectively
referred to as a "Hazardous Discharge") or upon the issuance of any complaint,
order, citation or notice of violation with regard to
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air emissions, water discharges, noise emissions or any other environmental,
health or safety matter caused by tenant or relating to the operations of
Tenant's business and/or occupancy at the Premises (hereinafter collectively
referred to as an "Environmental Complaint"), Tenant shall, at its sole cost and
expense, promptly take all such necessary steps to initiate and diligently
complete all remedial action relating to the Hazardous Discharge or the issuance
of such Environmental Complaint in accordance with all applicable Environmental
Laws to the reasonable satisfaction of Landlord and the applicable governmental
authority including the payment of any and all costs and penalties assessed
against the Premises. Provided however, with respect to a Hazardous Discharge
caused by Landlord, Tenant shall have no obligation to conduct any such remedial
actions.
Section 29.4 Copies of Notices. In the event that Tenant receives
any notice, whether written or oral, concerning the occurrence of any Hazardous
Discharge required to be reported under any Environmental Law or of any
Environmental Complaint from any person, entity or governmental agency, then
Tenant shall give prompt oral notice to Landlord, and shall within five (5) days
thereafter, give written notice of same to Landlord, which notice shall set
forth specifically and in detail all relevant facts and circumstances with
respect thereto.
Section 29.5 Tenant's Failure to Remediate Under Section 29.3,
Landlord's Right to Remediate. Upon the occurrence of a Hazardous Discharge or
Environmental Complaint, in the event Tenant fails to comply with Section 29.03,
Landlord shall have the right, but not the obligation, after giving Tenant at
least five (5) days prior written notice (unless emergent circumstances require
less notice) and a reasonable opportunity to cure (which cure shall not exceed
fifteen (15) days, unless emergent circumstances require less time) to enter
onto the Premises and after advising Tenant, to take any actions necessary or
advisable to remove, clean up and minimize the impact of, or otherwise deal with
any Hazardous Discharge or any Environmental Complaint pertaining to the
Premises. In the event such cure shall take more than fifteen (15) days to
accomplish, Tenant shall have a period of time equal to the earlier of the
reasonable time necessary to accomplish the cure or any requirement of any
applicable governmental agency or Environmental Law, provided Tenant commences
the cure within the fifteen (15) day period and thereafter diligently pursues
same to completion. All reasonable costs and expenses incurred by Landlord in
the exercise of any such rights shall be deemed to be additional rent hereunder
and shall be immediately payable by Tenant to Landlord upon demand.
Section 29.6 Environmental Indemnification. Except as specifically
set forth in Section 7.1(a)(ii) of the Contribution Agreement, Tenant shall
indemnify the Landlord, its affiliates, shareholders, directors, officers and
employees against, and hold them harmless from any and all damage, claim, loss
liability and expense (including without limitation reasonable expenses of
investigation and reasonable attorney's fees and expenses) incurred or suffered
by Landlord, (i) arising out of or due to any spill, discharge, or release of
any Hazardous Substances on, from, under or at the Premises resulting from
events or conduct occurring after the commencement date of this Lease Term and
solely caused by Tenant or relating to Tenant's business operations and/or
Tenant's occupancy at the Premises, (ii) due to Tenant's failure to comply with
its obligations under this Article, or (iii) due to Tenant's
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breach of any representation, warranty covenant or other agreement of the Tenant
contained in this Article.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Lease as of
the date first set forth above.
LANDLORD:
KAISER ALUMINUM & CHEMICAL CORPORATION
By: /s/ Daniel J. Rinkenberger
-------------------------------
Name: Daniel J. Rinkenberger
Title: Assistant Treasurer
TENANT:
AKW L.P.
By: AKW GENERAL PARTNER L.L.C.,
its General Partner
By:
-------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Lease
as of the date first set forth above.
LANDLORD:
KAISER ALUMINUM & CHEMICAL CORPORATION
By:
-------------------------------
Name:
Title:
TENANT:
AKW L.P.
By: AKW GENERAL PARTNER L.L.C.,
its General Partner
By: /s/ William J. Curtin
-------------------------------
Name: William J. Curtin
Title: Vice President
<PAGE>
[MAP OMITTED]
<PAGE>
EXHIBIT "A-2"
Personal Property
The following three overhead cranes located in buildings to be leased to
the Company:
-- Whiting double box bean bridge crane, 20-ton capacity x 60' span, cab
operated
-- Case double box beam mill crane, 15-ton capacity x 65' span, cab
operated
-- Shawbox double box beam mill crane, 20-ton capacity x 65' span
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<TABLE>
<CAPTION>
EXHIBIT "B"
Separation Work (Erie Plant Segregation)
=======================================================================================================================
$$
Project (x 1,000) C/E Status as of 04/15/97
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Relocate Wagner Log Saw 250 E Complete.
- -----------------------------------------------------------------------------------------------------------------------
Relocate Small Hem Saw 5 E Complete.
- -----------------------------------------------------------------------------------------------------------------------
Meters: Electric 130 C Planned July 4 shutdown. Rev. from lOOK.
- -----------------------------------------------------------------------------------------------------------------------
Gas & Water 50 C&E Complete. 50% capital est.
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Building 11: Floor and drains 12 C Complete.
---------------------------------------------------------------------
: East pad 26 C Complete.
---------------------------------------------------------------------
: Relocate propane 5 E Complete by 04/30.
---------------------------------------------------------------------
: Rebuild O/H 34 E Cost of controls & electrics higher than
bridge crane planned. Cost of revision forthcoming.
---------------------------------------------------------------------
: General clean up 20 E Still to do.
- -----------------------------------------------------------------------------------------------------------------------
New structures: Mills Offices, rest 170 C Getting bids.
restrooms and
lunch room
---------------------------------------------------------------------
: Store room 20 C Location change to West bldg. 22.
Complete by 04/30.
- -----------------------------------------------------------------------------------------------------------------------
Main office - isolate staff 15 C Still to do.
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Receiving - Door, dock, driveway 25 C Planned for June.
- -----------------------------------------------------------------------------------------------------------------------
Trk gate, driveway 80 C Getting permit. Start 04/20.
- -----------------------------------------------------------------------------------------------------------------------
Move small crane (trolley) 10 E Still to do.
- -----------------------------------------------------------------------------------------------------------------------
Fences & door blockages 20 C Have quotes. Still to do.
=======================================================================================================================
</TABLE>
Capital = $523,000
Expense = 349,000
--------
TOTAL = $872,000
<PAGE>
EXHIBIT "C"
Initial Expense Allocation
================================================================================
Expense Method of Allocating
- --------------------------------------------------------------------------------
Security Guard Services 50-50 Supplier Invoice
- --------------------------------------------------------------------------------
Snow Removal Services 50-50 Supplier Invoice
- --------------------------------------------------------------------------------
Lawn Care Services 50-50 Supplier Invoice
- --------------------------------------------------------------------------------
Mail Delivery & Pick Up 50-50 Supplier Invoice
- --------------------------------------------------------------------------------
Floor Mats and Uniforms 50-50 Supplier Invoice
- --------------------------------------------------------------------------------
Trash/Garbage Services 50-50 Supplier Invoice
- --------------------------------------------------------------------------------
Warehouse Storage-Mountfort Based on Square Footage Utilized
- --------------------------------------------------------------------------------
Heating, Ventilation, Air Actual Supplier Invoices Broken Out
Conditioning
- --------------------------------------------------------------------------------
Fire Extinguisher Services 50-50 Supplier Invoice
- --------------------------------------------------------------------------------
Telephone, Fax, Paging, Voice 50-50 Base Charges + Actual Long
Mail, and Mobiles (including Distance Charges from phone extensions
service contracts)
- --------------------------------------------------------------------------------
Environmental Engineering Services 50-50 for Work on Permits, and
(Consultant) Landlord Structurals and Wheels & Tire Molds
Tenant Invoiced Separately
- --------------------------------------------------------------------------------
Electricity 77-23 Utility Invoice
- --------------------------------------------------------------------------------
Natural Gas 71-29 Utility Invoice
- --------------------------------------------------------------------------------
Water & Sewer 80-20 Utility Invoice
- --------------------------------------------------------------------------------
Ultra-Forge machining, handling & Wheel and Tire Mold Invoices to Tenant from
warehousing Ultra-Forge Including Incentives
and Hub Invoices to Oxnard from Ultra-Forge
Including Incentives
================================================================================
Note: The first proportionate shares defined are Tenant. For example, 90-10 is
90% allocated to Tenant, and 10% allocated to Landlord structurals. It is
planned that these services will eventually be separated with third
parties directly invoicing Tenant following a transition period. In the
interim, Landlord will receive invoices and re-invoice the Tenant for the
defined share set forth above.
<PAGE>
<TABLE>
<CAPTION>
---------------------------
EQUIPMENT NAME
AND/OR NUMBER
PREVENTIVE MAINTENANCE CHECK CHART CRANES, D.C./A.C.
- ------------------------------------------------------------------------------------------------------------------------------------
WORK PERFORMED BY: BADGE NO.: DATE COMPLETED ASSIGNED TO: EQUIPMENT LOCATION
/ / BLDG. 11, 22, 26
- ------------------------------------------------------------------------------------------------------------------------------------
Unit Available for Preventive Maintenance / / YES / / NO FREQUENCY CHART NO.
SYMBOL D SHEET 2 OF
- ------------------------------------------------------------------------------------------------------------------------------------
PLANT WORK ORDER NO. PREVENTIVE MAINTENANCE TIME
ERIE FORGE PLANT Allocable Required
- ------------------------------------------------------------------------------------------------------------------------------------
CODES: / OK - No action required
0 Minor work performed
1 Work order required
2 Condition: dirty or poor
ELECTRICAL 3 Not properly lubricated
---------- 4 See comments below
- ------------------------------------------------------------------------------------------------------------------------------------
CODE AS COMPLETED
-----------------------------------------------------------------------
Lubricate
Item or Check Adjust Operate Check
No. Item and Element Lubrication Change Replace or Tighten or Test or Inspect Instructions:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONTROL CAB (CONT'D)
- ------------------------------------------------------------------------------------------------------------------------------------
HOIST CONTROLLER X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
RESISTANCE BANKS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
MOTOR ALARM X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
COMMENTS: Identify by Item Number
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE]
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
---------------------------
EQUIPMENT NAME
AND/OR NUMBER
PREVENTIVE MAINTENANCE CHECK CHART CRANES, D.C./A.C.
- ------------------------------------------------------------------------------------------------------------------------------------
WORK PERFORMED BY: BADGE NO.: DATE COMPLETED ASSIGNED TO: EQUIPMENT LOCATION
/ / BLDG. 11, 22, 26
- ------------------------------------------------------------------------------------------------------------------------------------
Unit Available for Preventive Maintenance / / YES / / NO FREQUENCY CHART NO.
SYMBOL D SHEET 1 OF
- ------------------------------------------------------------------------------------------------------------------------------------
PLANT WORK ORDER NO. PREVENTIVE MAINTENANCE TIME
ERIE FORGE PLANT Allocable Required
- ------------------------------------------------------------------------------------------------------------------------------------
CODES: / OK - No action required
0 Minor work performed
1 Work order required
2 Condition: dirty or poor
ELECTRICAL 3 Not properly lubricated
---------- 4 See comments below
- ------------------------------------------------------------------------------------------------------------------------------------
CODE AS COMPLETED
-----------------------------------------------------------------------
Lubricate
Item or Check Adjust Operate Check
No. Item and Element Lubrication Change Replace or Tighten or Test or Inspect Instructions:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BRIDGE X
- ------------------------------------------------------------------------------------------------------------------------------------
RUNWAY CONDUCTORS X X X
- ------------------------------------------------------------------------------------------------------------------------------------
RUNWAY CONDUCTOR SUPPORTS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
BRIDGE CONDUCTOR X X X
- ------------------------------------------------------------------------------------------------------------------------------------
BRIDGE CONDUCTOR SUPPORTS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
RUNWAY COLLECTORS X X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
TROLLEY COLLECTORS X X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
BRIDGE DRIVE MOTOR BRUSHES X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
TROLLEY MOTOR BRUSHES X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
HOIST MOTOR BRUSHES X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
HOIST LIMIT SWITCH X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
CONTROL CAB
- ------------------------------------------------------------------------------------------------------------------------------------
MAIN POWER SAFETY SWITCH X X X
- ------------------------------------------------------------------------------------------------------------------------------------
BRIDGE CONTROLLER CONTACTS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
TROLLEY CONTROLLER CONTACTS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
COMMENTS: Identify by Item Number
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE]
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
---------------------------
EQUIPMENT NAME
AND/OR NUMBER
PREVENTIVE MAINTENANCE CHECK CHART CRANES, D.C./A.C.
- ------------------------------------------------------------------------------------------------------------------------------------
WORK PERFORMED BY: BADGE NO.: DATE COMPLETED ASSIGNED TO: EQUIPMENT LOCATION
/ / BLDG. 11, 22, 26
- ------------------------------------------------------------------------------------------------------------------------------------
Unit Available for Preventive Maintenance / / YES / / NO FREQUENCY CHART NO.
SYMBOL D SHEET 3 OF
- ------------------------------------------------------------------------------------------------------------------------------------
PLANT WORK ORDER NO. PREVENTIVE MAINTENANCE TIME
ERIE FORGE PLANT Allocable Required
- ------------------------------------------------------------------------------------------------------------------------------------
CODES: / OK - No action required
0 Minor work performed
1 Work order required
2 Condition: dirty or poor
MECHANICAL 3 Not properly lubricated
---------- 4 See comments below
- ------------------------------------------------------------------------------------------------------------------------------------
CODE AS COMPLETED
-----------------------------------------------------------------------
Lubricate
Item or Check Adjust Operate Check
No. Item and Element Lubrication Change Replace or Tighten or Test or Inspect Instructions:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
HOIST (CONT'D)
- ------------------------------------------------------------------------------------------------------------------------------------
CABLE DRUM SHAFT BEARINGS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
MOTOR ANCHOR BOLTS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
MOTOR BEARINGS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
LOAD BRAKE FRICTION DISC X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
LOAD BRAKE [ILLEGIBLE) & SHIFTER X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
MOTOR BRAKE CAP X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
MOTOR BRAKE SHOES X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
CHAIN LINKS X X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
HOOK X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
CONTROL CAB
- ------------------------------------------------------------------------------------------------------------------------------------
BRAKE PEDAL & LINKAGE X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
CAB ACCESS GATE X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
CAB TO BRIDGE LADDER FASTENER X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
COMMENTS: Identify by Item Number
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE]
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
---------------------------
EQUIPMENT NAME
AND/OR NUMBER
PREVENTIVE MAINTENANCE CHECK CHART CRANES, D.C./A.C.
- ------------------------------------------------------------------------------------------------------------------------------------
WORK PERFORMED BY: BADGE NO.: DATE COMPLETED ASSIGNED TO: EQUIPMENT LOCATION
/ / BLDGS. 11, 22, 26
- ------------------------------------------------------------------------------------------------------------------------------------
Unit Available for Preventive Maintenance / / YES / / NO FREQUENCY CHART NO.
SYMBOL D SHEET 3 OF
- ------------------------------------------------------------------------------------------------------------------------------------
PLANT WORK ORDER NO. PREVENTIVE MAINTENANCE TIME
ERIE FORGE PLANT Allocable Required
- ------------------------------------------------------------------------------------------------------------------------------------
CODES: / OK - No action required
0 Minor work performed
1 Work order required
2 Condition: dirty or poor
3 Not properly lubricated
4 See comments below
- ------------------------------------------------------------------------------------------------------------------------------------
CODE AS COMPLETED
-----------------------------------------------------------------------
Lubricate
Item or Check Adjust Operate Check
No. Item and Element Lubrication Change Replace or Tighten or Test or Inspect Instructions:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TROLLEY X X X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
WHEELS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
WHEEL BEARINGS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
WHEEL AXLES X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
DRIVE MOTOR COUPLING X X X
- ------------------------------------------------------------------------------------------------------------------------------------
DRIVE MOTOR ANCHOR BOLTS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
DRIVE MOTOR PINION X X X
- ------------------------------------------------------------------------------------------------------------------------------------
TROLLEY DRIVE GEAR X X X
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
HOIST
- ------------------------------------------------------------------------------------------------------------------------------------
SHEAVES X X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
SHEAVE BEARINGS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
EQUALIZER SHEAVE X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
CABLE X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
CABLE ANCHOR X X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
CABLE DRUM X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
CABLE DRUM SHAFT X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
COMMENTS: Identify by Item Number
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE]
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
---------------------------
EQUIPMENT NAME
AND/OR NUMBER
PREVENTIVE MAINTENANCE CHECK CHART CRANES, D.C./A.C.
- ------------------------------------------------------------------------------------------------------------------------------------
WORK PERFORMED BY: BADGE NO.: DATE COMPLETED ASSIGNED TO: EQUIPMENT LOCATION
/ / BLDGS., 11, 22, 26
- ------------------------------------------------------------------------------------------------------------------------------------
Unit Available for Preventive Maintenance / / YES / / NO FREQUENCY CHART NO.
SYMBOL D SHEET 1 OF
- ------------------------------------------------------------------------------------------------------------------------------------
PLANT WORK ORDER NO. PREVENTIVE MAINTENANCE TIME
ERIE FORGE PLANT Allocable Required
- ------------------------------------------------------------------------------------------------------------------------------------
CODES: / OK - No action required PERSONNEL ACTUAL
0 Minor work performed ASSIGNED HOURS
1 Work order required ------------------------------
2 Condition: dirty or poor ------------------------------
3 Not properly lubricated ------------------------------
4 See comments below
- ------------------------------------------------------------------------------------------------------------------------------------
CODE AS COMPLETED
-----------------------------------------------------------------------
Lubricate
Item or Check Adjust Operate Check
No. Item and Element Lubrication Change Replace or Tighten or Test or Inspect Instructions:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BRIDGE
- ------------------------------------------------------------------------------------------------------------------------------------
BRIDGE TO TRUCK BOLTS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
TRUCK WHEELS X X X
- ------------------------------------------------------------------------------------------------------------------------------------
TRUCK WHEEL BEARINGS X X X
- ------------------------------------------------------------------------------------------------------------------------------------
TRUCK WHEEL AXLES X X X
- ------------------------------------------------------------------------------------------------------------------------------------
TRUCK WHEEL DRIVER GEAR X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
BRIDGE DRIVE SHAFT SUPPORTS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
BRIDGE DRIVE SHAFT PINION X X X
- ------------------------------------------------------------------------------------------------------------------------------------
BRIDGE DRIVE SHAFT MOTOR CPLG X X
- ------------------------------------------------------------------------------------------------------------------------------------
BRIDGE DRIVE SHAFT MOTOR BOLT X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
BRIDGE BRAKE X X
- ------------------------------------------------------------------------------------------------------------------------------------
CATWALK SUPPORTS X X X
- ------------------------------------------------------------------------------------------------------------------------------------
CATWALK HANDRAILS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
TROLLEY TRACK X X X
- ------------------------------------------------------------------------------------------------------------------------------------
TROLLEY TRACK FASTENERS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
CAB SUPPORT FASTENERS X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
REVISED FEB 86 KAISER ALUMINUM
- ------------------------------------------------------------------------------------------------------------------------------------
COMMENTS: Identify by Item Number ERIE WORKS
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE]
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 10.13
[AMER CUNNINGHAM BRENNAN LETTERHEAD]
November 30, 1993
Mr. J. T. Healy
Purchasing Manager
Kaiser Aluminum & Chemical Corp.
P.O. Box 619
Erie, Pennsylvania 16512
Re: Your Letter Dated October 12, 1993 to Michael Bell
Dear Mr. Healy:
In your above-referenced letter, you asked Mr. Bell to acknowledge in
writing his acceptance of Kaiser Aluminum and Chemical Corporation's
commitment to extend the lease on the building located at 129 Marc Avenue,
Cuyahoga Falls, Ohio.
As you may recall, I represent Mr. Bell. Please consider this letter his
acceptance of Kaiser Aluminum's exercise of its first option to renew. As
stated in your letter, the new term commenced November 1, 1993, and the
renewal term runs through October 31, 1998. The annual rental for the first
renewal period is Three Hundred Eighteen Thousand One Hundred Six and No/100
Dollars ($318,106.00), payable in monthly installments of Twenty-Six Thousand
Five Hundred Eight and No/100 Dollars ($26,508.00), as set forth in your
letter.
Please note that the renewal options are to be exercised in writing sixty
(60) days prior to the expiration of the then current term. Mr. Bell's
acceptance of your exercise of the first option is not and shall not be
construed as a waiver of this time requirement for the second option.
If you have any questions or I can be of any assistance please call.
Very truly yours,
/s/ Rollie Bauer
------------------------------
Roland H. Bauer
RHB/djw
cc: Michael Bell / Sarum Management
<PAGE>
<TABLE>
<CAPTION>
To DATE
<S> <C> <C> <C> <C>
M. Poling 16503/Erie January 24, 1989
T. Healy 16503/Erie FROM
J. Klock 2343 KB Ivy Chu 2006 KB
G. C. Webb 2039 KB
Original Vault Subject: KACC/WHSE. LEASE
Cuyahoga Falls, Ohio
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Attached is a copy of a Contract between KAISER ALUMINUM & CHEMICAL CORPORATION
and BELL COMPANY (Lessor)
covering LEASE AGREEMENT, dated November 1, 1988,
covering approximately 131,700 sq. ft. and
yard area within the warehouse and
manufacturing building and premises located
at 129 Marc Avenue, Cuyahoga Falls, Ohio.
</TABLE>
<PAGE>
LEASE AGREEMENT
LEASE AGREEMENT made an entered into this 1st day of November, 1988, by
and between THE BELL COMPANY, an Ohio partnership in which James D. Bell and
Michael E. Bell are general partners (hereinafter referred to as "Lessor"),
and KAISER ALUMINUM & CHEMICAL CORPORATION, a Delaware corporation
(hereinafter referred to as "Lessee").
WITNESSETH:
In consideration of the mutual covenants, undertakings and agreements of
the respective parties herein contained, the parties hereby agree as follows:
ONE: LEASED PREMISES
Lessor has demised and let and by these presents does hereby demise and
let unto Lessee, and Lessee hereby leases and hires from Lessor
approximately 131,700 square feet and yard area within the warehouse and
manufacturing building and premises located at 129 Marc Avenue, Cuyahoga
Falls, Ohio, as shown and located on the drawing attached hereto as Exhibit
"A".
TWO: USE
The purpose for which the Leased Premises may be used by Lessee shall be
storage and manufacturing uses and such other activities as are directly and
reasonably related to such uses and business of Lessee, provided that such
uses shall be in a careful, safe and proper manner in full compliance with
any applicable law, ordinance or regulation.
1
<PAGE>
THREE: TERM, RENEWAL AND ASSIGNMENT
The term of this Lease shall be five (5) years commencing November 1, 1988
and ending October 31, 1993.
Lessee shall have the option to renew the Lease for two (2) successive
five (5) year terms on the terms and conditions set forth herein, provided
written notice of renewal is given Lessor sixty (60) days prior to the
expiration of the term or renewal term.
FOUR: RENT
Lessee agrees to pay to Lessor an annual rental of $276,614.00 as rent
during the five (5) year aforementioned term of this Lease Agreement, payable
in monthly installments, in advance, in the amount of $23,051.00 each
beginning November 1, 1988.
In the event that Lessee exercises its option to renew the lease the rent
for the first renewal period shall be at an annual rental of $318,106.00,
payable in monthly installments of $26,508.00 per month in advance commencing
November 1, 1993.
Should the Lessee elect to renew the Lease for the second five (5) year
renewal term, commencing November 1, 1998 to October 31, 2003, the annual
rental shall be at a rate to be agreed upon between the parties hereto.
FIVE: TAXES AND UTILITIES
All taxes, assessments and levies, whether general or special, ordinary or
extraordinary, of every nature or kind whatsoever which may be taxed,
charged, assessed, levied or imposed at any time during the term of the Lease
against the Leased Premises or any estate, right or interest of Lessor in or
to be Leased Premises shall be paid by Lessor.
Lessee shall pay all charges for heat, gas, electricity and other public
utilities based upon or furnished to the Leased Premises which are required
and consumed by Lessee.
<PAGE>
SIX: ACCEPTANCE AND MAINTENANCE
Lessee hereby accepts the Leased Premises in its present condition and
Lessee agrees that it has examined and knows the condition of the Leased
Premises, that said premises are received in good order and repair and
satisfactory for the use purposes of Lessee, and that no representation as to
the condition or repair of said Leased Premises, or otherwise, have been made
by Lessor to Lessee which are not expressed herein.
Lessee hereby agrees to maintain and keep the interior of the Leased
Premises in good condition or repair, ordinary wear and tear excepted,
including but not limited to plate glass, electrical and heating units,
plumbing and doors, at Lessee's sole expense.
Lessor shall maintain the exterior of the Leased Premises and common
exterior grounds, provided, however, that Lessee shall be obligated to repair
any damage to the interior or exterior of the Leased Premises caused by
misuse or the careless, negligent or wrongful acts of its agents, invitees
and employees, ordinary wear and tear and depreciation excepted.
Lessee shall provide all security and related services for and upon
the leased premises as Lessee deems necessary at Lessee's sole cost and
expense.
SEVEN: RIGHT OF ACCESS, INGRESS AND EGRESS IMPROVEMENT AND
MAINTENANCE
At all times during the Lease term, Lessee shall have the right of
access, ingress and egress to and from the Leased Premises over existing
roadways adjacent to or serving the Leased Premises, including Marc Drive, in
common with Lessor.
3
<PAGE>
Lessor shall oil roadway three times per year, if necessary. Lessor
shall also provide double loading docks with two overhead doors, and make
access to loading dock secure. Lessor shall properly maintain existing
access to leased premises.
EIGHT: INSURANCE AND INDEMNIFICATION
Lessee shall have no obligation to insure the Leased Premises
against loss of any kind. Lessor shall insure said warehouse building
against loss by fire and other casualty normally covered by insurance risk
coverage at Lessor's sole expense. Lessee shall maintain its risk management
program, which program shall provide comprehensive insurance coverage with a
limit of liability of at least Two Million Dollars ($2,000,000.00).
Lessee at its sole expense shall insure Lessee's personal property
stored on the Leased Premises against loss by fire and other casualty
normally covered by risk coverage with Lessor as an additional insured.
Lessor agrees that the building of which the Leased Premises are a part will
not be used or leased for any purpose which would result in an increase in
the cost of such insurance due to an increase in risk. Lessee will indemnify
and save harmless the Lessor from and against any and all loss, damage,
expense, liabilities and causes of action resulting from injury or damage to
persons or property caused by the negligent acts or omissions of Lessee's
agents, invitees and employees relating to the use and occupancy of the
Leased Premises, except to the extent that the same is covered by insurance
proceeds actually paid to Lessor by the property insurer of said warehouse
building. Lessor insurers shall waive any right of subrogation against
Lessee and Lessee's insurers
4
<PAGE>
shall waive any right of subrogation against Lessee.
NINE: QUIET ENJOYMENT
If and so long as Lessee pays the rents provided for herein and performs
and observes all the covenants and provisions hereof, Lessee shall quietly
enjoy the Leased Premises and Lessor will warrant and defend Lessee in the
enjoyment and peaceful possession of the Leased Premises throughout the term
of this Lease.
TEN: MUTUAL COVENANTS
If said rent or any part thereof is not paid within ten (10) days after
the due date thereof, or if Lessee should violate any other covenant, term or
condition of this Agreement, or if any waste be committed or unnecessary
damage done upon or to said premises, the Lessor may, at its election,
declare the term ended and enter into possession of said premises and sue for
and recover all rents and damages accrued or accruing under this Agreement or
arising out of any violation thereof on the part of Lessee; or Lessor may sue
and recover the rentals due and damages caused by Lessee, without declaring
this Lease void, and without entering into possession of said premises.
Provided, however, that as to the terms, covenants and conditions of this
Agreement relating other than to the payment of rentals, Lessee shall not be
considered in default unless written notice of such default remains
uncorrected by Lessee, and provided further, that in the event Lessee, within
such thirty (30) day period of time, uses all reasonable efforts to correct
such default and diligently prosecute the work of correction, and such
default is, in fact, corrected, but not within such thirty (30) day
5
<PAGE>
period because of circumstances beyond the control of Lessee, such default will
be deemed to have been corrected within such thirty (30) day period of time.
Every demand for rent due wherever and whensoever made shall have the
same effect as if made at the time it falls due and at the place of payment
or on premises; and after the service of any notice or commencement of any
suit or final judgment therein, Lessor may receive and collect any rent due,
and such collection or receipt shall not operate as a waiver of or affect
such notice, suit and/or judgment. Any notice or summons to be served by or
on behalf of Lessor upon Lessee under this Agreement or in connection with
any proceeding or action growing out of this Agreement, or the tenancy
arising therefrom, may be sufficiently served by leaving such notice or
summons addressed to Lessee upon the said demised premises.
In the event the afore-described leased portion of said structure,
without any default or neglect of Lessee, shall be destroyed or partially by
the elements or other cause, said Lessee may thereupon surrender possession
of said premises to Lessor and thereupon this Agreement shall cease,
determine and be utterly void, provided, however, upon such surrender of
possession by Lessee, Lessor shall rebate to Lessee any portion of the rent
paid in advance by Lessee from the date of said surrender to the end of the
rental period covered by said advance rental payment.
But in the event of partial destruction of said leased portion of said
structure, without any fault or negligence of Lessee, as a result of the
elements or other cause, said Lessor shall at once proceed to make the
repairs necessary to place the
6
<PAGE>
building in substantially its former condition and this Agreement shall not
terminate, but during the time in which such repairs are being made, no rent
shall be payable by Lessee, except for such portions of said premises as may
be then used and occupied by said Lessee, provided, however, said partial
destruction can be reasonably repaired within sixty (60) days from the
occurrence of said destruction or injury, and if said partial destruction or
injury cannot reasonably be repaired within sixty (60) day period of time,
Lessee shall then be entitled to surrender possession of said premises
thereby terminating this Agreement and receive as a rebate all advance
rentals paid as aforesaid.
In the event of the appropriation or taking by and right of eminent domain
of all or substantially all of the said leased premises so as to cause said
premises to be unfit for the occupancy and use as intended by the Lessee by a
public authority, Lessee shall have the right to terminate this Agreement by
giving written notice to the Lessor, and Lessee hereby agrees to assign and
by said written notice thereby assigns to Lessor all of Lessee's rights and
claim for damages, if any, arising out of or resulting from said
appropriating or taking, and such taking shall not operate as or be deemed an
eviction of the Lessee or a breach of the Lessor's covenant for quiet
enjoyment, provided, however, that Lessee shall not be required to assign to
Lessor any awards specifically made to Lessee for its moving expenses.
Nothing contained herein is intended to limit the circumstances and/or
available remedies for default by Lessee by breach of or failure to perform
any of Lessee's covenants and
7
<PAGE>
obligations hereunder, said default of Lessee to include but not be limited
to circumstances of abandonment of the leased premises by the Lessee, or
adjudication of Lessee as bankrupt, the making by the Lease of a general
assignment for the benefit of creditors, the Lessee taking the benefit of any
insolvency action or law, the appointment of a permanent receiver for the
Lessee or trustee in bankruptcy for the Lessee or its assets, the appointment
of a temporary receiver for the Lessee or its assets, if such temporary
receivership has not been vacated or set aside within thirty (30) days from
the date of such appointment, the initiation of an arrangement of similar
proceeding for the benefit of creditors by or against the Lessee, and/or the
dissolution or other termination of Lessee as a corporate entity.
In the event of any default by Lessee, and in addition to the remedies
available to Lessor, as provided herein, the remedies of both the Lessor and
Lessee shall be cumulative and no one remedy shall be construed as exclusive
of any other remedy provided for by law and available to Lessor and Lessee.
This Agreement and all of the terms, covenants and conditions contained
herein shall inure to the benefit of and be binding upon the Lessor and
Lessee, and each of their successors and assigns.
ELEVEN: ALTERATIONS
Lessee, from time to time at its expense, may make such alterations,
improvements, repairs and additions to and upon the premises and install
therein such fixtures, equipment, furniture and property as it may consider
advisable for the conduct of its
8
<PAGE>
business. Lessee will not, without the prior written consent of Lessor, make
or suffer to be made any alterations, improvements or additions which will
affect the structural portions of the premises. Lessor agrees that it will
not unreasonably withhold consent to the making of such alterations,
improvements or additions. Lessee shall not be obligated to remove, alter
or change any alterations, improvements, repairs or additions, or to restore
the premises to their prior conditions, at the expiration of the Term hereof
or prior termination of this Lease.
TWELVE:
Provided Lessee remains obligated under this Lease, Lessee shall have
the right to assign this Lease or sublease all or any part of the premises
with the consent of the Lessor, which consent shall not be unreasonably
withheld.
THIRTEEN:
All notices and rent payments shall be forwarded to the following:
Lessor: THE BELL COMPANY
2346 Theiss Road
Cuyahoga Falls, Ohio 44223
Attention: James D. Bell
Lessee: KAISER ALUMINUM & CHEMICAL CORPORATION
P. O. Box 619
Erie, Pennsylvania 16512
Attention: J. T. Healy
9
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FOURTEEN:
This Lease shall be construed and interpreted by the laws of the State
of Ohio.
IN WITNESS WHEREOF, the parties have hereunto set their hands, the 19th
day of October in the year of our Lord one thousand nine hundred and
eighty-eight.
Signed and acknowledged in LESSOR: THE BELL COMPANY
the presence of: (A Partnership)
/s/ Robert S. Moore By: /s/ James D. Bell
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James D. Bell, Partner
/s/ Pat Nicol By: /s/ Michael E. Bell
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Michael E. Bell, Partner
- ------------------------- LESSEE: KAISER ALUMINUM &
CHEMICAL CORPORATION
By: /s/ J. T. Healy
- ------------------------- ----------------------------
STATE OF OHIO) Before me, a Notary Public in and for said
) SS County and State, personally appeared the
SUMMIT COUNTY) above named who acknowledged that they did
sign the foregoing instrument and that the
same is their free act and deed.
IN TESTIMONY WHEREOF: I have hereunto set
my hand and official seal, at Cuyahoga Falls,
Ohio
this 19th day of October, A.D. 1988.
/s/ Robert S. Moore
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Notary Public
This instrument prepared by
ROBERT S. MOORE
Attorney at Law
10
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EXHIBIT 10.14
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FISCAL COURT OF HENDERSON COUNTY, KENTUCKY
and
THE FIRESTONE TIRE & RUBBER COMPANY
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LEASE AGREEMENT
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Dated as of February 1, 1974
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TABLE OF CONTENTS
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PAGE
Parties ................................................................... 1
ARTICLE I
DEFINITIONS, ACQUISITION, CONSTRUCTION
AND FINANCING OF THE PROJECT
SECTION 1.1 Definitions .............................................. 3
1.2 Lease of Property ........................................ 5
1.3 Acquisition and Construction of Project .................. 5
1.4 Completion by Company .................................... 7
1.5 Issuance of Bonds ........................................ 7
1.6 Title Insurance .......................................... 8
1.7 Project Manager .......................................... 8
ARTICLE II
DURATION OF LEASE TERM AND RENTAL PROVISIONS
SECTION 2.1 Duration of Lease Term ................................... 10
2.2 Rental Provisions; Assignment of Rent .................... 10
2.3 Obligation of Company Unconditional ...................... 12
2.4 Redemption of Bonds ...................................... 14
2.5 Prepayment of Rent ....................................... 14
ARTICLE III
MAINTENANCE, TAXES AND INSURANCE
SECTION 3.1 Maintenance, Alteration. and Improvements ................ 15
3.2 Removal of Property of the Project ....................... 17
3.3 Waxes, Assessments and Charge. ........................... 18
3.4 Insurance ................................................ 19
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ARTICLE IV
PROVISIONS RESPECTING DAMAGE, DESTRUCTION
AND CONDEMNATION
PAGE
SECTION 4.1 Damage or Destruction .................................... 21
4.2 Condemnation ............................................. 21
ARTICLE V
PARTICULAR COVENANTS
SECTION 5.1 Dissolution, Bankruptcy or Merger of Company ............. 22
5.2 Indemnity ................................................ 23
5.3 Compensation and Expense of Trustee ...................... 24
5.4 Retention of Title to Project; Grant of
Easements; Release of Certain Land ....................... 25
5.5 County's Authority; Covenant of Quiet
Enjoyment ................................................ 26
ARTICLE VI
REMEDIES
SECTION 6.1 Default by Company ....................................... 27
6.2 Re-Letting of Project .................................... 29
6.3 Remedies Cumulative ...................................... 29
ARTICLE VII
OPTIONS
SECTION 7.1 Option to Purchase ....................................... 31
7.2 Conveyance on Exercise of Option to
Purchase ................................................. 31
7.3 Option to Renew .......................................... 32
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ARTICLE VIII
MISCELLANEOUS
PAGE
SECTION 8.1 REsolution; Amendment .................................... 33
8.2 Force Majeure ............................................ 33
8.3 Assignment or Sublet ..................................... 35
8.4 Benefit of and Enforcement by Bondholders ................ 35
8.5 Amendments ............................................... 35
8.6 Notices .................................................. 35
8.7 Prior Agreements Superseded .............................. 36
8.8 Severability ............................................. 36
8.9 Effective Date of Lease Agreement;
Counterparts ............................................. 36
8.10 Recording ................................................ 36
8.11 Members Not Personally Liable ............................ 37
8.12 Kentucky Law Governs ..................................... 37
Acknowledgement of Lessor ................................................. 39
Acknowledgement of Lessee ................................................. 40
Exhibit A ................................................................. 41
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LEASE AGREEMENT
THIS LEASE AGREEMENT, made and entered into as of this first day of
February, 1974. by and between the FISCAL COURT OF HENDERSON COUNTY, KENTUCKY
(the "County"), party of the first part, and THE FIRESTONE TIRE & RUBBER COMPANY
(the "Company"), a corporation organized and existing under and by virtue of the
laws of the State of Ohio. with its principal office at 1200 Firestone Parkway,
Akron, Ohio, party of the second part;
W I T N E S S E T H:
WHEREAS, the County is located in an area of increasing
unemployment; and
WHEREAS, the County proposes to relieve this condition of
unemployment, to aid in the rehabilitation of returning veterans and to
encourage the increase of industry in the Commonwealth of Kentucky by acquiring
and constructing an industrial plant and related facilities, including necessary
land therefor, for the manufacture of rims, wheels and other metal products (the
"Project"), and thereupon to lease the same to the Company: and
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WHEREAS, in furtherance of said objectives the County has determined
to proceed with the aforesaid acquisition and construction of the Project and
the leasing of the same by the County to the Company, and has authorized the
Company and the appropriate County officials to proceed with all necessary
preliminary operations; and
WHEREAS, it is desirable that the Company, rather than the County,
arrange for the construction of the Project in order to insure that the same
will conform to the requirements of the Company, for whose use it is to be
designed; and
WHEREAS, the estimated total cost of the Project is $15,000,000,
$1,000,000 of which is to be provided by the issuance of revenue bonds of the
County with the remainder of such cost to be paid by the Company, and
WHEREAS, the County has adopted on February , 1974 a resolution
authorizing the issuance of $1,000,000 Industrial Building Revenue Bonds
(Firestone Project) for the purpose of financing its agreed to portion of the
cost of the Project; and
WHEREAS, the County and the Company each has full right and lawful
authority to enter into this Lease Agreement and to perform and observe the
provisions hereof on its part to be performed and observed;
NOW, THEREFORE, in consideration of the premises and of the
covenants and undertakings herein expressed,
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ARTICLE I
DEFINITIONS; ACQUISITION, CONSTRUCTION
AND FINANCING OF THE PROJECT
SECTION 1.1. Definitions. In addition to the words and terms
elsewhere defined in this Lease Agreement, the following words and terms as used
in this Lease Agreement shall have the following meanings unless the context or
use indicates another or different meaning or intent:
"Bonds" means the $1,000,000 Industrial Building Revenue Bonds
(Firestone Project) of the County.
"Bonds Fund" means the Bond Fund created and established for the
Bonds pursuant to the Resolution.
"Building" means that certain building and all other structures and
facilities forming a part of the Project and not constituting part of the Leased
Equipment or the fixtures, machinery, equipment, other personal property,
facilities and improvements, title to which has been retained by the Company
pursuant to Section 3.1 hereof.
"Company" means The Firestone Tire & Rubber Company, an Ohio
corporation, or any corporation which is the surviving, resulting or transferee
corporation in any merger, consolidation or transfer of assets permitted under
this Lease Agreement.
"Construction Fund" means the Construction Fund created and
established by the Resolution, to be used for the purpose of paying costs of
constructing and acquiring the Project.
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"County" means Henderson County, Kentucky and any successor to the
duties and functions of said County.
"Lease Agreement" means this Lease Agreement and any amendments
changes or modifications hereto.
"Lease Term" means the duration of the leasehold estate created in
this Lease Agreement as specified in Section 2.1 hereof.
"Leased Equipment" means the machinery, equipment and related
property acquired and installed in the Building or elsewhere on the Leased Land,
and any replacements, additions end improvements thereto, but shall not include
(i) fixtures, machinery, equipment, other personal property, facilities and
improvements, title, to which has been retained by the Company pursuant to
Section 3.1 hereof, (ii) fixtures, machinery, equipment, other personal
property, fixtures and improvements removed by the Company from the Project
pursuant to Section 3.2 hereof, or (iii) raw material, in-process products or
finished goods.
"Leased Land" means the real estate more fully described in Exhibit
A attached hereto, together with all appurtenances thereto, and all right, title
and interest of the County, as lessor, in and to the portion of such roads,
streets and ways which bound said premises.
"Project" means the Leased Land, the Building and the Leased
Equipment.
"Project Manager" means the project manager who at the time shall
have been designated as such in or pursuant to the provisions of Section 1.7
hereof.
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"Resolution" means the Bond Resolution authorizing $1,000,000
Industrial Building Revenue Bonds (Firestone Project) adopted by the Fiscal
Court of the County on February 25, 1974, as the same may be amended or
supplemented from time to time in accordance with the provisions thereof.
"Trustee" means Third National Bank in Nashville, as Trustee under
the Resolution, and its successors as such Trustee.
SECTION 1.2. Lease of Property. The County agrees to lease to the
Company, and the Company agrees to lease from the County, for and during the
Lease Term and upon and subject to the terms and conditions hereinafter set
forth, the Leased Land, the Building and the Leased Equipment.
SECTION 1.3. Aquisition and Construction of Project. As promptly as
practicable after receipt of the proceeds of sale of the Bonds referred to in
Section 1.5 hereof, the County will, subject to the provisions of Section 1.4
hereof, cause the Building to be constructed on the Leased Land, substantially
in accordance with plans and specifications therefor prepared or to be prepared
by the Company, and cause the Leased Equipment to be acquired and installed in
the Building as shall from time to time be specified in written orders by the
Company. All contractors, materialmen, vendors, suppliers and other companies,
firms or persons furnishing
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labor, services or materials for or in connection with the Project shall be
designated by the Company.
In order to accomplish the purposes of the County, and to assure the
construction of the Project in conformity with the requirements of the Company
as lessee, the Company agrees and undertakes to proceed with the preparation of
the site and the construction of the Project, subject to reimbursement from the
proceeds of the Bonds of the County (but only to the extent Bond proceeds are
available therefor) in the manner and to the extent herein and in the Resolution
provided. The County Judge and appropriate County officials under his direction
shall establish procedures for the supervision of construction through the
Project Manager. Payments from the Construction Fund established under the
Resolution for the cost of construction of the Project shall be made as provided
in the Resolution. It is recognized that in order for the Project to fulfill the
public purpose of providing employment for citizens of the area in which the
County is located and thereby promote the general welfare of the County and the
Commonwealth of Kentucky, it is necessary for the construction of the Project to
conform to the specific requirements of the Company, as lessee. Inasmuch as the
Company is better able than the County to judge which facilities will be most
suitable for its operations, and such judgments must be made as construction
progresses, the County has requested the Company
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to undertake the letting of contracts necessary for the construction of the
Project in accordance with the laws of Kentucky and the Company agrees thereto.
SECTION 1.4. Completion by Company. It is hereby recognized by the
parties hereto that the proceeds of the Bonds will not be sufficient to pay the
total cost of the Project. The Company hereby agrees that it shall pay the
portion of the cost of the Project as may be in excess of the moneys therefor in
the Construction Fund and shall not be entitled to any reimbursement therefor
from the County or from the Trustee or from the holders of any of the Bonds, nor
shall it be entitled to any diminution of the rents payable under this Lease
Agreement.
SECTION 1.5. Issuance of Bonds. The County will sell and deliver the
Bonds in the principal amount of $1,000,000 under and pursuant to the
Resolution. The proceeds of sale of the Bonds remaining after the deposit in the
Bond Fund established under the Resolution of an amount equal to the accrued
interest, if any, paid by the purchasers of the Bonds shall be deposited in the
Construction Fund established under the Resolution and applied to the costs of
acquisition and construction of the Project in accordance with the provisions of
the Resolution. Pending
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application, amounts in the Construction Fund and the Bond Fund may be invested
as provided in Section 606 of the Resolution. The Company shall not request any
investment of such amounts which would be in violation of the covenant of the
County contained in Section 607 of the Resolution.
SECTION 1.6. Title Insurances The County has or will obtain title
insurance in the total amount of $1,000,000. Such title insurance shall be
maintained during the Lease Term. The proceeds of such insurance shall be paid
to the Trustee for deposit in the Bond Fund under the Resolution.
SECTION 1.7. Project Manager. Arlin H. Greber is hereby designated
as the Project Manager for the purpose of taking all actions and making all
certificates required to be taken and made by the Project Manager under the
provisions of this Lease Agreement and the Resolution; and Robert G. Runkle is
hereby designated as alternate Project Manager to take any such action or make
any such certificate if the same is not taken or made by the Project Manager. In
the event that said persons, or any successor appointed under the provisions of
this Section, should be removed by agreement of the County and the Company or
should become unavailable or unable to take any action or make any certificate
provided for in this Lease Agreement, another Project Manager or alternate
Project Manager shall thereupon be appointed by the Company. If
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the Company fails to make such designation within 15 days following the date
when the then incumbent becomes unavailable or unable to take any of the said
actions, the County may then appoint as a successor any licensed architect or
engineer.
ARTICLE II
DURATION OF LEASE TERM AND RENTAL PROVISIONS
SECTION 2.1. Duration of Lease Term. This Lease Agreement shall
become effective upon its delivery and shall continue in full force and effect,
unless terminated or renewed as hereinafter provided, until February 1, 1999.
The County shall deliver to the Company sole and exclusive possession of the
Project upon the completion of the Project (as stated in a certificate of the
Project Manager filed with the Company, the County and the Trustee pursuant to
Section 404 of the Resolution), and the Company shall accept possession thereof
at such time, provided that the Company shall be permitted such possession of
the Project prior to such date for delivery of sole and exclusive possession as
shall not interfere with the acquisition or construction of the Project.
The Company intends upon completion of the Project and thereafter
during the Lease Term to use and occupy the Project principally as an industrial
plant, as determined from time to time by the Company. The failure to use and
occupy the Project as aforesaid shall in no way abate or reduce the rent payable
by the Company to the County under the provisions of this Lease Agreement and
shall not be deemed a breach of this Lease Agreement in any respect.
SECTION 2.2. Rental Provisions: Assignment of Rent. The Company
covenants to make semiannual rental payments which the County agrees shall be
paid by the Company directly to the Trustee.
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Such semiannual rental shall be paid during the Lease Term not later than three
(3) business days prior to each interest payment date for the Bonds commencing
August 1, 1974. The amount of each such rental payment shall be a sum, which
when added to any moneys then on deposit in the Bond Fund, is equal to (i) the
interest due on the outstanding Bonds on such interest payment date, and (ii)
the principal amount, if any, of the Bonds then outstanding due (otherwise than
by call for redemption) on such interest payment date.
The above semiannual rental shall be set aside and pledged by the
County to the payment of the Bonds as provided in the Resolution, and in
furtherance of said pledge the County hereby unconditionally assigns such rental
payments to the Trustee for deposit in the Bond Fund in accordance with the
Resolution. In addition to the rental payments under this Lease Agreement, the
Bond Fund shall also receive for deposit therein in accordance with the
Resolution such other amounts as are required by the provisions of this Lease
Agreement or of the Resolution to be paid into the Bond Fund. Such payments
shall not in any way alter or suspend any obligations of the Company under the
terms of this Lease Agreement except to the extent that such payments result in
a credit against semiannual rental payments.
No further rental payments need be made to the County during the
Lease Term when and so long as the amount of cash and/or
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securities on deposit in the Bond Fund is sufficient to satisfy and discharge
the Resolution and pay the Bonds as provided in Section 1001 of the Resolution.
After all of the Bonds have been retired and all interest and
applicable premiums, if any, due thereon have been paid or provision for such
retirement and payment has been made in accordance with the Resolution, any
excess moneys in the Bond Fund from whatever source derived will be paid to the
Company as an adjustment of rentals.
SECTION 2.3. Obligation of Company Unconditional. The obligation of
the Company to pay the rent as provided in this Lease Agreement and to make all
other payments provided for in this Lease Agreement and to maintain the Project
in accordance with Section 3.1 of this Lease Agreement shall be absolute and
unconditional, irrespective of any rights of set-off, recoupment or counterclaim
it might otherwise have against the County. The Company will not suspend or
discontinue any such payment or terminate this Lease Agreement (other than such
termination as is provided for hereunder) for any cause including, without
limiting the generality of the foregoing, any acts or circumstances that may
constitute an eviction or constructive eviction, failure of consideration,
failure of title, or commercial frustration of purpose, or any damage to or
destruction of the Project, or the taking by eminent domain of title to or the
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right of temporary use of all or any part of the Project, or any inadequacy of
zoning for the purpose for which the Project is to be used, or any illegality,
with respect to the Bonds or any portion thereof, or any change in the tax or
other laws of the United States, the Commonwealth of Kentucky or any political
subdivision of either thereof, or any failure of the County to perform and
observe any agreement or covenant, whether express or implied or any duty,
liability or obligation arising out of or connected with this Lease Agreement.
Notwithstanding the foregoing, the Company may, at its own cost and expense,
and in its own name or in the name of the County, prosecute or defend any
action or proceeding or take any other action involving third persons which the
Company deems reasonably necessary in order to secure or protect its right of
use and occupancy and other rights hereunder. The provisions of the first and
second sentences of this Section shall apply only if and so long as there shall
be outstanding and unpaid any principal and interest on the Bonds adequate
provision for the payment of which, including the payment of the compensation
and expenses of the Trustee as provided in Section 5.3 hereof, shall not have
been made. Furthermore, except to the extent provided in the first and second
sentences of this Section, nothing contained herein shall be construed to
prevent or restrict the Company from asserting any rights which the Company may
have against the County under this Lease Agreement or under any provision of
law.
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SECTION 2.4. Redemption of Bonds. If the Company is not in default
in the payment of rent under Section 2.2 of this Lease Agreement, the County, at
the request of the Company, at any time that aggregate moneys in the Bond Fund
are sufficient to effect such redemption, shall forthwith take all steps that
may be necessary under the applicable redemption provisions of the Resolution to
effect redemption of all or part of the then outstanding Bonds as may be
specified by the Company, on such redemption date as may be specified by the
Company.
SECTION 2.5. Prepayment of Rents. There is expressly reserved to the
Company the right, and the Company is authorized, at any time it may choose, to
prepay any part of the rents payable under Section 2.2 of the Lease Agreement,
and the County agrees that the Trustee may accept such prepayment of rents when
the same are tendered by the Company. All rents so prepaid shall be deposited in
the Bond Fund and credited to the rental payments specified in Section 2.2 of
this Lease Agreement in the order of their due dates, or at the election of the
Company shall be used for the redemption or purchase of outstanding Bonds in the
manner and to the extent provided in the Resolution.
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ARTICLE III
MAINTENANCE, TAXES AND INSURANCE
SECTION 3.1. Maintenance, Alterations and Improvements. During the
Lease Term the Company will keep the Project in good operating order and
condition, ordinary wear and tear and acts of God excepted, and make all
replacements and repairs thereto necessary to insure that the security for the
Bonds shall not be impaired. Upon the expiration or termination of this Lease
Agreement (unless it shall purchase the Project) the Company will surrender the
Project to the County in as good condition as prevailed at the time it was put
in full possession thereof, ordinary wear and tear and acts of God excepted. The
foregoing agreements in this paragraph are subject to all the other provisions
of this Lease Agreement, particularly Sections 3.2, 4.1 and 4.2.
The company shall have the privilege of remodeling the buildings
included in the Project or making improvements or additions thereto or
installing fixtures, machinery, equipment and other facilities thereon from time
to time as it in its discretion may determine to be desirable for its uses and
purposes. The cost thereof shall be paid for by the Company and the same shall
be the property of the County subject, however, to the provisions of this
Section permitting retention of title in the Company.
In its use and occupancy of the Project the Company will at all
times comply with such zoning, sanitary and safety laws,
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and with such rules and regulation thereunder, as under applicable law shall be
binding upon it, provided, however, the Company shall not be required to comply
with any such laws (either statutory or the common law), rules or regulations so
long as the Company shall contest in good faith the validity, existence or
applicability thereof. The County will reasonably cooperate with the Company in
any such contest not involving any law, rule or regulation promulgated by the
County. To the extent it may legally do so, the County covenants that it will
not impose upon the use and occupancy of the Project by the Company any laws,
ordinances, rules or regulations more burdensome or restrictive than those in
effect upon the date of execution of this Lease Agreement.
Upon the filing with the County and the Trustee of a certificate of
one of its duly authorized officers, the Company may install machinery,
equipment and other personal property (which may be attached or affixed to the
Leased Land or the Building) and retain title thereto, and such machinery,
equipment and other personal property shall not be deemed a part of the Project.
The Company shall have the right at any time and from time to time during the
Lease Term to remove or permit to be removed such machinery, equipment or other
personal property from the Leased Land and to create or permit to be created any
mortgage, encumbrance, lien or charge on, or conditional sale or other title
retention agreement with respect to such machinery, equipment or other personal
property.
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The Company shall at all times keep on file with the County and the Trustee a
semiannual report of each item of such machinery, equipment and other personal
property installed on or about the Leased Land or the Building to which the
Company shell retain title, which report shall be signed by a duly authorized
officer of the Company.
The County hereby waives and surrenders any statutory or common law
right to any landlord's lien upon any of the machinery, equipment and other
property to which the Company shall retain title and covenants and agrees not to
distrain or exercise any similar remedy against any of such property.
SECTION 3.2. Removal of Property of the Project. The Company shall
have the privilege from time to time of removing from the Project any
improvements, fixtures, machinery, equipment or facilities constituting a part
of the Project and thereby acquiring the property therein, upon the filing of a
certificate with the County and the Trustee signed by a duly authorized officer
of the Company, describing any property removed pursuant to this Section 3.2,
provided, however, that such removal shall not reduce the overall operating
efficiency of the Project to materially less than that of the industrial plant
and related facilities existing at the time of completion of the Project as
evidenced by the certificate required to be filed pursuant to Section 404 of
the Resolution.
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SECTION 3.3. Taxes. Assessments and Charges. The County acknowledges
that under present law no part of the Project or the leasehold interest therein
will be subject to ad valorem taxation by the Commonwealth of Kentucky or any
county, municipality or other levying body so long as the same is owned by the
County, that material produced by the Project is exempt from County taxation,
and that these factors, among others, materially induced the Company to enter
into this Lease Agreement. However, the Company will pay all taxes, assessments
and utility charges, if any, in connection with the Project which may be
lawfully levied, assessed or charged upon the Company or the County or the
property covered by this Lease Agreement or upon the rental payments hereunder,
when the same shall become due, but only if and to the extent that such taxes,
assessments or charges, if any, shall result in a lien or charge upon the
Project or the revenue of the County therefrom; provided however, the Company
shall not be required to pay any such taxes, assessments or charges so long as
the Company shall contest the same, unless by such action the title of the
County to any part of the Project shall be materially endangered or the Project
or any part thereof shall become subject to loss of forfeiture, in which event
such taxes, assessments or charges shall be paid prior to becoming delinquent.
The County covenants that, unless otherwise
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required by law, it will not enact or adopt any laws, ordinances, rules or
regulations imposing any ad valorem taxes on the Project or the leasehold
interest therein or any taxes on material produced by the Project, and that it
will cooperate with the Company in resisting any such taxes if so requested by
the Company.
SECTION 3.4. Insurance. During the Lease Term, the Company shall
keep the Project continuously insured against such risks as are customarily
insured against by businesses of like size and type, paying, as the same become
due and payable all premiums with respect thereto, including but not necessarily
limited to:
(a) Insurance upon a repair and replacement cost value basis (but in
no event shall it be less than the cost of paying or redeeming all Bonds
from time to time outstanding) determined by a recognized appraiser or
insurer selected by the Company, against loss or damage by fire and
lightning, with uniform standard extended coverage endorsement limited
only as may be provided in the standard form of extended coverage
endorsement at the time in use in the Commonwealth of Kentucky and
(b) Insurance against liability for bodily injury including death
resulting therefrom, and against liability for damage to property
including loss of use thereof, occurring on or in any way related to the
Project or any part thereof;
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provided, however, that the Company may self-insure against any of the foregoing
risks to the extent and in the manner that it is the general practice of the
Company to self-insure against such risks
ARTICLE IV
PROVISIONS RESPECTING DAMAGE, DESTRUCTION
AND CONDEMNATION
SECTION 4.1. Damage or Destruction. If the Project shall be damaged
or either partially or totally destroyed at any time during the Lease Term there
shall be no abatement or reduction in the rent payable by the Company under this
Lease Agreement.
SECTION 4.2. Condemnation. If the whole or any part of the Project
shall be taken or condemned by a competent authority for any public use or
purpose, there shall be on account of such taking or condemnation no abatement
or reduction in the rent payable by the Company under this Lease Agreement.
Any award or compensation for damages recovered on account of any
such taking or condemnation, less any expenses including reasonable counsel fees
incurred in litigating, arbitrating, compromising or settling any claim arising
out of such condemnation, shall be paid to the Company. No compromise of any
condemnation proceeding shall be made without the approval of the Company.
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ARTICLE V
PARTICULAR COVENANTS
SECTION 5.1. Dissolution, Bankruptcy or Merger of Company. It is
understood that the Bonds will be payable as to principal and interest and
redemption premiums, if any, out of the revenues and rentals and other amounts
payable under this Lease Agreement, and that the purchasers of the funds will
necessarily make their purchase in reliance upon the credit and financial
condition of the Company. Accordingly the Company agrees that in the event it
should dissolve and terminate its corporate existence, or in the event a
receiver should be appointed by a court of competent jurisdiction to take charge
of the business or assets of the Company, or in the event the Company is
adjudicated a bankrupt, whether or not through voluntary proceedings, and such
receivership or bankruptcy proceedings are not dismissed within a period of 120
days, or in the event the Company should sell all or substantially all of its
assets (exclusive of the stock or assets of any of the Company's subsidiaries,
if any), all rentals for the entire remaining Lease Term shall forthwith and
automatically become due and payable and the Company shall so notify the Trustee
and immediately pay to the Trustee the aggregate amount so payable; provided,
however, that this provision shall be inapplicable with respect to any
dissolution and termination of the
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corporate existence of the Company if the same be pursuant to the terms of a
sale of all or substantially all of the assets of the Company to another
corporation which other corporation shall expressly assume all of the
obligations of the Company hereunder, and which other corporation (or such other
corporation and its subsidiaries) will have a net worth and net working capital
(or consolidated net worth and net working capital) immediately after the
acquisition of such assets by such other corporation computed according to
generally recognized accounting principles equal to not less than the net worth
and net working capital respectively of the Company as of the close of its last
fiscal year immediately preceding the date on which this Lease Agreement is
executed by the Company as shown by its audited annual statement for such
period, or the net worth and net working capital respectively computed according
to generally recognized accounting principles as of the close of the Company's
fiscal year immediately preceding the acquisition of such assets by such other
corporation, whichever are greater respectively. In the event the Company shall
merge or consolidate with any other corporation, such successor corporation
shall succeed to and be substituted for the Company with the same effect as if
it had been named herein as the Company.
SECTION 5.2. Indemnity. The Company shall at all times protect and
hold the County harmless against claims for losses,
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damage or injury, including death of or injury to the Person or damage to the
property of others, arising during the Lease Term upon or about the Project and
resulting from the acts or omissions of the Company or the Project Manager or
any defect in the Project. The County shall not be liable for any damage or
injury to the persons or property of the Company or its officers, agents,
servants or employees, or any other person who may be about the Project, due to
any act or negligence of any person other than the County, its officers, agents,
servants and employees.
SECTION 5.3. Compensation and Expenses of Trustee. The Company
shall, to the extent not paid out of the proceeds of the Bonds as financing
expenses, pay reasonable compensation to the Trustee for its services under the
Resolution and all actual out-of-pocket expense, including legal fees and
expenses, necessarily incurred by the Trustee in performing its duties
thereunder, including but not limited to expenses incurred in purchasing any
Bonds or making any investments in accordance with the Resolution. The Company
shall also pay the reasonable compensation and out-of-pocket expenses of the
Trustee as paying agent for the Bonds. Upon the termination of this Lease
Agreement, whether due to exercise by the Company of its options to purchase the
Project or otherwise, the Company will pay or make provision for payment of the
compensation and all out-of-pocket expenses then due, and thereafter to become
due of the Trustee.
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SECTION 5.4. Retention of Title to Project; Grant of Easements;
Release of Certain Land. The County shall not sell, assign, encumber, convey or
otherwise dispose of the Project or any part thereof during the Lease Term
without the prior written consent of the Company. The County will, however,
grant such railroad, utility and other similar easements over, across, or under,
the Leased Land as the Company may from time to time request by a written
instrument signed by an officer of the Company, provided that such easements
shall not adversely affect the operation of the Project. The County shall also
permit at the request of the Company any utility and other similar facilities
serving the Project and owned or leased by the Company to be tied into or
connected with utility and similar facilities serving such real property
adjacent to or near the Project, provided that such tie-in or connection shall
not adversely affect the operation of the Project and shall be so effected so as
to enable prompt disconnection at minimum expense.
Notwithstanding any other provision of this Lease Agreement, the
Company may from time to time request in writing (signed by an officer of the
Company) to the County the release of and removal from this Lease Agreement and
the leasehold estate created hereby of any unimproved part of the Leased Land
(on which neither the Leased Equipment nor the Building are situated). Upon any
such
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request by the Company, immediately by virtue of such request and without any
further act of any one, that portions of the Leased Land so specified shall be
released from any of the security for the Bond, and the County shall execute a
deed to such land so specified, conveying the title thereto in fee simple to
the Company or such person as the Company may designate. No conveyance or
release effected under the provisions of this Section shall entitle the Company
to any abatement or diminution of the rents payable under Section 2.2 hereof.
SECTION 5.5. County's Authority; Covenant of Quiet Enjoyment. The
County covenants and agrees that it has full right and lawful authority to enter
into this Lease Agreement for the full Lease Term, including the extension
thereof referred to herein and to grant the options to purchase herein
contained, and that so long as the Company shall pay the rent and all other sums
payable by it under the Lease Agreement and shall duly observe all the
covenants, stipulations and agreements herein contained obligatory upon it, the
Company shall have, hold and enjoy, during the Lease Term hereof, including any
renewal thereof, peaceful, quiet and undisputed possession of the Project, and
the County shall from time to time take all necessary action to that end.
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<PAGE>
ARTICLE VI
REMEDIES
SECTION 6.1. Default by Company. It is agreed that if the Company
shall fail to pay any semiannual rental payment when the same becomes due and
payable, or if the Company shall default in the performance of any other of the
terms, provision, covenants or conditions on its part to be performed, kept or
observed, under this Lease Agreement, then and in any such event the County, but
only with the written consent of the Trustee (which consent shall not be
unreasonably withheld), may at any time thereafter elect to terminate this Lease
Agreement and recover possession of the Project, in the case of such failure to
pay rent, by giving 30 days' written notice to the Company specifying such
failure and such election to terminate and recover possession or, in the case
of such other default by giving 120 days' written notice to the Company
specifying such default and such election to terminate and recover possession;
and upon the expiration of 30 days or l20 days, as the case may be, from the
receipt by the Company of such notice, this Lease Agreement and all of the
estate, right, title and interest herein, granted to or vested in the Company
shall cease and terminate unless within such period all accrued unpaid rentals
(exclusive of any such rentals accrued solely by virtue of acceleration of the
due date of the Bonds as provided in Section 701 of the Resolution), together
with interest thereon at the rate of 8% per annum, shall have been paid or any
such default shall have been fully cured except in the event that the curing of
such
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default takes more than 120 days and the Company is proceeding diligently to
cure the default. No such termination of this Lease Agreement shall relieve the
Company of its liability and obligations hereunder and such liability and
obligations shall survive any such termination
In the event that the Company fails to make any semiannual rental
payment required in Section 2.2 hereof, the installment so in default shall
continue as an obligation of the Company until the amount in default shall have
been fully paid, and the Company will pay the same with interest thereon at the
rate of 8% per annum until paid.
Notwithstanding the foregoing, unless and until the County, pursuant
to Section 6.2 hereof, shall have entered into a firm bilateral agreement for
the reletting of the Project for a period of at least one year--
(a) the Company may, at the time, pay all accrued unpaid rentals
(exclusive of any such rentals accrued solely by virtue of acceleration of
the due date of the Bonds as provided in Section 701 of the Resolution),
together with Interest thereon at the rate of 8% per annum, and fully cure
all defaults; and
(b) in such event this Lease Agreement shall be fully reinstated, as
if it had never been terminated, and the Company shall be accordingly
restored to the use, occupancy and possession of the Project.
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<PAGE>
SECTION 6.2. Re-Letting of Project. If the right of the Company to
the use, occupancy and possession of the Project shall be terminated in any way,
the County will use its best efforts to relet the same or any part thereof for
the account and benefit of the Company for such rental terms to such persons,
firms or corporations and for such period or periods as may be fixed and
determined by the County after notice to and approval by the Trustee, but the
County shall not unreasonably refuse to accept or receive any suitable occupant
or tenant offered by the Company. The County and the Trustee shall not otherwise
be required to do any act whatsoever or exercise any diligence whatsoever to
mitigate the damages to the Company, and if a sufficient sum shall not be
received from any reletting to satisfy the rental payments hereby agreed to be
made by the Company, after paying the expenses to reletting and collection, then
the Company hereby agrees to pay and satisfy any such deficiency if, as and when
the same exists, provided, however, any excess rentals from any such reletting
shall be credited to pay rental due or to become due by the Company.
SECTION 6.3. Remedies Cumulative. The rights and remedies of the
County under this Lease Agreement shall be cumulative and shall not exclude any
other rights and remedies of the County allowed by law with respect to any
default under this Lease Agreement.
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<PAGE>
Failure by the County to insist upon the strict performance of any of the
covenants and agreements herein set forth or to exercise any rights or remedies
upon default by the Company hereunder shall not be considered or taken as a
waiver or relinquishment for the future of the right to insist upon and to
enforce by mandamus or other appropriate legal remedy at strict compliance by
the Company with all of the covenants and conditions hereof, or of the right to
exercise any such right or remedies, if such default by the Company be continued
or repeated, or of the right to recover possession of the Project by reason
thereof. Nothing in this Section 6.3 shall be deemed to restrict the right of
the Company to reinstate this Lease Agreement as provided in Section 6.1.
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<PAGE>
ARTICLE VII
OPTIONS
SECTION 7.1. Option to Purchase. At any time after the date of
commencement of the Lease Term the Company shall have the option to purchase the
Project.
The purchase price payable if the Company exercises its option to
purchase the Project under the provisions of this Section shall be deposited in
the Bond Fund and shall be the full amount of money which will be necessary when
added to the amount then in the Bond Fund and, if the Project shall not then
have been completed, the unencumbered balance in the Construction Fund under the
Resolution to retire and redeem all the Bonds at the earliest possible date
(including, without limitation, principal, interest and applicable premium, if
any), but in no event less than $1.00.
Sixty days' written notice of the exercise of such option to
purchase as aforesaid must be given by the Company to the County in writing,
accompanied by assurances in form satisfactory to the Trustee, that such
purchase will be made.
SECTION 7.2. Conveyance on Exercise of Option to Purchase. At the
closing of any purchase of the Project pursuant to Section 7.1 or 7.3 hereof,
the County will, upon payment of the purchase price, deliver documents conveying
to the Company good and marketable title to the property being purchased, as
such
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property then exists, and all and every the rights, alleys, ways, waters,
privileges, appurtenances and advantages to the same belonging or anywise
appertaining subject to the following: (i) any liens, easements and encumbrances
to which title to said property was subject when conveyed to the County; (ii)
any liens, easements and encumbrances created at the request of the Company or
to the creation of suffering of which the Company consented in writing; (iii)
any liens and encumbrances resulting from the failure of the Company to perform
or observe any of the agreements on its part contained in this Lease Agreement;
(iv) any liens for taxes or easesments not then delinquent.
SECTION 7.3. Option to Renew. If the Company is not then in default
hereunder, it shall have the option to renew this Lease Agreement for a period
of 25 years from February 1, 1999, which option shall be conclusively deemed to
have been exercised by the Company unless at least 60 days prior to the then
termination date of this Lease Agreement, the Company by a written instrument
executed by a duly authorized officer shall have notified the County that it has
irrevocably elected to exercise such renewal option. The cash rental payable by
the Company during such rental term shall be the sum of $1,333 per month, but
otherwise all the terms and conditions contained herein to the extent applicable
shall apply during such renewal term; provided that at any time during such
renewal term the Company shall have the option to purchase the project at a
price of $1.00.
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<PAGE>
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Resolution; Amendment. Moneys received from the sale of
the Bonds and all rentals paid by the Company and all other moneys received by
the County or the Trustee in connection with the Project shall be applied solely
and exclusively in the manner and for the purposes expressed and specified in
the Resolution and in the Bonds and as provided in this Lease Agreement. The
Company shall have and may exercise all the rights, powers and authority stated
to be in the Company in the Resolution and in the Bonds, and the Resolution and
the Bonds shall not be modified, altered or amended in any manner which
adversely affects such rights, powers and authority so stated to be in the
Company or otherwise adversely affects the Company without the consent of the
Company.
SECTION 8.2. Force Majeure. If by reason of force majeure either
party hereto shall be rendered unable wholly or in part to carry out its
obligations under this Lease Agreement, then except as otherwise expressly
provided in this Lease Agreement, if such party shall give notice and full
particulars of such force majeure in writing to the other party within a
reasonable time after occurrence of the event or cause relied on, the
obligations of the party giving such notice, other than the obligation of the
Company to make the rental payments required
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under the terms hereof, so far as they are affected by such force majeure, shall
be suspended during the continuance of the inability then claimed which shall
include a reasonable time for the removal of the effect thereof, but for no
longer period, and such party shall endeavor to remove or overcome such
inability with all reasonable dispatch. The term "force majeure", as employed
herein, shall mean acts of God, strikes, lockouts or other industrial
disturbances, acts of the public enemy, orders of any kind of the Government of
the United States or the Commonwealth of Kentucky or any civil or military
authority, insurrections, riots, epidemics, landslides, lightning, earthquakes,
fires, hurricanes, storms, floods, washouts, droughts, arrests, restraining of
government and people, civil disturbances, explosions, partial or entire failure
of utilities, shortages of labor, material, supplies or transportation, or any
other cause not reasonably within the control of the party claiming such
liability. It is understood and agreed that the settlement of existing or
impending strikes, lockouts or other industrial disturbances shall be entirely
within the discretion of the party having the difficulty and that the above
requirements that any force majeure shall be reasonably beyond the control of
the party and shall be remedied with all reasonable dispatch shall be deemed to
be fulfilled even though such existing or impending strikes, lockouts and other
industrial disturbances may not be settled and could have been settled by
acceding to the demands of the opposing person or persons.
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<PAGE>
SECTION 8.3. Assignment or Sublet. The Company may assign or
transfer this Lease Agreement or sublet the whole or any part of the Project
without the consent of the County provided that the Company shall nevertheless
remain primarily liable to the County for the payment of all rent and for the
full performance of all of the covenants and conditions of this Lease Agreement.
SECTION 8.4. Benefit of and Enforcement by Bondholders. The County
and the Company agree that this Lease Agreement is executed in part to induce
the purchase by others of the Bonds and for the further securing of the Bonds,
and accordingly all covenants and agreements on the part of the County and the
Company as set forth in this Lease Agreement are hereby declared to be for the
benefit of the holders from time to time of the Bonds and may be enforced on
behalf of the Bondholders by the Trustee or by the holders of at least 25% of
the principal amount of all the Bonds then outstanding or their duly authorized
representative.
SECTION 8.5. Amendments. Except as provided in Section 5.4 hereof,
with respect to the release of an unimproved part of the Project, this Lease
Agreement may be amended only with the concurring written consent of the Trustee
given in accordance with the provisions of the Resolution.
SECTION 8.6. Notices. All notices hereunder shall be sufficient if
sent by United States registered or certified mail,
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<PAGE>
postage prepaid, addressed, if to the County, to the Fiscal Court of Henderson
County, County Court House, Henderson, Kentucky, and if to the Company, to The
Firestone Tire & Rubber Company, 1200 Firestone Parkway, Akron, Ohio, attention
the Secretary. The County and the Company may, by like notice, designate any
further or different addresses to which subsequent notices shall be sent.
SECTION 8.7. Prior Agreements Superseded. This Lease Agreement shall
completely and fully supersede all other prior understandings or agreements,
both written and oral, between the Company and the Company relating to the
Project.
SECTION 8.8. Severability. If any clause, provision or Section of
this Lease Agreement be ruled invalid by any court of competent jurisdiction,
the validity of such clause, provision or Section shall not affect any of the
remaining provisions hereof.
SECTION 8.9. Effective Date of Lease Agreement; Counterparts. This
Lease Agreement shall become effective upon its delivery. It may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
SECTION 8.10. Recording. This Lease Agreement and every assignment
and modification hereof shall be recorded in the
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office of the Henderson County Court Clerk, Henderson, Kentucky, or in any such
other office as may be at the time provided by law as the proper place for the
recordation thereof.
SECTION 8.11. Members Not Personally Liable. No official or member
of the County shall be personally liable on this Lease Agreement.
SECTION 8.12. Kentucky Law Governs. This Lease Agreement shall be
considered to have been executed in the Commonwealth of Kentucky and it is the
intention of the parties that the substantive law of said Commonwealth shall
govern all questions or interpretations, validity and effect.
IN WITNESS WHEREOF, the County has caused its corporate name to be
hereunto subscribed by its duly authorized County Judge, and attested under its
corporate seal by its Clerk, and the Company has caused its corporate name to be
subscribed hereto by a duly authorized officer and, attested under its corporate
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<PAGE>
seal by its Secretary or an Assistant Secretary, pursuant to a resolution duly
adopted by its Board of Directors or its Executive Committee, all being done as
of the year and day first above written.
FISCAL COURT OF HENDERSON COUNTY
By /s/ [ILLEGIBLE]
County Judge
[Seal of County]
Attest:
/s/ Mildred M. Howard
Clerk
THE FIRESTONE TIRE & RUBBER COMPANY
[Seal of Company]
By /s/ R.P. Beasley
(Title of Officer)
-----------------------------------
Executive Vice President
Attest:
/s/ [ILLEGIBLE]
(Title of Officer)
Assistant Secretary
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<PAGE>
ACKNOWLEDGMENT OF LESSOR
STATE OF KENTUCKY )
: ss.:
COUNTY OF HENDERSON )
I hereby certify that on this day the foregoing instrument of
writing by and between the Fiscal Court of Henderson County, Kentucky and The
Firestone Tire & Rubber Company, an Ohio corporation, was produced to me in my
County, and acknowledged before me by A. G. Pritchett, County Judge of said
Fiscal Court, party thereto, to be the act and deed of said Fiscal Court, by him
as its County Judge, thereunto duly authorized, and the Corporate Seal of said
County as affixed to said instrument was attested and proven before me by
Mildred Howard as its Clerk.
Given under my hand and Seal of Office this 25th day of February,
1974.
[SEAL]
/s/ [ILLEGIBLE]
--------------------------------------
Notary Public
Notary Public, Kentucky State-at-Large
My Commission Expires Aug. 26, 1974
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<PAGE>
ACKNOWLEDGMENT OF LESSEE
STATE OF OHIO )
: ss.:
COUNTY OF SUMMIT )
I hereby certify, that on this 22nd day of February, 1974, before
me, the subscriber, a Notary Public of the State of Ohio, personally appeared
R.P. Beasley, of The Firestone Tire & Rubber Company, and that he as such
Executive Vice President, being authorized so to do, executed the foregoing
Lease Agreement in the name of said corporation for the purposes therein
contained, and acknowledged said Agreement to be the act of said body corporate.
In Testimony Whereof, I have hereunto set my hand and notarial seal.
(Seal)
/s/ M. Ann Gosnell
----------------------------------
Notary Public
M. ANN GOSNELL
Notary Public, Summit County, Ohio
My Commission Expires Nov. 18, 1976
This Instrument Prepared by
/s/ [ILLEGIBLE]
- ----------------------------------------
of MUDGE ROSE GUTHRIE & ALEXANDER
20 Broad Street
New York, New York
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<PAGE>
EXHIBIT A
DESCRIPTION OF LEASELAND
All that certain tract or parcel of land, together with the
improvements thereon, situate in Henderson County, Kentucky, and more
particularly described as follows:
Beginning at station 12-A a right of way fence and post on the west
side of the Pennyrile Parkway being approximately 120 feet west of the
centerline of the Parkway and also being in the north right of way line of Adams
Lane and being approximately 160 feet from the centerline of Adams Lane; thence
leaving the Pennyrile Parkway with the north right of way line of Adams Lane,
the following cources and distances: thence S 87(degrees) 32' W 25.37 feet to
station 12-C being a highway right of way concrete monument; thence S
83(degrees) 15' W 207.94 feet to station 13-A being a highway right of way
concrete monument; thence N 81(degrees) 13' W 84.40 feet to station 13-B; thence
S 86(degrees) 55' W 191.31 feet to station 14-X; thence S 78(degrees) 54' W
227.12 feet to station 14-A a highway right of way concrete monument; thence S
82(degrees) 41' W 150.00 feet to station 15-A; thence S 06(degrees) 01' E 10.68
feet to station 14-B; thence S 82(degrees) 49' W 678.15 feet to station 16-A a
fence corner post in the north right of way line of Adams Lane and being the
southeast corner of Harry Frields, thence leaving Adams Lane along the property
line fence with first Harry Frields then James Rickard, then Harry Felty, then
Katie Hudson, and then Drura Scott N 04(degrees) 02' W 2,103.55 feet to station
17-A in the line of an area zoned residential, formerly the old Clore estate;
thence with the residential zoning line and Firestone Steel Products,
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<PAGE>
formerly the old Clore estate, N 81(degrees) 14' E 1,023.70 feet to station 4-X
in the west right of way fence of the Audubon Parkway interchange ramp with the
Pennyrile Parkway: thence with the ontrace ramp to the Audubon Parkway along the
right of way fence S 01(degrees) 41' E 135.42 feet to station 36-A, thence along
a chord of the right of way fence curving to the left S 31(degrees) 32' E 428.37
feet to station #7; thence along another chord of the right of way fence curving
to the left S 64(degrees) 59' E 577.l4 feet to station 7-X in the right of way
fence; thence along the remnants of the old property line fence being
approximately 5.0 feet west of the existing highway right of way fence S
09(degrees) 37' E 177.01 feet to station 8-X in the existing right of way fence;
thence along the existing west right of way fence of the Pennyrile Parkway, the
following courses and distances:
thence S 05(degrees) 16' W 121.49 feet to station 9-A;
thence S 09(degrees) 04' W 200.43 feet to station 10-A;
thence S 08(degrees) 11' W 196.47 feet to station l0-B;
thence S 05(degrees) 12' W 104.39 feet to station 10-C;
thence S 14(degrees) 25' W 105.75 feet to station ll-A;
thence S 00(degrees) 58' W 158.08 feet to station 11-D;
thence S 02(degrees) 23' E 217.96 feet to station 11-H;
thence S 05(degrees) 06' E 58.80 feet to the beginning,
containing 71.216 acres, as surveyed by Donan Engineering, Incorporated, on
January 16, 1974.
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<PAGE>
The above described tract is that portion of Firestone Steel
Products plant property, which lies within that area zoned as Industrial
Property by the Henderson County Planning and Zoning Commission.
STATE OF KENTUCKY
Sct.
HENDERSON COUNTY
I. MILDRED M. HOWARD, Clerk of the Henderson County Court, certify that
the foregoing lease agreement was this day at 9:12 o'clock A.M. lodged in my
office for record, and that I have recorded it, the foregoing and this
certificate in my said office.
Given under my hand this 26th day of February 1974
MILDRED M. HOWARD, Clerk
By /s/ [ILLEGIBLE] D.C.
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<PAGE>
EXHIBIT 10.15
LEASE AMENDMENT
Lease Amendment made as of the 19th day of December, 1986, by and
between the Fiscal Court of Henderson County, Kentucky (the "County") and
Accuride Corporation ("Accuride") having its principal place of business in
Henderson, Kentucky.
WHEREAS, the County as lessor and the Firestone Tire & Rubber
Company ("Firestone") as lessee entered into a lease agreement dated as of
February 1, 1974 (the "Lease") demising to Firestone the premises described in
Exhibit A attached hereto and incorporated herein by reference (the "Leased
Premises"), and
WHEREAS, effective upon the Closing Date, as hereinafter defined,
Firestone intends to assign to Accuride all of its right, title, and interest in
and to the Lease and the Leased Premises; and
WHEREAS, the County has consented to the assignment of the interest
of Firestone under the Lease to Accuride and has released Firestone from all
liabilities and responsibilities under the Lease and under other documents as
set forth in a Consent to Assignment and Assumption of Lease Agreement and
Release of Firestone executed by the County; and
WHEREAS, Accuride has requested the County to make certain
modifications to the Lease and the County has agreed to such modifications.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the
<PAGE>
County, the County and Accuride agree to amend the Lease as follows effective
upon the Closing Date:
1. Section 1.1 is amended by substituting Accuride for Firestone in the
definition of Company.
2. A new Article IX is added to the Lease as follows:
ARTICLE IX
PROVISIONS FOR LEASEHOLD MORTGAGES
SECTION 9.1. Definitions. For the purposes of the Lease, the terms
"mortgage" and "leasehold mortgage" shall include whatever security
instruments are used in the locale of the Project, such as, without
limitation, mortgages, deeds of trust, mortgage deeds, security deeds and
conditional deeds, as well as financing statements, security agreements
and other documentation which the lender may require, and the terms
"holder of a mortgage" and "mortgagee" or "holder of a leasehold mortgage"
and "leasehold mortgagee" shall mean the secured party in any of the
foregoing instruments or the prospective secured party if the instruments
have not been delivered.
SECTION 9.2. Right to Mortgage. Company and every successor and
assignee of Company is hereby given the right by County in addition to any
other rights herein granted, without any requirement to obtain County's
consent, to mortgage or grant a security interest in Company's interest in
the Lease and the Project, under one or more leasehold mortgages(s),
and/or in connection with any sale(s) of such interest, and assign the
Lease as collateral security for such leasehold mortgage(s), upon the
condition that all rights acquired under such leasehold mortgage(s) shall
be subject to each and all of the covenants, conditions and restrictions
set forth in this Lease, and to all rights and interests of County herein,
none of which covenants, conditions or restrictions is or shall be waived
by County by reason of the right given so to mortgage or grant a security
interest in Company's interest in the Lease and the Project, except as
expressly provided herein.
SECTION 9.3. Rights of Leasehold Mortgagee. If Company and/or
Company's successors and assignees shall mortgage or grant a security
interest in Company's interest in the Lease and the Project, and if the
leasehold mortgagee shall send to County a true copy of its leasehold
mortgage, together with written notice specifying the name and address
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<PAGE>
of the leasehold mortgagee, so long as such leasehold mortgage shall
remain unsatisfied of record or until written notice of satisfaction is
given by the holder to County, the following provisions shall apply (in
respect of such leasehold mortgage and of any other leasehold mortgages
which also comply with the above):
(a) There shall be no cancellation, surrender, acceptance of
surrender, amendment or modification of the Lease by joint action of
County and Company or by Company alone, without in each case the
prior consent in writing of the leasehold mortgagee.
(b) County shall, upon serving Company with any notice or
other communication, whether of default or any other matter,
simultaneously serve a copy of such notice upon the leasehold
mortgagee, and no such notice or other communication to Company
shall be deemed given unless a copy is so served upon the leasehold
mortgagee in the manner provided in the Lease for the giving of
notices.
(c) In the event of any default by Company under the Lease,
the leasehold mortgagee shall have the same period, after service of
notice upon it of such default, to remedy or cause to be remedied
the default complained of as Company has hereunder for such default,
plus an additional 30 days, and County shall accept such performance
by or at the instigation of such leasehold mortgagee as if same had
been done by Company. Each notice of default given by County will
state the amounts of whatever rent and other payments herein
provided for are then claimed to be in default. If the default is of
a nature that it cannot be cured within the time provided in the
Lease, and if the leasehold mortgages shall have notified County of
its desire to cure said default and shall prosecute or cause the
prosecution of same to completion with reasonable diligence, then in
such event County shall not be entitled to exercise any remedy for
such default and any notice of termination theretofore given shall
be void and of no effect.
(d) If County shall elect to terminate the Lease or exercise
any other remedy by reason of any default of Company, the leasehold
mortgagee shall not only have the right to nullify such election or
exercise by agreeing to cure such default as aforesaid, but shall
also have the separate right to postpone and extend the specified
date for the termination of the Lease as fixed by County in its
notice of termination for a
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<PAGE>
period of not more than 12 months, provided that such leasehold
mortgagee shall within the time period provided by the Lease plus 30
days cure or cause to be cured any then existing money defaults and
meanwhile pay or cause to be paid the rent, and provided further
that the leasehold mortgagee shall forthwith take steps to acquire
or sell Company's interest in the Lease by foreclosure of the
leasehold mortgage or otherwise and shall prosecute the same to
completion with reasonable diligence. If at the end of said 12-month
period the leasehold mortgagee shall be actively engaged in steps to
acquire or sell Company's interest in the Lease, the time of said
leasehold mortgages to comply with the provisions of this subsection
(d) shall be extended for such period as shall be reasonably
necessary to complete such steps with reasonable diligence provided
the leasehold mortgagee continues to pay the rent and other sums due
under the Lease. If the leasehold mortgagee is prohibited by any
process or injunction issued by any court or by reason of any action
by any court having jurisdiction of any bankruptcy, debtor
rehabilitation or insolvency proceeding involving Company from
commencing or prosecuting foreclosure or other appropriate
proceedings, the said 12-month period shall be extended for the
period of such prohibition, provided that the leasehold mortgagee
shall diligently attempt to remove any such prohibition. If
Company's interest is acquired or sold as aforesaid by foreclosure
of the leasehold mortgage or otherwise during said 12-month period,
as same may be extended as aforesaid, the intended termination of
the Lease or exercise of any other remedy by County under the
aforesaid notice will be automatically nullified and the Lease will
continue as if said notice of default and/or termination had never
been given.
(e) In the event of termination of the Lease by reason of any
default by Company, County will promptly notify the leasehold
mortgagee of such termination and the amount of the sums then due to
County under the Lease, and the leasehold mortgagee shall have the
right to have County enter into a new lease of the Project with the
leasehold mortgagee or its nominee or designee in accordance with
the following provisions;
(i) The leasehold mortgagee or its nominee or designee
shall be entitled to such new lease if the leasehold mortgagee
shall make written request upon County for such new lease on
or before the last date when the leasehold mortgagee is
entitled to cure the default pursuant to subsection (d)
-4-
<PAGE>
above and if such written request is accompanied by the
leasehold mortgagee's agreement to pay to County within 60
days after the execution and delivery of the new lease the
sums then due to County under the Lease.
(ii) Said new lease shall be for what would have been
the remainder of the term if the Lease had not terminated,
including all options to renew, effective as of the date of
such termination, at the rent and upon the terms, provisions,
covenants and agreements as herein contained, including all
rights and options herein contained.
(iii) Such lease shall be subject to the same conditions
of title as the Lease is subject to on the date of the
execution thereof.
(iv) In said new lease, the leasehold mortgagee or its
nominee or designee shall agree to perform and observe all
covenants contained in the Lease on Company's part to be
performed, except that all of the obligations and liabilities
of the leasehold mortgagee or its nominee or designee as
tenant under the new lease shall cease and terminate upon
assignment of the new lease and assumption of said obligations
and liabilities by the assignee.
(v) In said new lease, County shall not warrant
possession of the Project to the leasehold mortgagee or its
nominee or designee.
(vi) The leasehold mortgagee or its nominee or designee
as tenant under the new lease shall have the same right,
title, and interest in and to the Project as Company had under
the Lease.
(vii) The conveyance by the leasehold mortgagee or its
nominee or designee of its interest as tenant under the new
lease and the Project shall not require the consent of County
or constitute a breach of any provision of or a default under
the new lease.
(f) Any award or payment in condemnation or eminent domain in
respect of the Project shall be paid to the leasehold mortgagee to
be applied in the manner specified in the leasehold mortgage.
-5-
<PAGE>
(g) No fire or casualty loss claims shall be settled and no
agreement will be made in respect of any award or payment in
condemnation or eminent domain without in each case the prior
written consent of the leasehold mortgagee.
(h) Except where the leasehold mortgagee has become the
tenant, no liability for the payment of rent or the performance of
any of Company's covenants and agreements under the Lease shall
attach to or be imposed upon the leasehold mortgagee, all such
liability being hereby expressly waived by County, and if the
leasehold mortgagee or its nominee or designee becomes the tenant
under the Lease, all of the obligations and liabilities of the
leasehold mortgagee or its nominee or designee shall cease and
terminate upon assignment of the Lease and assumption of the
obligations and liabilities by the assignee.
(i) County, within 20 days after a request in writing by
Company or the leasehold mortgagee, shall furnish a written
statement, duly acknowledged, that the Lease is in full force and
effect and that there are no defaults thereunder by Company, or if
there are any defaults, such statement shall specify the defaults
County claims exist.
(j) If Company fails to exercise any extension, renewal, or
purchase option in the Lease, County shall promptly send the
leasehold mortgagee written notice thereof, and the leasehold
mortgagee, within 30 days after receipt of such notice. may exercise
any such option on behalf of Company.
(k) Notwithstanding any provision to the contrary, foreclosure
of a leasehold mortgage or any a sale of Company's interest in the
Lease and the Project in connection with a foreclosure, whether by
judicial proceedings or by virtue of any power of sale contained in
the leasehold mortgage, or any conveyance of Company's interest in
the Lease and the Project from Company to the leasehold mortgagee or
its nominee or designee by virtue of or in lieu of foreclosure or
other appropriate proceedings, or any conveyance of Company's
interest in the Lease and the Project by the leasehold mortgagee or
its nominee or designee, shall not require the consent or approval
of County or constitute a breach of any provision of or a default
under the Lease.
SECTION 9.4. Effective Date. This Lease Amendment shall become
effective upon assignment from Firestone to
-6-
<PAGE>
Accuride of Firestone's interest in the Lease. Unless and until Firestone
assigns its interest in the Lease and the Project to Accuride, this Lease
Amendment shall not be effective and the Lease shall remain in full force
and effect without the changes set forth in this Lease Amendment.
SECTION 9.5. Entire Agreement. This Amendment of Lease may not be
modified or terminated orally, and constitutes the entire agreement
between the parties with respect to the subject matter hereof.
SECTION 9.6. Lease Remains in Effect. Except as expressly amended
hereby, the Lease and all of the terms, covenants, and conditions thereof
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment of Lease
to be executed as of the day and year first above written.
THE FISCAL COURT OF HENDERSON COUNTY
By /s/ Paul Herron, Jr.
---------------------------------
Paul Herron, Jr.
County Judge/Executive
Attest: /s/ Virginia Clark
----------------------------
Virginia Clark
Clerk of Fiscal Court
SIGNED AND ACKNOWLEDGED
IN THE PRESENCE OF:
/s/ Robert L. Newton
- -----------------------------
ACCURIDE CORPORATION
By /s/ Joshua Beckenstein
---------------------------------
Title: President
Attest: /s/ Karl E. Lutz
----------------------------
Title: Secretary
SIGNED AND ACKNOWLEDGED
IN THE PRESENCE OF:
/s/ Melissa Plotsky
- -----------------------------
This instrument prepared by:
Melissa Plotsky
- -----------------------------
Melissa Plotsky, Esq.
Kirkland & Ellis
200 E. Randolph Dr.
Chicago, IL 60601
-7-
<PAGE>
ACKNOWLEDGEMENT OF THE FISCAL COURT OF
HENDERSON COUNTY, KENTUCKY
STATE OF KENTUCKY )
) SS:
COUNTY OF HENDERSON )
I hereby certify that on this day the foregoing instrument was
produced to me in the aforesaid County, and acknowledged before me by Paul
Herron, Jr., County Judge/Executive of said Fiscal Court, party thereto, to be
the act and deed of said Fiscal Court, by him as its County Judge/Executive
thereunto duly authorized, and the Corporate Seal of said County as affixed to
said instrument was attested and proven before me by Virginia Clark, Clerk of
Fiscal Court.
Given under my hand and Seal of Office this 9th day of December,
1986.
/s/ Robin L. Newton
-------------------------------
Notary Public
My commission expires: 1/17/88
(Seal)
<PAGE>
ACKNOWLEDGEMENT OF ACCURIDE CORPORATION
STATE OF New York )
) SS.:
COUNTY OF New York )
I hereby certify, that on this 19th day of December 1986, before me,
the subscriber, a Notary Public in and for such State and County, personally
appeared Joshua Beckenstein and Karl E. Lutz, the President and Secretary,
respectively, of Accuride Corporation, and that in such capacities and being
authorized so to do, such persons executed and attested the foregoing Lease
Amendment in the name of said corporation for the purposes therein contained,
and acknowledged said Agreement to be the act of said body corporate.
In Tesitmony Whereof, I have hereunto set my hand and notarial seal.
/s/ [ILLEGIBLE]
-------------------------------
Notary Public
My commission expires: 30 November 1988
(Seal)
<PAGE>
EXHIBIT A COUNTY OF HENDERSON
STATE OF KENTUCKY
DESCRIPTION OF PROPERTY
Property leased to the Firestone Tire and Rubber Company by virtue
of a certain indenture of lease made by Henderson County, Kentucky to the
Firestone Tire and Rubber Company dated February , 1974, recorded on February
26, 1974 in Deed Book 270, page 558, of the Henderson County clerk's office.
Beginning at station 12-A a right of way fence and post on the west
side of the Pennyrile Parkway being approximately 120 feet west of
the centerline of the Parkway and also being in the north right of
way line of Adams Lane and being approximately 160 feet from the
centerline of Adams Lane; thence leaving the Pennyrile Parkway with
the north right of way line of Adams Lane, the following courses and
distances: thence S 87(degrees) 32' W 25.37 feet to station 12-C
being a highway right of way concrete monument; thence S 83(degrees)
15' W 207.94 feet to station 13-A being a highway right of way
concrete monument; thence N 81(degrees) 13' W 84.40 feet to station
13-B; thence S 86(degrees) 55' W 191.31 feet to station 14-X; thence
S 78(degrees) 54' W 227.12 feet to station 14-A a highway right of
way concrete monument; thence S 82(degrees) 41' W 150.00 feet to
station 15-A; thence S 06(degrees) 01' E 10.68 feet to station 14-B;
thence S 82(degrees) 49' W 678.15 feet to station 16-A a fence
corner post in the north right of way line of Adams Lane and being
the southeast corner of Harry Frields; thence leaving Adams Lane
along the property line fence with first Harry Frields then James
Rickard, then Harry Felty, then Katie Hudson, and then Drura Scott N
04(degrees) 02' W 2,103.55 feet to station 17-A in the line of an
area zoned residential, formerly the old Clore estate; thence with
the residential zoning line and Firestone Steel Products, formerly
the old Clore estate, N 81(degrees) 14' E 1,023.70 feet to station
4-X in the west right of way fence of the Audubon Parkway
interchange ramp with the Pennyrile Parkway: thence with the
entrance ramp to the Audubon Parkway along the right of way fence S
01(degrees) 41' E 135.42 feet to station 36-A, thence along a chord
of the
<PAGE>
right of way fence curving to the left S 31(degrees) 32' E 428.37
feet to station #7; thence along another chord of the right of way
fence curving to the left S 64(degrees) 59' E 577.l4 feet to station
7-X in the right of way fence; thence along the remnants of the old
property line fence being approximately 5.0 feet west of the
existing highway right of way fence S 09(degrees) 37' E 177.01 feet
to station 8-X in the existing right of way fence; thence along the
existing west right of way fence of the Pennyrile Parkway, the
following courses and distances: thence S 05(degrees) 16' W 121.49
feet to station 9-A; thence S 09(degrees) 04' W 200.43 feet to
station 10-A; thence S 09(degrees) 11' W 196.47 feet to station
l0-B; thence S 05(degrees) 12' W 104.39 feet to station 10-C; thence
S 14(degrees) 25' W 105.75. feet to station 11-A thence S
00(degrees) 58' W 158.08 feet to station 11-D; thence S 02(degrees)
23' E 217.96 feet to station 11-H; thence S 05(degrees) 06' E 58.80
feet to the beginning,
LESS AND EXCEPTING therefrom, a small strip of land conveyed by
Henderson-Henderson County Industrial Foundation, Inc., to
Commonwealth of Kentucky for the use and benefit of the Bureau of
Highways, for the purpose of widening the right of way for Adams
Lane, by deed of conveyance dated February 5, 1974, and of record in
Deed Book 270, Page 636, in the Henderson County Court Clerk's
office, to which deed reference is hereby made for a more particular
description of said strip of real property.
Also being known as:
A certain tract of parcel located near the City of Henderson, in Henderson
County, Kentucky, and being more specifically described as follows: Beginning at
the north edge of a concrete right-of-way monument found at the intersection of
the west right-of-way line of the Pennyrile Parkway and the north right-of-way
line of Adams Lane, being located 120 feet left of Pennyrile Parkway Station
3668+86.1 (Hwy plane show 3668+80); thence with the north right-of-way line of
Adams Lane the following nine calls:
1) South 85 degrees 31 minutes 20 seconds West, 24.39 feet to the north edge of
a concrete right-of-way monument found in the north right-of-way of Adams Lane;
2) thence South 80 degrees 04 minutes 14 seconds West, 207.87 feet to the north
edge of a concrete right-of-way monument found in the north right-of-way line of
Adams Lane;
<PAGE>
3) thence North 84 degrees 19 minutes 04 seconds West, 85.57 feet to an iron pin
set 80 feet left of Adams Lane Station 45+00;
4) thence South 83 degrees 18 minutes 33 seconds West, 21.74 feet to the north
edge of an iron pin set 80 feet left of Adams Lane Station 43+00;
5) thence South 69 degrees 07 minutes 35 seconds West, 21.74 feet to the north
edge of a concrete right-of-way monument found in the north right-of-way line of
Adams Lane, and being the beginning of a curve to the left in said right-of-way;
6) thence with said curve to the left, having a radius of 2571.69 feet, a delta
angle of 8 degrees 29 minutes 24 seconds, subtended by a chord of South 32
degrees 24 minutes 31 seconds West, 380.99 feet, an arc distance of 381.24 feet
to the north edge of a concrete right-of-way monument found in the north
right-of-way line of Adams Lane;
7) thence South 78 degrees 09 minutes 32 seconds West, 359.30 feet to an iron
pin set in said north right-of-way line;
8) thence South 74 degrees 49 minutes 51 seconds West, 100.16 feet to the north
edge of a concrete right-of-way monument found in the north right-of-way of
Adams Lane;
9) thence South 80 degrees 01 minutes 01 seconds West, 169.71 feet to an iron
pin set in the north right-of-way line of Adams Lane, said north right-of-way
line having been established by a conveyance between the Henderson-Henderson
County Industrial Foundation, Inc. and the Commonwealth of Kentucky recorded in
Deed Book 270 Page 636 in the Henderson County Court Clerk's Office, and said
iron pin being in the east Rise of the Martha Frields property (Deed Book 152
Page 100);
thence with the east line of said Frields property and the east lines of the
properties of James Richard (Deed Book 269 Page 763), Harry Felty (Deed Book 179
Page 218), Roman Todd (Deed Book 202 Page 85), Carl Gish (Deed Book 282 Page
450), and Drura Scott (Deed Book 177 Page 179, Deed Book 150 Page 255, Deed Book
156 Page 530), North 7 degrees 11 minutes 24 seconds West, passing a fence
corner post found 0.59 feet to the left at 141.54 feet, passing a 1 3/4 inch
iron pipe found 0.86 feet to the left at 397.80 feet, passing a 2 inch pipe
found 0.81 feet to the left at 482.75 feet, passing another 2 inch pipe found
0.18 feet to the left at 492.60 feet, passing an iron pin found 1.16 feet to the
right at 751.82 feet, a total distance of 2080.37 feet to an iron pin found at a
fence corner post, being the southwest corner of the Firestone Tire & Rubber Co.
property (Deed Book 272 Page 702-Tract II), also known as the Lakeland
Subdivision, plats of which are recorded in Deed Book 152 Page 254, Deed Book
152 Page 128, Deed Book 161 Page 306, Deed Book 191 Page 456; thence with the
south line of said Firestone Tire & Rubber Co. property (Lakeland Subdivision),
North 78 degrees 09 minutes 19 seconds East, 1004.33 feet (cited as 1003.06 feet
in Deed Book 272 Page 702) to an iron pin found at a fence corner post, being
the most southwesterly corner of the remainder of the Firestone Tire & Rubber
Co. property (Deed Book 272 Page 702-Tract I); thence with said Tract I, North
78 degrees 09 minutes 19 seconds East, 19.54 feet to an iron pin set in the
right-of-way line of Ramp "A"
<PAGE>
(property of the Commonwealth of Kentucky) of the River Valley Parkway (Audubon
Parkway), said iron pin being located 63.16 feet right or West of Ramp "A"
Station 23+09.15; thence with said right-or-way line (property of the
Commonwealth of Kentucky) the following four (4) calls:
1) South 4 degrees 40 minutes 51 seconds East, l34.33 feet to an iron pin set 96
feet right of Station 24+25, said iron pin being located North 44 degrees 39
minutes 43 seconds West, 1.90 feet from an angle post in the controlled access
fence of said Parkway, and being the beginning of a curve to the left;
2) thence with said curve, having a radius of 653.96 feet, a delta angle of 35
degrees 35 minutes 56 seconds, and subtended by a chord of South 33 degrees 52
minutes 43 seconds East, 4l2.32 feet, an arc distance of 419.14 feet to an iron
pin set 96 feet right of said Ramp "A" Station 27+83.99 and 130 feet right of
River Valley Parkway (Audubon Parkway) Station 93 + 09.50, and being the Point
of Compound Curvature of another curve to the left;
3) thence with said curve, having a radius of 1,084.93 feet, a delta angle of 27
degrees 30 minutes 00 seconds, subtended by a chord of South 65 degrees 34
minutes 46 seconds East, 515.74 feet, an arc distance, of 520.72 feet to an iron
pin set at 130 feet right of Station 97+57.83, and being the Point of Compound
Curvature of another curve to the left;
4) thence with said curve, having a radius of 2,039.66 feet, a delta angle of 2
degrees 16 minutes 21 seconds, subtended by a chord of South 80 degree 27
minutes 57 seconds East, 30.10 feet, an arc distance of 80.11 feet to an iron
pin set 130 feet right of Station 98.43.58 (Parkway Plans show 95+46), being
located South 82 degrees 16 minutes 38 seconds West, 3.98 feet from an angle
post in the controlled access fence, said iron pin being the point of
intersection of said Parkway right-of-way and an old woven wire fence marking
the east line of the old Thompson & Clore property recorded in Deed Book 150
Page 82, being the east line of the property herein described, and being the
point of intersection of the River Valley (Audubon) and Pennyrile Parkway
right-of-ways, but which point does not coincide with the reference dimensions
shown on the Right-of-Way Plans of said Parkways or in the deed to the
Commonwealth of Kentucky in Deed Book 229 Page 655;
thence with said old woven wire fence, and with the west right-of-way line of
the Pennyrile Parkway, South 13 degrees 15 minutes 04 seconds East, 131.41 feet
to an iron pin set at the intersection of said old woven wire fence and the
right-of-way as shown on the plans of the Pennyrile Parkway and as shown in the
aforementioned deed to the Commonwealth of Kentucky; thence with the west
right-of-way line of the Pennyrile Parkway the following six (6) calls:
1) South 12 degrees 11 minutes 43 seconds East, 37.71 feet to an iron pin set
110 feet left of Pennyrile Parkway Station 3680+25;
<PAGE>
2) thence South 1 degree 14 minutes 59 seconds West, 125.40 feet to an iron pin
set 100 feet left of Station 3679+00;
3) thence South 5 degrees 31 minutes 05 seconds West, 387.69 feet to an iron pin
100 feet left of Curve to Spiral Station 3675+16.81;
4) thence South 2 degrees 36 minutes 18 seconds West, 120.85 feet to an iron pin
set 100 feet left of Station 3674+00, and being located North 21 degrees 43
minutes 35 seconds East, 4.72 feet from an angle post in the controlled access
fence;
5) thence South 11 degrees 20 minutes 15 seconds West, 105.74 feet to an iron
pin set at the beginning of a curve to the left in said right-of-way, and being
located 120 feet left of Station 3673+00, and being located South 16 degrees 51
minutes 37 seconds West, 6.50 feet from an angle post in said controlled access
fence;
6) thence with said curve to the left, having a radius of 2984.70 feet, a delta
angle of 8 degrees 16 minutes 41 seconds, subtended by a chord of South 4
degrees 42 minutes 07 seconds East, 430.37 feet, an arc distance of 431.24 feet
to the point of beginning containing 70.587 acres.
This description was prepared from a physical survey conducted under the
direction of Dennis E. Branson, Ky. RLS # 2532 on December 4, 1986, the basis of
bearings of which is True NORTH based on a solar observation taken on December
4, 1986.
STATE OF KENTUCKY
COUNTY OF HENDERSON........Set.
I, NANCY D. BETHEL, Clerk of Henderson County, certify
that the foregoing amendment was this day at 2:47 O'clock
P. M. lodged in my said office for record and that I
have recorded it, the foregoing and this certificate in my
said office.
Given under my hand this 23 day of December 1986.
NANCY D. BETHEL, Clerk
BY: Penny Matthews D.C.
<PAGE>
Exhibit 10.16
JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT ("Agreement") is made as of the 5th day of
November, 1997 ("Effective Date"), by and among ACCURIDE CORPORATION, a Delaware
corporation ("Accuride"), INDUSTRIA AUTOMOTRIZ, S.A. DE C.V., a Mexican
corporation ("IASA"), GRUPO INDUSTRIAL RAMIREZ, S.A., a Mexican corporation
("GIR"), and ACCURIDE DE MEXICO, S.A. DE C.V., a Mexican corporation
("Company").
R E C I T A L S
WHEREAS, Accuride manufactures metal wheels for the automotive industry, at
production facilities located in Henderson, Kentucky, U.S.A. and, through a
subsidiary, in London, Ontario, Canada;
WHEREAS, IASA designs, manufactures, markets and sells metal wheels through
its wheel division ("Wheel Division") at IASA's production facilities located in
San Nicolas de los Garza, Nuevo Leon, Mexico (the "IASA Plant");
WHEREAS, Accuride and IASA desire to create and realize synergies and
efficiencies, and to develop new technological capabilities, in the production,
marketing and sale of all kinds of steel wheels, rims, side rings, lock rings,
adaptor rings, spacer bands, mounting bands and related components, replacements
and products ("Wheels");
WHEREAS, Accuride and IASA desire to create a joint venture ("Joint
Venture") through which to pursue emerging opportunities in the Wheel market in
Mexico and elsewhere in Latin America, in the United States of America and in
Canada, and in other countries where sufficient demand exists;
WHEREAS, in consideration of the foregoing, Accuride and IASA have
incorporated the Joint Venture as a variable capital corporation under the laws
of the United Mexican States, under the name "Accuride de Mexico, S.A. de C.V.,"
to produce, market and sell Wheels; and
WHEREAS, each of Accuride, IASA, GIR and the Company desires to make
certain covenants, representations, warranties and other agreements, and to
prescribe various conditions, regarding the formation, further capitalization
and operation of the Company.
<PAGE>
NOW, THEREFORE, in consideration of the recitals, representations,
warranties, covenants, conditions and agreements contained in this Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
Definitions; Incorporation of Recitals
SECTION 1.1 Defined Terms. As used herein, the following terms shall have
the definitions set out in Exhibit A attached hereto, and as set out in the main
body of the Agreement, provided, however, that in the event of any conflict
between the definitions in Exhibit A and those set out in the main body of this
Agreement, Exhibit A shall govern.
AAA
Accuride
Accuride/Company Technical Services Agreement
Accuride Tradename and Trademark License
Affiliate
Agreement
Alternate
Annual Business Plan
Arbitration Act
Asset Assignment, Purchase and Sale Agreement
Asset List
Automotive Decree
Bank
Board
Bylaws
Closing
Closing Date
Company
Company Bank Instructions
Company Facility
Company/IASA Equipment Bailment Agreement
Confidential Information
Day
DIARSA
Director
Director General
Distribution Agreements
Effective Date
Escritura Constitutiva
Examiner
Exclusive Mexico/Latin America Commercial Mediator Agreement
Exclusive United States/Canada Commercial Mediator Agreement
Exhibit
Extraordinary Shareholders' Meeting
Fiscal Year
FMVAT
FMVLA
FMVNAT
General Law of Business Organizations
GIR
IASA
IASA Bank Instructions
IASA/Company Technical Services Agreement
IASA Tradename and Trademark License
IASA Plant
Indemnified Party
Indemnifying Party
Initial Business Plan
Inventory
Joint Venture
Labor Plan
Loan
Loan Documents
Loss
Maximum Contingent Labor Liability Assumed
Mexico, D.F. Office Lease
Note 1
Note 2
Note 3
Notice
Notice of Intent to Terminate
Option
Ordinary Shareholders' Meeting
Percentage Interest
Person
Phase-Out Services
Representative
Response Notice
Ruedas AISA
San Nicolas Office Leases
2
<PAGE>
Security Interest
Security Interest Releases
Servicios AISA
Shareholder
Stock Purchase Agreement
Stock Registry Book
Teller
Term
Usable Inventory
VAT
Wheel
Wheelmaking Equipment
Wheel Division
Wheel Requirements Agreement
SECTION 1.2 Incorporation of Recitals. The parties to this Agreement
hereby acknowledge the accuracy of the recitals hereto and incorporate them
herein by this reference.
ARTICLE II
Purpose and Initial Scope of the Joint Venture;
Corporate Joint Venture Entity
SECTION 2.1 Purpose and Initial Scope of the Joint Venture. The purpose
of the Joint Venture shall be to create and realize synergies and efficiencies
and to develop technological capabilities in the joint production, marketing and
sale of Wheels. Initially, the scope of the Joint Venture shall be to design,
manufacture, purchase, sell, import, export, market, deal in and distribute
Wheels for the light vehicle, heavy truck, trailer, bus and agricultural and
off-road vehicle markets, in Mexico and elsewhere in Latin America, in the
United States of America and Canada, and in other countries where sufficient
demand exists. The Joint Venture shall be authorized to undertake business
activities outside its initial scope only upon the prior unanimous written
approval of both Accuride and IASA.
SECTION 2.2 Corporate Joint Venture Entity. Each of Accuride and IASA
desires and intends that the Joint Venture operate and conduct its business
exclusively in the form of a variable capital corporation incorporated under the
laws of the United Mexican States.
ARTICLE III
The Joint Venture Company
SECTION 3.1 Formation of the Company; Formation Expenses. The parties
acknowledge that the Joint Venture was incorporated by Accuride and IASA under
the name "Accuride de Mexico, S.A. de C.V.," as a sociedad anonima de capital
variable
3
<PAGE>
under the General Law of Business Organizations, on October 17, 1997,
before Lic. Jose Andres Garza Tamez, Corredor Publico No. 15 in the Municipality
of Monterrey, Nuevo Leon, Mexico. The Company shall bear the costs arising from
its incorporation (such as, for example, Corredor Publico fees and recording
fees); notwithstanding the foregoing, however, each Shareholder shall bear in
full the professional fees it incurs for its own attorneys, accountants and
financial and other advisors in connection with the Company's formation and
organization.
SECTION 3.2 Escritura Constitutiva; Bylaws. A copy of the Escritura
Constitutiva of the Company, which includes the form of Bylaws that was adopted
upon its incorporation, is attached hereto as Exhibit B (Spanish), and an
English translation of the Bylaws only is attached hereto as Exhibit C; but the
English version is provided for convenience only, the Spanish version of the
Bylaws found in the Escritura Constitutiva to be controlling in every case and
to govern in the event of any conflict with this Agreement. The Escritura
Constitutiva was inscribed and registered in the Public Registry of Commerce for
the Municipality of Monterrey, Nuevo Leon on October 22, 1997. Neither the
Bylaws nor the Escritura Constitutiva has been amended or otherwise modified as
of the Effective Date.
SECTION 3.3 Corporate Purpose. The corporate purpose of the Company shall
be that which is stated in Article Second of the Bylaws.
SECTION 3.4 Ownership of the Fixed Portion of the Company's Capital Stock.
The fixed portion of the Company's capital stock is in the amount of $50,000
Mexican pesos and is represented by Fifty Thousand (50,000) registered no-par
value common shares. Accuride currently owns Twenty-Five Thousand Five Hundred
(25,500) shares of the fixed capital stock of the Company, and IASA currently
owns the remaining Twenty-Four Thousand Five Hundred (24,500) shares of the
fixed capital stock (in percentage terms, Accuride owns fifty-one percent (51%)
of the Company's fixed capital stock, and IASA owns the remaining forty-nine
percent (49%) thereof); and copies of the certificates representing the shares
of the fixed capital stock of the Company held by Accuride, and by IASA,
respectively, are attached hereto as Exhibit D.
SECTION 3.5 Issuance of the Company's Variable Capital Stock. The Company
shall issue the variable portion of its capital stock as provided in Article IV.
SECTION 3.6 Powers of Attorney. Attached hereto in Exhibit B (as part of
the Escritura Constitutiva) are true and complete copies of all powers of
attorney that have been granted by the Company at any time from its date of
formation through the Effective Date.
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SECTION 3.7 Taxpayer Identification Number. Attached hereto as Exhibit E
is a true and complete copy of the Cedula de Identificacion Fiscal that was
issued to the Company on October 22, 1997 by the Ministry of Finance and Public
Credit, which contains the Mexican federal taxpayer identification number that
has been issued to the Company.
SECTION 3.8 PITEX Application. Attached hereto as F is a true and
complete copy of the Application filed by the Company on October 24, 1997 with
the Ministry of Commerce and Industrial Development to solicit authority for the
Company to operate under the PITEX program.
SECTION 3.9 National Supplier Application. Attached hereto as Exhibit G
is a true and complete copy of the Application filed by the Company on October
24, 1997 with the Ministry of Commerce and Industrial Development for
registration as a National Supplier under the Automotive Decree.
ARTICLE IV
Issuance of Variable Portion of the Company's Capital Stock
and Related Transactions; Initial Business Plan;
Lease of Equipment to IASA; Wheel Requirements Agreement;
Purchase of Servicios Aisa; Office Leases; Commercial
Mediator Agreements; License Agreements; Technical Services Agreements
SECTION 4.1 Issuance of the Variable Portion of the Company's Capital
Stock. At the Closing, immediately upon the execution of this Agreement, the
Shareholders and the Company shall take the actions indicated in Sections 4.1(a)
through (g), in the order indicated, in connection with the issuance of the
variable portion of the Company's capital stock.
(a) Transfer of Wheel Division Business and Assets to the Company.
IASA shall sell, bargain, transfer, convey and assign to the Company, free and
clear of any and all Security Interests, and IASA shall deliver to the Company,
all of the business and all of the assets of IASA that relate primarily to, or
that are or have been used primarily in connection with or by, the Wheel
Division (excluding only interests in real property and accounts receivable of
IASA arising from sales of Wheels produced by the Wheel Division), the
descriptions of the business and assets to be transferred to the Company under
this Section 4.1(a) to be broadly construed and to include all Wheel Division
equipment, machinery, fittings, tools, dies, jigs, hoists, furniture, personal
computers and
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all other similar and related items of tangible personalty, all Wheel
Division removable fixtures, and all Wheel Division automobiles, trucks,
tractors, trailers, forklifts and other vehicles; provided additionally, that
in the case of equipment, machinery and all other items of tangible
personalty used primarily in connection with or by the Wheel Division but
titled in the name of any Person other than IASA, or subject to any Security
Interest, IASA hereby expressly undertakes to correct all such title
deficiencies and to remove such Security Interests so as to be able to convey
to the Company good and marketable title to such assets at Closing; and
provided further, that in the case of trucks and trailers owned by IASA but
subject to any lease or other similar financing arrangement, the Company
shall have the right to take title thereto and assume the corresponding lease
obligations at any time upon at least thirty (30) Days advance Notice to
IASA, at the sole discretion of the Company; and provided further, that the
business and assets transferred by IASA to the Company under this Section
4.1(a) shall include each and every one of the following:
(i) all assets shown on the Asset List attached hereto as
Exhibit H;
(ii) all inventories of IASA relating in any manner to the Wheel
Division, including all inventories of Wheels, of raw materials and supplies, of
purchased and manufactured parts, and of goods, goods-in-progress and finished
goods ("Inventory"), provided, however, that the transfer of Inventory to the
Company under this Section 4.1(a)(ii) shall be subject to the further
requirements of Section 5.1;
(iii) all rights of IASA arising under or in connection with
any and all agreements, contracts, instruments and other binding arrangements
of or relating in any manner to the business or assets of the Wheel Division,
to the extent that the Company agrees to accept such rights, the Company
retaining the right to accept or reject such rights on a case-by-case basis,
at its sole discretion;
(iv) all original books, records, ledgers, files, correspondence,
customer and other lists, plans, equipment manuals, drawings, advertising and
promotional materials, specifications, studies, reports and all other documents
and materials, all information relating in any manner to litigation, product
warranties and claims, human resources, intellectual and industrial property,
product design, engineering, manufacturing, testing or sales, and all other
know-how, trade secrets and other business information of any kind or
description whatsoever, of or relating in any manner to the business or assets
of the Wheel Division, provided, however, that to the extent that it may be
unlawful or otherwise reasonably impractical for IASA to deliver such original
records to the Company, the delivery of exact copies thereof shall be deemed an
acceptable substitute; and
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(v) any and all other business or assets of IASA that relate
primarily to, or that are or have been used primarily in connection with, the
conceptualization, design, tooling, manufacturing, production, packaging,
marketing, sale, export, transportation or delivery of Wheels.
The parties acknowledge and agree that the fair market value of the assets
transferred ("FMVAT") by IASA to the Company in accordance with this Section
4.1(a) shall be Sixteen Million One Hundred Fifty-Seven Thousand Eight Hundred
Dollars (U.S. $16,157,800); and to evidence further the transfer to the Company
of the Wheel Division business and assets, IASA and the Company shall execute
and deliver the Asset Assignment, Purchase and Sale Agreement attached hereto as
Exhibit I, which Asset Assignment, Purchase and Sale Agreement shall govern in
the event of any conflict with this Agreement.
(b) Assumption of Certain Liabilities by the Company. At the Closing,
IASA shall assign to the Company, and the Company shall assume from IASA,
certain indebtedness of IASA, in accordance with and as more particularly
described in the following provisions of this Section 4.1(b):
(i) IASA shall assign to the Company, and the Company shall
assume from IASA, an aggregate of Two Million Five Hundred Fifty-Four Thousand
Seven Hundred Sixty-Two Dollars (U.S. $2,554,762) of indebtedness of IASA, as
follows: (A) Five Hundred Fifty-Four Thousand Three Hundred Seventy-Five Dollars
(U.S. $554,375) of indebtedness to Fina Factor, S.A. de C.V.; (B) One Million
Two Hundred Eleven Thousand Two Hundred Thirty-Four Dollars (U.S. $1,211,234) of
indebtedness to Banca Quadrum, S.A. de C.V.; and (C) Seven Hundred Eighty-Nine
Thousand One Hundred Fifty-Three Dollars (U.S. $789,153) of indebtedness to
Factoraje Bancrecer, S.A. de C.V.;
(ii) IASA shall assign to the Company, and the Company shall
assume from IASA, One Million Dollars (U.S. $1,000,000) of the trade
indebtedness of IASA to Hylsa, S.A. de C.V.;
(iii) IASA shall assign to the Company, and the Company shall
assume from IASA, an aggregate of One Million Two Hundred Thirty-Four
Thousand Six Hundred Thirty-Seven Dollars (U.S. $1,234,637) of indebtedness
of IASA, as follows: (A) Forty Thousand One Hundred Thirty-Seven Dollars
(U.S. $40,137) of indebtedness to Arrendadora Atlas, S.A. de C.V.; (B) Three
Hundred Fifty-Seven Thousand Dollars (U.S. $357,000) of indebtedness to
Arrendadora Serfin, S.A.; and (C) Eight Hundred Thirty-Seven Thousand Five
Hundred Dollars (U.S. $837,500) of indebtedness to Arrendadora Financiera
Quadrum, S.A. de C.V.;
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(iv) IASA shall assign to the Company, and the Company shall
assume from IASA, Nine Hundred Fifty-Five Thousand One Hundred Twenty-Five
Dollars (U.S. $955,125) of indebtedness of IASA to Banca Serfin, S.A.;
(v) IASA shall assign to the Company, and the Company shall
assume from IASA, a total of One Hundred Five Thousand Four Hundred Seventy-Six
Dollars (U.S. $105,476) of indebtedness of IASA to the holders of commercial
paper issued by IASA and currently outstanding; and
(vi) The Company hereby assumes contingent seniority and
severance liabilities in an aggregate amount up to, but not to exceed, Seven
Hundred Thousand Dollars (U.S. $700,000) ("Maximum Contingent Labor Liability
Assumed"), such seniority and severance liabilities, if any, being those that
otherwise would be incurred by IASA under the Mexican federal labor law as a
direct result of the transfer or dislocation of Wheel Division workers arising
from the conveyance hereunder of the business and assets of the Wheel Division
to the Company; provided additionally that the parties intend that the Maximum
Contingent Labor Liability Assumed shall include any and all liabilities of
Servicios AISA, and of Ruedas AISA, that may arise at any time, directly or
indirectly, as a result of or in connection with the transfer or dislocation of
Wheel Division workers (regardless of whether paid on a salaried or hourly
basis) due to the formation of the Joint Venture or of the Company or due to the
conveyance by IASA of the business and assets of the Wheel Division to the
Company; and the parties further intend that IASA shall be and remain solely
responsible for any and all such labor or employment-related liabilities
whatsoever, regardless of which party incurs them in the first instance, to the
extent that such liabilities exceed, individually (as reflected in Exhibit AA)
or in the aggregate, the amount of the Maximum Contingent Labor Liability
Assumed by the Company, all in accordance with and as provided under Article
VIII hereof.
The parties acknowledge and agree that the fair market value of the liabilities
assumed ("FMVLA") by the Company in accordance with this Section 4.1(b) shall be
Six Million Five Hundred Fifty Thousand Dollars (U.S. $6,550,000), consisting of
fixed liabilities in the amount of Five Million Eight Hundred Fifty Thousand
Dollars (U.S. $5,850,000) and contingent liabilities in the amount of Seven
Hundred Thousand Dollars (U.S. $700,000); and the parties further acknowledge
and agree that the fixed liabilities assumed by the Company under Sections
4.1(b)(i) through (v) shall be paid as follows and otherwise as provided in
Section 5.2: (xx) at the Closing, the Company shall execute and deliver
irrevocable instructions ("Company Bank Instructions") to Citibank Mexico, S.A.
(the "Bank") to draw immediately upon the Loan, in the name of the Company, the
sum of Five Million Eight Hundred Fifty Thousand Dollars (U.S. $5,850,000), to
pay immediately One Million Dollars (U.S. $1,000,000) of such draw directly to
Hylsa, S.A. de C.V. (which
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payment shall be deemed to satisfy fully and discharge the indebtedness
assumed by the Company under Section 4.1(b)(ii)), and to transfer immediately
the remaining portion of such draw, in the amount of Four Million Eight
Hundred Fifty Thousand Dollars (U.S. $4,850,000), to the account maintained
by IASA with the Bank; (yy) at the Closing, IASA shall execute and deliver
irrevocable instructions to the Bank ("IASA Bank Instructions") to transfer
immediately from the IASA Bank account to the bank account of IASA at The
Laredo National Bank, Laredo, Texas, account number 06-2869-0, ABA 114900313,
the sum of Four Million Eight Hundred Fifty Thousand Dollars (U.S.
$4,850,000); and (zz) at the Closing, IASA shall execute and deliver
irrevocable instructions to The Laredo National Bank to purchase Mexican
pesos with funds deposited in the above-described account and to transfer
such peso-denominated funds immediately to each of the creditors identified
in Sections 4.1(b)(i)(A) and (B) (but not C), and 4.1(b)(iii), in amounts
sufficient to discharge the peso-denominated indebtedness of IASA thereto (as
specified in letters that IASA obtained from each such creditor and delivered
to the Company prior to the Closing), respectively; provided that, to the
extent that any excess funds may remain in the IASA account at The Laredo
National Bank following the performance by that bank of IASA's instructions
thereto (as set out above), and following the full performance by IASA of all
its obligations under Section 5.2, such excess funds shall be the sole
property of IASA.
(c) Fair Market Value of Net Assets Transferred by IASA to the
Company. The parties hereby acknowledge and agree that the fair market value of
the net assets transferred by IASA to the Company in accordance with Sections
4.1(a) and (b) equals FMVAT minus FMVLA, or Nine Million Six Hundred Seven
Thousand Eight Hundred Dollars (U.S. $9,607,800) ("FMVNAT").
(d) Issuance of Note 1 and Note 2. The Company, in consideration of
its receipt and assumption of the assets and liabilities transferred to it by
IASA in accordance with Sections 4.1(a) and (b), shall issue two promissory
notes to IASA: (I) the first of which ("Note 1") shall be in the original
principal amount of Four Million Seven Hundred Seven Thousand Eight Hundred
Twenty-Two Dollars (U.S. $4,707,822), which is forty-nine percent (49%) of
FMVNAT, and otherwise in the form attached hereto as Exhibit J; and (ii) the
second of which ("Note 2") shall be in the original principal amount of Four
Million Eight Hundred Ninety-Nine Thousand Nine Hundred Seventy-Eight Dollars
(U.S. $4,899,978), which is fifty-one percent (51%) of FMVNAT, and otherwise in
the form attached hereto as Exhibit K.
(e) Issuance of Variable Capital Stock to IASA. IASA shall subscribe
for, and the Company shall issue to IASA, forty-nine percent (49%) of the shares
of the variable capital stock of the Company, the exact number of which shall be
determined by an Extraordinary Shareholders' Meeting, in consideration of which,
IASA shall cancel Note 1;
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a copy of the certificate representing the shares of the Company's variable
capital stock issued to IASA, a copy of the Minutes of the Extraordinary
Shareholders' Meeting approving the issuance thereof, and a copy of Note 1
showing the cancellation thereof, all to be attached hereto as Exhibit L.
(f) Purchase of Note 2 by Accuride. Accuride shall purchase Note 2
from IASA, and IASA shall sell, transfer, bargain, convey, assign and negotiate
Note 2 to Accuride, for the sum of Four Million Eight Hundred Ninety-Nine
Thousand Nine Hundred Seventy-Eight Dollars (U.S. $4,899,978).
(g) Issuance of Variable Capital Stock to Accuride. In the final
step leading to the further equity capitalization of the Company under this
Section 4.1, Accuride shall subscribe for, and the Company shall issue to
Accuride, fifty-one percent (51%) of the shares of the variable capital stock of
the Company, the exact number of which shall be determined by an Extraordinary
Shareholders' Meeting, in consideration of which, Accuride shall cancel Note 2;
a copy of the certificate representing the shares of the Company's variable
capital stock issued to Accuride, a copy of the Minutes of the Extraordinary
Shareholders' Meeting approving the issuance thereof, and a copy of Note 2
showing the cancellation thereof, all to be attached hereto as Exhibit M.
SECTION 4.2 Value-Added Tax Payable Upon Transfer of Assets Under Section
4.1(a); Issuance of Note 3. The parties acknowledge and agree that, as a result
of the transfer of assets by IASA to the Company in accordance with Section
4.1(a), value-added tax ("VAT"), in the amount of Mexican pesos that is
equivalent on the Closing Date to Two Million Four Hundred Twenty-Three Thousand
Six Hundred Dollars (U.S. $2,423,670), shall be collected by IASA from the
Company and paid under the VAT law to the applicable Mexican tax authorities;
and to evidence this obligation, at the Closing, the Company shall issue to IASA
a promissory note ("Note 3") in the same principal amount as the amount of the
VAT due and payable, Note 3 to be paid in full on or before December 15, 1997,
to bear interest on the unpaid principal at the same rate as that which would be
applied to IASA as a penalty for late payment of the VAT due, and otherwise to
be in the form attached hereto as Exhibit N.
SECTION 4.3 Initial Business Plan. The Company has adopted, and both
Shareholders hereby formally adopt, ratify and approve, the Initial Business
Plan of the Company attached hereto as Exhibit O, which Initial Business Plan
corresponds to the period from the date of formation of the Company through
December 31, 1998.
SECTION 4.4 Bailment of Certain Equipment. The Company shall deliver
possession to IASA, for the use of IASA (and in the event the Company transfers
Wheel
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Division equipment to any Affiliate of the Company, the Company shall cause
such Affiliate to agree to deliver possession to IASA, for the use of IASA),
and IASA shall receive from the Company or any Affiliate thereof, for nominal
consideration, certain machinery and equipment; and to evidence such bailment
the Company and IASA agree to execute and deliver at Closing the Company/IASA
Equipment Bailment Agreement attached hereto as Exhibit P, which Company/IASA
Equipment Bailment Agreement shall govern in the event of any conflict with
this Agreement.
SECTION 4.5 Wheel Requirements Agreement. IASA agrees to manufacture,
sell, supply and deliver to the Company, free and clear of any and all Security
Interests, all of the Company's requirements of Wheels; provided that the
Company shall have no obligation to purchase any minimum quantity or quantities
of Wheels, nor shall the Company have any obligation to limit its purchases of
Wheels; and provided further, that the Company and IASA shall evidence more
fully the terms and conditions of this Wheel requirements supply arrangement by
executing the form of Wheel Requirements Agreement attached hereto as Exhibit Q,
which Wheel Requirements Agreement shall govern in the event of any conflict
with this Agreement.
SECTION 4.6 Purchase of Servicios AISA. Exclusively in consideration of
the payment of Six Thousand One Hundred Ninety-Nine Dollars (U.S. $6,199) by the
Company to IASA, at the Closing, IASA shall sell, bargain, transfer, convey and
assign to the Company Forty-Nine Thousand Nine Hundred Ninety-Nine (49,999)
shares of the common stock of Servicios AISA, one (1) Peso par value per share,
duly subscribed and paid up, free and clear of any and all Security Interests;
and the Company and IASA shall evidence the terms and conditions of such stock
purchase by executing a Stock Purchase Agreement in substantially the same form
as that which is attached hereto as Exhibit R. Also at the Closing, IASA shall
deliver to the Company the books and records of Servicios AISA. Exclusively in
consideration of the payment of One Dollar (U.S. $1) by the Company's nominee
to GIR, at the Closing, GIR shall sell, bargain, transfer, convey and assign to
the Company's nominee One (1) share of the common stock of Servicios AISA, one
(1) Peso par value per share, duly subscribed and paid up, free and clear of any
and all Security Interests; and the Company's nominee and GIR shall evidence the
terms and conditions of such stock purchase by executing a form of Stock
Purchase Agreement substantially identical to that under which the Company is
acquiring the majority interest in Servicios AISA from IASA, such additional
Stock Purchase Agreement, as well as copies of the certificates evidencing the
Servicios AISA shares being acquired by the Company from IASA and those being
acquired by the Company's nominee from GIR, duly endorsed and delivered to the
Company, also to be attached hereto as part of Exhibit R.
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SECTION 4.7 San Nicolas de los Garza Office Leases. IASA shall rent and
lease to the Company and to Servicios AISA, and the Company and Servicios AISA
shall rent and lease from IASA, for Four Hundred Fifty Dollars (U.S. $450) each
per month, office space located in San Nicolas de los Garza, Nuevo Leon, Mexico;
and to evidence the terms and conditions of such leases, the Company and IASA,
and Servicios AISA and IASA, each shall execute a San Nicolas Office Lease in
substantially the same form as that which is attached hereto as Exhibit S, which
San Nicolas Office Leases shall govern in the event of any conflict with this
Agreement.
SECTION 4.8 Mexico, D.F. Office Lease. IASA shall rent and lease to
Servicios AISA, and Servicios AISA shall rent and lease from IASA, office space
located in Mexico, D.F., Mexico; and to evidence the terms and conditions of
such lease, Servicios AISA and IASA shall execute a Mexico, D.F. Office Lease in
the form attached hereto as Exhibit T, which Mexico, D.F. Office Lease shall
govern in the event of any conflict with this Agreement.
SECTION 4.9 Exclusive Commercial Mediator Agreements.
(a) The Company shall engage Accuride to act as the exclusive
commercial mediator of the Company in the United States of America and in
Canada, and to evidence such commercial mediator arrangement Accuride and the
Company shall execute, and IASA shall ratify in writing, the Exclusive United
States/Canada Commercial Mediator Agreement in the form attached hereto as
Exhibit U, which Exclusive United States/Canada Commercial Mediator Agreement
shall govern in the event of any conflict with this Agreement.
(b) Accuride shall engage the Company to act as Accuride's exclusive
commercial mediator in Mexico and elsewhere in Latin America, and to evidence
such commercial mediator arrangement the Company and Accuride shall execute, and
IASA shall ratify in writing, the Exclusive Mexico/Latin America Commercial
Mediator Agreement in the form attached hereto as Exhibit V, which Exclusive
Mexico/Latin America Commercial Mediator Agreement shall govern in the event of
any conflict with this Agreement.
SECTION 4.10 Certain Tradename and Trademark Licenses. Each of Accuride
and IASA hereby grants to the Company a non-exclusive license to use for the
Term of this Agreement its tradename and any and all trademarks it may own that
relate in any manner to products or services connected with the Wheel business;
provided, however, that the Company shall not be authorized to grant any
sublicense of any of the rights granted to the Company under this Section 4.10;
and provided further, that to evidence such licenses, Accuride and the Company
shall execute and deliver at Closing that certain Accuride
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Tradename and Trademark License, and IASA and the Company shall execute and
deliver at Closing that certain IASA Tradename and Trademark License, both
such license agreements to be attached hereto as Exhibit W.
SECTION 4.11 Accuride/Company Technical Services Agreement. Accuride
hereby agrees to render to and on behalf of the Company, and the Company hereby
agrees to receive and purchase from Accuride, the technical services set out in
the Accuride/Company Technical Services Agreement attached hereto as Exhibit X,
upon the terms and conditions described therein. Accuride and the Company
hereby agree to execute and deliver the Accuride/Company Technical Services
Agreement at Closing, and IASA hereby ratifies it in its capacity as a
Shareholder of the Company.
SECTION 4.12 IASA/Company Technical Services Agreement. IASA hereby agrees
to render to and on behalf of the Company, and the Company hereby agrees to
receive and purchase from IASA, the technical services set out in the
IASA/Company Technical Services Agreement attached hereto as Exhibit Y, upon the
terms and conditions described therein. IASA and the Company hereby agree to
execute and deliver the IASA/Company Technical Services Agreement at Closing,
and Accuride hereby ratifies it in its capacity as a Shareholder of the Company.
ARTICLE V
Certain Other Covenants
SECTION 5.1 Disposition of Usable Inventory and of Non-Usable Inventory.
Immediately upon receipt by the Company of the Inventory transferred to it by
IASA under Section 4.1(a)(ii), Accuride and IASA, acting on behalf of the
Company, reasonably shall determine the extent, if any, to which the Inventory
so received is Usable Inventory:
(a) To the extent that the Inventory received by the Company from
IASA in accordance with Section 4.1(a)(ii) is determined to be Usable Inventory,
then the Company shall accept such Usable Inventory and value it in accordance
with Section 5.1(c). If the value of such Usable Inventory is determined under
Section 5.1(c) to be: (i) less than One Million Three Hundred Thousand Dollars
(U.S. $1,300,000), then, within five (5) Days after the Closing, IASA shall pay
to the Company the amount by which the value of the accepted Usable Inventory is
less than One Million Three Hundred Thousand Dollars (U.S. $1,300,000), plus the
amount of VAT that corresponds to such payment, both in immediately available
funds; (ii) greater than One Million Three Hundred Thousand Dollars (U.S.
$1,300,000), then, within five (5) Days after the Closing, the Company shall
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pay to IASA the amount by which the value of the accepted Usable Inventory
exceeds One Million Three Hundred Thousand Dollars (U.S. $1,300,000), plus
the amount of VAT that corresponds to such payment, both in immediately
available funds; or (iii) equals One Million Three Hundred Thousand Dollars
(U.S. $1,300,000), then neither the Company nor IASA shall make any payment
to the other under this Section 5.1(a).
(b) To the extent that the Inventory received by the Company from
IASA in accordance with Section 4.1(a)(ii) is determined to be non-Usable
Inventory, then Accuride shall cause the Company to reject and return such
Inventory to IASA, whereupon IASA shall have the following two options only: (I)
IASA at its sole expense may attempt to remanufacture all or any portion of the
rejected Inventory, and to the extent that IASA chooses to do so it shall
present all such remanufactured Inventory to the Company for inspection within
forty-five (45) Days after the date of the prior rejection, whereupon, Accuride,
acting on behalf of the Company, shall determine the extent to which such
remanufactured Inventory is Usable Inventory and cause the Company to purchase
any that is, at the prices set out in Section 5.1(c), provided that all
remanufactured Inventory that is determined to be non-Usable Inventory shall be
destroyed by IASA and sold as scrap; or (ii) to the extent that IASA chooses not
to attempt to remanufacture rejected Inventory, as permitted under Section
5.1(b)(i), IASA shall destroy such rejected Inventory and sell it as scrap.
(c) For all purposes under this Section 5.1, Usable Inventory shall
be valued as follows: (I) for raw-materials Usable Inventory, at the invoice
price plus amounts paid by IASA to have the materials transported to the IASA
Plant; (ii) for Usable Inventory-in-progress, at standard cost; and (iii) for
finished-goods Usable Inventory, at standard cost of finished goods.
SECTION 5.2 Payment by IASA of Certain Indebtedness. The parties
acknowledge that the Company is assuming on the Closing Date certain amounts of
indebtedness of IASA to third parties, as provided in Sections 4.1(b)(i) through
(v). The parties further acknowledge that it has been their intent that, on the
Closing Date, the Company pay directly to the creditors named in Sections
4.1(b)(i) through (v) the amounts of indebtedness assumed by the Company under
those Sections; however, for various logistical reasons, the parties acknowledge
that, as of the Closing Date, payment of the indebtedness to Factoraje
Bancrecer, S.A. de C.V., of the indebtedness to Banca Serfin, S.A. and of the
indebtedness to the holders of certain commercial paper issued by IASA, as
reflected in Sections 4.1(b)(i)(C) and 4.1(b)(iv) and (v), respectively, may not
be feasible, notwithstanding that, upon completion of the transactions described
in Sections 4.1(b)(xx), (yy) and (zz), IASA will have obtained control of the
funds that are to be used to pay such creditors. As a result, IASA hereby
undertakes and agrees to pay, whether from its account
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at The Laredo National Bank or otherwise (and without receiving any funds
from the Company in addition to those transferred in accordance with the
Company Bank Instructions), on or before November 6, 1997 to Banca Serfin,
S.A., on or before November 14, 1997 to the holders of the commercial paper
issued by IASA, and on or before November 30, 1997 to Factoraje Bancrecer,
S.A. de C.V., respectively, in Mexican pesos, the lesser of the following
amounts: (a) the amount of peso-denominated indebtedness of IASA to the
creditor in question; or (b) the amount that, if converted to dollars by The
Laredo National Bank as of the Closing Date, would be sufficient to pay in
full the dollar-denominated indebtedness assumed by the Company under each of
Sections 4.1(b)(i)(C) and 4.1(b)(iv) and (v), respectively; provided,
however, that irrespective of whether amounts actually paid by IASA under
this Section 5.2 to the creditors named in Sections 4.1(b)(i)(C) and
4.1(b)(iv) and (v) are sufficient to discharge the underlying indebtedness of
IASA thereto, all indebtedness assumed by the Company under Sections
4.1(b)(i) through (v) shall be deemed paid in full and discharged when the
Bank performs the Company Bank Instructions; and provided further, that on
each of November 6, 1997 (with respect to the indebtedness to Banca Serfin,
S.A.), November 14, 1997 (with respect to the indebtedness to the holders of
the IASA commercial paper), and November 30, 1997 (with respect to the
indebtedness to Factoraje Bancrecer, S.A. de C.V.), IASA shall deliver to the
Company a Notice stating either that it has paid in full and discharged
IASA's liability to the creditor in question (in which case IASA shall attach
to the Notice a carta finiquito issued by that creditor with respect to the
discharged liability) or, if IASA has not paid in full and discharged such
liability, the Notice shall state the amount actually by IASA to the creditor
in question through the date of the Notice.
SECTION 5.3 Assignment of Certain Distribution and Sales Agency
Agreements. IASA shall assign to the Company all written distribution and sales
agency agreements ("Distribution Agreements") in effect currently between IASA
and any Latin American distributor or other sales agent of Wheels. The Company,
on a case-by-case basis and for good cause only, may refuse to accept assignment
of any one or more such Distribution Agreements. To the extent that the Company
agrees to accept assignment of any particular Distribution Agreement, the
Company shall refrain from terminating it during the Company's first Fiscal
Year. In every case, IASA shall be and remain solely responsible for any and
all costs and liabilities arising in connection with the assignment to the
Company of, or the modification or termination of, any such Distribution
Agreements.
SECTION 5.4 Future Annual Business Plans. Beginning September 15, 1998
and continuing each September 15 thereafter throughout the Term of this
Agreement, the Company shall prepare and propose that the Board adopt, and that
each Shareholder ratify, the Company's Annual Business Plan for the following
Fiscal Year. Each such Annual
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Business Plan shall consist of a one-year operating plan, a three-year
capital expenditure plan, and a five-year strategic plan.
SECTION 5.5 Right of First Refusal Regarding Certain Future Business
Opportunities Anywhere in Latin America Other Than Mexico.
(a) If Accuride or IASA at any time during the Term of this Agreement
desires to develop or otherwise pursue any opportunity to acquire an existing
wheelmaking business, to form, create or otherwise participate directly or
indirectly in a new or existing wheelmaking joint venture, or to build,
construct, finance or otherwise participate directly or indirectly in any
greenfield wheelmaking plant, anywhere in Latin America other than Mexico, then
that Shareholder first shall be required to offer to share such opportunity with
the other Shareholder upon the same Percentage Interests and other terms and
conditions that are set out in this Agreement with respect to the Company. The
Shareholder desiring to take advantage of such opportunity shall notify the
other Shareholder thereof in writing, and shall include with such Notice a
written description and explanation of all terms, conditions and other
information reasonably necessary to permit the reviewing Shareholder to evaluate
whether to pursue the opportunity, and an irrevocable letter of credit confirmed
by a reasonably acceptable commercial bank in the same country as that where the
opportunity is located, guaranteeing the availability of the funds necessary for
the offering Shareholder to pursue the opportunity. The reviewing Shareholder
shall respond in writing to the offering Shareholder not later than twenty (20)
Days after receipt of such Notice, and in the responding Notice the reviewing
Shareholder in good faith shall state whether it desires to pursue the
opportunity, and if so, the responding Notice shall be accompanied by an
irrevocable letter of credit confirmed by a reasonably acceptable commercial
bank in the same country as that where the opportunity is located, guaranteeing
the availability of the funds necessary for the reviewing Shareholder to pursue
the opportunity.
(b) If the reviewing Shareholder is unable or does not wish to pursue
the opportunity, or if the reviewing Shareholder does not respond as required
within the twenty (20) Day period, then the offering Shareholder shall be free
to pursue the opportunity itself, alone or in combination with any third party
or parties; provided, however, that the following shall constitute conditions
precedent to the participation in, or other pursuit by, either Shareholder of
any such Latin American wheelmaking plant acquisition, joint venture or
greenfield plant outside Mexico: (I) the Shareholder desiring to pursue such
opportunity shall obtain a written agreement reasonably acceptable in form to
Accuride and providing that Accuride shall be the sole and exclusive sales and
distribution agent in the United States of America and Canada for all products
manufactured by such new wheelmaking acquisition, joint venture or greenfield
plant; and (ii) the Shareholder
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desiring to pursue such opportunity shall obtain a written agreement
reasonably acceptable in form to the Company and providing that the Company
shall be the sole and exclusive sales and distribution agent in Mexico for
all products manufactured by such new wheelmaking acquisition, joint venture
or greenfield plant.
SECTION 5.6 Exclusivity of the Joint Venture's Wheel Operations in Mexico.
During the Term of this Agreement, each of Accuride, IASA and GIR shall conduct
any and all business activities in Mexico that are within the scope of the Joint
Venture exclusively through the Company, and each of Accuride, IASA and GIR
hereby agrees to cause each of its respective subsidiaries and other controlled
Affiliates to do likewise; but nothing in this Section 5.6 shall modify or have
any effect whatsoever upon the obligations of the parties specified in Article X
of this Agreement; and provided further that, notwithstanding the foregoing,
this Section 5.6 shall not be construed to limit the business activities of
Distribuidora Automotriz Ramirez, S.A. de C.V., a Mexican corporation ("DIARSA")
and subsidiary of Trailers de Monterrey, S.A. de C.V., a Mexican corporation and
subsidiary of GIR, to the extent that DIARSA's activities consist of operating
retail outlets in Mexico at which Wheels are offered for sale and sold, so long
as such offers and sales are made only to end-users and small retailers known
in the trade as "sub-distributors," and not to vehicle manufacturers or Wheel
distributors.
SECTION 5.7 Exclusive Option to Purchase Majority Interest in Ruedas AISA.
IASA and GIR hereby grant to the Company and its nominee the exclusive option
("Option") to purchase and acquire upon demand, at any time before December 31,
2005, Fifty Thousand (50,000) shares (which is and shall remain one hundred
percent (100%)) of the issued and outstanding shares of the capital stock of
Ruedas AISA, duly subscribed and paid up, free and clear of any and all Security
Interests, for the sum of Six Thousand Two Hundred Dollars (U.S. $6,200) to be
paid by the Company and its nominee to IASA upon the exercise of the Option; and
upon any such exercise of the Option, the parties shall execute a Stock Purchase
Agreement in substantially the same form as that set out in Exhibit R with
respect to the Company's purchase of shares in Servicios AISA, to evidence the
terms and conditions of the purchase of the Ruedas AISA shares.
SECTION 5.8 Agreement to Grant License of Company-Developed Technology.
Upon demand by any Shareholder at any time during the Term of this Agreement,
the Company shall grant to such Shareholder a non-exclusive, paid-up,
royalty-free license to use any and all patents, inventions and other
technology, if any, developed by and proprietary to the Company; provided,
however, that the Company shall not be authorized to grant any such license to
any Person or Persons other than the Shareholders, and no Shareholder may grant
any sublicense thereof to any other Person without the prior written consent of
the other Shareholder.
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SECTION 5.9 Purchase of Wheelmaking Equipment by the Company from
Accuride. As contemplated under the Initial Business Plan, the Company shall
purchase from Accuride certain wheelmaking equipment ("Wheelmaking Equipment"),
which is more particularly described in Exhibit Z attached hereto; and to
evidence such purchase of the Wheelmaking Equipment, Accuride and the Company
shall execute an instrument transferring title to the Company upon the following
terms and conditions: (a) the purchase price shall be Two Million Dollars (U.S.
$2,000,000); and (b) the purchase price shall be paid in full not later than one
hundred twenty (120) Days following installation of the Wheelmaking Equipment by
the Company as contemplated under the Initial Business Plan. Upon completion of
the purchase, the Wheelmaking Equipment shall be included in the list of items
delivered in bailment by the Company to IASA, as provided under Section 4.4,
under the Company/IASA Equipment Bailment Agreement.
SECTION 5.10 Agreements Between the Company and a Shareholder. The
Company may enter into and make any agreement with either or both of the
Shareholders for any purpose; provided that any and all such agreements shall be
effected on an arm's-length basis only, with terms no less than favorable to the
Company than those that could be obtained through negotiations with unrelated
third parties, and all such agreements that are not contemplated in the Annual
Business Plan corresponding to the timing of such agreement shall require the
written approval of both Shareholders.
SECTION 5.11 Covenant to Maintain Ruedas AISA Free of Indebtedness; Sole
Exception. During the Term of this Agreement, IASA and GIR covenant and agrees
to keep and maintain Ruedas AISA free and clear of any indebtedness of any kind
to any Person, except such seniority and severance liabilities as may arise
under the Mexican federal labor law in the ordinary course of Ruedas AISA's
business.
SECTION 5.12 Potential Future Reimbursement of Import Duties. In the event
that the Company's PITEX program is not amended, and if, as a result, IASA
incurs and actually pays, under applicable Mexican customs laws, import duties
with respect to any of the assets transferred by IASA to the Company under
Section 4.1(a), then the Company shall reimburse such amount or amounts to IASA.
ARTICLE VI
Closing
SECTION 6.1 Closing. The Closing of all transactions contemplated under
this Agreement shall occur on November 5, 1997 the ("Closing Date"), at the
offices of IASA,
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Avenida Universidad, 1011 Norte, Planta Baja, San Nicolas de los Garza, Nuevo
Leon, Mexico.
(a) At the Closing, Accuride, IASA, GIR and the Company shall execute
and deliver to each other, and to certain third parties (to the extent
applicable), original counterparts of the following documents:
(i) this Agreement;
(ii) the Asset Assignment, Purchase and Sale Agreement, and an
invoice attaching a list of all assets transferred thereunder;
(iii) Note 1 (to be issued and canceled at the Closing);
(iv) Note 2 (to be issued and canceled at the Closing);
(v) Minutes of the Extraordinary Shareholders' Meeting of the
Company approving the issuance to Accuride of 38,250,000 shares of the Company's
variable capital common stock, and approving the issuance to IASA of 36,750,000
shares of the Company's variable capital common stock;
(vi) Share certificate evidencing the issuance to Accuride of
38,250,000 shares of the Company's variable capital common stock;
(vii) Share certificate evidencing the issuance to IASA of
36,750,000 shares of the Company's variable capital common stock;
(viii) Note 3;
(ix) the Company/IASA Equipment Bailment Agreement;
(x) the Wheel Requirements Agreement;
(xi) the Stock Purchase Agreement whereby the Company will
purchase 49,999 shares of the capital stock of Servicios AISA from IASA; the
Stock Purchase Agreement whereby the Company will purchase 1 share of the
capital stock of Servicios AISA from GIR; the share certificates evidencing a
total of 50,000 shares of the capital stock of Servicios AISA, duly endorsed by
IASA and GIR for transfer to the Company and the Company's nominee,
respectively; and all books and records of Servicios AISA;
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(xii) the San Nicolas Office Leases;
(xiii) the Mexico, D.F. Office Lease;
(xiv) the Exclusive United States/Canada Commercial Mediator
Agreement;
(xv) the Exclusive Mexico/Latin America Commercial Mediator
Agreement;
(xvi) the Accuride Tradename and Trademark License;
(xvii) the IASA Tradename and Trademark License;
(xviii) the Accuride/Company Technical Services Agreement; and
(xix) the IASA/Company Technical Services Agreement.
(b) At the Closing, the Company shall execute and deliver to Citibank
Mexico, S.A. (the "Bank") the Loan Documents and the Company Bank Instructions,
irrevocably instructing the Bank to draw upon the Loan in the name of the
Company and to make the transfers described in Section 4.1(b)(xx);
(c) At the Closing, IASA shall execute and deliver to the Bank the
IASA Bank Instructions, irrevocably instructing the Bank to draw upon funds from
the Bank account of IASA and to make the transfers described in Section
4.1(b)(yy);
(d) At the Closing, IASA shall execute and deliver to The Laredo
National Bank instructions irrevocably instructing it to draw upon funds from
the account of IASA therewith and to make the transfers described in Section
4.1(b)(zz);
(e) At the Closing, IASA shall obtain and deliver to the Company any
and all documents ("Security Interest Releases") necessary or appropriate, in
the sole judgment of the Company: (I) to remove, release, terminate and render
of no further force and effect, any and all Security Interests then encumbering
title to any of the assets that are to be transferred to the Company under the
Asset Assignment, Purchase and Sale Agreement, subject only to recording such
Security Interest Releases in the appropriate Public Registries of Property; and
(ii) to invoice and otherwise transfer to the Company, free and clear of any and
all Security Interests, title to any and all of the assets subject to the Asset
Assignment, Purchase and Sale Agreement as to which IASA did not actually hold
title
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prior to the Closing (such as, for example, equipment or machinery titled in
the name of an equipment lease company), as well as all appropriate invoices
to IASA from the previous titleholders thereof; and
(f) At the Closing, Accuride shall wire transfer the sum of Four
Million Eight Hundred Ninety-Nine Thousand Nine Hundred Seventy-Eight Dollars
($4,899,978) to IASA's account at The Laredo National Bank, Laredo, Texas,
account number 06-2869-0, ABA 114900313, which shall pay in full and discharge
Accuride's obligation with respect to the purchase of Note 2 from IASA, as
provided in Section 4.1(f).
ARTICLE VII
Management; Surveillance
SECTION 7.1 Composition and Functions of The Board of Directors. The
Board of Directors of the Company ("Board") shall be constituted and shall
function as follows, and otherwise as provided in Chapter Fourth of the Bylaws:
(a) The Board shall have five (5) members, three (3) of whom shall be
elected by Accuride, and the other two (2) of whom shall be elected by IASA.
Alternate Directors shall be elected in the same manner.
(b) Accuride shall designate one of the Directors it elects to serve
as Chairman of the Board.
(c) IASA shall designate the Secretary of the Board, who may or may
not be a member of the Board; provided that no individual shall be eligible to
serve as Secretary of the Board unless he or she is a continuing full-time
employee of IASA or of GIR.
(d) The Board shall hold regularly scheduled Board meetings every two
(2) months, and otherwise as may be required in accordance with Article
Fifteenth of the Bylaws.
(e) The Shareholder that appoints a Director shall pay all costs
associated with that Director's serving on the Board. The Company shall not
compensate Directors for their service as Directors.
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(f) The initial Board shall consist of the following individuals:
William P. Greubel, Jr. (Chairman), Robert J. Fagerlin and H. Larry Taylor,
appointed by Accuride; and Gregorio Ramirez Jauregui and Juan Antonio
Trevino, appointed by IASA. The initial Secretary of the Board shall be Lic.
Jose Andres Garza Tamez (who shall serve as Secretary only, but shall not be
a member of the Board), appointed by IASA, and the initial Assistant
Secretary shall be H. Larry Taylor.
SECTION 7.2 Board Meetings - Location, Quorum Requirements. Board
meetings may be held anywhere, both within the Republic of Mexico and abroad, as
determined by the Board in accordance with the Bylaws. The presence of at least
three (3) Directors or their respective Alternates shall be required in order
for the Board to act at any Board meeting.
SECTION 7.3 Actions by the Board. All actions of the Board shall be taken
only upon the affirmative vote of at least three (3) Directors or their
respective Alternates; provided, however, that in order to be duly adopted, each
of the following actions shall require the affirmative vote of at least four (4)
Directors or their respective Alternates:
(a) approval of the Annual Business Plan;
(b) contracting indebtedness in an amount that would cause the
Company's total indebtedness to exceed, by at least twenty-five percent (25%) at
any time during the Fiscal Year, the debt limit set out in the corresponding
Annual Business Plan;
(c) any sale of equipment that would cause the aggregate annual
amount of such sales to exceed seven percent (7%) of the inflation-adjusted book
value of the Company's total assets at the time of sale;
(d) approval of any material deviation from the Company's operating
plan or capital expenditure plan;
(e) approval of any settlement of any lawsuit or administrative
proceeding to which the Company is a party and to which any agency, department,
ministry or instrumentality of the United Mexican States or of the State of
Nuevo Leon or of any Municipality located in the State of Nuevo Leon also is a
party, or with respect to which the Company proposes to pay any amount in excess
of One Million Dollars (U.S. $1,000,000) for the purpose of settlement; and
(f) approval of any agreement between the Company and any Shareholder
that is not contemplated in the Annual Business Plan.
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Every resolution of the Board shall indicate the manner in which the actions
taken by it shall be implemented.
SECTION 7.4 Officers.
(a) Accuride shall have exclusive authority to appoint and to remove
the Company's Director General, at Accuride's sole discretion. The Director
General may be and remain an employee of Accuride. The initial Director General
of the Company shall be Robert J. Fagerlin, who shall be authorized to act on
behalf of the Company as set out in the corresponding Power of Attorney attached
hereto under Exhibit B. Each and every individual who may be appointed in the
future by Accuride as Director General of the Company shall be granted a power
of attorney at least as broad as that granted to the initial Director General.
Accuride shall have the right, at its expense, to pay compensation to the
Director General in excess of any budgeted or suggested Director General
compensation set out in the Initial Business Plan or in any future Annual
Business Plan.
(b) Accuride shall have exclusive authority to appoint and to remove
the Company's Director of Finance, at Accuride's sole discretion. The Director
of Finance may be and remain an employee of Accuride. The initial Director of
Finance shall be designated by Accuride in a Notice to be delivered to the
Company and IASA for such purpose as soon as reasonably practicable following
the Closing. The initial Director of Finance shall be authorized to act on
behalf of the Company as set out in the Power of Attorney granted to the
Director General and attached hereto under Exhibit B. Each and every individual
who may be appointed in the future by Accuride as Director of Finance shall be
granted a power of attorney at least as broad as that granted to the initial
Director of Finance. Accuride shall have the right, at its expense, to pay
compensation to the Director of Finance in excess of any budgeted or suggested
Director of Finance compensation set out in the Initial Business Plan or in any
future Annual Business Plan.
(c) The Board shall have authority to create, to appoint individuals
to, and to remove individuals from, any other office of the Company.
SECTION 7.5 General Shareholders' Meetings.
(a) The general meetings of Shareholders constitute the supreme
authority of the Company and, therefore, have unlimited powers to resolve and
ratify the acts and operations of the Company. Resolutions of general
Shareholders' meetings shall be carried out by the Chairman of the Board, unless
such power specifically is delegated by the Shareholders to another individual.
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(b) General Shareholders' meetings may be Ordinary Shareholders'
Meetings or Extraordinary Shareholders' Meetings. All Shareholders' meetings
must be held at the Company's domicile.
(c) Written resolutions adopted by unanimous decision of the
Shareholders, if confirmed in a dated document signed by each Shareholder or a
duly authorized representative thereof, shall be valid and have the same legal
effect as if such resolutions had been adopted at a duly convened Shareholders'
meeting. Such resolutions shall be signed by the Secretary or by the Assistant
Secretary of the Company and be transcribed in the minute book of the
proceedings of the Shareholder's meetings. The Secretary or the Assistant
Secretary shall deliver a certified copy of all such resolutions to the
Examiners of the Company. Enclosures relating thereto, if any, shall be
attached to the corresponding file.
(d) Ordinary Shareholders' Meetings shall be held at least once every
year, within the first four (4) months of the Fiscal Year, and shall resolve on
the following matters: (I) to discuss, approve or modify the report of the Board
referred to in Article 172 of the General Law of Business Organizations, based
upon the report of the Examiners; (ii) to appoint the Directors and their
Alternates, and the Examiners and their Alternates, as provided in the Bylaws;
(iii) to determine the remuneration, if any, that will be paid to the Directors
and to the Examiners; and (iv) to determine any matter not reserved to
Extraordinary Shareholders' Meetings.
(e) Extraordinary Shareholders' Meetings may be called and held at
any time, in accordance with the Bylaws, to consider any of the matters listed
in Article 182 of the General Law of Business Organizations. Any of the matters
listed in Section 7.3(a) through (f) shall be considered by an Extraordinary
Shareholders' Meeting if submitted thereto.
(f) General Shareholders' Meetings, both Ordinary Shareholders'
Meetings and Extraordinary Shareholders' Meetings, may be held only upon a call
by the Board or by the Examiners, in accordance with Articles 166 and 184, or as
provided in Article 185, of the General Law of Business Organizations.
(g) The call Notice for a general Shareholders' meeting must indicate
the date, time and place for the meeting, state the specific purpose or purposes
for which the meeting is called, provide an agenda for the meeting, and state
whether it is a first, second or later call; and the call Notice must be signed
by the person issuing it. Call Notices must be published in a newspaper of
large circulation in the domicile of the Company at least fifteen (15) Days in
advance of the proposed date of the meeting if it is a first call; and if it
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is a second call, the Notice must be published within the fifteen (15) Day
period following the proposed date set for the meeting indicated in the first
call and at least five (5) Days in advance of the new proposed date for the
meeting. Call Notices for general Shareholders' meetings shall be delivered
to the Shareholders at their corresponding addresses recorded in the
Company's Stock Registry Book. Each call Notice shall be delivered by hand,
by telefax with acknowledgment of receipt or by courier service, at least
fifteen (15) Days prior to the date of the meeting if on first call, or at
least five (5) Days prior to the date of the meeting if on second call.
Notices shall be effective upon actual receipt at the domicile of the
addressee as shown in the Stock Registry Book.
(h) Notwithstanding Section 7.5(f), if all shares of the capital
stock are represented at a Shareholders' meeting, said meeting shall be deemed
validly held without any prior call.
(i) In order for an Ordinary Shareholders' Meeting to be legally
convened upon first call, at least sixty percent (60%) of the issued and
outstanding shares of the capital stock, duly subscribed and paid up, must be
represented thereat. In the event an Ordinary Shareholders' Meeting cannot be
held on the date fixed for such purpose, a second call shall be made stating the
circumstances thereof. In order for an Ordinary Shareholders' Meeting to be
legally convened upon second or subsequent calls, at least fifty percent (50%)
of the issued and outstanding shares of the capital stock, duly subscribed and
paid up, must be represented thereat. Resolutions shall be validly adopted at
Ordinary Shareholders' Meetings only upon the affirmative vote of Shareholders
representing a majority of the issued and outstanding shares of the capital
stock.
(j) In order for an Extraordinary Shareholders' Meeting to be legally
convened upon first call, at least seventy-five percent (75%) of the issued and
outstanding shares of the capital stock, duly subscribed and paid up, must be
represented thereat. In the event an Extraordinary Shareholders' Meeting cannot
be held on the date fixed for such purpose, a second call shall be made stating
the circumstances thereof. In order for an Extraordinary Shareholders' Meeting
to be legally convened upon second or subsequent calls, at least fifty percent
(50%) of the issued and outstanding shares of the capital stock, duly subscribed
and paid up, must be represented thereat. Resolutions shall be validly adopted
at Extraordinary Shareholders' Meetings only upon the affirmative vote of
Shareholders representing more than fifty percent (50%) of the issued and
outstanding shares of the capital stock; except, however, that the affirmative
vote of Shareholders representing at least sixty percent (60%) of the issued and
outstanding shares of the capital stock, duly subscribed and paid up, shall be
required to approve any amendment to or other modification of the Bylaws, to
approve any capital increase as a result of future capital contributions of any
Shareholder, and to approve any of the matters listed
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in Section 7.3(a) through (f) that may be submitted for consideration by an
Extraordinary Shareholders' Meeting.
(k) If at a duly convened Shareholders' meeting it is not possible to
resolve on all matters listed in the agenda, due to lack of time, the meeting
may be adjourned and be continued on the next business day, without the need of
a new call.
(l) At all Shareholders' meetings, each Shareholder shall be entitled
to one (1) vote for each share of the capital stock held thereby.
(m) In order for Shareholders to be admitted to Shareholders'
meetings, their names must be recorded in the Stock Registry book as the owners
of the shares represented.
(n) Any Shareholder may be represented at a Shareholders' meeting by
an attorney-in-fact pursuant to a special power of attorney, for which a plain
letter proxy shall suffice.
(o) In order for resolutions to be validly adopted at any
Shareholders' meeting, they must concern and be within the scope of the matters
listed in the agenda of said meeting.
(p) The Chairman shall designate one or more of the Shareholders or
their representatives to act as Tellers, in order for the same to determine
whether the required quorum is present to hold the Shareholders' meeting in
question.
(q) The Secretary or the Assistant Secretary shall attend all
Shareholders' meetings and record minutes of the proceedings of said meetings in
a minute book or books to be kept for such purpose. Minutes shall be prepared
for all Shareholders' meetings, including those not held due to a lack of
quorum. The minutes of each Shareholders' meeting shall be reviewed and signed
by the individuals acting as the Chairman and as the Secretary of the meeting,
by the attending Examiners, and by any duly authorized representative of a
Shareholder who wishes to do so. The documents that evidence that the calls
were made under the terms set forth in the Bylaws, as well as the attendance
list and any other document presented to the meeting, shall be attached to the
minutes. The Secretary and the Assistant Secretary shall have custody of the
minute book of Shareholders' meetings, the Stock Registry Book, and related
books and records. Upon request by any Shareholder, the Secretary or the
Assistant Secretary shall issue copies of the recordings and entries contained
in such books and permit any Shareholder to review them.
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SECTION 7.6 Surveillance of the Company. The surveillance of the
Company's affairs shall be entrusted to two (2) Examiners, and in their absence
to Alternate Examiners, who shall be appointed and have the powers and duties as
specified in Chapter Sixth of the Bylaws. The reasonable and customary fees and
other expenses of the Examiners shall be borne by the Company.
ARTICLE VIII
Labor Matters
SECTION 8.1 Labor Plan. Attached hereto as Exhibit AA is the Company's
Labor Plan, which: (a) identifies the name and title of all personnel who
currently are employed by Servicios AISA; (b) sets out, alongside the name of
each employee of Servicios AISA the maximum amounts (in United States dollars)
of the contingent severance and seniority liabilities that the parties agree
that the Company is assuming under Section 4.1(b)(vi) with respect to that
individual; and (c) defines the expected future numbers and positions of
individuals, and fixes the maximum number of individual who are expected to be
employed by Servicios AISA or any other Mexican services company that in the
future may be owned or controlled by the Company, based upon the Company's
projection of demand for its products and of the schedule for completion of the
Company Facility referred to in Article IX. Subject to the limitation on
employment levels that are reflected in the Labor Plan, the parties currently
contemplate that Servicios AISA and possibly other services companies that may
be owned or controlled in the future by the Company will employ over time the
individuals who are employed in the business of the Wheel Division as of the
Effective Date of this Agreement.
SECTION 8.2 Costs Associated with the Transfer or Dislocation of Wheel
Division Personnel. Notwithstanding Sections 4.1(b)(vi) and 8.1, IASA and GIR,
jointly and severally, shall effect, and pay all costs attributable to or
incurred or to be incurred in connection with, the transfer or other dislocation
of Wheel Division personnel, whether as a direct or indirect result of the
formation of the Joint Venture or of the establishment of the Company, or of the
transfer of employees from IASA to Servicios AISA or to Ruedas AISA or to any
other services company, including any and all severance, seniority, pension (if
any) and other similar or related benefits or payments that may be required in
accordance with any applicable labor or employment or other contracts or
agreements or pursuant to applicable Mexican laws, statutes, codes, rules and
regulations; provided that, consistent with Sections 4.1(b)(vi) and 8.1, the
Company shall be contingently responsible for the amount of severance and
seniority liabilities listed in Exhibit AA and corresponding to
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particular employees of Servicios AISA; and in no event shall the aggregate
of such contingent liabilities assumed by the Company exceed the Maximum
Contingent Labor Liability Assumed.
ARTICLE IX
Future Production Facilities
SECTION 9.1 Future Production Facilities. As contemplated in the Initial
Annual Business Plan, the Company plans to construct a new manufacturing
facility ("Company Facility") in the State of Nuevo Leon, to serve as its
principal source of Wheel production. The Shareholders contemplate that such
Company Facility should be ready for operation not later than April 1999.
ARTICLE X
Protection of Confidential Information;
Damages for Breach
SECTION 10.1 Protection of Confidential and Proprietary Information of the
Company. The parties acknowledge and agree that the prospects for the present
and future success of the Joint Venture depend upon the protection by the
Company, Accuride, IASA and GIR of the confidential and proprietary business
information, trade secrets, technology and know-how ("Confidential Information")
of the Company, irrespective of the manner in which the Company may obtain it
(e.g., whether developed independently by the Company, obtained from the
Shareholders, or otherwise); and each of the parties acknowledges and agrees
that irreparable harm to the Company will result if any Confidential Information
of the Company is disclosed to any Person that is neither a party to this
Agreement nor a duly authorized representative or agent of any Person that is a
party hereto, or if any of the parties uses Confidential Information anywhere
within the Republic of Mexico for any purpose or in any context other than in
connection with and for the purpose of advancing the legitimate interests of the
Company.
SECTION 10.2 Certain Covenants Regarding the Treatment of Confidential
Information Generally. For the reasons stated in Section 10.1, each the parties
hereby covenants and agrees that it and each and every one of its officers,
directors, partners, members, shareholders, consultants, advisors, lawyers,
accountants, employees, agents and
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other representatives ("Representatives"), during the period commencing as of
the Effective Date and ending three (3) years following any termination of
this Agreement, shall:
(a) not disclose any Confidential Information of the Company or of
any other party to this Agreement to any Person who is not a party to this
Agreement or a duly authorized Representative of any party hereto; and
(b) maintain and protect, and cause each and every Representative and
other Person under its control to maintain and protect, the confidentiality,
secrecy, integrity and quality of the Confidential Information at issue.
Each party hereto shall be liable for any failure of strict compliance with this
Section 10.2, whether by the party itself or by any of its Representatives;
notwithstanding the foregoing, however, no party shall be held liable for any
unauthorized disclosure of or failure to protect Confidential Information under
this Section 10.2 in cases where: (I) at the time of disclosure, such
Confidential Information was available to the general public in a manner not
involving any breach of this Agreement or of any other Agreement between the
parties, thus rendering such information no longer truly confidential; or (ii)
the information was made available to the disclosing party by a Person not bound
by any covenant of confidentiality with any of the parties hereto with respect
thereto; or (iii) disclosure was compelled by applicable law or the order of any
court of competent jurisdiction.
SECTION 10.3 Certain Activities Deemed Unauthorized Use of Confidential
Information to the Detriment of the Company. Each of Accuride, IASA and GIR
covenants and agrees that, during the period beginning on the Effective Date and
ending three (3) years after any termination of this Agreement, if it or any of
its respective Affiliates (except DIARSA, to the extent that DIARSA operates as
required under Section 5.6) engages, directly or indirectly (other than through
the Company), anywhere within the territory of the United Mexican States, in any
activity or operation involving or relating in any manner whatsoever to
designing, manufacturing, testing, marketing, dealing in, importing, exporting,
selling or distributing Wheels, then such activity or operation shall be deemed
automatically to constitute: (a) an unauthorized use of Confidential Information
of the Company, and therefore a breach of this Agreement; and (b) an injury to
the Company, with no requirement of proof of actual damages, which injury may be
compensated only upon assessment and payment of the damages described in Section
10.4.
SECTION 10.4 Damages for Breach of Covenant to Refrain from Activities
Constituting Unauthorized Use of Confidential Information to the Detriment of
the Company. Any breach of the covenant in Section 10.3 to refrain from making
any unauthorized use of the Confidential Information of the Company shall
empower the
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Company or the non-breaching Shareholder or Shareholders to claim and obtain
damages from the breaching party as follows:
(a) the Company shall have the right to recover damages from the
breaching party in either of the following amounts, as appropriate: (I) if both
Accuride and IASA were Shareholders of the Company at the time of the breach,
Five Million Dollars (U.S. $5,000,000); or (ii) if only one of Accuride and IASA
was a Shareholder of the Company at the time of the breach, Two Million Five
Hundred Thousand Dollars (U.S. $2,500,000); or
(b) at the sole discretion of at least one Shareholder that has not
breached Section 10.3, and in lieu of the remedy stated in Section 10.4(a), each
non-breaching Shareholder shall have the right to recover directly from the
breaching party the amounts that correspond to the Percentage Interest of such
Shareholder multiplied by the appropriate amount in either Section 10.4(a)(i) or
(ii).
ARTICLE XI
Indemnification and Insurance
SECTION 11.1 General Indemnification of Accuride and the Company by IASA
and GIR. In addition to the other indemnifications under this Article XI, IASA
and GIR, jointly and severally, shall indemnify, defend and save and hold
harmless Accuride, the Company, and their respective officers, directors,
employees and other agents, jointly and severally, from and against any and all
losses, liabilities, adverse claims, causes of action, damages, demands,
contingencies, settlements, fines, assessments, penalties, charges, costs,
obligations and expenses of every kind and description whatsoever (including,
without limitation, attorneys' fees and litigation, arbitration and other
dispute resolution costs), whether known or unknown, foreseen or unforeseen, or
foreseeable or unforeseeable ("Loss"), arising directly or indirectly from, as a
result of or otherwise in connection with the past operations of IASA or the
Wheel Division, the present operations of IASA, the transfer of the business and
assets of the Wheel Division to the Company and the Company's use and employment
thereof in its business, the transfer of any Wheel Division employees to
Servicios AISA and the purchase by the Company and its nominee of Servicios
AISA, the transfer of any Wheel Division employees to Ruedas AISA and any
purchase by the Company of any interest therein, or directly or indirectly from,
as a result of or otherwise in connection with any use by the Company of land or
buildings owned or controlled or previously owned or controlled by IASA or GIR
or any subsidiary or other
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Affiliate thereof, and, without limiting the generality of the foregoing,
irrespective of whether any such Loss arises in the form of damages for
breach of this Agreement or of any of the Exhibits, damages or Security
Interests for unsatisfied contractual obligations to third parties, unpaid
taxes, obligations arising under the Mexican federal labor or other laws or
in accordance with any applicable labor, employment or other contracts or
agreements, or otherwise. The indemnity obligations under this Section 11.1
shall be construed and applied in the broadest manner permitted under
applicable law and shall survive any termination of this Agreement for so
long as it remains possible that any Person indemnified under this Section
11.1 may incur any Loss or Losses of the kind described or referred to
herein.
SECTION 11.2 Products Liability and Warranty Indemnification of Accuride
and the Company by IASA and GIR. In addition to the other indemnifications
under this Article XI, IASA and GIR, jointly and severally, shall indemnify,
defend and save and hold harmless Accuride, the Company and their respective
officers, directors, employees and other agents, jointly and severally, from and
against any and all Losses arising directly or indirectly from, as a result of
or otherwise in connection with any products liability claim, warranty claim, or
both, relating in any way to Wheels manufactured by IASA, except Wheels
manufactured and delivered to the Company under the Wheel Requirement Agreement.
The indemnity obligations under this Section 11.2 shall be construed and applied
in the broadest manner permitted under applicable law and shall survive any
termination of this Agreement for so long as it remains possible that any Person
indemnified under this Section 11.2 may incur any Loss or Losses of the kind
described or referred to herein.
SECTION 11.3 Environmental Indemnification of Accuride and the Company by
IASA and GIR. In addition to the other indemnifications under this Article XI,
IASA and GIR, jointly and severally, shall indemnify, defend and save and hold
harmless Accuride, the Company and their respective officers, directors,
employees and other agents, jointly and severally, from and against any and all
Losses relating to or arising in any manner out of any matter involving
contamination or pollution of any land, site, surface water, ground water, air
or soil, or of equipment or machinery, or of buildings and other structures of
any kind, located at the IASA Plant or in the vicinity thereof.
SECTION 11.4 Products Liability and Warranty Indemnification of IASA and
GIR by Accuride. Accuride shall indemnify, defend and save and hold harmless
IASA, GIR and their respective officers, directors, employees and other agents,
jointly and severally, from and against any and all Losses arising directly or
indirectly from, as a result of or otherwise in connection with any products
liability claim, warranty claim, or both, relating in any way to Wheels
manufactured by Accuride. The indemnity obligations under this Section
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11.4 shall be construed and applied in the broadest manner permitted under
applicable law and shall survive any termination of this Agreement for so
long as it remains possible that any Person indemnified under this Section
11.4 may incur any Loss or Losses of the kind described or referred to
herein.
SECTION 11.5 Products Liability and Warranty Indemnification of Accuride
and IASA by the Company. The Company shall indemnify, defend and save and hold
harmless Accuride and IASA, and their respective officers, directors, employees
and other agents, jointly and severally, from and against any and all Losses
arising directly or indirectly from, as a result of or otherwise in connection
with any products liability claim, warranty claim, or both, relating in any way
to Wheels manufactured by the Company. The indemnity obligations under this
Section 11.5 shall be construed and applied in the broadest manner permitted
under applicable law and shall survive any termination of this Agreement for so
long as it remains possible that any Person indemnified under this Section 11.5
may incur any Loss or Losses of the kind described or referred to herein.
SECTION 11.6 Claims for Indemnification. Any party seeking
indemnification under this Article XI (an "Indemnified Party") promptly shall
give Notice to the party from which such indemnification is sought (the
"Indemnifying Party") of any claim, action, proceeding or suit that may give
rise to liability for indemnification; but the failure of an Indemnified Party
to so notify an Indemnifying Party shall not relieve the Indemnifying Party of
any of its obligations under this Article XI, except to the extent that the
Indemnifying Party is actually and materially prejudiced by the failure to
receive timely Notice. Without limiting the generality of the other provisions
of this Article XI, the Indemnifying Party shall assume and be responsible for
all expenses with respect to the defense, settlement, adjustment or compromise
of any claim, action, proceeding or suit as to which this Article XI requires
indemnification; and the Indemnifying Party shall acknowledge in writing to the
Indemnified Party its obligation to indemnify and hold harmless the Indemnified
Party from and against any Losses arising from any such claim, action proceeding
or suit. Any Indemnified Party may, if it so desires, employ counsel at its own
expense to assist in the handling of such matters. Neither an Indemnifying
Party nor an Indemnified Party shall enter into any settlement, adjustment or
compromise of any such claim, action, proceeding or suit, or cease to defend
against the same, without the prior written consent of the other party, which
shall not be unreasonably withheld.
SECTION 11.7 Insurance. The Company shall insure its business and assets
in a manner consistent with prudent risk management practices. From time to
time, the Company may seek advice and expertise from the Shareholders concerning
its insurance and other risk management policies, practices and procedures.
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ARTICLE XII
Representations and Warranties
SECTION 12.1 Representations and Warranties of Accuride. Accuride hereby
represents and warrants to IASA, GIR and the Company that, as of the Effective
Date, each and every one of the statements contained in this Section 12.1 is
true, correct and complete and does not omit any information necessary or
appropriate to make such statement not misleading or deceptive:
(a) Organization. Accuride is duly incorporated, validly existing
and in good standing under the laws of the State of Delaware;
(b) Authorization of Transaction. Accuride has all requisite
corporate power and authority and has taken all corporate actions necessary to
authorize, execute and deliver this Agreement and the Exhibits and any other
agreements and documents contemplated herein and therein, to consummate the
transactions contemplated herein and therein, and to perform its obligations
hereunder and thereunder;
(c) Binding, Enforceable Agreement and Exhibits. This Agreement and
the Exhibits constitute valid and legally binding obligations of Accuride, and
are fully enforceable in accordance with their terms and conditions,
respectively;
(d) Noncontravention. Neither the execution and delivery of this
Agreement and the Exhibits, nor the consummation of the transactions
contemplated hereby, will: (I) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge or other restriction
of any government, governmental agency or court to which Accuride is subject, or
any provision of the Certificate of Incorporation or Bylaws of Accuride; or (ii)
conflict with, result in a breach of, constitute a default under, result in
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any Notice under, any agreement, contract, lease, license
instrument or other arrangement to which Accuride is a party or by which it is
bound or to which any of its assets is subject, or result in the imposition of
any Security Interest upon any of its assets.
SECTION 12.2 Representations and Warranties of IASA and GIR. Each of IASA
and GIR, jointly and severally, hereby represents and warrants to Accuride and
the Company, jointly and severally, that, as of the Effective Date, each and
every one of the statements contained in this Section 12.2 is true, correct and
complete and does not omit any information necessary or appropriate to make such
statement not misleading or deceptive:
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(a) Organization. Each of IASA, GIR, Servicios AISA and Ruedas AISA
is a corporation duly organized, validly existing and in good standing under the
laws of the United Mexican States;
(b) Authorization of Transaction. Each of IASA, GIR, Servicios AISA
and Ruedas AISA has all requisite corporate power and authority and has taken
all corporate actions necessary or appropriate to authorize, execute and deliver
this Agreement and the Exhibits and any other agreements and documents
contemplated herein and therein, to consummate the transactions contemplated
herein and therein, and to perform its obligations hereunder and thereunder.
Without limiting the generality of the foregoing, the Boards of Directors, the
shareholders, and the bondholders and other creditors, of each of IASA and GIR,
duly have authorized the execution, delivery and performance of this Agreement
and all Exhibits and other attachments hereto and the individuals executing this
Agreement and the Exhibits on behalf of IASA and GIR, respectively, have been
duly authorized to do so, all as required and otherwise in accordance with
applicable Mexican laws and the bylaws and other governing documents of IASA and
GIR, respectively; and to further evidence certain of such authorizations, IASA
and GIR hereby attach the following documents to this Agreement as Exhibit BB,
and each of IASA and GIR further represents and warrants, jointly and severally,
that none of the following documents has been amended or revoked, but each
remains in full force and effect as of the Effective Date: (I) the Minutes of
the General Shareholders' Meeting of IASA, dated as of March 19, 1997, approving
the execution and delivery by IASA of this Agreement and the Exhibits; (ii) the
Minutes of the Meeting of the Bondholders of IASA, dated as of October 31, 1997,
approving the execution and delivery of this Agreement and the Exhibits and the
release of any and all Security Interests affecting the assets of IASA that are
to be transferred to the Company as provided in Section 4.1(a) of this
Agreement; (iii) the Power of Attorney granted to Ing. Gregorio Ramirez Jaurequi
by IASA as of December 3, 1996; and (iv) the Power of Attorney granted to
Gregorio Ramirez Gonzalez by GIR as of October 26, 1981.
(c) Binding, Enforceable Agreement and Exhibits. This Agreement and
the Exhibits constitute valid and legally binding obligation of each of IASA and
GIR, and are fully enforceable in accordance with their terms and conditions,
respectively.
(d) Noncontravention. Neither the execution and delivery of this
Agreement and the Exhibits, nor the consummation of the transactions
contemplated hereby, will: (I) violate any constitution, statute, regulation,
rule, injunction, judgment, norm, standard, order, decree, ruling, charge,
order, opinion or other restriction of any government, governmental agency or
court to which any of IASA or GIR is subject, or any provision of the bylaws of
any of IASA or GIR; or (ii) conflict with, result in a breach of, constitute a
default under, result in acceleration of, create in any party the right to
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accelerate, terminate, modify or cancel or require any Notice under, any
agreement, contract, lease, license instrument or other arrangement to which
either or both of IASA and GIR are parties or by which either or both are bound
or to which any of the assets of either or both are subject, or result in the
imposition of any Security Interest upon any of the assets of either or both.
(e) Brokers' Fees. Neither IASA nor GIR has any liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement for which Accuride,
the Company, Servicios AISA or Ruedas AISA could become liable or obligated.
(f) Title to Assets; No Security Interests or Restrictions on
Transfer. IASA has and holds good and marketable title to all of the business
and all of the assets that it is to convey and transfer to the Company by means
of the Asset Assignment, Purchase and Sale Agreement, in accordance with Section
4.1(a) of this Agreement, free and clear of any and all Security Interests,
except those that will be removed by the Company's recording in the appropriate
Public Registries of Property the Security Interest Releases that IASA shall
deliver to the Company at the Closing; and each of IASA and GIR further
represents and warrants, jointly and severally, to Accuride and the Company,
that none of the assets to be transferred to the Company as provided in Section
4.1(a) of this Agreement is subject to any right of first refusal or any other
restriction on transfer of any kind whatsoever.
(g) Servicios AISA; Ruedas AISA . Each of Servicios AISA and Ruedas
AISA has issued 50,000 shares of capital stock, 49,999 shares of each of which
are owned by IASA, free and clear of any and all Security Interests, and 1 share
of each of which is owned by GIR, free and clear of any and all Security
Interests. Each of Servicios AISA and Ruedas AISA is a corporation duly
organized, validly existing, and in good standing under the laws of the United
Mexican States. Each of Servicios AISA and Ruedas AISA is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. Each of Servicios AISA and Ruedas AISA
has full corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the businesses in which it is engaged and
in which it presently proposes to engage and to own and use the properties owned
and used by it. IASA has delivered to Accuride correct and complete copies of
the bylaws of Servicios AISA and of Ruedas AISA, current as of the Effective
Date. All of the issued and outstanding shares of the capital stock of each of
Servicios AISA and Ruedas AISA have been duly authorized and are validly issued,
fully paid up, and nonassessable. The minute books, the stock certificate
books, and the stock record books of each of Servicios AISA and Ruedas AISA are
correct and complete. Neither of Servicios AISA or Ruedas AISA is in default
under or in violation of any provision of its bylaws or of any agreement to
which either of them or their assets are
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subject, and neither has any liabilities of any kind or description other
than normal seniority and severance liabilities that are customary and that
arise in the ordinary course of business under the Mexican federal labor law.
(h) Financial Statements. Attached hereto as Exhibit CC are the
following financial statements: (I) audited consolidated and unaudited
consolidating balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal year ended December 31, 1996, for
IASA, which (including the notes thereto) present fairly the financial condition
of IASA as of such date and the results of operations of IASA for such period,
are correct and complete, and are consistent with the books and records of IASA.
(i) Legal Compliance. Each of IASA, GIR, Servicios AISA and Ruedas
AISA and their respective predecessors and Affiliates has complied with all
applicable laws (including statutes, rules, regulations, codes, norms,
standards, plans, injunctions, judgments, orders, decrees, rulings and charges
thereunder) of the United Mexican States, of the State of Nuevo Leon, and of the
Municipality of San Nicolas de los Garza; and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand or Notice has been
filed or commenced against any of them alleging any failure so to comply.
(j) Tax Matters.
(i) Each of IASA, GIR and Servicios AISA has filed all tax
returns that it was required to file under the laws of the United Mexican
States, of the State of Nuevo Leon and of the Municipality of San Nicolas de los
Garza. All such tax returns were correct and complete in all respects. All
taxes owed by any of IASA, GIR and Servicios AISA (whether or not shown on any
tax return) have been paid. No claim has ever been made by any authority in a
jurisdiction where any of IASA, GIR or Servicios AISA does not file tax returns
that it is or may be subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of any of IASA, GIR, Servicios AISA or
Ruedas AISA that arose in connection with any failure or alleged failure to pay
any tax.
(ii) Each of IASA, GIR, Servicios AISA and Ruedas AISA has
withheld and paid all taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor or shareholder thereof, or to any other Person.
(iii) No director or officer (or employee responsible for tax
matters) of any of IASA, GIR, Servicios AISA or Ruedas AISA expects any
authority to assess any additional taxes for any period for which tax returns
have been filed. There is no dispute or
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claim concerning any tax liability of any of IASA, GIR, Servicios AISA or
Ruedas AISA either: (A) claimed or raised by any authority in writing; or
(B) as to which any of the IASA, GIR, Servicios AISA or Ruedas AISA directors
and officers has knowledge based upon personal contact with any agent of such
authority.
(k) IASA Plant. IASA has good and marketable title to the IASA
Plant, free and clear of any Security Interest, easement, covenant or other
restriction except liens arising from bonds secured by certain property of IASA,
including the IASA Plant, and except recorded easements, covenants and other
restrictions that do not impair the current use, occupancy or value or the
marketability of title of the IASA Plant. There are no pending or threatened
condemnation proceedings, lawsuits or administrative actions relating to the
IASA Plant or other matters affecting adversely the current use, occupancy, or
value thereof. All facilities at the IASA Plant have received all approvals of
governmental authorities (including licenses and permits) required in connection
with the ownership or operation thereof and have been operated and maintained in
accordance with applicable laws, rules and regulations.
(l) Intellectual Property. IASA owns all intellectual and industrial
property necessary or desirable for the operation of its business as presently
conducted. Each item of intellectual property owned or used by IASA immediately
prior to the Closing hereunder and relating in any manner to the Wheel business
will be available for use by the Company on identical terms and conditions
immediately subsequent to the Closing hereunder.
(m) Tangible Assets. IASA owns all buildings, machinery, equipment
and other tangible assets necessary for the conduct of the Wheel Division
business as presently conducted. Each such tangible asset is free from defects
(patent and latent), has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear), and is suitable for the purposes for which it presently is used and is
proposed to be used.
(n) Inventory. The Inventory consists of inventories of Wheels, of
raw materials and supplies, of purchased and manufactured parts, and of goods,
goods-in-progress and finished goods, all of which are merchantable and fit for
the purpose for which procured or manufactured, and none of which are
slow-moving, obsolete, damaged or defective.
(o) Litigation. IASA is not subject to any material outstanding
injunction, judgment, order, decree, ruling or charge, and IASA is not a party
or threatened to be made a party to any action, suit, proceeding, hearing or
investigation of, in, or before any court
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or quasi-judicial or administrative agency of any federal, state, municipal
or foreign jurisdiction or before any arbitrator. No actions, suits,
proceedings, hearings, and investigations in which IASA is involved will
result in any adverse change in the business, financial condition,
operations, results of operations or future prospects of the Wheel Division
business and assets, or of the Company, or of Servicios AISA, or of Ruedas
AISA.
(p) Product Warranty. Each Wheel sold or delivered by IASA has been
in conformity with all applicable contractual commitments and all express and
implied warranties, and IASA has no liability (and there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against IASA giving rise to any liability) for
replacement or repair thereof or other damages in connection therewith. No
product manufactured, sold, leased, or delivered by IASA is subject to any
guaranty, warranty or other indemnity beyond the applicable standard terms and
conditions of sale.
(q) No Product Liability. IASA has no liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against IASA giving rise to
any liability) arising out of any injury to individuals or property as a result
of the ownership, possession or use of any Wheel or other product manufactured,
sold, leased, or delivered by IASA or the Wheel Division.
(r) Employees. No executive, key employee or group of employees has
any plans to terminate employment with IASA, Servicios AISA or Ruedas AISA, to
the best of IASA's and GIR's knowledge.
(s) Environment, Health, and Safety. None of IASA, Servicios AISA or
Ruedas AISA has handled or disposed of any substance, arranged for the disposal
of any substance, exposed any employee or other individual to any substance or
condition, or owned or operated any property or facility in any manner that
could form the basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand against the Company
or Servicios AISA or Ruedas AISA for damage to any site, location or body of
water (surface or subsurface), for any illness of or personal injury to any
employee or other individual, or for any reason under any environmental, health
or safety law.
(t) GIR is the direct, majority shareholder of IASA, and IASA is a
direct subsidiary of GIR.
(u) Full Disclosure. The representations and warranties contained in
this Section 12.2 do not contain any untrue statement of any fact or omit to
state any fact
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necessary in order to make the statements and information contained in this
Section 12.2 not misleading.
ARTICLE XIII
Conditions Precedent
SECTION 13.1 Conditions Precedent to Obligations of Accuride. The
obligation of Accuride to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) the representations and warranties set forth in Section 12.2
above shall be true and correct in all material respects at and as of the
Closing Date;
(b) each of IASA and GIR shall have performed and complied with all
of the covenants made by them hereunder and in the Exhibits, in all material
respects, through the completion of the Closing;
(c) no Security Interest shall encumber the title to any of the
business or assets that IASA is to transfer to the Company as provided in
Section 4.1(a), except such Security Interests as may be released merely by the
Company's recording of Security Interest Releases in the Public Registries of
Property for the appropriate Municipalities corresponding thereto;
(d) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, municipal or other jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would: (I)
prevent consummation of any of the transactions contemplated by this Agreement
or the Exhibits; (ii) cause any of the transactions contemplated by this
Agreement or the Exhibits to be rescinded following consummation; or (iii)
affect adversely the right of the Company to own the Wheel Division business and
assets, to operate the Wheel Division business and to control Servicios AISA and
Ruedas AISA;
(e) the Company shall have obtained the Loan, upon terms and
conditions satisfactory to it, at its sole discretion, and otherwise in
accordance with the Initial Business Plan;
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(f) all actions to be taken by IASA or GIR in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby will be satisfactory in form and substance to Accuride.
Each of Accuride and the Company, or both, may waive any condition precedent
specified in this Section 13.1, but only by executing and delivering to IASA and
GIR a writing clearly stating the scope of the waiver.
SECTION 13.2 Conditions Precedent to Obligations of IASA and GIR. The
obligations of IASA and GIR, respectively, to consummate the transactions to be
performed by them in connection with the Closing are subject to satisfaction of
the following conditions precedent:
(a) the representations and warranties set forth in Section 12.1
above shall be true and correct in all material respects at and as of the
Closing Date;
(b) Accuride shall have performed and complied with all of the
covenants made by it hereunder, and in the Exhibits, in all material respects,
through completion of the Closing;
(c) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling or charge would: (i)
prevent consummation of any of the transactions contemplated by this Agreement
or the Exhibits; or (ii) cause any of the transactions contemplated by this
Agreement or the Exhibits to be rescinded following consummation;
(d) the Company shall have obtained the Loan, upon terms and
conditions satisfactory to it, at its sole discretion, and otherwise in
accordance with the Initial Business Plan;
(e) all actions to be taken by Accuride in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby will be satisfactory in form and substance to IASA and GIR.
Each of IASA and GIR may waive any condition precedent specified in this Section
13.2, but only by executing and delivering to Accuride a writing clearly stating
the scope of the waiver.
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ARTICLE XIV
Term, Termination & Phase-Out
SECTION 14.1 Term. The Term of this Agreement shall commence on the
Effective Date hereof and, unless otherwise terminated sooner, shall end upon
any effective sale or other transfer by one Shareholder of all of its shares of
capital stock of the Company, or following the dissolution and completion of
liquidation of the Company in accordance with Chapter Eighth of the Bylaws,
whichever is first; provided, however, that this Section 14.1 shall not
terminate, limit or otherwise affect any provision of this Agreement that the
parties clearly have indicated should survive for any period that is or may be
longer than the Term of this Agreement.
SECTION 14.2 Restriction on Encumbrance and Transfer of Shares. During
the Term of this Agreement, no Shareholder may grant any Security Interest in or
upon, or otherwise encumber or offer to encumber, any of its shares of capital
stock of the Company, except upon the prior written authorization of both
Shareholders. Except as otherwise provided in Sections 14.3 and 14.4 with
respect to a share transfer resulting from an unresolved fundamental dispute
between the Shareholders, from the Effective Date through December 31, 2000 no
Shareholder may sell, gift, convey, assign, endorse, or otherwise transfer or
offer to transfer, any of its shares of capital stock of the Company. Beginning
January 1, 2001, any Shareholder may transfer its capital stock in the Company
to a third party, but only upon the prior written authorization of the Board,
which shall be granted if the requirements set forth in Article Tenth of the
Bylaws have been met, or upon the written authorization of both Shareholders of
the Company, or by means of a share transfer under Sections 14.3 and 14.4 caused
by an unresolved fundamental dispute between the Shareholders. Any attempted
grant of a Security Interest in or upon, or other encumbrance or offer of
encumbrance in or upon, or any attempted sale, gift, conveyance, assignment,
endorsement or other transfer or offer of transfer of, any of the shares of the
capital stock of the Company, made in breach of any of the provisions of Chapter
Third of the Bylaws, shall be null and void from the beginning.
SECTION 14.3 Fundamental Disagreement Between Shareholders; Notice of
Intent to Terminate.
(a) Upon the occurrence of any dispute between the Shareholders (but
not between any other parties hereto) with respect to any major aspect of the
operation of the Company, the Shareholder that considers itself aggrieved may
request that the matter be placed upon the agenda for consideration by the Board
at the next regularly scheduled Board meeting; and whenever such a request is
made, the Board shall place the matter
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upon the agenda as requested. If that Board meeting fails to produce a
mutually acceptable resolution of the dispute, then a special Board meeting
automatically shall be called and held not more than forty (40) Days and not
less than thirty (30) Days after the prior Board meeting, the sole purpose of
which shall be to resolve the issue in dispute.
(b) Any fundamental dispute between the Shareholders that has not
been resolved as provided in Section 14.3(a) shall be submitted to mandatory
mediation upon the demand of either Shareholder, any such mediation to be
conducted under the guidance of the American Arbitration Association in Dallas,
Texas U.S.A., the Shareholder that demands the mediation to bear the full
expense of the mediation services, but each Shareholder to bear all other costs
of its own participation in the mediation.
(c) In the event that any mediation under Section 14.3(b) fails to
produce a mutually acceptable resolution to the fundamental disagreement within
thirty (30) Days after the commencement of the mediation, then the aggrieved
Shareholder may, at its discretion, deliver to the other Shareholder a Notice of
Intent to Terminate, which must contain the following information and supporting
documents:
(i) the name of the Shareholder that is delivering the Notice of
Intent to Terminate;
(ii) the date of the Notice of Intent to Terminate;
(iii) the name and address of the Shareholder and its officer
to whom the Notice of Intent to Terminate is being delivered;
(iv) a brief description of the fundamental dispute and the
decisions, if any, of the Board directed at resolving the dispute, and why the
Shareholder considers the results unsatisfactory;
(v) a brief description of the results of the mediation, and why
the Shareholder considers them unsatisfactory;
(vi) a statement that the notifying Shareholder thereby is making
a binding and enforceable offer to sell all (but not less than all) of its
shares of the capital stock of the Company to the other Shareholder (which shall
include a binding and enforceable offer to sell at least one (1) share, but not
more than one percent (1%) of its shares, to any nominee of the other
Shareholder) for a fixed price per share, payable in immediately available
funds, in United States dollars, ten (10) Days after any acceptance of such
offer;
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(vii) a statement that the notifying Shareholder or its
nominee thereby also is making, simultaneously with the offer referred to in
Section 14.3(c)(vi), a binding and enforceable offer to purchase all (but not
less than all) of the shares of the capital stock of the Company held by the
other Shareholder, at the same fixed price per share as that referred to in
Section 14.3(c)(vi), also payable in immediately available funds, in United
States dollars, ten (10) Days after acceptance of such offer;
(viii) the Notice of Intent to Terminate shall contain the
original signature of an officer of the notifying Shareholder who is duly
authorized on behalf of the notifying Shareholder to make the offers referred
to in Sections 14.3(c)(vi) and (vii); and
(ix) the Notice of Intent to Terminate shall be accompanied by an
irrevocable letter of credit confirmed by a reasonably acceptable commercial
bank in the same country as the domicile of the Shareholder to which the Notice
of Intent to Terminate is being transmitted, such letter of credit to guarantee
full payment of the full purchase price for the shares to the Shareholder
receiving the Notice of Intent to Terminate in the event that such Shareholder
accepts the offer referred to in Section 14.3(c)(vii), the only condition to
drawing upon such letter of credit to be the duly authorized endorsement and
delivery of the corresponding share certificates representing the shares being
sold.
SECTION 14.4 Response to Notice of Intent to Terminate. Within twenty
(20) Days after receiving any Notice of Intent to Terminate containing the
information required in Section 14.3, the responding Shareholder shall deliver
to the notifying Shareholder a Response Notice, which must contain the following
information:
(a) the name of the Shareholder that is responding;
(b) the date of the Response Notice;
(c) the name and address of the Shareholder and its officer to whom
the Response Notice is being delivered;
(d) a statement that the responding Shareholder either accepts the
offer referred to in Section 14.3(c)(vi), or that it accepts the offer referred
to in Section 14.3(c)(vii), and that a binding contract thereby has been formed
for the purchase or sale of shares upon the terms and conditions indicated;
(e) the Response Notice shall contain the original signature of an
officer of the responding Shareholder who is duly authorized on behalf of the
responding Shareholder to accept either of the offers referred to in Section
14.3(c)(vi) and (vii); and
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(f) if the Response Notice indicates that the responding Shareholder
is accepting the offer referred to in Section 14.3(c)(vi), then the Response
Notice must be accompanied by an irrevocable letter of credit confirmed by a
reasonably acceptable commercial bank in the same country as the domicile of the
Shareholder to which the Response Notice is being transmitted, said letter of
credit to guarantee payment of the full purchase price for the shares to the
Shareholder that receives the Response Notice, the only condition to drawing
upon such letter of credit to be the duly authorized endorsement and delivery of
the corresponding share certificates representing the shares being sold.
In the event that the Shareholder receiving a Notice of Intent to Terminate does
not deliver a Response Notice to the notifying Shareholder within twenty (20)
Days after receipt of the Notice of Intent to Terminate, then for a period of
twenty (20) additional Days the notifying Shareholder again shall notify the
Shareholder that should have responded that the former either will purchase all
the shares of the Company held by the Shareholder that should have responded, or
that it will sell all of its shares of the Company to the Shareholder that
should have responded, at the price previously stated in the Notice of Intent to
Terminate, which additional Notice shall, under the circumstances, constitute
the formation of a binding contract between the Shareholders for the purchase or
sale of such shares.
SECTION 14.5 Closing of Purchase of Shares. The closing of any purchase
or sale transaction for shares of the Company in accordance with this Article
XIV shall be completed not more than thirty (30) Days after the formation of a
binding contract therefor, regardless of how the binding agreement therefor may
be formed under Section 14.4.
SECTION 14.6 Phase-Out Services. In the event of any termination of this
Agreement arising from any sale by one Shareholder of all its shares in the
Company in accordance with Sections 14.3 through 14.5, then the Shareholder that
is selling its shares of stock in the Company shall continue to provide to the
Company, for a period of sixty (60) Days following such transfer, any and all
services that it provided to the Company prior to the transfer ("Phase-Out
Services").
ARTICLE XV
Dispute Resolution
SECTION 15.1 Pre-Arbitration Efforts to Resolve Disputes. Each of
Accuride, IASA, GIR and the Company agrees to attempt in good faith to resolve
any dispute, controversy or claim that may arise in any manner whatsoever with
respect to this Agreement, the Joint
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Venture, the Company, or any or all other agreements, contracts, arrangements
or other understandings relating in any manner to this Agreement, any of the
Exhibits hereto, or any other document contemplated herein or therein; and
each party hereby designates its chief executive officer as the individual
who has primary authority and responsibility therefor. Each such designated
officer of a party involved in any such dispute, controversy or claim shall
attempt in good faith to resolve such matter within thirty (30) Days after
becoming aware of the dispute.
SECTION 15.2 Requirement of Binding Arbitration; Scope. Each and every
dispute, controversy or claim arising in any manner out of or in any way
relating to any provision of this Agreement (including any Exhibit that contains
data and business information primarily and is not drafted in the form of a
stand-alone contract), or arising in any manner out of or in any way relating to
the validity, interpretation, performance, breach, enforceability or termination
hereof or thereof (including this Article XV), that is not settled amicably
within the thirty (30) Day period referred to in Section 15.1, shall be solely
and finally settled by binding, non-appealable arbitration at Dallas, Texas,
U.S.A. not later than six (6) months following the initial Notice of arbitration
(which Notice shall be given in writing to the party against whom the claim is
being made, and to the arbitration administrator, by the party initiating the
arbitration) in accordance with the International Arbitration Rules of the
American Arbitration Association ("AAA"), as modified by the provisions of this
Article XV.
SECTION 15.3 Selection of Arbitrators. Each and every arbitration
hereunder shall be conducted by a panel of three (3) arbitrators. Accuride
shall select one arbitrator, and IASA and GIR together shall select one
arbitrator, not later than ten (10) Days after the initial Notice of
arbitration. The AAA shall have power to select either or both such arbitrators
if they have not been selected by the parties as required within the time
specified. Not later than twenty (20) Days after the selection and appointment
of the two arbitrators, the two appointees shall choose a third arbitrator to
serve as the chairperson of the arbitration panel. If the two party-appointees
cannot agree regarding the selection of the third arbitrator within such twenty
(20) Day period, then the AAA shall have power to select the third arbitrator.
Each arbitrator appointed to hear any dispute, controversy or claim shall have
no relationship or connection with any party to this Agreement or with any
Affiliate of any party hereto or with legal counsel to any such party or
Affiliate. In the event of the death or disability of an arbitrator, a new
arbitrator shall be selected in the same manner as, and by the same Person or
Persons that selected, the previous arbitrator.
SECTION 15.4 Governing Law and Arbitration Rules. The provisions of this
Article XV, the International Arbitration Rules of the AAA, and the contract and
other substantive laws of the State of Delaware, as modified by the terms of
this Article XV, shall govern the
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arbitration of any and all disputes arising hereunder or in connection
herewith, and in the event of any conflict between the laws of Delaware and
the Federal Arbitration Act, 9 U.S.C. Section 1 et seq. (1990) (the
"Arbitration Act"), in connection with any arbitration of any dispute
hereunder, it is the express intent of the parties that the substantive laws
of Delaware, as modified by this Article XV, shall govern to the maximum
extent permitted by law; provided, however, that any and all disputes,
controversies and claims arising primarily or entirely out of or in
connection with the interpretation, performance, breach or enforceability of
the Company's Bylaws shall be governed by the substantive laws of the United
Mexican States.
SECTION 15.5 Binding Arbitration. The award rendered in connection with
any arbitration conducted in accordance with this Article XV shall be final and
binding upon the parties, and any judgment upon such award may be entered and
enforced by any court of competent jurisdiction in any country without any
further proceedings on the merits of the case. The parties agree that the award
of the arbitral tribunal shall be the sole and exclusive remedy between them
regarding any and all claims and counterclaims with respect to the subject
matter of the arbitrated dispute. The parties hereby waive all jurisdictional
defenses in connection with any arbitration instituted under this Article XV and
the enforcement of any award or judgment rendered pursuant thereto.
SECTION 15.6 Explanation of Award. Promptly following the rendering of an
order or award in the arbitration of any disputed matter hereunder, the
arbitrators shall issue to the interested parties hereunder a written
explanation in the English language, with a certified translation thereof in the
Spanish language, of the reasons for such order or award and a full statement of
the facts found and the rules of law applied in reaching the decision.
SECTION 15.7 Enforcement of Award. With respect to any award issued by
the arbitrators pursuant to this Agreement, the parties expressly agree: (a) to
the prosecution of an action by one or more parties against any other party or
parties in any court of the United States of America, or in any court of the
State of Nuevo Leon or of the United Mexican States located in Monterrey, Nuevo
Leon, to confirm and enforce such arbitration award; (b) that any such
arbitration award shall constitute conclusive proof of the validity of the
determinations of the arbitrators underlying such award; and ((c)) that any
court of the United States of America, or any court of the State of Nuevo Leon
or of the United Mexican States, may enter judgment upon and enforce such award,
whether pursuant to the Inter-American Convention on International Commercial
Arbitration (9 U.S.C. Section 301-307), the Arbitration Act, the other laws of
the United States of America or of the United Mexican States or of the State of
Nuevo Leon, respectively, or otherwise, without any further proceedings on the
merits of the case.
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SECTION 15.8 Language of Arbitration. All proceedings in any arbitration
conducted hereunder shall be conducted in the English language, and all
documents, exhibits and other evidence submitted in Spanish by any party shall
be accompanied by a certified English translation thereof; provided, however,
that upon request by any party to the arbitration all such proceedings, hearings
and evidence shall be translated simultaneously into the Spanish language for
the convenience of such party.
SECTION 15.9 Discovery; Presentation of Case. Not later than sixty (60)
Days following the delivery of the Notice of arbitration, each side shall
produce and deliver to the arbitrators and to the other parties copies of all
documents and witness testimony upon which it plans to rely, as well as a list
identifying such documents and witnesses, which list shall contain all
information necessary for a full understanding of the legitimate issues raised
in the arbitration, including, without limitation, the following: (a) a written
statement of the factual basis of the claim or defense and the legal theories
upon which each claim or defense is based; (b) the names and addresses of all
individuals, including witnesses whom the disclosing party expects to call to
present testimony or other evidence during the arbitration proceeding and other
individuals whom the party believes may have knowledge or information relevant
to the arbitration, a description of the nature of the knowledge or information
that each such individual is believed to possess, and a summary of each such
witness' expected testimony; ((c)) the names and addresses of all individuals
who have given statements, along with copies of those statements; (d) a written
computation of the measure of damages alleged by the disclosing party and the
documents or summary of the testimony upon which such computation or measure is
based; and (e) the existence, location, custodian and general description of any
relevant documents or other tangible evidence that the disclosing party plans to
use at the arbitration hearing. Each side shall be permitted five (5) hours of
witness depositions, to be allocated as that side sees fit. No interrogatories
or requests for admission shall be permitted. The arbitration hearing shall
take place no later than ninety (90) Days following the initial Notice of
arbitration. Each side shall have no more than ten (10) hours to make its
arguments and present its evidence to the arbitration panel. The parties also
may submit pre- and post-hearing memoranda, each not to exceed twenty (20)
double-spaced pages.
SECTION 15.10 Confidentiality. All papers, documents and other evidence,
whether written or oral, filed with or presented to the arbitrators, shall be
deemed by the parties and the arbitrators to be confidential information. No
party, witness or arbitrator shall disclose in whole or in part to any other
Person any confidential information submitted in connection with arbitration
proceedings hereunder, except to the extent: (a) required by applicable law or
regulation; (b) reasonably necessary to assist counsel in or preparation for
arbitration of the dispute; or ((c)) that such "confidential" information was
previously known or subsequently became known to the disclosing party, without
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restrictions on disclosure, that it was developed independently by such
disclosing party, or that it became publicly known through no fault of the
disclosing party.
SECTION 15.11 Arbitration Expenses. The non-prevailing party in the
arbitration shall bear the fees and expenses of the arbitrators, the reasonable
costs of arbitration, the expense of any award rendered therein and of its
enforcement, and the reasonable attorneys' fees and expenses of the prevailing
party; and the non-prevailing party shall reimburse the prevailing party for all
such fees, costs and expenses incurred by the prevailing party prior to the date
of the award. All expenses, fees, costs and charges, and any award, shall be
expressed in United States dollars.
SECTION 15.12 Integrated Arbitration Clause. To the extent, if any, that
this Article XV may be deemed a separate contract, independent from this
Agreement, Sections 16.5 and 16.11 (concerning Notices, and governing law,
respectively) shall be deemed incorporated into this Article XV by this
reference.
ARTICLE XVI
General Provisions
SECTION 16.1 Survival of Representations and Warranties. The
representations and warranties in this Agreement and in any other document
executed and delivered in connection with the transactions contemplated herein
shall survive the Closing and remain in full force and effect for the longer of
the following periods: (a) as long as it is possible that any party to this
Agreement could suffer any Loss or Losses of the kind referred to in Article XI;
or (b) five (5) years after the date of any termination of this Agreement.
SECTION 16.2 Public Disclosure. No press release or similar public
announcement or communication shall be made or caused to be made concerning the
execution or performance of this Agreement unless such announcement specifically
has been approved in advance by each of Accuride and IASA, or unless applicable
securities laws require such announcement to be made and the announcing party is
unable to contact and obtain the approval of the other within a reasonable time
using reasonable efforts; but in each such case the announcing party shall send
a copy of the announcement to the other party at its address set out in this
Article XVI.
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SECTION 16.3 No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the parties hereto and
their successors in interest and any permitted assignees, unless otherwise
expressly provided herein.
SECTION 16.4 Further Assurances. Each of the parties, upon the request of
any other party, shall execute and deliver, or cause to be executed and
delivered, any and all additional documents and instruments, and shall take or
cause to be taken any and all further actions, that are reasonably necessary to
consummate the transactions contemplated hereunder.
SECTION 16.5 Notices. Any and all notices, requests, demands, claims or
other communications or presentations of information ("Notice") required or
permitted under this Agreement shall be given in writing (including facsimile
transmissions) and sent by mail, facsimile, courier or in person, as follows:
(a) if to Accuride, addressed to:
Accuride Corporation
2315 Adams Lane
Post Office Box 40
Henderson, Kentucky, U.S.A. 42420-0040
Attention: President
Fax No.: (502) 827-7601
with a copy to:
Phelps Dodge Corporation
2600 North Central Avenue
Phoenix, Arizona, U.S.A. 85004
Attention: Vice President and General Counsel
Fax No.: (602) 234-8076
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(b) if to IASA or GIR, addressed to:
Industria Automotriz, S.A. de C.V.
Avenida Universidad 1011 Norte, Planta Baja
San Nicolas de los Garza, Nuevo Leon
C.P. 66450 Mexico
Attention: Chairman
Fax No.: 52-8-376-9098
with a copy to:
Grupo Industrial Ramirez, S.A.
Avenida Universidad 1004 Norte
San Nicolas de los Garza, Nuevo Leon
C.P. 66450 Mexico
Attention: Chairman
Fax No.: 52-8-376-5949; and
(c) if to the Company, addressed to:
Accuride de Mexico, S.A. de C.V.
Avenida Universidad 1011 Norte, Planta Alta
San Nicolas de los Garza, Nuevo Leon
C.P. 66450 Mexico
Attention: Director General
Each party may specify a different address by giving Notice as aforesaid to the
other parties. All Notices shall be deemed to have been duly given or made when
delivered in person, or five (5) Days after being deposited with DHL Courier or
another similar courier, correctly addressed with postage prepaid, or when sent
by facsimile transmission, correctly addressed and receipt acknowledged. Any
party may change the address to which Notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other parties
Notice in the manner set forth herein.
SECTION 16.6 Exhibits; Headings. All Exhibits to this Agreement shall be
deemed incorporated herein and construed with and as an integral part hereof.
The Article and Section headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation hereof in any
manner whatsoever.
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SECTION 16.7 Counterparts. This Agreement may be executed in any number
of separate counterparts, each of which shall be deemed to be an original, but
all of which, taken together, shall constitute one and the same instrument.
SECTION 16.8 No Assignment. No party shall assign any or all of its
rights under this Agreement to any other Person without the express written
consent of all the other parties hereto, which consent may be withheld for any
or no reason. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and any permitted assignees.
SECTION 16.9 Severability. If any term or other provision of this
Agreement is found by a competent authority to be invalid, illegal or incapable
of being enforced, all other conditions and provisions of this Agreement
nevertheless shall remain in full force and effect. Upon any determination that
any term or other provision hereof is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this Agreement to
effect the original intent of the parties as closely as possible.
SECTION 16.10 Amendment; Waiver. This Agreement shall not be amended or
modified except by a writing duly executed by all parties hereto. Any waiver of
any term or condition of this Agreement shall be effective only if in writing
and signed by a duly authorized officer thereof, but no such waiver shall be
construed as a waiver of any subsequent default, misrepresentation or breach of
the same term or condition or as a waiver of any other term or condition of this
Agreement.
SECTION 16.11 Governing Law. Except as otherwise provided in Section
15.4, this Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without giving effect to any choice or conflict of
law provision or rule of any jurisdiction that would cause the application of
the laws of any jurisdiction other than Delaware. All Exhibits hereto shall be
governed by and construed in accordance with the laws of the jurisdiction
specified therein; provided, however, that in the case of any Exhibit that does
not contain a choice of law provision, the following choice of law rules shall
apply: (a) if such Exhibits contain data and business information only (i.e.,
Exhibits that have not been prepared in the usual form of a stand-alone
contract), they shall be governed by and construed in accordance with the laws
of the State of Delaware; and (b) if such Exhibits constitute stand-alone
contracts, and if they are between only Persons that are of Mexican nationality,
then they shall be governed by and construed in accordance with the laws of the
United Mexican States and of the State of Nuevo Leon, Mexico.
SECTION 16.12 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent
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or interpretation arises, this Agreement shall be construed as having been
drafted jointly by the parties, and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state,
municipal or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. The word "including" shall mean "including without limitation."
The singular forms of words used herein shall include the plural, and the
plural shall include the singular, as the context reasonably may require.
The parties intend that each representation, warranty, and covenant contained
herein shall have independent significance. If any party has breached any
representation, warranty, or covenant contained herein in any respect, the
fact that there exists another representation, warranty or covenant relating
to the same subject matter (regardless of the relative levels of specificity)
that the party has not breached shall not detract from or mitigate the fact
that the party is in breach of the first representation, warranty or
covenant. All rights and remedies described in or available to any party
under this Agreement shall be cumulative and in addition to all other rights
and remedies thereof, unless otherwise specifically provided herein.
SECTION 16.13 Incorporation of Exhibits. The Exhibits, schedules and any
and all other documents or materials attached to this Agreement are incorporated
herein by reference and made a part hereof; but, to the extent that any Exhibit
contains a governing law provision or arbitration or other dispute resolution
provision, then each such provision of such Exhibit shall be controlling with
respect thereto, and Exhibits that do not contain any such provisions shall be
governed as provided in Section 16.11.
SECTION 16.14 Specific Performance. Each of the parties acknowledges and
agrees that the other parties would be damaged irreparably in the event that any
of the provisions of this Agreement are not performed in accordance with their
specific terms, or otherwise are breached. Accordingly, each of the parties
agrees that the other parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce this
Agreement specifically, in addition to any and all other remedies to which it
may be entitled under applicable law.
SECTION 16.15 Compliance with Law. Each and every party to this Agreement
agrees to comply with all applicable laws, statutes, codes, rules and
regulations in the conduct of its business in connection with the transactions
contemplated hereunder.
SECTION 16.16 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations, correspondence, undertakings and communications, both written and
oral, among the parties with respect to
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the subject matter hereof, including that certain Letter of Intent re: Joint
Venture Between Accuride Corporation and Industria Automotriz, S.A., dated
June 30, 1997 and executed by Accuride, IASA and GIR. There are no
restrictions, promises, representations, warranties, covenants or
undertakings other than those expressly set forth or referred to herein.
IN WITNESS WHEREOF, Accuride, IASA, GIR and the Company have entered into
this Agreement as of the date first set forth above.
ACCURIDE CORPORATION,
a Delaware corporation
By /s/ William P. Greubel, Jr.
--------------------------------
Name: William P. Greubel, Jr.
Title: President
GRUPO INDUSTRIAL RAMIREZ, S.A.,
a Mexican corporation
By /s/ Gregorio Ramirez Jauregui
----------------------------------
Name: Ing. Gregorio Ramirez Jauregui
Title: Director General
INDUSTRIA AUTOMOTRIZ, S.A. DE C.V.,
a Mexican corporation
By /s/ Gregorio Ramirez Jauregui
---------------------------------
Name: Ing. Gregorio Ramirez Jauregui
Title: Chairman of the Board
ACCURIDE DE MEXICO, S.A. DE C.V.,
a Mexican corporation
By /s/ Robert J. Fagerlin
----------------------------------
Name: Robert J. Fagerlin
Title: Director General
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List of Exhibits
<TABLE>
<CAPTION>
Exhibit Name First Reference
- ------- ---- ---------------
<S> <C> <C>
A Defined Terms Section 1.1
B Escritura Constitutiva of the Company, Sections 3.2, 3.6
including Bylaws and Powers of Attorney
(Spanish)
C Bylaws of the Company (English Section 3.2
translation)
D Share Certificate Issued to Accuride Section 3.4
(25,500 Shares of Fixed Capital Stock
of the Company); and Share Certificate
Issued to IASA (24,500 Shares of Fixed
Capital Stock of the Company)
E Taxpayer Identification Number Section 3.7
(Spanish)
F PITEX Application (Spanish) Section 3.8
G National Supplier Application (Spanish) Section 3.9
H Asset List (Spanish) Section 4.1(a)(I)
I Asset Assignment, Purchase and Sale Section 4.1(a)
Agreement
J Note 1 (Spanish) Section 4.1(d)
K Note 2 (Spanish) Section 4.1(d)
L Share Certificate Issued to IASA Section 4.1(e)
(36,750,000 Shares of Variable Capital
Common Stock of the Company) (Spanish);
Minutes of Extraordinary Shareholders'
Meeting Approving the Issuance Thereof
(Spanish); Copy of Note 1 (canceled)
(Spanish)
<PAGE>
M Share Certificate Issued to Accuride Section 4.1(g)
(38,250,000 Shares of Variable Capital
Common Stock of the Company) (Spanish);
Minutes of Extraordinary Shareholders'
Meeting Approving the Issuance Thereof
(Spanish); Copy of Note 2 (canceled)
(Spanish)
N Note 3 (Spanish) Section 4.2
O Initial Business Plan Section 4.3
P Company/IASA Equipment Bailment Section 4.4
Agreement (Spanish)
Q Wheel Requirements Agreement Section 4.5
R Stock Purchase Agreement and Share Section 4.6
Certificate(s) (Company's purchase of
49,999 shares of capital stock of
Servicios AISA); Stock Purchase
Agreement and Share Certificate
(Company's Nominee's Purchase of 1
share of capital stock of Servicios
AISA) (Spanish)
S San Nicolas Office Leases (Spanish) Section 4.7
T Mexico, D.F. Office Lease (Spanish) Section 4.8
U Exclusive United States/Canada Section 4.9(a)
Commercial Mediator Agreement
V Exclusive Mexico/Latin America Section 4.9(b)
Commercial Mediator Agreement
W Accuride Tradename and Trademark Section 4.10
License; IASA Tradename and Trademark
License
X Accuride/Company Technical Services Section 4.11
Agreement
Y IASA/Company Technical Services Section 4.12
Agreement (Spanish)
Z Wheelmaking Equipment Section 5.9
<PAGE>
AA Labor Plan Section 8.1
BB Minutes of the General Shareholders' Section 12.2(b)
Meeting of IASA, dated as of March 19,
1997 (Spanish); Minutes of the Meeting
of the Bondholders of IASA, dated as of
October 31, 1997 (Spanish); Power of
Attorney granted to Ing. Gregorio
Ramirez Jaurequi by IASA as of December
3, 1996 (Spanish); and Power of
Attorney granted to Gregorio Ramirez
Gonzalez by GIR as of October 26, 1981
CC Financial Statements of IASA Section 12.2(h)
</TABLE>
<PAGE>
Exhibit A To Joint Venture Agreement
DEFINED TERMS
1. "AAA" shall mean American Arbitration Association.
2. "Accuride" shall mean Accuride Corporation, a Delaware corporation, and any
successor thereto.
3. "Accuride/Company Technical Services Agreement" shall mean the agreement
by and between Accuride and the Company, under which Accuride shall
provide certain technical services to the Company.
4. "Accuride Tradename and Trademark License" shall mean the agreement
whereby Accuride grants to the Company a non-exclusive license to use
for the Term of the Agreement Accuride's tradename and any and all
trademarks it may own that relate in any manner to products or services
connected with the Wheel business.
5. "Affiliate" shall mean and include, with respect to any other Person,
each and every natural person, corporation, partnership, limited
liability company, joint venture, trust, institution, association and
other business entity of any kind or description, whether now existing
or hereafter formed, together with its respective directors, officers,
partners, members, trustees, employees and other agents and its
respective successors and assigns, that directly or indirectly controls,
is controlled by, or is under common control with, such other Person.
6. "Agreement" shall mean the Joint Venture Agreement made as of the
Effective Date, by and among Accuride, IASA, GIR and the Company, to
which this Exhibit A is attached.
7. "Alternate" shall mean, with respect to any official of the Company, the
individual selected and empowered, in accordance with the Bylaws and the
Agreement, to act in the place and stead of such official whenever he or
she is absent or otherwise unable to perform his or her duties.
8. "Annual Business Plan" shall mean the written business plan for the
Company that is to be approved on an annual basis by the Board, and
which is to consist of a one-year operating plan, a three-year capital
expenditure plan and a five-year strategic plan.
<PAGE>
9. "Arbitration Act" shall mean the Federal Arbitration Act of the United
States of America, 9 U.S.C. Section 1, et seq. (1990).
10. "Asset Assignment, Purchase and Sale Agreement" shall mean the agreement
attached to the Agreement as Exhibit I, which is more particularly
described in Section 4.1(a) of the Agreement.
11. "Asset List" shall mean the list detailing certain assets that IASA
shall sell, bargain, transfer, convey and assign to the Company at
Closing, free and clear of any and all Security Interests.
12. "Automotive Decree" shall mean the Decreto para el fomento y
modernizacion de la Industria Automotriz, Diario Oficial de la
Federacion, II-XII-89, along with its subsequent amendment, the Decreto
que reforma y adiciona el diverso para el fomento y modernizacion de la
Industria Automotriz, Diario Oficial de la Federacion, 31-V-1995, and
any and all amendments and successors thereto.
13. "Bank" shall mean Citibank Mexico, S.A., the bank from which the Company
has received a commitment to fund the Loan to the Company at Closing.
14. "Board" shall mean the Board of Directors of the Company.
15. "Bylaws" shall mean the Estatutos Sociales of the Company, which have
been formalized and recorded in connection with the formation of the
Company as part of the Escritura Constitutiva, and which describe the
Company's corporate purpose, capitalization and administration.
16. "Closing" shall mean the consummation of the transactions contemplated
in the Agreement and in the Exhibits, as provided in Article VI of the
Agreement.
17. "Closing Date" shall mean the date upon which the Closing shall occur,
which is November 5, 1997.
18. "Company" shall mean Accuride de Mexico, S.A. de C.V., a Mexican
sociedad anonima de capital variable or variable capital corporation,
which is the corporate entity through which the Joint Venture is to
exist and conduct its business, and any successor thereto.
<PAGE>
19. "Company Bank Instructions" shall mean the irrevocable written
instructions of the Company to the Bank at Closing to draw upon the Loan
and to transfer funds as provided in Section 4.1(b)(xx) (see also
Section 6.1(b)).
20. "Company Facility" shall mean the manufacturing facility that the
Company plans to construct in the future in the State of Nuevo Leon,
which thereafter will serve as the Company's principal source of Wheel
production.
21. "Company/IASA Bailment Agreement" shall mean the personal property
bailment agreement under which the Company shall deliver possession and
use to IASA, for nominal consideration, of certain machinery and
equipment, in accordance with Section 4.4 of the Agreement.
22. "Confidential Information" shall mean any confidential and proprietary
business information, trade secrets, technology and know-how, of any of
the parties to the Agreement.
23. "Day" shall mean a calendar day.
24. "DIARSA" shall mean Distribuidora Automotriz Ramirez, S.A. de C.V., a
Mexican corporation and subsidiary of Trailers de Monterrey, S.A. de
C.V., a Mexican corporation and subsidiary of GIR.
25. "Director" shall mean a member of the Board.
26. "Director General" shall mean the individual with principal management
responsibility for, and authority to control, the day-to-day operations
of the Company as provided in the Power of Attorney granted by the
Company to such individual.
27. "Distribution Agreements" shall mean all written distribution and sales
agency agreements in effect, as of the Effective Date, between IASA and
any Latin American distributor or other sales agent of Wheels.
28. "Effective Date" shall mean the date as of which the transactions
contemplated in the Agreement become effective and binding upon the
parties thereto, which is stated on the first page of the Agreement.
29. "Escritura Constitutiva" shall mean the escritura constitutiva of the
Company, which established the Company as a legal entity and includes a
copy of the Company's Bylaws
<PAGE>
and the powers of attorney it has granted through the Effective Date,
which Escritura Constitutiva was inscribed and registered in the Public
Registry of Commerce for the Municipality of Monterrey, Nuevo Leon on
October 22, 1997.
30. "Examiner" shall mean each Comisario of the Company, the individual
charged under the Bylaws and the General Law of Business Organizations
with responsibility for surveilling the activities of the Company on
behalf of the Shareholders.
31. "Exclusive Mexico/Latin America Commercial Mediator Agreement" shall
mean the agreement by and between Accuride and the Company under which
Accuride shall engage the Company to act as Accuride's exclusive
commercial mediator in Mexico and elsewhere in Latin America.
32. "Exclusive United States/Canada Commercial Mediator Agreement" shall
mean the agreement by and between Accuride and the Company under which
the Company shall engage Accuride to act as the Company's exclusive
commercial mediator in the United States of America and in Canada.
33. "Exhibit" shall mean any attachment to the Agreement that is intended by
the parties to constitute a part thereof, regardless of whether
denominated as an exhibit, schedule, attachment or otherwise.
34. "Extraordinary Shareholders' Meeting" shall mean any extraordinary
shareholders' meeting of the Company, as such meetings are defined and
described in the General Law of Business Organizations, in the Bylaws,
and in this Agreement.
35. "Fiscal Year" shall mean the fiscal year of the Company, which shall
begin on January 1 and end on December 31 of each year.
36. "FMVAT" shall mean the fair market value of the assets transferred by
IASA to the Company as provided in Section 4.1(a) of the Agreement.
37. "FMVLA" shall mean the fair market value of the liabilities assigned by
IASA and assumed by the Company as provided in Section 4.1(b) of the
Agreement.
38. "FMVNAT" shall mean the fair market value of the net assets transferred
by IASA to the Company, as provided in Sections 4.1(a), (b) and (c) of
the Agreement, which equals FMVAT minus FMVLA.
<PAGE>
39. "General Law of Business Organizations" shall mean the Mexican Ley
General de Sociedades Mercantiles, Diario Oficial de la Federacion,
4-VIII-34 and any and all amendments and successors thereto.
40. "GIR" shall mean Grupo Industrial Ramirez, S.A., a Mexican corporation,
and any successor thereto.
41. "IASA" shall mean Industria Automotriz, S.A. de C.V., a Mexican
corporation, and any successor thereto.
42. "IASA Bank Instructions" shall mean the irrevocable written instructions
of IASA to the Bank at Closing to transfer funds from the Bank account
of IASA, as provided in Section 4.1(b)(yy).
43. "IASA/Company Technical Services Agreement" shall mean the agreement by
and between IASA and the Company, under which IASA shall provide certain
technical services to the Company.
44. "IASA Tradename and Trademark License" shall mean the agreement whereby
IASA grants to the Company a non-exclusive license to use for the Term
of this Agreement IASA's tradename and any and all trademarks it may own
that relate in any manner to products or services connected with the
Wheel business.
45. "IASA Plant" shall mean IASA's production facility located in San
Nicolas de los Garza, Nuevo Leon, Mexico.
46. "Indemnified Party" shall mean any party to the Agreement seeking
indemnification under Article XI of the Agreement.
47. "Indemnifying Party" shall mean any party to the Agreement from whom
indemnification is sought under Article XI of the Agreement.
48. "Initial Business Plan" shall mean the initial written business plan for
the Company, which has been formally adopted, ratified and approved by
the Shareholders, and which corresponds to the period from the date of
formation of the Company through December 31, 1998.
49. "Inventory" shall mean all inventory of IASA relating in any manner to
the Wheel Division, including all inventories of Wheels, of raw
materials and supplies, of
<PAGE>
purchased and manufactured parts, and of goods, goods-in-progress and
finished goods.
50. "Joint Venture" shall mean the joint venture formed between Accuride and
IASA to produce, market and sell Wheels, with the goal of pursuing
emerging opportunities in the Wheel market in Mexico and elsewhere in
Latin America, in the United States of America and in Canada, and in
other countries where sufficient demand exists.
51. "Labor Plan" shall mean the labor plan of the Company, the contents of
which are specified in Exhibit AA to the Agreement and referenced
in Article VIII of the Agreement.
52. "Loan" shall mean the Loan that the Bank has committed to provide to the
Company at Closing, in the amount of Thirty Million Dollars (U.S.
$30,000,000).
53. "Loan Documents" shall mean any and all documents that are to be
executed by the Bank and the Company to evidence the terms and
conditions of the Loan to be made to the Company by the Bank at the
Closing.
54. "Loss" shall mean and include any and all losses, liabilities, adverse
claims, causes of action, damages, demands, contingencies, settlements,
fines, assessments, penalties, charges, costs, obligations and expenses
of every kind and description whatsoever (including, without limitation,
attorneys' fees and litigation, arbitration and other dispute resolution
costs), whether known or unknown, foreseen or unforeseen, or foreseeable
or unforeseeable.
55. "Maximum Contingent Labor Liability Assumed" shall mean the maximum amount
of contingent liability assumed by the Company for seniority and severance
liabilities, if any, that otherwise would be incurred by IASA under the
Mexican federal labor law as a direct result of the transfer or
dislocation of Wheel Division workers arising from the formation of the
Joint Venture and the conveyance by IASA to the Company under the
Agreement of the business and assets of the Wheel Division; provided
additionally, that the Maximum Contingent Labor Liability Assumed shall
include any and all liabilities of Servicios AISA, and of Ruedas AISA,
that may arise at any time, directly or indirectly, as a result of or in
connection with the transfer or dislocation of Wheel Division workers
(regardless of whether paid on a salaried or hourly basis) due to the
formation of the Joint Venture or of the Company or due to the
conveyance by IASA of the business and assets of the Wheel Division to
the Company; and provided further, that the Maximum Contingent
6
<PAGE>
Labor Liability Assumed shall not exceed Seven Hundred Thousand Dollars
(U.S. $700,000).
56. "Mexico, D.F. Office Lease" shall mean the lease agreement under which IASA
shall rent and lease to Servicios AISA office space located in Mexico,
D.F., Mexico.
57. "Note 1" shall mean the promissory note issued by the Company in favor of
IASA in the original principal amount of Four Million Seven Hundred
Seven Thousand Eight Hundred Twenty-Two Dollars (U.S. $4,707,822), such
amount to represent forty-nine percent (49%) of FMVNAT.
58. "Note 2" shall mean the promissory note issued by the Company in favor of
IASA in the original principal amount of Four Million Eight Hundred
Ninety-Nine Thousand Nine Hundred Seventy-Eight Dollars (U.S.
$4,899,978), such amount to represent fifty-one percent (51%) of FMVNAT.
59. "Note 3" shall mean the promissory note issued at the Closing by the
Company in favor of IASA in the original principal amount of the VAT
due upon the transfer of assets to the Company described in Section
4.1(a) of the Agreement.
60. "Notice" shall mean any notice, request, demand, claim or other
communication or presentation of information in writing and
transmitted as provided in Section 16.5 of the Agreement.
61. "Notice of Intent to Terminate" shall mean any Notice given in accordance
with Section 14.3(c) of the Agreement.
62. "Option" shall mean the exclusive option granted to the Company by IASA and
GIR under Section 5.7 of the Agreement whereby the Company may purchase
and acquire at any time, upon demand, one hundred percent (100%) of the
issued and outstanding shares of the capital stock of Ruedas AISA.
63. "Ordinary Shareholders' Meeting" shall mean any ordinary shareholders'
meeting of the Company, as such meetings are defined and described in
the General Law of Business Organizations, in the Bylaws and in this
Agreement.
64. "Percentage Interest" shall mean the percentage interest of ownership that
each of Accuride and IASA has in the Company by virtue of its
shareholdings therein, as follows: (a) with respect to Accuride,
fifty-one percent (51%); and (b) with respect to IASA, forty-nine
percent (49%).
7
<PAGE>
65. "Person" shall mean and include, without limitation, any natural person,
and any corporation, partnership, limited liability company, joint venture,
trust, institution, association and other business entity of any kind or
description.
66. "Phase-Out Services" shall have the meaning set out in Section 14.6 of the
Agreement.
67. "Representative" shall mean, with respect to any Person, that Person's
officers, directors, partners, members, shareholders, consultants,
advisors, lawyers, accountants, employees, agents and other
representatives.
68. "Response Notice" shall mean any Notice given in accordance with Section
14.4 of the Agreement.
69. "Ruedas AISA" shall mean Ruedas AISA, S.A. de C.V., a Mexican corporation
and subsidiary of IASA, and any successor thereto.
70. "San Nicolas Office Leases" shall mean the lease agreements under which
IASA shall rent and lease to the Company and to Servicios AISA office space
located in San Nicolas de los Garza, Nuevo Leon, Mexico.
71. "Security Interest" shall mean and include, without limitation, any and all
security interests, mortgages, pledges, deposits, deeds of trust,
prendas, gravamenes, hipotecas, liens and other encumbrances of any kind
or description whatsoever, whether arising under the laws of the United
Mexican States or of any State or Municipality thereof, under the laws
of the United States of America or of any State thereof, or under the
laws of any other country or of any political subdivision thereof.
72. "Security Interest Releases" shall mean any and all documents necessary or
appropriate, in the sole judgment of the Company, to remove, release,
terminate and render of no further force or effect any and all Security
Interests encumbering title to any assets that are to be transferred to
the Company by IASA under the Asset Assignment, Purchase and Sale
Agreement, subject only to the recordation thereof in the corresponding
Public Registries of Property.
73. "Servicios AISA" shall mean Servicios AISA, S.A. de C.V., a Mexican
corporation, and any successor thereto.
8
<PAGE>
74. "Shareholder" shall mean Accuride or IASA, as the case may be, in its
capacity as a shareholder of the Company.
75. "Stock Purchase Agreement" shall mean the forms of stock purchase agreement
used by the Company and its nominee to purchase at the Closing all of
the issued and outstanding shares of the capital stock of Servicios AISA
from IASA and GIR, respectively.
76. "Stock Registry Book" shall mean the Registro de Acciones of the Company.
77. "Teller" shall mean any person appointed to number or count those present
at a meeting in order to determine whether a quorum is present.
78. "Term" shall have the meaning set out in Section 14.1 of the Agreement.
79. "Usable Inventory" shall mean Inventory that is good, usable and
defect-free, per IASA Wheel specifications, and that reasonably is
determined by Accuride and IASA to be salable within six (6) months after
the Company takes title to it as provided under Section 4.1(a)(ii) of the
Agreement.
80. "VAT" shall mean the value-added tax or impuesto al valor agregado that
arises under the tax laws and accompanying regulations of the United
Mexican States upon the transfer of title to personal property from one
Person to another.
81. "Wheel" shall mean and include any and every kind of steel wheel, rim, side
ring, lock ring, adaptor ring, spacer band, mounting band and related
component, replacement and product.
82. "Wheelmaking Equipment" shall mean that certain wheelmaking equipment
described in Exhibit Z to the Agreement, which is to be purchased by the
Company as described in Section 5.9 of the Agreement.
83. "Wheel Division" shall mean the Wheel design, manufacturing, marketing and
sales division of IASA.
84. "Wheel Requirements Agreement" shall mean the Agreement by and between IASA
and the Company that is attached as Exhibit Q to the Agreement.
9
<PAGE>
Exhibit Z to Joint Venture Agreement
WHEELMAKING EQUIPMENT
(See Section 5.9 of Joint Venture Agreement)
1. "Line 427" - A collection of machines, chutes, conveyors and other devices
manufactured and arranged to produce heavy tubeless truck rims from flat raw
material.
U.S. $ 1,000,000
2. "Line 468" - A collection of machines, chutes, conveyors and other devices
manufactured and arranged to assemble and weld discs into wheels and inspect
said wheels.
U.S. $ 400,000
3. "Ring Lines" - A collection of machines, chutes, conveyors and other
devices arranged into lines to manufacture the following products:
Line 430 Continuous Side Ring
Line 431 Split Side Ring
Line 432 Lock Ring
Line 434/476 Corrugated Spacer Band
U.S. $ 600,000
U.S. $1,000,000
400,000
+ 600,000
---------------
Total Purchase Price U.S. $2,000,000
<PAGE>
Exhibit 10.17
BYLAWS OF ACCURIDE DE MEXICO, S.A. DE C.V.
CHAPTER FIRST
CORPORATE NAME, PURPOSE, DOMICILE, NATIONALITY AND DURATION
FIRST - The corporate name of the Company shall be "ACCURIDE DE MEXICO." This
name always shall be followed by the words "SOCIEDAD ANONIMA DE CAPITAL
VARIABLE," or by the abbreviation "S.A. de C.V."
SECOND - The Company's corporate purpose shall be:
(1) to design, manufacture, purchase, sell, import, export, market, deal in and
distribute all kinds of wheels, rims and other automotive parts, and all
kinds of components, replacements and related products, for the light
vehicle, heavy truck, trailer, bus and agricultural and off-road vehicle
markets;
(2) to negotiate and contract with any and all natural persons, corporations,
partnerships, trusts, limited liability and other companies, associations,
institutions and other entities of any kind or description for the
provision or supply of, or other arrangements regarding, goods, services,
equipment, materials, capital and any and all other tangible and intangible
items in connection with or relating in any manner to the fulfillment of
the Company's corporate purpose set out in this Article Second;
(3) to provide and receive advice, consultations, technical assistance and
other services with respect to any matters in connection with or relating
in any manner to the fulfillment of the Company's corporate purpose set out
in this Article Second, including, without limitation, matters of
administration, production, advertising, marketing, sales, security,
maintenance, employee nutrition, health and safety, business information
systems and processing, and other technical matters generally;
(4) to acquire, purchase, hold, own, possess, manage, deal in, import, export,
pledge, grant security interests and liens in and upon, encumber, sell,
lease, sublease, and transfer or otherwise dispose of, all types of
materials, machinery, equipment, tools, goods, vehicles and other chattels
of any kind or description, real estate and all kinds of interests therein,
and any and all other rights in, of or pertaining to any of the foregoing;
<PAGE>
(5) to offer for sale, sell, issue, and maintain an accounting of, shares of
the Company's capital stock, warrants, options and convertible securities
of every kind, chattel paper, bonds, debentures and other instruments or
evidences of indebtedness of the Company, whether secured or unsecured, and
any and all other Company securities of any kind or description;
(6) to subscribe, acquire, purchase, hold, own, deal in, endorse, vote, pledge,
deposit, grant security interests and liens in and upon, encumber, sell,
and transfer or otherwise dispose of, shares of corporate stock,
partnership interests, member interests, investment contracts, options,
preferences, bonds, debentures, promissory notes and other negotiable
instruments generally, and any and all other securities or participations
generally in any and all kinds of corporations, partnerships, trusts,
limited liability and other companies, associations, institutions and other
entities of any kind or description;
(7) to acquire, purchase, hold, own, license the use of, pledge, grant security
interests and liens in and upon, encumber, sell, and transfer or otherwise
dispose of, patents, trademarks, trade names, service marks, inventions,
concessions, franchises, designs, drawings, trade secrets, copyrights, and
any and all other industrial property of any kind or description;
(8) to contract and grant loans, security interests, avales, pledges, mortgages
and trusts, and to guarantee obligations of third parties; and
(9) in general, to effect, perform and carry out any and all acts, operations
and agreements necessary or convenient to fulfill the Company's corporate
purpose set out in this Article Second.
THIRD - The Company's domicile shall be San Nicolas de los Garza, Nuevo Leon;
however, the Board of Directors may cause the Company to establish offices,
agencies or branches anywhere in the world without such constituting a change of
domicile.
FOURTH - The Company is of Mexican nationality. The current and future foreign
shareholders of the Company formally agree with the Foreign Affairs Secretariat
to consider themselves as Mexican nationals with regard to the shares of the
Company that they own or acquire, and with regard to the assets, rights,
concessions, participations and interests of the Company and the rights and
obligations arising from agreements with Mexican authorities to which the
Company is a party; and such foreign shareholders agree not to invoke the
protection of their governments, under penalty,
2
<PAGE>
in the event of a default thereof, of forfeiting to the benefit of the
Mexican Nation the corporate participations they may have acquired in the
Company.
FIFTH - The duration of the Company shall be 99 (ninety-nine) years counted from
the date of its incorporation.
CHAPTER SECOND
CAPITAL STOCK
SIXTH - (1) The capital stock is variable. The minimum required amount of fixed
capital, which is not entitled to withdrawal, is $50,000.00 (FIFTY THOUSAND AND
00/100 PESOS) in Mexican currency, which shall be represented by 50,000 (FIFTY
THOUSAND) common, registered no-par value shares, fully subscribed and paid up.
The variable portion of the capital stock shall be unlimited and be represented
by registered, no-par value shares, and shall be issued with such
characteristics as may be determined by the Shareholders' Meeting that approves
the issuance thereof.
(2) The provisional and final share Certificates shall be numbered
consecutively, shall bear the legend set out in Article Ninth (2) of these
Bylaws, and shall contain the references required under Article 125 of the
General Law of Business Organizations; and Article Fourth hereof shall be
transcribed thereon. Each Certificate may represent one or more shares and
shall be signed by the Chairman of the Board and by any other Director.
(3) The Company shall maintain a Stock Registry book, which clearly shall
identify all subscriptions, payments for, and transfers of, shares, and which
also shall identify each seller, former owner, and assignee or purchaser of any
such shares.
(4) No transfer of shares shall be acknowledged or recorded in the Stock
Registry book unless it complies with the restrictions on the encumbrance or
transfer of shares set forth in Chapter Third of these Bylaws.
SEVENTH - (1) Any increase or reduction of the minimum fixed capital stock must
be approved in accordance with these Bylaws at an Extraordinary Shareholders'
Meeting. Any increase or reduction of the variable portion of the capital stock
also shall be approved at an Extraordinary Shareholders' Meeting but shall not
require any formality or recording other than as set forth in these Bylaws.
3
<PAGE>
(2) The shareholders shall have preemptive rights, in proportion to the number
of shares held by each, to subscribe for shares to be issued in connection with
any increase in the capital stock of the Company. Shareholders must exercise
their preemptive rights, if at all, within a period of 15 (fifteen) calendar
days following the date of publication, in the Official Gazette for the
Company's domicile, of Notice of the adoption by a General Shareholders' Meeting
of a resolution approving the increase. In the event all shares are represented
at the Shareholders' Meeting approving the increase, said period of 15 (fifteen)
calendar days shall be counted from the date the Meeting was held, and no Notice
shall be required to be published. In the event any shareholder does not
exercise its preemptive right, a General Shareholders' Meeting or the Board of
Directors shall determine the manner in which to dispose of the shares not
subscribed as a result.
EIGHTH - In the event of a reduction of the capital stock, the same shall affect
all of the shareholders, in proportion to the number of shares held by each.
Each of the shareholders of the Company hereby expressly waives any right of
withdrawal, both partial and total, and each hereby waives any right of
separation, including, without limitation, the rights to which Articles 220 and
206 of the General Law of Business Organizations refer.
CHAPTER THIRD
RESTRICTIONS ON ENCUMBRANCE OR TRANSFER OF SHARES
NINTH - (1) For the duration of the Company, shareholders shall not pledge,
deposit, grant any security interest or lien in or upon, or otherwise encumber
or offer to encumber, any of their shares of capital stock in the Company,
except upon the prior written authorization of shareholders representing more
than 60% (sixty percent) of the issued and outstanding shares. With the
exception of a share transfer under Chapter Ninth caused by an unresolved
fundamental difference between Shareholders, from the date of formation of the
Company through December 31, 2000, no shareholder may sell, gift, convey,
assign, endorse, or otherwise transfer or offer to transfer, any of its shares
of capital stock in the Company. Beginning January 1, 2001, shareholders may
transfer their capital stock to a third party, but only upon the prior written
authorization of the Board of Directors, which shall be granted if the
requirements set forth in Article Tenth have been met, or upon the written
authorization of those shareholders representing more than 60%(sixty percent) of
the issued and outstanding shares, or upon any transfer under Chapter Ninth
caused by an unresolved fundamental difference between shareholders. Any
attempted pledge, deposit, grant of a security
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interest or lien, or other encumbrance or offer of encumbrance, or any
attempted sale, gift, conveyance, assignment, endorsement or other transfer
or offer of transfer, of any of the shares of the capital stock of the
Company, made in breach of any of the provisions of this Chapter Third, shall
be null and void from the beginning.
(2) All Certificates evidencing shares of the Company's capital stock shall
bear the following legend:
"The shares represented by this Certificate shall not be pledged,
deposited or have any security interest or lien granted therein, or
otherwise be encumbered; and such shares shall not be sold, gifted,
conveyed, assigned, endorsed or otherwise transferred, except in
compliance with the provisions of Chapter Third of the Bylaws of the
Company."
(3) Unless otherwise specified, all references in these Bylaws to "shares" or
"capital stock" shall mean and refer to any and all forms, shares and series of
shares of the capital stock that may be issued by the Company.
TENTH - No shareholder that desires to sell, gift, convey, assign, endorse or
otherwise transfer or offer to transfer all or any lesser number of its shares
of capital stock ("Offeror") may do so without first granting to the other
shareholders of the Company ("Offerees") the exclusive right to purchase all,
and only all, of the Offeror's shares ("Offered Shares"), upon the following
terms and conditions:
(1) By a written offer ("Offer") delivered to each Offeree, the Offeror shall
offer to sell the Offered Shares at a particular price; provided that the
Offer price shall not exceed the fair market value of the Offered Shares at
the time of the Offer;
(2) Each Offeree shall have 30 (thirty) calendar days (the "Original Offer
Period"), beginning upon its receipt of the Offer, within which to
determine whether to accept the Offer. Each Offeree that decides to accept
the Offer shall, within the Original Offer Period, so notify the Offeror in
writing. Any Offeree that does not so notify the Offeror shall be deemed
to have rejected the Offer. Any acceptance of the Offer shall be for all
of the Offered Shares. If more than one Offeree accepts the Offer, each
such acceptance shall be deemed to have been made in the proportion that
the shareholdings of each accepting Offeree, respectively, bear to the
shareholdings of all the accepting Offerees as a group;
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(3) In the event any one or more Offerees accept the Offer within the Original
Offer Period, the closing with respect to the purchase or purchases of the
Offered Shares shall take place within 20 (twenty) calendar days following
the end of the Original Offer Period, and a written Notice shall be
delivered by the Offeror to each purchasing Offeree at least 10 (ten)
calendar days prior to the closing, specifying: (i) the date, time and
place of the closing; (ii) the identity of each purchasing Offeree, and the
number and description of the Offered Shares to be sold to each purchasing
Offeree; (iii) the purchase price, both on a per-share basis and in the
aggregate, to be paid by each purchasing Offeree for the Offered Shares so
purchased; and (iv) the currency in which the purchase price is to be
paid. At closing, each purchasing Offeree shall deliver the purchase
price in immediately available funds to the Offeror against receipt of
the Certificate or Certificates evidencing the corresponding Offered
Shares, duly endorsed for transfer;
(4) If an Offer made pursuant to this Article Tenth is not accepted by any
Offeree, and if at least one (1) Offeree requests an appraisal under the
terms of this paragraph, within the Original Offer Period, then the
Offeror, and the Offerees as a group, each shall employ a qualified
independent appraiser and cause him or it to determine and report in
writing to the shareholders, within 20 (twenty) calendar days following the
end of the Original Offer Period, the "going concern" value of the Company
on a per-share basis, the Offeror to bear the cost of engaging its own
appraiser, and each Offeree to bear its pro-rata share of the cost of
engaging the Offeree group's appraiser. If the greater of these two
appraisals of the shares is not more than 110% (one hundred ten percent) of
the lesser of the appraisals, then the Offer shall be deemed extended for
30 (thirty) calendar days following delivery of the second appraisal (the
"First Extension Period") and shall be modified such that the Offer price
shall be the simple average of the two appraisals of the shares. If the
Offer, as modified based upon the 2 (two) appraisals, is accepted by one or
more of the Offerees during the First Extension Period, then the closing of
the resulting share purchase or purchases shall occur as provided in
Article Tenth (3), as if the First Extension Period were the Original Offer
Period; but if the Offer, as modified, is not accepted within the First
Extension Period, then the Offeror may sell the Offered Shares as provided
in Article Tenth (6).
(5) If the two appraisals referred to in Article Tenth (4) differ by more than
10% (ten percent), then the Offeror, and the Offerees as a group, each
shall cause their appraisers, respectively, to select a third qualified
independent
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appraiser and cause him or it to determine and report in writing
to the shareholders, within 30 (thirty) calendar days following
delivery of the second appraisal, the "going concern" value of the Company
on a per-share basis, the cost of the third appraisal to be borne entirely
by the Offeror; and in that event the Offer shall be deemed extended for 20
(twenty) calendar days following delivery of the third appraisal (the
"Second Extension Period") and shall be deemed modified such that the Offer
price shall be the median of the 3 (three) appraisals of the shares. If
the Offer, as modified based upon the 3 (three) appraisals, is accepted by
one or more of the Offerees during the Second Extension Period, then the
closing of the resulting share purchase or purchases shall occur as
provided in Article Tenth (3), as if the Second Extension Period were the
Original Offer Period; but if the Offer, as modified, is not accepted
within the Second Extension Period, then the Offeror may sell the Offered
Shares as provided in Article Tenth (6).
(6) If 2 (two) appraisals differing by 10% (ten percent) or less have been
performed in accordance with Article Tenth (4), or if 3 (three) appraisals
have been performed in accordance with Article Tenth (5), and if the Offer,
as modified based upon the 2 (two) appraisals or upon the 3 (three)
appraisals, has not been accepted by at least 1 (one) Offeree within the
First Extension Period or within the Second Extension Period, as the case
may be, then the Offer shall terminate and the Offeror may sell all, but
not less than all, of the Offered Shares to any third party, provided that:
(i) the transfer price in any such third-party sale shall not be less than,
and the terms and conditions of the sale shall not be more favorable to the
third-party purchaser than, those of the Offer as it had been in effect
during the First Extension Period or during the Second Extension Period;
and (ii) if the Offered Shares have not been sold or otherwise transferred
by the Offeror to a third party within 90 (ninety) calendar days after the
expiration of the First Extension Period or the Second Extension Period, as
the case may be, then any proposed sale or other transfer of any or all of
the Offered Shares shall be subject once again to the right of first
refusal procedure provided in this Article Tenth; and
(7) Each Offer and any other Notice to be given under this Chapter Third shall
be delivered to the addresses of the registered shareholders indicated in
the Company's Stock Registry book, and to the Chairman and to the Secretary
of the Company, by hand, telefax or courier service; and each shall be
effective upon actual receipt at the domicile of the addressee as shown in
the Stock Registry book.
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CHAPTER FOURTH
THE BOARD OF DIRECTORS
ELEVENTH - (1) The management and administration of the Company's business shall
be entrusted to a Board of Directors consisting of a total of 5 (five)
Directors, who may but need not be shareholders, each of whom shall be elected,
along with his corresponding Alternate, by a simple majority vote of the
shareholders at the first Ordinary Shareholders' Meeting of each fiscal year;
provided, however, that in the event any shareholder holds at least 49%
(forty-nine) percent but less than 50% (fifty percent) of the Company's capital
stock, duly subscribed and paid up, then that shareholder shall be entitled to
elect 2 (two) Directors (including the Director that such shareholder would be
entitled under Article 144 of the General Law of Business Organizations to
elect), the other 3 (three) Directors still to be elected by a simple majority
vote of the shareholders.
(2) In the absence of a Director for any reason, including without limitation,
absences due to retirement, death, resignation or removal, the Alternate
Director elected by the same shareholder or group of shareholders that elected
the absent Director shall be entitled to act. In the absence of such Alternate,
a Shareholders' Meeting shall be called to elect a successor.
(3) Each Director shall serve until his successor has been elected and
qualified; and each may be reelected any number of times without limitation. No
person who has been convicted of a serious crime shall be eligible to serve as a
Director or as an Alternate.
(4) No Director may be removed from his position without the prior written
consent of the shareholder or group of shareholders that elected him, except,
however, that if any Director or any Alternate is convicted of a serious crime,
then: (i) the Board of Directors shall be both authorized and required to remove
that Director or that Alternate, as the case may be, within 15 (fifteen)
calendar days following the criminal conviction; and (ii) the shareholder or
group of shareholders that elected the Director or the Alternate so removed
shall elect a replacement within 10 (ten) calendar days following the removal.
TWELFTH - (1) The Board of Directors, at its first meeting held after the first
Ordinary Shareholders' Meeting of each fiscal year, shall appoint a Chairman, a
Secretary and an Assistant Secretary, if they were not appointed by the
Shareholders' Meeting. The Chairman shall be a member of the Board of Directors
and shall have the powers and duties expressly granted
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to him by the Board. The Secretary and the Assistant Secretary may but need
not be members of the Board.
(2) The Secretary or the Assistant Secretary shall attend all meetings of the
Board of Directors and record minutes of the proceedings of said meetings in a
minute book to be kept for such purpose. The minutes of each Board meeting
shall be reviewed and signed by the Chairman and by the Secretary or the
Assistant Secretary. The Secretary and the Assistant Secretary shall have
custody of the minute book of Board meetings and related books and records.
Upon request by any shareholder, the Secretary or the Assistant Secretary shall
issue copies of the recordings and entries contained in such books and permit
any shareholder to review them.
THIRTEENTH - The Board of Directors shall have the following powers and
authority:
(1) to represent the Company under a general power of attorney for lawsuits and
collections with all general authority and the special powers that require
a special grant in accordance with the law, including, without limitation,
those set out in the first paragraph of Article 2448 of the Civil Code for
the State of Nuevo Leon and the relevant articles of the Civil Codes for
the various states of the Republic of Mexico, including authority to file
Amparo Suits and to withdraw them, to file criminal complaints and to
withdraw them, to become coparty to the Public Prosecutor and grant
pardons, if proper, according to the law, to compromise, to submit to
arbitration, to take and answer depositions, to challenge judges, to
receive payments and perform all other acts expressly determined by law,
among which are included representing the Company before criminal, civil,
administrative and labor authorities and courts;
(2) to represent the Company under a general power of attorney for acts of
ownership, pursuant to the terms of the third paragraph of Article 2448 of
the Civil Code for the State of Nuevo Leon and the relevant articles of the
Civil Codes for the various states of the Republic of Mexico;
(3) to manage the business and property of the Company under a general power of
attorney pursuant to the terms of the second paragraph of Article 2448 of
the Civil Code for the State of Nuevo Leon and the relevant articles of the
Civil Codes of the various states of the Republic of Mexico;
(4) to execute, accept, endorse, subscribe and guarantee negotiable instruments
pursuant to the terms of Article 9 of the General Law of Credit Instruments
and Operations;
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(5) to open and close bank accounts on behalf of the Company and to designate
the persons who may sign on the same;
(6) to appoint and remove the officers and employees of the Company, fixing
their duties, fringe benefits and compensation;
(7) to execute individual labor contracts and collective bargaining agreements
and to intervene in preparing Company work regulations;
(8) to grant powers of attorney, either general or special, with or without the
right to be substituted, as well as to revoke the powers granted herein;
(9) to call Shareholders' Meetings and execute their resolutions; and
(10) in general, to carry out any and all acts authorized directly or indirectly
by these Bylaws or the General Law of Business Organizations, or that
result therefrom or otherwise are a consequence thereof.
FOURTEENTH - (1) The Chairman, who shall not cast any vote in his capacity as
Chairman (but who may vote in his capacity as a Director), shall preside over
the Shareholders' Meetings and over the Board of Directors' Meetings, and shall
execute the resolutions adopted thereby, without need of any special
appointment.
(2) In the event the Chairman does not attend a Board or Shareholders' Meeting,
a Director shall be designated at the Meeting to act as presiding officer
thereat. In the event the Secretary does not attend a Meeting, the Assistant
Secretary shall take his place. In the absence of both the Secretary and the
Assistant Secretary, the Board shall designate a Director to act as secretary
for the Meeting.
FIFTEENTH - The Board of Directors shall meet at least 6 (six) times during each
fiscal year, and at least one Board Meeting shall be held during the first 4
(four) months of each fiscal year. In addition, the Board shall meet at any
other time at which a Board Meeting may be duly called. Board Meetings shall be
called by the Chairman or by any 2 (two) other Directors, by means of written
Notice delivered by hand, telefax or courier service to each Director and
received at least 15 (fifteen) calendar days in advance of the Meeting date.
The call Notice must indicate the date, time and place for the Board Meeting,
state the specific purpose or purposes for which the Meeting is
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called, and provide an agenda for the Meeting. The call shall not be
required when all Directors are present at the Meeting.
SIXTEENTH - Written resolutions adopted by unanimous decision of all Directors
or their Alternates, if confirmed in a dated document signed by each Director or
his Alternate, shall be valid and have the same legal effect as if such
resolutions had been adopted at a duly convened Board of Directors' Meeting.
Such resolutions shall be signed by the Secretary or the Assistant Secretary and
be transcribed in the minute book referred to in Article Twelfth. The Secretary
or the Assistant Secretary shall deliver a certified copy of all such
resolutions to the Examiners of the Company. Enclosures relating thereto, if
any, shall be attached to the corresponding file.
SEVENTEENTH - Board Meetings may be held anywhere, both within the Republic of
Mexico and abroad, as determined by the Board. The presence of at least 3
(three) Directors or their respective Alternates shall be required in order for
the Board of Directors to act at any Board Meeting. All actions of the Board of
Directors shall be taken only upon the affirmative vote of any 3 (three) or more
Directors or their respective Alternates; provided, however, that in order to be
duly adopted each of the following actions shall require the affirmative vote of
at least 4 (four) Directors or their respective Alternates:
(1) approval of the Company's annual business plan, which shall consist of a 1
(one) year operating plan, a 3 (three) year capital expenditure plan and a
5 (five) year strategic plan;
(2) contracting indebtedness in an amount that would cause the Company's total
indebtedness to exceed, by at least 25% (twenty-five percent) at any time
during the fiscal year, the debt limit set out in the corresponding
business plan;
(3) any sale of capital equipment that would cause the aggregate annual amount
of such sales to exceed 7% (seven percent) of the inflation-adjusted book
value of the Company's total assets at the time of sale;
(4) approval of any material deviation from the Company's operating plan or
capital expenditure plan set out in the Company's business plan;
(5) approval of any settlement of any lawsuit or administrative proceeding to
which the Company is a party and to which any agency, department, ministry
or instrumentality of the United Mexican States or of the State of Nuevo
Leon or of any municipality located in the State of Nuevo Leon also is a
party, or with respect to which the Company proposes to
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pay any amount in excess of U.S. $1 million (ONE MILLION AND 00/100
DOLLARS) for transactional purposes;
(6) approval of any agreement between the Company and any of its shareholders
that is not contemplated in the business plan.
All resolutions of the Board shall indicate the manner in which the action
resolved to be taken shall be implemented.
CHAPTER FIFTH
GENERAL SHAREHOLDERS' MEETINGS
EIGHTEENTH - (1) The General Meetings of Shareholders constitute the supreme
authority of the Company and, therefore, have unlimited powers to resolve and
ratify the acts and operations of the Company. Resolutions of General
Shareholders' Meetings shall be carried out by the Chairman of the Board of
Directors, unless such power specifically is delegated by the shareholders to
some other person.
(2) General Shareholders' Meetings may be Ordinary or Extraordinary. All
Shareholders' Meetings must be held at the Company's domicile.
(3) Written resolutions adopted by unanimous decision of all shareholders, if
confirmed in a dated document signed by each shareholder or a duly authorized
representative thereof, shall be valid and have the same legal effect as if such
resolutions had been adopted at a duly convened Shareholders' Meeting. Such
resolutions shall be signed by the Secretary or by the Assistant Secretary and
be transcribed in the minute book of the proceedings of the Shareholders'
Meetings. The Secretary or the Assistant Secretary shall deliver a certified
copy of all such resolutions to the Examiners of the Company. Enclosures
relating thereto, if any, shall be attached to the corresponding file.
NINETEENTH - (1) Ordinary Shareholders' Meetings shall be held at least once
every year, within the first 4 (four) months of the fiscal year, and shall
resolve on the following matters: (i) to discuss, approve or modify the report
of the Board of Directors referred to in Article 172 of the General Law of
Business Organizations, based upon the report of the Examiners; (ii) to appoint
the Directors and their Alternates, and the Examiners, as provided in these
Bylaws; (iii) to determine the remuneration, if any, that will be paid to the
Directors and to the Examiners; and (iv) to determine any matter not reserved to
Extraordinary Shareholders' Meetings.
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(2) Extraordinary Shareholders' Meetings may be called and held at any time, in
accordance with these Bylaws, to consider any of the matters listed in Article
182 of the General Law of Business Organizations. Any of the matters listed in
Article Seventeenth (1) through (6) of these Bylaws also may be considered by an
Extraordinary Shareholders' Meeting if submitted thereto.
TWENTIETH - (1) General Shareholders' Meetings, both Ordinary and Extraordinary,
may be held only upon a call by the Board of Directors or by the Examiners, in
accordance with Articles 166 and 184, or as provided in Article 185, of the
General Law of Business Organizations.
(2) The call Notice for a General Shareholders' Meeting must indicate the
date, time and place for the Meeting, state the specific purpose or purposes
for which the Meeting is called, provide an agenda for the Meeting, and state
whether it is a first, second or later call. Each call Notice must be signed
by the person issuing it. Call Notices must be published in a newspaper of
large circulation in the domicile of the Company at least 15 (fifteen)
calendar days in advance of the proposed date of the Meeting if it is a first
call; and if it is a second call, the Notice must be published within the 15
(fifteen) calendar-day period following the proposed date set for the Meeting
indicated in the first call and at least 5 (five) calendar days in advance of
the new proposed date for the Meeting. Call Notices for General
Shareholders' Meetings shall be delivered to the shareholders of the Company
at their corresponding addresses recorded in the Company's Stock Registry
Book. Each call Notice shall be delivered by hand, by telefax with
acknowledgment of receipt, or by courier service, at least 15 (fifteen)
calendar days prior to the date of the Meeting if on first call, or at least
5 (five) calendar days prior to the date of the Meeting if on second call.
For purposes of this Article Twentieth, Notices shall be effective upon
actual receipt at the domicile of the addressee as shown in the Stock
Registry book.
(3) Notwithstanding paragraph (1), if all shares of the capital stock are
represented at a Shareholders' Meeting, said Meeting shall be deemed validly
held without any prior call.
TWENTY-FIRST - In order for an Ordinary Shareholders' Meeting to be legally
convened upon first call, at least 60% (sixty percent) of the issued and
outstanding shares of the capital stock, duly subscribed and paid up, must be
represented thereat. In the event an Ordinary Shareholders' Meeting cannot be
held on the date fixed for such purpose, a second call shall be made stating the
circumstances thereof. In order for an Ordinary Shareholders' Meeting to be
legally convened upon second or subsequent calls, at least 50% (fifty percent)
of the issued and
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outstanding shares of the capital stock, duly subscribed and paid up, must be
represented thereat. Resolutions shall be validly adopted at Ordinary
Shareholders' Meetings only upon the affirmative vote of shareholders
representing a majority of the issued and outstanding shares of the capital
stock.
TWENTY-SECOND - In order for an Extraordinary Shareholders' Meeting to be
legally convened upon first call, at least 75% (seventy-five percent) of the
issued and outstanding shares of the capital stock, duly subscribed and paid up,
must be represented thereat. In the event an Extraordinary Shareholders'
Meeting cannot be held on the date fixed for such purpose, a second call shall
be made stating the circumstances thereof. In order for an Extraordinary
Shareholders' Meetings to be legally convened upon second or subsequent calls,
at least 50% (fifty percent) of the issued and outstanding shares of the capital
stock, duly subscribed and paid up, must be represented thereat. Resolutions
shall be validly adopted at Extraordinary Shareholders' Meetings only upon the
affirmative vote of shareholders representing more than 50% (fifty percent) of
the issued and outstanding shares of the capital stock; except, however, that
the affirmative vote of shareholders representing at least 60% (sixty percent)
of the issued and outstanding shares of the capital stock, duly subscribed and
paid up, shall be required to approve: (i) any amendment to or other
modification of these Bylaws; (ii) any increase in the capital of the Company
through an additional capital contribution by any shareholder; and, (iii) any of
the matters listed in Article Seventeenth (1) through (6) of these Bylaws that
may be submitted for consideration by an Extraordinary Shareholders' Meeting.
TWENTY-THIRD - If at a duly convened Shareholders' Meeting it is not possible to
resolve on all matters listed in the agenda, due to lack of time, the Meeting
may be adjourned and be continued on the next business day, without the need of
a new call.
TWENTY-FOURTH - (1) At all Shareholders' Meetings, each shareholder shall be
entitled to 1 (one) vote for each share of the capital stock held thereby.
(2) In order for shareholders to be admitted to Shareholders' Meetings, their
names must be recorded in the Stock Registry book as the owners of the shares
represented.
(3) Any shareholder may be represented at a Shareholders' Meeting by an
attorney-in-fact pursuant to a special power of attorney, for which a plain
letter proxy shall suffice.
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(4) In order for resolutions to be validly adopted at any Shareholders'
Meeting, they must concern and be within the scope of the matters listed in the
agenda of said Meeting.
TWENTY-FIFTH - The Chairman shall designate one or more of the shareholders or
their representatives to act as Tellers, in order for the same to determine
whether the required quorum is present to hold the Shareholders' Meeting in
question.
TWENTY-SIXTH - The Secretary or the Assistant Secretary shall attend all
Shareholders' Meetings and record minutes of the proceedings of said Meetings in
a minute book or books to be kept for such purpose. Minutes shall be prepared
for all Shareholders' Meetings, including those not held due to a lack of
quorum. The minutes of each Shareholders' Meeting shall be reviewed and signed
by the persons acting as the Chairman and as the Secretary of the Meeting, by
the attending Examiners, and by any duly authorized representative of a
shareholder who wishes to do so. The documents that evidence that the calls
were made under the terms set forth in these Bylaws, as well as the attendance
list and any other document presented to the Meeting, shall be attached to the
minutes. The Secretary and the Assistant Secretary shall have custody of the
minute book of Shareholders' Meetings, the Stock Registry Book, and related
books and records. Upon request by any shareholder, the Secretary or the
Assistant Secretary shall issue copies of the recordings and entries contained
in such books and permit any shareholder to review them.
CHAPTER SIXTH
SURVEILLANCE OF THE COMPANY
TWENTY-SEVENTH - The surveillance of the Company's affairs shall be entrusted to
Examiners, and in their absence, to Alternate Examiners, who shall be appointed
or removed at an Ordinary Shareholders' Meeting. Neither the Examiners nor
their Alternates need be shareholders. Each shareholder that holds at least 25%
(twenty-five percent) of the issued and outstanding shares of the capital stock
shall have the right to appoint one Examiner and his Alternate. Examiners and
their Alternates may be reappointed any number of times.
TWENTY-EIGHTH - Each Examiner shall continue in his duties until his successor
is duly appointed, qualified and takes office.
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TWENTY-NINTH - The Examiners shall have the authority and duties set forth in
the General Law of Business Organization.
CHAPTER SEVENTH
FISCAL YEAR, PROFITS AND LOSSES AND BALANCE SHEET
THIRTIETH - The fiscal year shall begin on January 1, and shall end on
December 31, of each year.
THIRTY-FIRST - At the end of each fiscal year, a report and financial statements
shall be prepared as required under Article 172 of the General Law of Business
Organizations. Said financial statements shall be audited by the Company's
external auditors.
THIRTY-SECOND - The annual net profits shown in the balance sheet and the
financial statements referred to under the preceding Article shall be applied as
follows by the Annual Ordinary Shareholders' Meeting: (1) 5% (five percent) of
the net profits shall be used to establish or increase the legal reserve until
such reserve reaches an amount equivalent to 20% (twenty percent) of the capital
stock; and (2) the remaining amount shall be applied as determined by the
corresponding Shareholders' Meeting.
CHAPTER EIGHTH
DISSOLUTION AND LIQUIDATION OF THE COMPANY
THIRTY-THIRD - The Company shall not be dissolved, except upon the occurrence of
one or more of the following events: (1) the expiration of the fixed term of the
Company stated in Article Fifth; (2) the absolute impossibility of the Company's
continuing to pursue its corporate purpose stated in Article Second; (3) the
number of shareholders of the Company becomes less than the minimum number of
shareholders that is required under the General Law of Business Organizations;
or (4) the loss of 2/3 (two-thirds) of the Company's corporate capital.
THIRTY-FOURTH - Upon any declaration by an Extraordinary Shareholders' Meeting
that the Company has been dissolved, following the occurrence of 1 (one) or more
of the events listed in Article Thirty-Third, the Company shall be liquidated.
In this event, the Extraordinary Shareholders' Meeting dealing with the
dissolution shall appoint one or more Liquidators. The shareholders also shall
determine the authority of the
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Liquidators, setting forth the guidelines to which the Liquidators shall be
subject, and shall fix their compensation. Any shareholder or group of
shareholders representing at least 25% (twenty-five percent) of the shares of
the capital stock shall have the right to appoint a Liquidator in the event
any dissolution is declared.
THIRTY-FIFTH - (1) During the period of any liquidation of the Company, the
shareholders shall hold meetings in the same manner as provided in these Bylaws
and the General Law of Business Organizations.
(2) In the event of any dissolution, the Liquidator or Liquidators shall assume
the duties of the Board of Directors, with the powers said duties confer.
(3) In the event of any dissolution, the Examiners shall continue carrying out
the same duties with respect to the Liquidators as they would discharge with
respect to the Board of Directors.
CHAPTER NINTH
FUNDAMENTAL DISAGREEMENT BETWEEN SHAREHOLDERS
THIRTY-SIXTH - (1) In the case that the Company has only two shareholders (and
in no other case) and upon the occurrence of any fundamental dispute with
respect to any major aspect of the operation of the Company, the shareholder
that considers itself aggrieved may place the matter upon the agenda for
consideration by the Board at the next scheduled Board meeting. If the Board
meeting fails to produce a mutually acceptable resolution of the dispute, then a
special Board meeting shall immediately be called and held not more than forty
(40) days and not less that thirty (30) days after the prior Board meeting, the
sole purpose of which shall be to resolve the issue in dispute.
(2) Any fundamental dispute between the shareholders that has not been resolved
as provided previously in paragraph (1), shall be submitted to mandatory
mediation upon demand of either shareholder, any such mediation to be conducted
under the guidance of the American Arbitration Association in Dallas, Texas,
U.S.A., the shareholder that demands the mediation to bear the full expense of
the mediation services, but each shareholder to bear all other costs of its own
participation in the mediation.
(3) In the event that mediation under the previous paragraph (2) fails to
produce a mutually acceptable resolution to the fundamental disagreement within
thirty (30) days after the
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commencement of the mediation, then the aggrieved shareholder may, at its
discretion, deliver to the other shareholder a Notice of Intent to Terminate,
which must contain the following information and supporting documents:
(i) the name of the shareholder that is delivering the Notice of Intent to
Terminate;
(ii) the date of the Notice of Intent to Terminate;
(iii) the name and address of the shareholder and its officer to whom
the Notice of Intent to Terminate is being delivered;
(iv) a brief description of the fundamental dispute and the decisions, if
any, of the Board directed at resolving the dispute, and why the shareholder
considers the results unsatisfactory;
(v) a brief description of the results of the mediation, and why the
shareholder considers them unsatisfactory;
(vi) a statement that the notifying shareholder thereby is making a binding
and enforceable offer to sell all (but not less than all) of its shares of the
capital stock of the Company to the other shareholder (which shall include a
binding and enforceable offer to sell at least one (1) share, but not more than
1% (one percent) of its shares, to any nominee of the other shareholder) for a
fixed price per share, payable in immediately available funds, in United States
dollars, ten (10) days after any acceptance of such offer;
(vii) a statement that the notifying shareholder or its nominee thereby
also is making, simultaneously with the offer referred to in the previous
paragraph (vi), a binding and enforceable offer to purchase all (but not less
than all) of the shares of the capital stock of the Company held by the other
shareholder, at the same fixed price per share as that referred to in the
previous paragraph (vi), also payable in immediately available funds, in United
States dollars, ten (10) days after acceptance of such offer;
(viii) the Notice of Intent to Terminate shall contain the original
signature of an officer of the notifying shareholder who is duly authorized on
behalf of the notifying shareholder to make the offers referred to in the
previous paragraphs (vi) and (vii); and
(ix) the Notice of Intent to Terminate shall be accompanied by an
irrevocable letter of credit confirmed by a reasonably acceptable commercial
bank in the same country as the domicile of the shareholder to which the Notice
of Intent to
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Terminate is being transmitted, such letter of credit to guarantee full
payment of the full purchase price for the shares to the shareholder
receiving the Notice of Intent to Terminate in the event that such
shareholder accepts the offer referred to the previous paragraph (vii), the
only condition to drawing upon such letter of credit to be the duly
authorized endorsement and delivery of the corresponding share certificates
representing the shares being sold.
THIRTY-SEVENTH - Within twenty (20) days after receiving any Notice of Intent to
Terminate containing the information required in Article Thirty-Sixth, the
responding shareholder shall deliver to the notifying shareholder a Response
Notice, which must contain the following information:
(1) the name of the shareholder that is responding;
(2) the date of the Response Notice;
(3) the name and address of the shareholder and its officer to whom the
Response Notice is being delivered;
(4) a statement that the responding shareholder either accepts the offer to
sell referred to in Article Thirty-Sixth (3)(vi), or that it accepts the offer
to buy referred to in Article Thirty-Sixth (3)(vii), and that a binding contract
thereby has been formed for the purchase or sale of shares upon the terms and
conditions indicated;
(5) the Response Notice shall contain the original signature of an officer of
the responding shareholder who is duly authorized on behalf of the responding
shareholder to accept either of the offers referred to in Article Thirty-Sixth
(3)(vi) and (3)(vii); and
(6) if the Response Notice indicates that the responding shareholder is
accepting the offer referred to in Article Thirty-Sixth (3)(vi), then the
Response Notice must be accompanied by an irrevocable letter of credit confirmed
by a reasonably acceptable commercial bank in the same country as the domicile
of the shareholder to which the Response Notice is being transmitted, said
letter of credit to guarantee payment of the full purchase price for the shares
to the shareholder that receives the Response Notice, the only condition to
drawing upon such letter of credit to be the duly authorized endorsement and
delivery of the corresponding share certificates representing the shares being
sold.
In the event that the shareholder receiving a Notice of Intent to Terminate does
not deliver a Response Notice to the notifying shareholder within twenty (20)
days after receipt of the Notice of Intent to Terminate, then for a period of
twenty (20)
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additional days the notifying shareholder again shall notify the shareholder
that should have responded that the former either will purchase all the
shares of the Company held by the shareholder that should have responded, or
that it will sell all of its shares of the Company to the shareholder that
should have responded, at the price previously stated in the Notice of Intent
to Terminate, which additional notice shall, under the circumstances,
constitute the formation of a binding contract between the shareholders for
the purchase or sale of such shares.
THIRTY-EIGHTH - The closing of any purchase or sale transaction for shares of
the Company in accordance with this Chapter Ninth shall be completed not more
than thirty (30) days after the formation of a binding contract therefor,
regardless of how the binding agreement therefor may be formed under the final
paragraph of Article Thirty-Seventh.
THIRTY-NINTH - In the event of any transfer of shares under this Chapter, the
shareholder that is selling its shares of stock in the Company shall continue to
provide to the Company for a period of sixty (60) days following such transfer,
any and all services that it provided prior to the transfer.
CHAPTER TENTH
ARBITRATION
FORTIETH - Each of the shareholders and the Company shall attempt in good faith
to resolve any dispute, controversy or claim that may arise in any manner
whatsoever with respect to these Bylaws within 30 (thirty) calendar days after
becoming aware of the dispute, controversy or claim.
FORTY-FIRST - Each and every dispute, controversy or claim arising out of or in
connection with any provision of these Bylaws that is not settled amicably
within the 30 (thirty) calendar day period referred to in Article Thirty-Sixth
shall be solely and finally settled by binding, non-appealable arbitration at
Dallas, Texas, U.S.A. not later than 6 (six) months following the initial Notice
of arbitration (which Notice shall be given in writing to the party against whom
the claim is being made, and to the arbitration administrator, by the party
initiating the arbitration), in accordance with the International Arbitration
Rules of the American Arbitration Association ("AAA") as modified by the
provisions of this Chapter Ninth of the Bylaws.
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FORTY-SECOND - Each and every arbitration hereunder shall be conducted by a
panel of 3 (three) arbitrators. Not later than 10 (ten) calendar days after the
initial Notice of arbitration, one arbitrator shall be selected and appointed by
the Company to represent the position of the Company and the majority of the
shareholders regarding the dispute, and another arbitrator shall be selected and
appointed by the largest minority shareholder that disagrees with the position
of the majority. The AAA shall have power to select either or both such
arbitrators if they have not been selected by the parties as required within the
time specified. Not later than 20 (twenty) calendar days after the selection
and appointment of the two arbitrators, the two appointees shall choose a third
arbitrator to serve as the neutral chairperson of the arbitration panel. If the
two appointees cannot agree regarding the selection of the third arbitrator
within such 20 (twenty) calendar day period, then the AAA shall have power to
select the third arbitrator. Each arbitrator appointed to hear any dispute,
controversy or claim hereunder shall have no relationship or connection with the
Company or any of its shareholders or with any affiliate of any shareholder or
with legal counsel to the Company or any of its shareholders. In the event of
the death or disability of an arbitrator, a replacement arbitrator shall be
selected and appointed in the same manner as the previous arbitrator.
FORTY-THIRD - The International Arbitration Rules of the AAA, as modified by the
terms of this Chapter Tenth, shall govern the arbitration of any and all
disputes arising under these Bylaws; and all disputes, controversies and claims
arising out of or in connection with the interpretation, performance, breach or
enforceability of these Bylaws shall be governed exclusively by the substantive
laws of the United Mexican States.
FORTY-FORTH - The award rendered in connection with any arbitration conducted in
accordance with this Chapter Tenth shall be final and binding, and any judgment
upon such award may be entered and enforced by any court of competent
jurisdiction in any country. The award of the arbitral tribunal shall be the
sole and exclusive remedy regarding any and all claims and counterclaims with
respect to the subject matter of the arbitrated dispute. The shareholders
hereby waive all jurisdictional defenses in connection with any arbitration
hereunder or the enforcement of any award or judgment rendered pursuant thereto.
FORTY-FIFTH - Promptly following the rendering of an order or award in the
arbitration of any disputed matter hereunder, the arbitrators shall issue to the
interested parties hereunder a written explanation in the English language, with
a certified
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translation thereof in the Spanish language, of the reasons for such order or
award and a full statement of the facts found and the rules of law applied in
reaching the decision.
FORTY-SIXTH - With respect to any award issued by the arbitrators with regard to
any dispute arising under these Bylaws, the shareholders and the Company
expressly agree: (a) to the prosecution of an action in any court of the United
States of America or of any State thereof, or in any court of the State of Nuevo
Leon or of the United Mexican States located in Monterrey, Nuevo Leon, to
confirm and enforce such arbitration award; (b) that any such arbitration award
shall constitute conclusive proof of the validity of the determinations of the
arbitrators underlying such award; and (c) that any court mentioned in section
(a) of this paragraph may enter judgment upon and enforce such award, whether
pursuant to the Inter-American Convention on International Commercial
Arbitration, the laws of the United States of America or of the United Mexican
States or of any of their several States, respectively, or otherwise.
FORTY-SEVENTH - All proceedings in any arbitration conducted hereunder shall be
conducted in the English language, and all documents, exhibits and other
evidence submitted in Spanish by any party shall be accompanied by a certified
English translation thereof; provided, however, that upon request by any party
to the arbitration all such proceedings, hearings and evidence shall be
translated simultaneously into the Spanish language for the convenience of such
party.
FORTY-EIGHTH - Not later than 60 (sixty) calendar days following delivery of the
Notice of arbitration, each side shall produce and deliver to the arbitrators
and to the other parties a list of all documents and witnesses upon which it
plans to rely, which list shall contain all information necessary for a full
understanding of the legitimate issues raised in the arbitration, including,
without limitation, the following: (1) a written statement of the factual basis
of the claim or defense and the legal theories upon which each claim or defense
is based; (2) the names and addresses of all individuals, including witnesses
whom the disclosing party expects to call to present testimony or other evidence
during the arbitration proceeding and those whom the party believes may have
knowledge or information relevant to the arbitration, and a description of the
nature of the knowledge of information that each such individual is believed to
possess; (3) the names and addresses of all persons who have given statements,
along with copies of those statements; (4) a written computation of the measure
of damages alleged by the disclosing party and the documents or testimony upon
which such computation or measure is based; and (5) the existence, location,
custodian
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and general description of any relevant documents or other tangible evidence
that the disclosing party plans to use at the arbitration hearing. Each side
shall be permitted 5 (five) hours of witness depositions, to be allocated as
that side sees fit. No interrogatories or requests for admission shall be
permitted. The arbitration hearing shall take place not later than 90
(ninety) calendar days following the initial Notice of arbitration. Each
side shall have not more than 10 (ten) hours to make its arguments and
present its evidence to the arbitration panel. The parties also may submit
pre- and post-hearing memoranda, each not to exceed 20 (twenty) double-spaced
pages.
FORTY-NINTH - All papers, documents and other evidence, whether written or oral,
filed with or presented to the arbitrators, shall be deemed by the parties and
the arbitrators to be confidential information. No party, witness or arbitrator
shall disclose in whole or in part to any other person any confidential
information submitted in connection with arbitration proceedings hereunder,
except to the extent: (1) required by applicable law or regulation; (2)
reasonably necessary to assist counsel in preparation for arbitration of the
dispute; or (3) that such information was previously known or subsequently
became known to the disclosing party, without restrictions on disclosure, that
it was developed independently by such disclosing party, or that it became
publicly known through no fault of the disclosing party.
FIFTIETH - The non-prevailing party in the arbitration shall bear the fees and
expenses of the arbitrators, the costs of arbitration, the expense of any award
rendered therein and of its enforcement, and the reasonable attorney's fees and
expenses of the prevailing party. All expenses, fees, costs and charges, and
any award, shall be expressed in United States dollars.
ARTICLE ELEVENTH
GENERAL PROVISIONS
FIFTY-FIRST - All matters not specifically discussed in these Bylaws shall be
governed in accordance with the provisions of any separate written agreement
drafted for such purpose by all the shareholders, or as provided in the General
Law of Business Organizations, or, with respect to arbitration hereunder, as
otherwise may be provided under the International Commercial Arbitration Rules
of the AAA.
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Exhibit 10.18
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made this 21st day of October, 1997 by and between
GENERAL ELECTRIC COMPANY, a New York corporation having an office at
2690 Balltown Road, Building 610, Schenectady, New York 12345 (hereinafter
called "Seller"), and ACCURIDE CORPORATION, a New York corporation having an
office at 2315 Adams Lane, P.O. Box 40, Henderson, Kentucky 42420 (hereinafter
called "Buyer').
WITNESSETH:
1. PREMISES: Subject to the terms, provisions and conditions of
this Agreement, Seller covenants and agrees to sell to Buyer, and Buyer
covenants and agrees to buy from Seller, on the terms hereinafter specified:
(a) that certain piece, parcel or tract of land, together with
all buildings and other improvements, if any, located thereon, situate, lying
and being in the City of Columbia, County of Maury and State of Tennessee which
is more particularly described in EXHIBIT "A" attached hereto, together with any
and all easements, covenants and other rights appurtenant to such land (the
"Real Property"); and
(b) all furniture, furnishings, fixtures, equipment and other
tangible personal property, if any, presently affixed to and/or located at the
Real Property and used exclusively in connection with Seller's management,
operation or repair of the Real Property, but excluding the equipment described
in EXHIBIT "B" attached hereto (collectively, the "Personal Property").
The term "Property" as hereinafter used in this Agreement means the
Real Property and the Personal Property.
2. PURCHASE PRICE: Buyer shall pay to Seller as the total purchase
price ("Purchase Price") for the Property the sum of Three Million Nine Hundred
Fifty Thousand and 00/100 Dollars ($3,950,000.00) as follows:
(a) Eighty-Five Thousand and 00/100 Dollars ($85,000.00) by
check upon the signing of this Agreement, subject to collection, the nonpayment
of which check in due course shall give Seller the option of canceling this
Agreement; and
(b) The balance, plus or minus any adjustments and prorations as
may be provided elsewhere in this Agreement, by wire transfer of immediately
available funds to Seller's designated account or, if Seller so chooses,
certified or bank check payable to Seller's order, on the "Closing Date" as
hereinafter defined.
3. INSPECTION: Subject to any restrictions relative to
environmental inspections as may be elsewhere provided in this Agreement, Buyer
and its representatives shall have the right to enter upon the Real Property for
the purpose of conducting building surveys and such other examinations and
inspections (other than environmental inspections or assessments)
<PAGE>
of the Property as Buyer may reasonably desire prior to the Scheduled Closing
Date (as hereinafter defined); provided, however, that the discovery of any
objectionable condition on or with respect to the Property shall not give Buyer
any right to terminate this Agreement or to require Seller to take any
corrective action with respect to such condition except to the extent otherwise
expressly provided in this Agreement. Excluding any damage, liabilities, loss,
cost, damage or expense resulting from Seller's negligence or misconduct, Buyer
shall repair any and all damage caused by such surveys, examinations and
inspections and shall indemnify and hold Seller harmless from all liability,
loss, cost, damage or expense in connection therewith. In the exercise of its
rights pursuant to this Paragraph 3, Buyer shall not interfere with the conduct
of Seller's activities on or with respect to the Property and shall give Seller
reasonable advance notice of any surveys, examinations and inspections Buyer
intends to conduct on or with respect to the Property. Such notice shall
contain the date and time Buyer intends to conduct such activities and a
description of the nature of the activities. Seller shall be entitled to have
representatives present throughout such activities. The indemnification
provision of this Paragraph 3 shall survive the closing of title, or if such
closing does not occur, the termination of this Agreement.
4. SURVEY: Buyer shall obtain any survey of the Real Property which
Buyer may require or desire ("Survey") at Buyer's cost and expense. Any Survey
shall be made only by a surveyor licensed in the State of Tennessee. Buyer
shall provide Seller with a copy of any Survey (including any survey made by
Buyer prior to the execution and delivery of this Agreement) immediately upon
completion of such Survey, but not later than thirty (30) days after the date of
this Agreement, and such Survey shall be certified to Buyer and Seller. If the
Survey shall not confirm that (a) the Real Property consists of an integral land
area with no slivers, ships, vacancies or gores, and that the Real Property has
no voids or lapses in the description thereof, (b) the Real Property has ingress
and egress to a public street, (c) there are no encroachments onto the Real
Property, and (d) the improvements on the Real Property do not encroach onto
adjoining lands (any one or more of the foregoing being collectively referred to
as a "Survey Objection"), then Buyer shall have the fights set forth in
Paragraph 5 below.
5. TITLE:
(a) Indefeasible fee simple title to the Real Property is to be
conveyed on the Closing Date to Buyer, free of liens, encumbrances, judgments,
tenancies, covenants, conditions, restrictions, easements, encroachments and
rights-of-way, recorded or unrecorded; subject, however, only to "Permitted
Encumbrances" as hereinafter defined. Title is to be marketable, good of record
and in fact, and insurable without exceptions (other than the Permitted
Encumbrances) at standard rates by a recognized title insurance company licensed
to do business in the State of Tennessee. Buyer shall order, immediately
following execution of this Agreement, an examination title of the Real Property
("Title Report"), to be made on Buyer's behalf and at Buyer's cost and expense.
(b) Within thirty (30) days following the date of this
Agreement, Buyer shall give seller written notice of any specific title matters
which are unacceptable to Buyer and any Survey Objections (collectively, "Title
Objections") and of the requirements
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reasonably necessary to correct said Title Objections. If Buyer notifies Seller
as aforesaid, Seller shall, within twenty (20) days following receipt of such
notice from Buyer, elect by written notice to Buyer to (i) take such action at
its own expense as reasonably may be necessary to remedy the Title Objections
within thirty (30) days from the date of Seller's notice, or (ii) reduce the
Purchase Price by an amount which Seller in its reasonable business judgment
deems sufficient to enable Buyer to remedy the Title Objections after the
Closing Date, or (iii) take no remedial action. If Seller fails timely to elect
any option, then Seller shall be deemed to have elected option (iii) above. If
Seller elects or is deemed to elect option (iii) above, or if Seller elects
option (ii) above but Buyer does not, in its reasonable business judgment,
believe the Purchase Price reduction is sufficient to remedy the Title
Objections, or if Seller fails or is unable to satisfy the requirements
reasonably necessary to correct the Title Objections within thirty (30) days
from the date of Seller's notice, then Buyer shall have the right to either
terminate this Agreement or waive any such Title Objections and take title to
the Real Property subject thereto. Buyer shall exercise such right within seven
(7) days of notice to Buyer of Seller's election of option (ii) or (iii), or
within thirty seven (37) days after notice to Buyer of Seller's election of
option (i). If Buyer fails to give Seller written notice of Title Objections
within thirty (30) days after the date of this Agreement, then all title and
survey matters then affecting the Real Property shall be deemed to be acceptable
to Buyer, and Buyer shall take title subject thereto; provided, however, that
any liens or encumbrances or other instruments affecting title to the Real
Property which are recorded after said thirty-day period may be considered Title
Objections, except as and to the extent that Buyer is otherwise obliged by the
provisions hereof to accept a conveyance of the Real Property subject thereto.
Buyer expressly acknowledges and agrees that nothing in this Agreement shall
obligate Seller to incur any expense or to bring any action or proceeding in
order to clear up any Title Objections or to render title marketable, and if at
any time Seller shall notify Buyer that it cannot or will not correct any such
Title Objections, either those which were reported to Seller within thirty (30)
days following the date of this Agreement or those which came into existence
following said thirty-day period, Buyer shall have seven (7) days following
receipt of such notice from Seller within which to either terminate this
Agreement or waive any such Title Objections and take title to the Real Properly
subject thereto, without any abatement or reduction of the Purchase Price.
Failure of Buyer to make such election by giving written notice thereof to
Seller within said seven-day period shall be conclusively deemed to be an
exercise of its option to waive such Title Objections and to complete the
purchase as aforesaid. If this Agreement has not been previously terminated and
on the Scheduled Closing Date Seller shall be unable to convey title to the Real
Property free and clear of Title Objections which have not been waived or deemed
acceptable to Buyer as provided above, then Buyer shall have the right to
terminate this Agreement by giving Seller written notice thereof on the
Scheduled Closing Date.
(c) From and after the execution of this Agreement and until the
Closing Date or termination, (i) Seller shall not mortgage or encumber the
Property or execute any easements, covenants, conditions or restrictions with
respect to the Property or seek any zoning changes or other governmental
approvals with respect to the Property without first obtaining Buyer's prior
written consent in each instance, and (ii) Seller will keep any existing
mortgage(s) or deed(s) of trust and other liens encumbering the Property current
and not in
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default and will pay in a timely fashion all taxes and other public charges
against the Property so as to avoid forfeiture of Buyer's rights under this
Agreement.
(d) Upon request by Buyer, Seller shall execute such affidavits,
indemnities, and other similar type instruments as are consistent with Seller's
obligations under this Agreement and are required reasonably by a title company
for the elimination of any standard or printed exceptions in Buyer's final
policy of title insurance, including, without limitation, the exception for
unfiled mechanics' liens and parties in possession.
6. CLOSING: The deed shall be a special warranty deed and shall be
duly executed and acknowledged by Seller so as to convey to Buyer fee simple
title to the Real Property subject to: (a) zoning and other municipal, health
and police regulations and ordinances of the state, county and City, town or
village in which the Real Property is located; (b) covenants, easements,
restrictions and reservations of record as may be in force and affect the Real
Property; (c) any state of facts that a current accurate survey or an inspection
of the Real Property might disclose, and (d) taxes not yet due and payable
(collectively, "Permitted Encumbrances"). Seller shall deliver the deed to
Buyer and Buyer shall pay the balance of the Purchase Price to Seller as
provided in Paragraph 2 hereof, at the office of Buyer's attorney at 11:00 A.M.
on October 22, 1997 (the "Scheduled Closing Date"), or at such other time, date
and/or place as may be agreed to by Seller and Buyer or as may be otherwise
provided for herein. The date on which the closing of title actually occurs is
herein called the "Closing Date". Notwithstanding any provision contained
herein to the contrary, if the closing of title does not occur on or before
December 31, 1997, then Seller shall have the absolute right to terminate this
Agreement without any liability or obligation to Buyer, except the obligation to
reimburse Buyer for certain documented out-of-pocket expenses as provided in
Subparagraph 15 (b) below.
7. ADJUSTMENTS; TRANSFER TAXES: Water and sewer charges, rents and
fees, if any, shall be apportioned as of the Closing Date. Buyer shall pay all
state, county and municipal documentary stamp and real property transfer taxes
payable in connection with the sale of the Property hereunder.
8. REAL ESTATE TAXES: All real estate taxes shall be apportioned as
of the Closing Date on the basis of the fiscal year for which said taxes are
assessed. If the closing of title shall occur before the tax rate or rates are
fixed, the apportionment of taxes shall be upon the basis of the tax rates for
the next preceding year applied to the latest known assessed valuation. Buyer
shall pay all taxes which shall become due on and after the Closing Date. Buyer
and Seller acknowledge that the statement for water and sewer charges for the
Property will not be available until after the closing and shall be apportioned
when received. Buyer shall pay amounts due for water and sewer charges and
Seller shall reimburse Buyer for its pro rata share of such charges within
thirty (30) days after demand therefore by Buyer.
9. CONDEMNATION: If, prior to the Scheduled Closing Date, all or
any substantial part of the Real Property shall be condemned by governmental or
other lawful authority, Buyer shall have no liability for any such condemnation
and shall have the right to either:
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<PAGE>
(a) terminate this Agreement, in which event Seller shall
promptly refund to Buyer all sums paid by Buyer to Seller pursuant to this
Agreement; or
(b) complete the purchase in accordance with the terms of this
Agreement, in which event all of the condemnation proceeds shall be payable to
Buyer or, if such proceeds are not then available, Seller shall assign all
claims therefor to Buyer.
Failure of Buyer to exercise one of the aforementioned options by written notice
to Seller within ten (10) days of such condemnation shall be conclusively deemed
to be an exercise of its option to complete the purchase as set forth in
subparagraph (b) hereof.
10. BROKER: Buyer and Seller each represent and warrant to the other
that it has not dealt with any broker in connection with this Agreement of the
purchase of the Property except Binswanger. Seller shall pay any fees,
commissions or other compensation due Binswanger in connection with this
Agreement and the sale of the Property. If any other broker or person shall
assert a claim to a fee, commission or other compensation on account of alleged
dealings with or for Buyer as a broker or finder in connection with this
Agreement or the purchase of the Property, then Buyer (a) shall indemnify and
hold harmless Seller against and from any such claim and all costs, expenses,
and liabilities incurred in connection with such claim or any action or
proceeding brought thereon (including, but without limitation, counsel and
witness fees in defending against such claim); and (b) shall satisfy promptly
any settlement or judgment arising from any such claim or any action or
proceeding brought thereon. If any other broker or person shall assert a claim
to a fee, commission or other compensation on account of alleged dealings with
or for Seller as a broker or finder in connection with this Agreement or the
purchase of the Property, then Seller: (a) shall indemnify and hold harmless
Buyer against and from any such claim and all costs, expenses, and liabilities
incurred in connection with such claim or any action or proceeding brought
thereon (including, but without limitation, counsel and witness fees in
defending against such claim); and (b) shall satisfy promptly any settlement or
judgment arising from any such claim or any action or proceeding brought
thereon. The provisions of this Paragraph 10 shall survive the closing of title
or termination of this Agreement.
11. REPRESENTATIONS AND WARRANTIES OF SELLER:
Seller represents and warrants to Buyer that the following are true,
accurate and complete as of the date of this Agreement and will be true,
accurate and complete as of the Closing Date:
(a) Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York.
(b) Authority, Seller and any individual executing this
Agreement on Seller's behalf, each has the power to execute, deliver and perform
this Agreement and has taken all actions required to authorize the due execution
and delivery of this Agreement. The execution, delivery and performance of this
Agreement does not, and the consummation of the transactions contemplated hereby
will not, violate any provision of the Articles of Incorporation or Bylaws of
Seller, or any provision of any agreement, instrument, order, judgment or decree
to
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<PAGE>
which Seller is a party or by which it or any of its assets is bound. This
Agreement is a valid and binding obligation of Seller and is enforceable against
Seller in accordance with its terms.
(c) Litigation. There are no actions, suits, claims or other
proceedings pending or, to the best of Seller's knowledge, contemplated or
threatened against Seller that could affect Seller's ability to perform its
obligations under this Agreement in a timely manner or which would affect any
portion of the Property.
(d) Title. Seller owns fee simple title to the Real Property
and Seller owns good and marketable title to the Personal Property.
(e) Defaults. Except for matters which may be disclosed in the
Title Report or the Survey, to the best of Seller's knowledge, no default or
breach exists under any covenant, condition, restriction, right of way,
easement, mortgage, deed of trust, lien or license affecting the Real Property,
or any portion thereof, that is to be performed or complied with by either
Seller or by any other party thereto.
(f) Mechanics' Liens. All bills and claims for labor performed
or materials supplied to or for the benefit of the Real Property have been paid
in full and there are no perfected or unperfected mechanics', materialmen's or
artisans' liens on or affecting the Real Property.
(g) Assessments. Seller has received no notice that any portion
of the Real Property is subject to any proposed or pending special assessments.
(h) Condemnation. There is no pending, or to the best of
Seller's knowledge, threatened, condemnation or eminent domain proceeding
affecting any portion of the Real Property.
(i) Compliance. To the best of Seller's knowledge, there are no
outstanding or uncured notices from any governmental authority of violations of
any laws, orders, ordinances, or regulations applicable to the Real Property.
(j) Leases. There are no leases, tenancies, licenses or other
rights of occupancy or use for any portion of the Real Property or any
assignments or sublets thereunder in effect.
(k) Contracts. There are no commitments, contracts, licenses,
options or other agreements of any kind affecting or relating to the Property.
(l) Binding Commitments. Seller has not made and will not make
any commitments or representations to the applicable governmental authorities,
any adjoining or surrounding property owners, any civic association, any
utility, or any other person or entity that would in any manner be binding upon
Buyer or the Property.
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(m) Bankruptcy. Seller (i) is not in receivership or
dissolution, (ii) has not made an assignment for the benefit of creditors or
admitted in writing its inability to pay its debts as they mature, and (iii) has
not been adjudicated a bankrupt or filed a petition in voluntary bankruptcy or a
petition or answer seeking reorganization or an arrangement with creditors under
the Federal bankruptcy law or any other similar law or statute of the United
States or any jurisdiction and no such petition has been filed against Seller.
12. REPRESENTATIONS AND WARRANTIES OF BUYER:
Buyer represents and warrants to Seller that the following are true,
accurate and complete as of the date of this Agreement and will be true,
accurate and complete as of the Closing Date:
(a) Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York,
and, on the Closing Date, will be duly qualified as a foreign corporation to
conduct business in the State of Tennessee. Buyer is a wholly-owned subsidiary
of Phelps Dodge Corporation.
(b) Authority. Buyer and any individual executing this
Agreement on Buyer's behalf, each has the power to execute, deliver and perform
this Agreement and has taken all actions required to authorize the due execution
and delivery of this Agreement. The execution, delivery and performance of this
Agreement does not, and the consummation of the transactions contemplated hereby
will not, violate any provision of the Articles of Incorporation or Bylaws of
Buyer, or any provision of any agreement, instrument, order, judgment or decree
to which Buyer is a party or by which it or any of its assets is bound. This
Agreement is a valid and binding obligation of buyer and is enforceable against
Buyer in accordance with its terms.
(c) Bankruptcy. Buyer (i) is not in receivership or
dissolution, (ii) has not made an assignment for the benefit of creditors or
admitted in writing its inability to pay its debts as they mature, and (iii) has
not been adjudicated a bankrupt or filed a petition in voluntary bankruptcy or a
petition or answer seeking reorganization or an arrangement with creditors under
the Federal bankruptcy law or any other similar law or statute of the United
States or any jurisdiction and no such petition has been filed against Buyer.
13. "AS IS" CONDITION: EXCEPT AS MAY BE OTHERWISE PROVIDED HEREIN,
BUYER REPRESENTS THAT IT HAS INSPECTED THE PROPERTY AND EVERY PART THEREOF, IS
FULLY ACQUAINTED WITH AND SATISFIED WITH THE CONDITION THEREOF, AND SHALL ACCEPT
TITLE TO THE PROPERTY ON THE CLOSING DATE IN ITS "AS IS" CONDITION. SELLER
MAKES NO REPRESENTATION OR WARRANTY WHATSOEVER CONCERNING THE CONDITION OF THE
PROPERTY (INCLUDING, BUT NOT LIMITED TO, THE ENVIRONMENTAL CONDITION OF THE
PROPERTY) OR ITS FITNESS FOR ANY PARTICULAR PURPOSE. SELLER FURTHER
SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF CONDITION OR FITNESS FOR USE.
AS MAY BE REQUIRED BY LAW, THE PARTIES AGREE THAT THIS DISCLAIMER OF WARRANTIES
IS CONSPICUOUS. SELLER SHALL CONVEY THE PROPERTY TO BUYER ON THE CLOSING DATE
IN THE SAME PHYSICAL
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CONDITION AS THE PROPERTY WAS ON MARCH 26, 1997, ORDINARY WEAR AND TEAR
EXCEPTED, AND SUBJECT TO THE PROVISIONS OF PARAGRAPH 9 HEREOF.
14. GOVERNMENTAL APPROVALS: Should Seller be required to obtain
subdivision or some other governmental approval in order to convey title to the
Property, the Scheduled Closing Date shall be extended to the extent necessary
to obtain such approvals; however if the Scheduled Closing Date must be extended
for more than ninety (90) days to obtain such approvals then, either party may
terminate this Agreement, whereupon Seller's sole obligation shall be to refund
to Buyer all sums paid on account of the Purchase Price.
15. DEFAULT; TERMINATION: If Buyer defaults in the performance of
Buyer's obligations under Paragraph 2 hereof or any other material term or
condition of this Agreement, then Seller may at any time thereafter terminate
this Agreement by giving a written termination notice to Buyer and Seller may
thereupon, at its option, retain all monies paid by Buyer on account of this
Agreement as liquidated damages and not as a penalty. In the event of any such
termination by Seller, Buyer shall promptly deliver to Seller: (i) copies of
all studies, assessments, findings, and inspection reports relating to the
Property and generated by Buyer's inspection activities under Paragraph 3 of
this Agreement; and (ii) all originals and copies of all Environmental Reports
(as hereinafter defined) and copies of all environmental assessments and other
documents generated by Buyer's environmental inspection activities under
Paragraph 17 of this Agreement.
(b) In the event of any termination of this Agreement by Buyer as may
be permitted pursuant to the provisions of Paragraph 5, or in the event the
conditions to Buyer's obligation to close hereunder set forth in Paragraph 18
(a) are not fulfilled, Seller's only obligation to Buyer shall be to refund all
sums paid on account of the Purchase Price and to reimburse Buyer for Buyer's
reasonable and documented out-of-pocket costs incurred through the date of the
termination for the Title Report and Survey of the Real Property.
16. NOTICES: All notices, demands and requests which may or are
required to be given by either party to the other shall be in writing and shall
be sent by certified mail, postage prepaid, return receipt requested, or by
Federal Express addressed to the parties at their respective addresses as first
above written (with Seller's copy to be sent to the attention of
Director-Corporate Real Estate), or at such other place within the continental
limits of the United States as either party may from time to time designate in a
written notice to the other party. Notices, demands and requests which shall be
served upon either in the manner aforesaid shall be deemed served or given for
all purposes hereunder as of the date of such certification.
17. ENVIRONMENTAL:
(a) Buyer acknowledges and agrees that:
(i) Seller has previously provided to Buyer and Buyers
environmental consultant, Environmental Liability Management, Inc. ("ELM"),
certain environmental reports and assessments, and has permitted Buyer and ELM
to inspect and copy certain documents and records, relating to the Property
(collectively, "Environmental Reports"),
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which environmental ports, assessments, documents and records are identified in,
and are subject to, those certain confidentiality letter agreements dated June
10, 1997 and August 22, 1997 between Seller and Buyer, copies of which are
attached hereto as EXHIBIT "C" (the "Confidentiality Letter Agreements") and
incorporated herein by reference;
(ii) Seller has previously provided to Buyer various
environmental site assessments and reports, as more particularly identified in
the letter from H. Carl Homeman to Dean H. Cannon dated October 14, 1997, a
copy of which is attached hereto as EXHIBIT "D" (the "Fedders Property
Environmental Reports"), relating to certain real property previously owned by
Seller, sold by Seller to Columbia Specialties, Inc. and located contiguous to
the Real Property (the "Fedders Property") and the Fedders Property
Environmental Reports are subject to the restrictions contained in the
Confidentiality Letter Agreements;
(iii) Pursuant to the Access Agreement dated August 29,
1997 ("Access Agreement"), which Access Agreement is attached hereto as
EXHIBIT "E" and incorporated herein by reference, Buyer has had an opportunity
to make such independent environmental inspections and assessments of the
Property as Buyer deemed necessary or appropriate and, pursuant to such
independent environmental inspections and assessments, ELM has prepared for
Buyer's legal Counsel, Beveridge & Diamond, P.C., a Phase I environmental
assessment set forth in ELM's letter to Beveridge & Diamond, P.C. dated
September 11, 1997 and a Phase II Environmental Site Assessment for the Former
GE Compressor Facility in Columbia, Tennessee, dated October 3, 1997 ("Buyer's
Environmental Reports").
(b) Seller represents and warrants to Buyer that, to the best of
its knowledge and based solely upon a review of the books and records of General
Electric Appliances, a division of Seller, that the Environmental Reports, the
Fedders Property Environmental Reports, and Buyer's Environmental Reports
constitute all material information in Seller's possession relating to
environmental conditions on, under or about the Property; provided that the
foregoing representation and warranty applies only to material information
relating directly to the Property and does not apply to any information, whether
or not material, with respect to the Fedders Property, about which Seller makes
no warranty or representation; and further provided that the foregoing warranty
and representation does not apply to any information generated prior to
October 1, 1987, about which information Seller makes no warranty or
representation. Seller further represents and warrants to Buyer that to the
best of its knowledge, material information relating to environmental conditions
on, under or about the Property would, under Seller's regular corporate record
keeping practices, be retained within the books and records of General Electric
Appliances.
(c) Buyer acknowledges that it has reviewed the Environmental
Reports, the Fedders Property Environmental Reports, and Buyer's Environmental
Reports and agrees that on the Closing Date it shall accept the Property in the
condition described in all of those environmental reports and, except as set
forth in Paragraph 17(f) hereof, shall assume all obligations and liabilities
with respect to the matters therein described.
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(d) Buyer further acknowledges and agrees that, except as set
forth in Paragraph 17(b) hereof, the submission of the Environmental Reports,
and the Fedders Property Environmental Reports to Buyer does not constitute any
representation or warranty whatsoever by Seller as to the accuracy of the
information contained in the Environmental Reports, or the Fedders Property
Reports or the environmental or any other condition of the Property. Buyer
shall treat the Environmental Reports, the Fedders Property Environmental
Reports, the Buyer's Environmental Reports, and all other Environmental
Information (as defined in the Confidentiality Letter Agreements) in a
confidential manner and shall not disclose the existence or any aspect of the
Environmental Reports, the Fedders Property Environmental Reports, the Buyer's
Environmental Reports, or any other Environmental Information to any third party
without the prior written approval of Seller, except as may be permitted by
Paragraph 17 (e) hereof or by the terms of the Confidentiality Letter
Agreements.
(e) Buyer acknowledges and agrees that all findings,
recommendations, opinions and information derived from Buyer's environmental
assessment of the Property shall be deemed "Environmental Information" as
defined in the Confidentiality Letter Agreements and Buyer shall not disclose
any aspect of such Environmental Information to any third party without the
prior written approval of Seller, except (i) as may be permitted under the terms
of the Confidentiality Letter Agreements, and (ii) that after Buyer's purchase
of the Property, Buyer may disclose any such Environmental Information to a
third party (x) that is a governmental entity, upon notice to Seller, if
required by applicable legal authority, and (y) for any reasonable business
purpose, including but not limited to disclosure to a potential purchaser of
Buyer's stock or assets, if such third party executes a confidentiality
agreement with Buyer on substantially the same terms as the Confidentiality
Letter Agreement.
(f) Notwithstanding anything set forth herein to the contrary,
Buyer does not assume any obligations, liabilities, expenses, claims, demands,
judgments, damages, penalties, fines, costs, amounts paid in settlement of
claims, attorneys' fees, consultants' fees, court costs, litigation expenses, or
other losses related to or arising from, and does not indemnify or hold harmless
Seller for or with respect to, any of the following matters (collectively,
"Seller Retained Matters"): (i) alleged violations of criminal laws by Seller
or any of Seller's affiliates; and (ii) personal injuries by current or former
employees, independent contractors or invitees of Seller resulting from exposure
to Hazardous Substances (as hereinafter defined), which exposure occurred
(solely or in part) prior to the Closing Date.
(g) As an inducement to, and as further consideration for,
Seller to sell the Property to Buyer upon the terms and conditions set forth in
this Agreement, Buyer covenants and agrees that upon the closing of title to the
Property Buyer shall forever release Seller and covenant not to sue Seller with
respect to any matters or things arising out of the environmental condition of
the Property, whether or not such environmental condition is disclosed in the
Environmental Reports, the Fedders Property Environmental Reports, or Buyer's
Environmental Reports, except for the Seller Retained Matters identified in
Paragraph 17(f) hereof. Furthermore, Buyer covenants and agrees to indemnify,
defend, and hold Seller and its officers, employees and agents harmless from any
and all claims, demands, judgments, damages, penalties, fines, costs,
liabilities (including sums paid in settlement of claims), or other losses,
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including attorneys' and/or consultants' fees, court costs and litigation
expenses, in connection with the presence or suspected presence of Hazardous
Substances (as hereinafter defined) in or on any building, structure, or paved
surface, or in any environmental medium, including but not limited to, the soil,
groundwater, or soil vapor on or under, or emanating from the Property, except
for the Seller Retained Matters set forth in Paragraph 17(f) hereof. Without
limiting the generality of the foregoing but excluding the Seller Retained
Matters, this indemnification shall specifically cover costs incurred in
connection with any investigation of site conditions or any clean-up, remedial,
removal, or restoration work required by any federal, state, or local government
agency or political subdivision, or by the Seller because of the presence or
suspected presence of Hazardous Substances, in or on any environmental medium,
building, structure, or paved surface in, on, under or about the Property.
(h) As used herein, "Hazardous Substances" means any substance
which is toxic, ignitable, reactive, or corrosive or which otherwise is
regulated by or under "Environmental Laws." The term "Environmental Laws" means
federal, state and local laws and regulations, judgments, orders and permits
governing safety and health and the protection of the environment, including
without limitation the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9601 ET SEQ., as amended (CERCLA), the Resource
Conservation and Recovery Act, as amended 42 U.S.C. 6901 ET SEQ., the Clean
Water Act, 33 U.S.C. 1251 ET SEQ., the Clean Air Act, 42 U.S.C. 7401 ET SEQ.,
the Toxic Substance Control Act, 15 U.S.C. 2601 ET SEQ., and the Safe Drinking
Water Act, 42 U.S.C. 300f through 300j. Hazardous Substances" includes any and
all materials or substances which are defined as "hazardous waste," "extremely
hazardous waste" or a "hazardous substance" pursuant to state, federal or local
law. "Hazardous Substances" also includes asbestos, polychlorinated biphenyls
("PCBs") and petroleum products.
(i) The provisions of this Paragraph 17, including the
provisions of the Confidentiality Letter Agreements and the Access Agreement,
shall survive the closing of title. However, the parties agree to execute and
exchange at the time of closing such further documentation of the agreements
herein contained as either party reasonably requests. Without limiting the
generality of the foregoing, Buyer agrees to execute and deliver to Seller at
the time of closing an agreement granting and reaffirming the release, covenant
not to sue and indemnifications set forth in Subparagraph 17(g) above.
18. CONDITIONS PRECEDENT TO CLOSING:
(a) The obligations of Buyer under this Agreement to purchase
the Property from Seller is subject to the satisfaction, as of the Closing Date,
of each of the following conditions:
(i) The representation and warranties made by Seller in
this Agreement shall be true, accurate and complete as of the Closing Date with
the same force and effect as if such representations and warranties had been
made on and as of such date, and Seller shall have performed all of the
covenants and obligations required by this Agreement to be performed by on or
before the Closing Date.
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(ii) The survey and title to the Property shall conform
with the requirements of Paragraphs 4 and 5, respectively.
(iii) All governmental approvals and other authorizations
necessary to convey title to the Real Property shall have been obtained by
Seller.
(b) The obligation of Seller under this Agreement to sell the
Property to Buyer is subject to the satisfaction, as of the Closing Date, of the
following conditions: The representations and warranties made by Buyer in this
Agreement shall be true, accurate and complete as of the Closing Date with the
same force and effect as if such representations and warranties had been made on
and as of such date, and Buyer shall have performed all of the covenants and
obligations required by this Agreement to be performed by Buyer on or before the
Closing Date.
19. SURVIVAL: The representations, warranties, covenants and
agreements set forth in this Agreement shall survive the closing and the
transfer of title hereunder for the full period of any applicable statute of
limitations.
20. FOREIGN PERSON: Seller represents that it is not a foreign
person within the meaning of Section 1445 of the Internal Revenue Code of 1954,
as amended, and Buyer shall therefore not deduct any amount from the Purchase
Price at closing as provided for therein. Seller shall furnish Buyer with an
appropriate affidavit on non-foreign status on the Closing Date if so requested
by Buyer.
21. NON-ASSIGNMENT: Buyer shall not assign this Agreement or any
interest herein prior to the closing of transfer of title to the Property
without the written approval of Seller, which approval may be arbitrarily
withheld, and any attempted or purported assignment prior to closing of transfer
of title of the Property without Seller's prior written approval shall be null
and void and of no force and effect. For purposes of the preceding sentence,
the term "assignment" shall be deemed included a transfer of Buyer's interest
under this Agreement by merger or operation of law or by the sale or transfer by
Phelps Dodge Corporation of a controlling interest in Buyer. No permitted
assignment of Buyer's rights under this Agreement prior to the dosing of
transfer of title to the property shall be effective against Seller unless and
until an executed counterpart of the instrument assignment shall have been
delivered to Seller and Seller has been furnished with the name and address of
the assignee. The term "Buyer" shall be deemed to include the assignee under
any much effective assignment.
22. NO RECORDING: Neither Seller nor Buyer shall cause or permit
this Agreement, or any short form variation thereof, to be filed of record in
any office or place of public record. However, the filing of this Agreement in
any suit or other proceeding in which this document is relevant or material
shall not be deemed to be a violation of this Paragraph.
23. SEVERABILITY: If any term, covenant or condition of this
Agreement is held to be invalid, void or otherwise unenforceable, to any extent,
by any court of competent jurisdiction, the remainder of this Agreement shall
not be affected thereby, and each term,
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covenant or condition of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
24. MISCELLANEOUS: This Agreement, the terms, covenants and
conditions contained herein, all exhibits attached hereto, and all other
agreements expressly referred to herein, including the Confidentiality Letter
Agreements attached hereto as EXHIBIT "C" and the Access Agreement attached
hereto as EXHIBIT "E" and incorporated herein by reference, constitute the
entire agreement between the parties with respect to the subject matter hereof,
and all prior agreements, understandings, representations and statements, oral
or written, with respect to such subject matter are merged into this Agreement.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their heirs, executors, administrators, personal representatives,
successors, and assigns, as may be permitted hereunder. No provision of this
Agreement shall be deemed to have been waived or modified except by an
instrument in writing signed by the parties hereto. This Agreement and the
Reaffirmation Agreement to be delivered pursuant to Paragraph 17(i) above may be
executed in any number counterparts each of which, when executed and delivered,
shall be an original, and all of which together shall constitute one and the
same instrument. Any counterpart may be executed and delivered by facsimile and
such facsimile shall be deemed an original for all purposes. The laws of the
State of Tennessee shall govern the interpretation and enforcement of this
Agreement. This Agreement is intended to express the mutual intent of parties,
and no rule of strict construction shall be applied against either party. The
headings and captions of this Agreement are for convenience only, and in no way
define, describe or limit the scope or intent of this Agreement.
25. TIME OF THE ESSENCE: Time is of the essence as to each and every
provision of this Agreement requiring performance within a specified time, and
particularly with respect to any termination rights herein afforded to Buyer.
26. NON-OFFER: The submission of this Agreement for examination or
the negotiation of the transaction described herein does not constitute an offer
to sell by Seller, and this Agreement does not constitute a binding contract
until executed by Seller.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written. The individual
signing this Agreement on behalf of Buyer personally warrants and represents
that he is authorized to sign this Agreement on behalf of Buyer.
ATTEST: SELLER:
GENERAL ELECTRIC COMPANY
By:
- ---------------------------------- --------------------------------
Attesting Secretary Title:
-----------------------------
ATTEST: BUYER:
ACCURIDE CORPORATION
By:
- ---------------------------------- --------------------------------
VP - Operations William P. Greubel
Terrence Keating President
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Exhibit 10.19
"Chromtec" cladded wheel Purchase Supply and Assembly Agreement
PURCHASE, SUPPLY AND ASSEMBLY AGREEMENT, dated as of January 15, 1998. (the
"Agreement"), between ACCURIDE CORPORATION, a Delaware corporation with offices
at Henderson, Kentucky ("Accuride"), and LACKS INDUSTRIES, INC., a [Michigan]
corporation with offices at Southfield, Michigan ("Lacks" and, together with
Accuride, the "Parties").
RECITALS
A. Lacks manufactures plastic cladding for steel wheels and has developed
a patented process of applying plastic cladding to steel wheels under the name
"CHROMTEC".
B. Accuride manufactures PN-96/UN-93 and UN-173 steel wheels and sells
such wheels to Ford Motor Company ("Ford") for Ford trucks (the "Wheels").
C. Accuride and Lacks desire that Lacks will apply CHROMTEC plastic
cladding and adhesive or bonding agent ("Cladding") to Wheels supplied by
Accuride, for sale by Accuride to Ford (Wheels with the Cladding applied are
referred to herein as "Cladded Wheels").
IN CONSIDERATION OF the mutual covenants contained herein, the Parties
agree as follows:
ARTICLE I--ASSEMBLY OF CLADDED WHEELS
1.1 Application of Cladding: Lacks shall apply Cladding to all Wheels shipped
to Lacks by Accuride that are to be sold by Accuride to Ford as Cladded Wheels
pursuant to an agreement or agreements between Ford and Accuride.
1.2 Statement of Work: In order to comply with all ISO & QS-9000
requirements (the "ISO & QS-9000 Requirements"), Lacks and Accuride have
jointly developed and agreed upon a Statement of Work as set forth on
Schedule 1 attached hereto (the
<PAGE>
"Statement of Work"). The Statement of Work includes, but is not limited to,
the following areas:
- - General Program Description
- - Program Objectives / Assumptions
- - Program Timing
- - Responsibilities for Design and Development (with designations for Lead,
Support and Verification)
The Parties hereby agree to abide by and carry out all of the terms and
conditions set forth in the Statement of Work. Notwithstanding the preceding
sentence, the terms of this Agreement will control and displace any inconsistent
provision of the Statement of Work.
1.3 Tooling: Accuride and Ford have authorized the acquisition of all the
required tooling to produce, plate and apply the Cladding to the Wheels (the
"Tooling") have been issued. All the funds required for the tooling have been
paid by Ford and are subject to Ford Supply Practice 35 as set forth on Schedule
2 attached hereto ("Ford Supply Practice 35"). Lacks must insure the Tooling to
general industrry practices and maintain the Tooling (i) in excellent repair,
(ii) in good working order, and (iii) in accordance with Ford Supply Practice
35. Lacks hereby represents and warrants that, no lien or encumbrance exists on
the tooling, it has no loan or other obligation that would purport to create any
lien or encumbrance on the Tooling, and it will incur no such obligation. Lacks
must use the Tooling exclusively for applying the Cladding to Wheels and may not
use the Tooling for cladding any other wheels.
1.4 Quality Parameters: The Cladded Wheels as delivered to Ford by Lacks,
including but not limited to the assembly of the Cladded Wheels, shall meet and
be in accordance with (i) the Statement of Work, (ii) ISO & QS-9000
Requirements, and (iii) Ford's design and product specification XL34-1015-CA
(for PN-96/UN-93 Wheels) and XL 74-1015-AA (for UN-173 Wheels) and subsequent
design revisions, previously furnished to Lacks, as the same may be revised from
time to time by Ford ("Ford's Design and Product Specifications"). Lacks may at
no time alter Ford's Design and Product Specifications without prior written
consent from Ford and Accuride. Lacks shall assure that each shipment of
Cladded Wheels to Ford adheres to (i) the Statement of Work, (ii) the ISO &
QS-9000 Requirements, and (iii) Ford's Design and Product Specifications.
1.5 Delivery Performance: Lacks shall deliver Cladded Wheels to Ford in
accordance with (i) the delivery times specified in Accuride's QS-9000 procedure
4.6 as set forth on Schedule 3 attached hereto, and (ii) any delivery notices or
release orders Accuride may provide to Lacks in agreement with Lacks' process
timing requirements which shall at no time exceed four (4) weeks. Lacks requests
copies of Ford' 830 and 862 releases.
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1.6 Freight: Lacks will dispatch and ship the Cladded Wheels to the
plant designated by Ford, F.O.B. Grand Rapids, Michigan, unless the
delivery location is otherwise specified in writing (i) by Accuride's
Project Coordinator (as defined in Section 1.10 of this Agreement), (ii)
by an Accuride delivery notice or release order or (iii) by Ford.
1.6.1 Premium Freight: In the event Lacks fails to meet the delivery times
specified in sections 1.5 (I) and (ii) of this agreement ("Delivery Delays"),
Lacks will absorb the premium freight expenditures associated with such delivery
delays, and will indemnify Accuride for any premium freight expenditures paid by
Accuride assocated with Delivery Delays.
1. 7 Advance Shipping Notices: In accordance with Accuride QS-9000 procedures
as set forth on Schedule 4 attached hereto, Lacks will submit if feasible,
advance shipping notices ("ASNs") via Electronic Data Exchange ("EDI") to [Ford]
within thirty (30) minutes after shipping the Cladded Wheels to the Ford
location specified in Section 1.6 of this Agreement.
1.8 Pricing: The purchase price to be paid by Accuride to Lacks for each
Cladded Wheel to be delivered hereunder (the "Purchase Price") shall be set
forth on Schedule 5 attached hereto.
1.9 Packaging: Accuride will provide all Wheels to Lacks on plastic
pallets. Lacks will use the same plastic pallets to deliver the Cladded
Wheels to Ford at the location specified in Section 1.6 of this Agreement.
Lacks will at its expense load and band the pallets with Cladded Wheels to
be delivered to Ford and will do so in (i) a safe and protective manner,
and (ii) the same manner as Lacks received the Wheels from Accuride.
1.10 Project Coordinator: Accuride will assign a project coordinator who will
manage the flow of Wheels and information (the "Project Coordinator"). At
the Project Coordinator's request, Lacks will provide on the 30th.of each
month to the Project Coordinator in writing a monthly inventory
reconciliation of Wheels at Lacks site. In the event that Lacks cannot
account for all of the Wheels, Accuride will invoice Lacks, and Lacks
agrees to pay within sixty (60) days of the date of the invoice, $24.90 for
each unaccounted for Wheel (allowing for 3% scrap allowance), as the
Parties will assume that Lacks has lost the unaccounted for Wheels due
to assembly difficulties.
1.11 Annual Inventory Audit: Once a year, at Accuride's request, Lacks shall
afford Accuride and its representatives (including Accuride's accountants)
reasonable access, during reasonable business hours, for a reasonable number of
days, to Lacks' premises, for the purpose of auditing Lacks' inventory of Wheels
and Cladded Wheels
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for the period since the date of this Agreement or since Accuride's last
audit, whichever is later.
1.12 Periodic Quality Audit: At Accuride's request, and at times chosen by
Accuride, Lacks shall afford Accuride and Ford and their representatives
reasonable access, during reasonable business hours, for a reasonable number of
days, to Lacks's premises, books, records, data, personnel, Tooling, Cladded
Wheels and inventory relating to Lacks' obligations under this Agreement, for
the purpose of determining whether the Cladded Wheels and the Tooling conform to
the requirements specified in this Agreement. Within the audit Accuride
personnel must adhere to Lacks' proprietary guidelines.
1.13 Ownership of Wheels: Lacks will have no title or interest in any Cladded
Wheels (other than to receive payment of the Purchase Price as provided
hereunder) or in any Wheels sent to Lacks for assembly, and Accuride will at all
times be the exclusive owner thereof. Lacks hereby represents and warrants that
it has no loan or other obligation that would purport to create any lien or
encumbrance on any Cladded Wheels or Wheels sent to Lacks for assembly, and it
will incur no such obligation.
ARTICLE II--WARRANTIES; INDEMNIFICATION
2.1 Warranties:
Lacks hereby represents and warrants to Accuride that at the time of delivery of
Cladded Wheels to Ford, the Cladding on the Cladded Wheels will be free from all
defects of whatever nature and shall meet (i) the Statement of Work, (ii) the
ISO & QS-9000 Requirements, and (iii) Ford's Design and Product Specifications
("Lacks's Warranty").
2.2 Repair & Replacement:
Accuride and Lacks have agreed to agree upon a Repair & Replacement procedure
within 12 weeks after this agreement takes effect.
2.3 Product Recall Programs: In the event of a product re-call, Accuride, as
the Tier 1 supplier, will be responsible for the coordination of all the
activities. Any such recall must be in accordance with the National Traffic
Motor Safety Act of 1966, and regulations pursuant thereto, as the same may be
amended from time to time. During such an occurrence, Accuride shall advise
Lacks of the actions it plans to take in administering such program and shall,
at Accuride's sole option, incorporate suggestions from Lacks if practicable.
Accuride shall bear the cost of any such programs except that Lacks shall bear
any such costs covered by its indemnities and obligations contained in this
Agreement or otherwise arising out of or resulting from any inaccuracy in or
failure of (or alleged inaccuracy in or failure of) a Cladded Wheel to
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conform to Lacks' Warranty. In the event that Accuride reasonably believes
that the cost of such program is Lacks' responsibility, it shall so notify
Lacks and invoice Lacks for the related costs; provided that the failure to
provide such notice shall not release Lacks from its obligation unless Lacks
shall be materially prejudiced thereby. Lacks shall be entitled, at its own
expense, to participate in any such program for which it is to pay the cost.
2.4 Third Party Products Liability Claims: Lacks will indemnify, defend and
hold harmless Accuride from and against any and all demands, claims, actions,
suits and proceedings, together with all costs and expenses (including
reasonable attorney's fees and disbursements) of every kind, nature or
description relating thereto, asserted or brought by a third party for injury to
person or property (collectively, "Claims"), to the extent that such Claims
arise out of, relate to, or result from (i) any actual or alleged inaccuracy in,
or any actual or alleged failure of, a Cladded Wheel to conform to Lacks'
Warranty, or (ii) any actual or alleged failure of Lacks to perform its
obligations under Section 2.2 of this Agreement. Accuride will administer any
warranties with Ford. Accuride will review the warranty claims at the
appropriate Ford location and make disposal on said claim upon consultation with
Lacks, provided, however, that after consultation with Lacks, Accuride has the
sole disctretion as to the disposal of warranty claims. (The word "alleged" as
set forth in the within paragraph shall be interpreted so as to require
substantive proof from the manufacturer or third party".)
2.5 Accuride's Indemnity: Accuride will indemnify, defend and hold harmless
Lacks from and against any and all claims not covered by Lacks' indemnity under
Section 2.4 to the extent that such Claims arise out of or result from any
alleged defect in the Wheel itself, exclusive of the Cladding or any adhesive
used to apply the Cladding.
2.6 Patent Infringement Indemnification: Lacks will indemnify, defend and hold
harmless Accuride from and against any and all Claims incurred in any suit
brought against Accuride for infringement of any patent or other right relating
to the Cladding on a Cladded Wheel or the application of such Cladding.
ARTICLE III--ARBITRATION
2.7 Indemnification Procedures: (a) In the event of any Claim that is
subject to indemnification under Sections 2.4, 2.5 or 2.6 that is not also
covered by Section 2.3, the Party claiming the right to indemnity (the
"Indemnitee") shall promptly notify the indemnifying Party (the "Indemnitor")
or the Claim for which it is seeking indemnification; provided that the
failure to provide such notice shall not release the Indemnitor from any of
its indemnification obligations unless the Indemnitor shall be materially
prejudiced thereby. Accuride will undertake the defense of any such Claim by
counsel of its own choosing, at the expense of Lacks if Lacks is the
Indemnitor. If Lacks is the Indemnitor, Accuride shall advise Lacks of the
counsel Accuride is using to defend the Claim and shall consider any
suggestion for the use of different counsel
5
<PAGE>
made by Lacks and Lacks may, by notice to Accuride, assume the defense of
such Claim by counsel reasonably satisfactory to Accuride.
(b) In the event that Accuride, within a reasonable time after notice of a
Claim against Lacks covered by Section 2.5 , fails to undertake the defense of
such Claim, Lacks (upon further notice to Accuride), shall have the right to
undertake the defense, compromise or settlement of such Claim for the account of
Accuride, subject to the right of Accuride to assume the defense of such Claim
at any time prior to settlement, compromise or final determination thereof.
(c) The Party not handling the defense of a Claim referred to in Section 2.7(a)
shall provide the Party handling such defense (the "Defending Party") with such
information as may reasonably be requested by the Defending Party and shall
cooperate with the Defending Party in defending such Claim. Any expense
reasonably incurred by the Party not handling the defense in connection
therewith shall be paid by the Indemnitor. An Indemnitee may, at its sole
option and expense, participate through separate counsel of its own choosing in
the defense of a Claim brought against it.
3.1 Arbitration: Any dispute, controversy or claim arising out of, relating
to, or in connection with, this Agreement, or the breach, termination or
validity thereof, shall be finally settled by arbitration. The arbitration
shall be conducted in accordance with the rules of the American Arbitration
Association in effect at the time of the arbitration, except as they may be
modified herein or by the mutual agreement of the Parties. The seat of
arbitration will be New York, New York. The arbitration shall be the sole and
exclusive forum for resolution of the dispute, controversy or claim. The
abrital award shall be in writing, state the reasons for the award, and be final
and binding on the Parties. The award may include an aware of costs, including
reasonable attorneys' fees and disbursements. Judgment upon the award may
entered by any court having jurisdiction thereof or having jurisdiction over the
Parties or their assets. Notwithstanding Section 5.5 hereof, the arbitration
and this clause shall be governed by the Federal Arbitration Act, 9 U.S.C. SS 1
et seq.
3.2 Selection of Arbitrator: The arbitration shall be conducted by one
arbitrator. The Parties agree to seek to reach agreement on the identity of the
sole arbitrator within 20 days of receipt of notice of said arbitration by the
Party named as defendant. If the Parties are unable to reach agreement on the
sole arbitrator, then the appointment of the sole arbitrator shall be made by
the American Arbitration Association, which shall promptly notify the Parties of
the appointment of the sole arbitrator.
3.3 (a) Remedies: Punitive damages - The Parties expressly waive and forego
any right to punitive, exemplary or similar damages as a result of any
controversy or claim arising out of, relating to or in connection with this
Agreement, or the breach, termination or validity thereof.
3.3 (b) Claims by Ford: Without limiting in any way any other remedies that
Accuride
6
<PAGE>
may be entitled to under this Agreement or under law, Accuride shall be
entitled to recover from Lacks any costs or damages, including any outage
penalties, charged by Ford to Accuride, including, but not limited to,
transportation and hauling fees resulting from or arising out of any breach
by Lacks of its obligations hereunder or of Lacks' Warranty.
ARTICLE IV--TERM, OBLIGATIONS UPON TERMINATION
4.1 Term: The term of this Agreement shall commence as of the date hereof
and shall continue until such time Ford no longer requires wheel
assemblies.
4.2 Obligations Upon Termination: A termination of the obligation of Lacks to
apply Cladding to Wheels and Accuride to ship Wheels to Lacks for the
application of Cladding hereunder shall not terminate the rights and obligations
of the Parties with respect to Wheels delivered by Accuride to Lacks and Cladded
Wheels delivered by Lacks to Ford hereunder prior to such termination or the
other rights and obligations of the Parties hereunder that are specified herein
to survive such termination.
ARTICLE V--MISCELLANEOUS
5.1 Notices: All notices and other communications hereunder or in connection
herewith shall be effective and deemed given to a Party when received by that
Party by personal delivery, by facsimile transmission or by mail, including any
courier service, at the address applicable under this Section 5.1. Unless and
until subsequently changed by notice given in accordance with this Section 5.1,
the addresses and facsimile numbers of the Parties shall be as follows:
Lacks Industries, Inc.
26600 Telegraph Road, Suite 400
Southfield, MI 48034
Attention: Reed Miller
Fax No.: 248-351-0759
Accuride Corporation
2315 Adams Lane
Henderson, KY 42420
U.S.A.
Attention: President
Fax No.: 502-827-7601
5.2 Assignment: This Agreement or any part thereof may not be assigned,
sublicensed, pledged, encumbered or otherwise disposed of by either Party,
whether by operation of law, as part of a merger or sale of all or
substantially all of the assets of a Party or otherwise, and any such
attempted disposition shall be void and
7
<PAGE>
unenforceable, except that either Party may assign this Agreement with the
prior written consent of the other Party, which consent shall not be
unreasonably withheld. This Agreement shall be binding upon and inure solely
to the benefit of the Parties and their respective permitted assigns, and no
person other than the Parties and their respective permitted assigns shall
have any right, remedy or claim hereunder or in respect hereof.
5.3 Entire Agreement: This Agreement (together with the Schedules attached
hereto and forming an integral part hereof) constitutes the entire agreement
between the Parties with respect to the subject matter thereof. All prior
agreements and understandings with respect to the subject matter hereof between
the Parties are hereby superseded by this Agreement and are of no further force
and effect.
5.4 Amendments and Waivers: This Agreement shall not be amended, changed or
modified, whether by a purchase order, acknowledgment form or otherwise, except
in a writing signed by both Parties through their authorized officers. No
waiver shall be deemed to have been made by either Party of any of its rights
under this Agreement unless the same shall be in a writing signed by such Party
through its authorized officer. Any such waiver shall constitute a waiver only
with respect to the specific matter described therein, and shall in no way
impair the rights of the Party granting such waiver in any other respect or at
any other time. No delay on the part of either Party in exercising any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and, except as herein provided, are
not exclusive of any other rights, remedies, powers and privileges provided by
law.
5.5 Choice of Law: This Agreement shall be governed in all respects, including
validity, interpretation and effect, by the law of the state of New York,
without giving effect to the conflict of law rules thereof.
5.6 Miscellaneous: The headings contained in this Agreement are for reference
only and shall not affect in any way the meaning or interpretation of this
Agreement. This Agreement may be executed in several counterparts, each of
which shall constitute one and the same instrument.
5.7 Confidentiality: Each party will, during the term of this Agreement and
for three years thereafter, maintain in confidence, and use solely for the
purpose of the transactions contemplated in this Agreement, all non-public
confidential or proprietary information (including proprietary intellectual
property rights) of the other Party disclosed, either before or after the date
of this Agreement, in connection with the transactions described herein, and
each Party confirms that it has heretofore so maintained and used solely for
such purpose all such information previously disclosed to it. Either Party may
request at any time the return or destruction of any of its confidential or
proprietary information that may have been disclosed to the other Party.
8
<PAGE>
Each Party will cause its employees, agents and consultants to comply with
such obligations.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed by their respective duly authorized representatives as of the date
first above written.
LACKS INDUSTRIES, INC.
By /s/ Tom Gavin
-----------------------
Name: Tom Gavin
Date:
Title: Executive Vice President
ACCURIDE CORPORATION
By /s/ William P. Greubel
------------------------------
Name: William P. Greubel
Date:
Title: President
9
<PAGE>
Schedule 6
Repair & Replacement
This is an unresolved issue which needs to be settled.
10
<PAGE>
Exhibit 10.20
EXECUTION COPY
$275,000,000
CREDIT AGREEMENT
Dated as of January 21, 1998
Among
ACCURIDE CORPORATION
and
ACCURIDE CANADA INC.AS BORROWERS
and
THE INITIAL LENDERS, INITIAL ISSUING BANK AND
SWING LINE BANK NAMED HEREIN
AS INITIAL LENDERS, INITIAL ISSUING BANK AND SWING LINE BANK
and
CITICORP USA, INC.
AS ADMINISTRATIVE AGENT
and
CITICORP SECURITIES, INC.
AS ARRANGER
and
BANKERS TRUST COMPANY
AS SYNDICATION AGENT
and
WELLS FARGO BANK N.A.
AS DOCUMENTATION AGENT
<PAGE>
T A B L E O F C O N T E N T S
SECTION PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . 2
1.02. Computation of Time Periods. . . . . . . . . . . . . . . . . . . 32
1.03. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . 32
1.04. Currency Equivalent. . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
2.01. The Advances . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.02. Making the Advances. . . . . . . . . . . . . . . . . . . . . . . 34
2.03. Issuance of and Drawings and Reimbursement Under Letters of
Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.04. Repayment of Advances. . . . . . . . . . . . . . . . . . . . . . 38
2.05. Termination or Reduction of the Commitments. . . . . . . . . . . 40
2.06. Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.07. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.08. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2.09. Conversion of Advances . . . . . . . . . . . . . . . . . . . . . 45
2.10. Increased Costs, Etc.. . . . . . . . . . . . . . . . . . . . . . 46
2.11. Payments and Computations. . . . . . . . . . . . . . . . . . . . 48
2.12. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
2.13. Sharing of Payments, Etc.. . . . . . . . . . . . . . . . . . . . 53
2.14. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 54
2.15. Defaulting Lenders . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE III
CONDITIONS OF LENDING
3.01. Conditions Precedent to the Initial . . . . . . . . . . . . . . 56
3.02. Conditions Precedent to Each Borrowing and Issuance. . . . . . . 61
3.03. Determinations Under Section 3.01. . . . . . . . . . . . . . . . 61
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of Each Borrower. . . . . . . . . 62
<PAGE>
ARTICLE V
COVENANTS OF THE BORROWERS
5.01. Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . 67
5.02. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . 70
5.03. Reporting Requirements . . . . . . . . . . . . . . . . . . . . . 78
5.04. Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE VI
GUARANTY
6.01. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
6.02. Guaranty Absolute. . . . . . . . . . . . . . . . . . . . . . . . 83
6.03. Waivers and Acknowledgments. . . . . . . . . . . . . . . . . . . 85
6.04. Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . 86
6.05. Continuing Guaranty; Assignments . . . . . . . . . . . . . . . . 86
ARTICLE VII
EVENTS OF DEFAULT
7.01. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 87
ARTICLE VIII
THE ADMINISTRATIVE AGENT
8.01. Authorization and Action . . . . . . . . . . . . . . . . . . . . 89
8.02. Administrative Agent's Reliance, Etc.. . . . . . . . . . . . . . 90
8.03. Citicorp and Affiliates. . . . . . . . . . . . . . . . . . . . . 90
8.04. Lender Party Credit Decision . . . . . . . . . . . . . . . . . . 90
8.05. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 91
8.06. Successor Administrative Agents. . . . . . . . . . . . . . . . . 92
8.07. Arranger, Syndication Agent and Documentation Agent. . . . . . . 93
ARTICLE
MISCELLANEOUS
9.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 93
9.02. Notices, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 94
9.03. No Waiver; Remedies. . . . . . . . . . . . . . . . . . . . . . . 94
9.04. Costs, Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 95
9.05. Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . 96
9.06. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . 96
9.07. Assignments and Participations . . . . . . . . . . . . . . . . . 97
9.08. Replacements of Lenders Under Certain Circumstances. . . . . . . 99
9.09. Execution in Counterparts. . . . . . . . . . . . . . . . . . . . 100
9.10. No Liability of the Issuing Bank . . . . . . . . . . . . . . . . 100
<PAGE>
9.11. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 100
9.12. Jurisdiction, Etc. . . . . . . . . . . . . . . . . . . . . . . . 101
9.13. Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
9.14. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 102
9.15. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . 102
SCHEDULES
Schedule I Commitments and Applicable Lending Offices
Schedule II Subsidiary Guarantors
Schedule 3.01(d) Surviving Debt
Schedule 3.01(l) Restructuring Memorandum
Schedule 4.01(a) Investor Group
Schedule 4.01(b) Subsidiaries
Schedule 4.01(d) Government and Third Party Approvals
Schedule 4.01(p) Existing Debt
Schedule 5.02(a) Existing Liens
Schedule 5.02(e) Existing Investments
EXHIBITS
Exhibit A-1 - Form of Term A Note
Exhibit A-2 - Form of Term B Note
Exhibit A-3 - Form of Revolving Credit Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Pledge Agreement
Exhibit E - Form of Subsidiaries Guaranty
Exhibit F - Form of Opinion of Borrowers' Counsel
Exhibit G - Form of Opinion of Borrowers' Canadian Counsel
Exhibit H - Form of Solvency Opinion
Exhibit I - Form of Solvency Certificate
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of January 21, 1998 among ACCURIDE
CORPORATION, a Delaware corporation (the "U.S. BORROWER"), and ACCURIDE CANADA
INC., a corporation organized and existing under the law of the Province of
Ontario (the "CANADIAN BORROWER", and, together with the U.S. Borrower, the
"BORROWERS"), the banks, financial institutions and other institutional lenders
listed on the signature pages hereof as the Initial Lenders (the "INITIAL
LENDERS"), CITIBANK, N.A., a national banking association ("CITIBANK"), as the
initial issuing bank (the "INITIAL ISSUING BANK"), CITICORP USA, INC., a
Delaware corporation ("CITICORP"), as the swing line bank (the "SWING LINE
BANK") and as administrative agent (together with any successor appointed
pursuant to Article VIII, the "ADMINISTRATIVE AGENT") for the Lender Parties (as
hereinafter defined), Citicorp Securities, Inc. ("CSI"), as arranger (the
"ARRANGER") for the Facilities (as hereinafter defined), BANKERS TRUST COMPANY
("BANKERS TRUST "), as syndication agent ("SYNDICATION AGENT") for the Lender
Parties and WELLS FARGO BANK N.A. ("WELLS FARGO"), as documentation agent
("DOCUMENTATION AGENT") for the Lender Parties.
PRELIMINARY STATEMENTS:
(1) Pursuant to the Stock Subscription and Redemption Agreement
dated November 17, 1997 (as amended, supplemented or otherwise modified in
accordance with its terms, to the extent permitted in accordance with the Loan
Documents (as hereinafter defined) the "STOCK PURCHASE AGREEMENT"), Hubcap
Acquisition, L.L.C. ("HUBCAP"), an affiliate of Kohlberg Kravis Roberts & Co.,
L.P. ("KKR" and, together with Hubcap, the "INVESTOR GROUP") will acquire
approximately 90% of the U.S. Borrower (the "ACQUISITION") from Phelps Dodge
Corporation ("PHELPS DODGE"), for cash consideration of approximately
$108,000,000. Following the Acquisition, Phelps Dodge will continue to own
approximately 10% of the U.S. Borrower.
(2) The Borrowers have requested that, immediately upon the
consummation of the Acquisition, the Lender Parties lend up to $215,000,000 to
the U.S. Borrower and up to $60,000,000 to the Canadian Borrower to enable
Hubcap to consummate the Acquisition and to pay transaction fees and expenses in
connection therewith, and that from time to time, the Lender Parties lend to the
U.S. Borrower and issue Letters of Credit for the benefit of the U.S. Borrower
to finance the foregoing, to provide working capital for the U.S. Borrower and
its Subsidiaries and for other general corporate purposes.
(3) The Lender Parties have indicated their willingness to agree to
lend such amounts on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
<PAGE>
2
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ACQUISITION" has the meaning specified in the Preliminary Statements
to this Agreement.
"ADMINISTRATIVE AGENT" has the meaning specified in the recital of
parties to this Agreement.
"ADMINISTRATIVE AGENT'S ACCOUNT" means the account of the
Administrative Agent maintained by the Administrative Agent with Citibank
at its office at 399 Park Avenue, New York, New York 10043, Account No.
3685-2248, Reference: Accuride.
"ADVANCE" means a Term A Advance, a Term B Advance, a Revolving Credit
Advance, a Swing Line Advance or a Letter of Credit Advance.
"AFFILIATE" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with
such Person (or, in the case of any Lender which is an investment fund, (i)
the investment advisor thereof, and (ii) any other investment fund having
the same investment advisor), or is a director or officer of such Person.
For purposes of this definition, the term "control" (including the terms
"controlling," "controlled by" and "under common control with") of a Person
means the possession, direct or indirect, of the power to vote 10% or more
of the Voting Stock of such Person or to direct or cause the direction of
the management and policies of such Person, whether through the ownership
of Voting Stock, by contract or otherwise.
"APPLICABLE LENDING OFFICE" means, with respect to (a) each Term A
Lender, such Lender Party's Canadian Lending Office in the case of a Base
Rate Advance and such Lender Party's Eurodollar Lending Office in the case
of a Eurodollar Rate Advance and (b) for each other Lender Party, such
Lender Party's Domestic Lending Office in the case of a Base Rate Advance
and such Lender Party's Eurodollar Lending Office in the case of a
Eurodollar Rate Advance.
"APPLICABLE MARGIN" means, for Advances outstanding under each of the
Term A Facility, the Term B Facility and the Revolving Credit Facility, a
percentage per annum determined by reference to the Performance Level as
set forth for each such Facility below:
(a) for Advances outstanding under the Term A Facility:
<PAGE>
3
============================================================================
PERFORMANCE LEVEL BASE RATE ADVANCES EURODOLLAR RATE ADVANCES
============================================================================
I 0.250% 1.250%
============================================================================
II 0.250% 1.250%
============================================================================
III 0.500% 1.500%
============================================================================
IV 0.750% 1.750%
============================================================================
V 1.125% 2.125%
============================================================================
VI 1.375% 2.375%
============================================================================
(b) for Advances outstanding under the Term B Facility:
============================================================================
PERFORMANCE LEVEL BASE RATE ADVANCES EURODOLLAR RATE ADVANCES
============================================================================
I 0.500% 1.500%
============================================================================
II 0.500% 1.500%
============================================================================
III 0.750% 1.750%
============================================================================
IV 1.000% 2.000%
============================================================================
V 1.250% 2.250%
============================================================================
VI 1.500% 2.500%
============================================================================
(c) for Advances outstanding under the Revolving Credit Facility:
============================================================================
PERFORMANCE LEVEL BASE RATE ADVANCES EURODOLLAR RATE ADVANCES
============================================================================
I 0.000% 0.875%
============================================================================
II 0.125% 1.125%
============================================================================
III 0.375% 1.375%
============================================================================
IV 0.625% 1.625%
============================================================================
V 1.000% 2.000%
============================================================================
VI 1.250% 2.250%
============================================================================
<PAGE>
4
For outstanding Advances under each of the Facilities, the Applicable
Margin for each Base Rate Advance and each Eurodollar Rate Advance shall,
(i) for the first six months following the Closing Date, be determined by
reference to Performance Level V, and (ii) thereafter, the Applicable
Margin for each Base Rate Advance shall be determined by reference to the
Performance Level in effect from time to time and the Applicable Margin for
each Eurodollar Rate Advance shall be determined by reference to the
Performance Level in effect on the first day of each Interest Period for
such Advance. Changes in the Applicable Margin resulting from changes in
the Performance Level shall become effective (for purposes of this
definition only, the date of such effectiveness being the "EFFECTIVE DATE")
as of the first day following the last day of the most recent Fiscal
Quarter or Fiscal Year for which (A) financial statements are delivered to
the Administrative Agent pursuant to Section 5.03(b) or (c) and (B) a
certificate of the chief financial officer of the U.S. Borrower is
delivered by the U.S. Borrower to the Administrative Agent setting forth,
with respect to such financial statements, the then-applicable Performance
Level and the basis of the calculations therefor, and shall remain in
effect until the next change to be effected pursuant to this definition;
PROVIDED that, (i) if either Borrower shall have made any payments in
respect of interest during the period (for purposes of this definition
only, the "INTERIM PERIOD") from and including the Effective Date to the
day on which any change in Performance Level is determined as provided
above, then the amount of the next such payment of interest due by such
Borrower on or after such day shall be increased or decreased by an amount
equal to any underpayment or overpayment so made by such Borrower during
such Interim Period and (ii) each determination of the Performance Level
pursuant to this definition shall be made with respect to the Measurement
Period ending at the end of the fiscal period covered by the relevant
financial statements.
"APPLICABLE PERCENTAGE" means (a) for the six month period immediately
following the Closing Date, a rate per annum equal to 0.425% and (b)
thereafter, a rate per annum determined by reference to the applicable
Performance Level as set forth below:
============================================================
PERFORMANCE LEVEL COMMITMENT FEE
============================================================
I 0.250%
============================================================
II 0.300%
============================================================
III 0.350%
============================================================
IV 0.375%
============================================================
V 0.375%
============================================================
VI 0.425%
============================================================
The Applicable Percentage determined pursuant to clause (b) above shall be
determined by reference to the Performance Level in effect from time to
time. Changes in the Applicable Percentage resulting from changes in the
Performance Level shall become effective (for purposes of this definition
only, the date of such effectiveness being the "EFFECTIVE DATE") as of
<PAGE>
5
the first day following the last day of the most recent Fiscal Quarter or
Fiscal Year for which (A) financial statements are delivered to the
Administrative Agent pursuant to Section 5.03(b) or (c) and (B) a
certificate of the chief financial officer of the U.S. Borrower is
delivered by the U.S. Borrower to the Administrative Agent setting forth,
with respect to such financial statements, the then-applicable Performance
Level and the basis of the calculations therefor, and shall remain in
effect until the next change to be effected pursuant to this definition;
PROVIDED that, (i) if the U.S. Borrower shall have made any payments in
respect of commitment fees during the period (for purposes of this
definition only, the "INTERIM PERIOD") from the Effective Date to the day
on which any change in Performance Level is determined as provided above,
then the amount of the next such payment in respect of commitment fees due
by such Borrower on or after such day shall be increased or decreased by an
amount equal to any underpayment or overpayment so made by such Borrower
during such Interim Period and (ii) each determination of the Performance
Level pursuant to this definition shall be made with respect to the
Measurement Period ending at the end of the fiscal period covered by the
relevant financial statements.
"APPLICABLE RATE" has the meaning specified in Section 2.11(d).
"APPROPRIATE BORROWER" means, (a) with respect to the Term A Facility,
the Canadian Borrower and (b) with respect to the Term B Facility, the
Revolving Credit Facility, the Swing Line Facility or the Letter of Credit
Facility, the U.S. Borrower.
"APPROPRIATE LENDER" means, at any time, with respect to (a) any of
Term A Facility, the Term B Facility or the Revolving Credit Facility, a
Lender that has a Commitment with respect to such Facility at such time,
(b) the Letter of Credit Facility, (i) the Issuing Bank and (ii) the other
Revolving Credit Lenders and (c) the Swing Line Facility, (i) the Swing
Line Bank and (ii) if the other Revolving Credit Lenders have made Swing
Line Advances pursuant to Section 2.02(b) that are outstanding at such
time, each such other Revolving Credit Lender.
"ARRANGER" has the meaning specified in the recital of parties to this
Agreement.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Lender Party and an Eligible Assignee, and accepted by the
Administrative Agent and the Appropriate Borrower, in accordance with
Section 9.07 and in substantially the form of Exhibit C hereto.
"AVAILABLE AMOUNT" means, as of any date of determination, an amount
equal to (a) the sum of (i) the amount of any capital contributions (other
than the capital contributions referred to in Section 3.01(b)) made in cash
to the U.S. Borrower during the period from the Business Day immediately
following the Closing Date to such date, (ii) the aggregate amount of Net
Cash Proceeds which are required to be used to prepay Advances pursuant to
Section 2.06(b)(ii) but are not so used, and are retained by the U.S.
Borrower, pursuant to Section 2.06(c) on or prior to such date, (iii) an
amount equal to (x) the cumulative amount of Excess Cash Flow for all
Fiscal Years completed prior to such date MINUS (y) the portion of such
Excess Cash Flow that has been on or prior to such date (or will be)
applied to the prepayment
<PAGE>
6
of Advances in accordance with Section 2.06(b)(i), (iv) the aggregate
amount of all cash dividends and other cash distributions received by the
U.S. Borrower or any Subsidiary Guarantor on or prior to such date from any
Persons which are not Restricted Subsidiaries (other than the portion of
any such dividends and other distributions that is used by the U.S.
Borrower or any Subsidiary Guarantor to pay taxes), (v) the aggregate
amount of all cash repayments of principal received by the U.S. Borrower or
any Subsidiary Guarantor on or prior to such date from any Persons which
are not Restricted Subsidiaries in respect of loans made by the U.S.
Borrower or such Subsidiary Guarantor to such Persons and (vi) the
aggregate amount of all net cash proceeds received by the U.S. Borrower or
any Subsidiary Guarantor on or prior to such date in connection with the
sale, transfer or other disposition of its ownership interest in any Person
which is not a Restricted Subsidiary LESS (b) any amounts in subclauses (i)
through (vi) of clause (a) above used (i) for Investments pursuant to
Section 5.02(e)(ix) or (xii), (ii) for prepayments of Debt pursuant to
5.02(g) or (iii) for Capital Expenditures pursuant to Section 5.02(j)(i).
"AVAILABLE LC AMOUNT" of any Letter of Credit means, at any time, the
maximum amount available to be drawn under such Letter of Credit at such
time (assuming compliance at such time with all conditions to drawing).
"BANK HEDGE AGREEMENT" means any interest rate Hedge Agreement
permitted under Article V that is entered into by and between the U.S.
Borrower and any Hedge Bank.
"BANKERS TRUST" has the meaning specified in the recital of parties to
this Agreement.
"BASE RATE" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to the
highest of:
(a) (i) with respect to Term B Advances and Revolving
Credit Advances, the rate of interest announced publicly by Citibank
in New York, New York, from time to time, as Citibank's base rate and
(ii) with respect to Term A Advances, the variable rate of interest
per annum specified from time to time by Citibank as the reference
rate of interest established or quoted from time to time by Citibank
Canada and then in effect for determining interest rates on United
States dollar denominated commercial loans made by Citibank Canada in
Canada;
(b) the sum (adjusted to the nearest 1/16 of 1% or, if
there is no nearest 1/16 of 1%, to the next higher 1/16 of 1%) of
(i) 1/2 of 1% per annum, PLUS (ii) the rate obtained by dividing
(A) the latest three-week moving average of secondary market morning
offering rates in the United States for three-month certificates of
deposit of major United States money market banks, such three-week
moving average (adjusted to the basis of a year of 360 days) being
determined weekly on each Monday (or, if such day is not a Business
Day, on the next succeeding Business Day) for the three-week period
ending on the previous Friday by Citibank on the basis of such rates
reported by certificate of deposit dealers to and published by the
Federal Reserve Bank of New York or, if such publication shall be
suspended or terminated, on the basis of
<PAGE>
7
quotations for such rates received by Citibank from three New York
certificate of deposit dealers of recognized standing selected by
Citibank, by (B) a percentage equal to 100% minus the average of the
daily percentages specified during such three-week period by the Board
of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, but not
limited to, any emergency, supplemental or other marginal reserve
requirement) for Citibank with respect to liabilities consisting of or
including (among other liabilities) three-month U.S. dollar
non-personal time deposits in the United States, PLUS (iii) the
average during such three-week period of the annual assessment rates
estimated by Citibank for determining the then current annual
assessment payable by Citibank to the Federal Deposit Insurance
Corporation (or any successor) for insuring U.S. dollar deposits of
Citibank in the United States; and
(c) 1/2 of one percent per annum above the Federal Funds
Rate.
"BASE RATE ADVANCE" means an Advance that bears interest as provided
in Section 2.07(a)(i).
"BORROWERS" has the meaning specified in the recital of parties to
this Agreement.
"BORROWER'S ACCOUNT" means (i) with respect to the Canadian Borrower,
the account of the Canadian Borrower maintained by the Canadian Borrower
with Citibank Canada at its office at 123 Front Street West, 10th Floor,
Toronto, Ontario, Canada, M5J2M3, Account No. 2/012752/019, Re: Accuride
Canada Inc. and (ii) with respect to the U.S. Borrower, the account of the
U.S. Borrower maintained by the U.S. Borrower with Citibank at its office
at 399 Park Avenue, New York, New York 10043, Account No. 4075-2127, Re:
Accuride Corporation.
"BORROWING" means a Term A Borrowing, a Term B Borrowing, a Revolving
Credit Borrowing or a Swing Line Borrowing.
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized by law to close in New York City and with respect to notices
and determinations in connection with, and payments of principal and
interest on, the Term A Advances, on which banks are not required or
authorized to close in Toronto, Ontario, Canada, and if the applicable
Business Day relates to any Eurodollar Rate Advances, on which dealings are
carried on in the London interbank market.
"CANADIAN BORROWER" has the meaning specified in the recital of
parties to this Agreement.
"CANADIAN LENDING OFFICE" means, with respect to any Term A Lender,
the office of a Subsidiary or Affiliate of such Lender Party specified as
its "Canadian Lending Office" opposite its name on Schedule I hereto or in
the Assignment and Acceptance pursuant to which it became a Lender Party,
as the case may be, or such other office of such Lender Party as
<PAGE>
8
such Lender Party may from time to time specify to the Canadian Borrower
and the Administrative Agent.
"CAPITAL EXPENDITURES" means, for any Person for any period, the sum,
without duplication, of all expenditures made, directly or indirectly
(whether paid in cash or accrued as liabilities and including in all events
all amounts expended or capitalized under Capitalized Leases, but excluding
any amount representing capitalized interest), by such Person or any of its
Restricted Subsidiaries during such period for equipment, fixed assets,
real property or improvements, or for replacements or substitutions
therefor or additions thereto, that have been or should be, in accordance
with GAAP, reflected as additions to property, plant or equipment on a
Consolidated balance sheet of such Person, PROVIDED that Capital
Expenditures shall not include (without duplication) (a) any expenditures
made in connection with the replacement, substitution, repair or
restoration of any assets to the extent financed (i) with insurance
proceeds received by the U.S. Borrower or any of its Restricted
Subsidiaries on account of the loss of, or any damage to, the assets being
replaced, substituted for, repaired or restored or (ii) with the proceeds
of any compensation awarded to the U.S. Borrower or any of its Restricted
Subsidiaries as a result of the taking, by eminent domain or condemnation,
of the assets being replaced or substituted for, (b) any expenditures for
the purchase price of any equipment that is purchased simultaneously with
the trade-in of any existing equipment by the U.S. Borrower or any of its
Restricted Subsidiaries to the extent that the gross amount of such
purchase price is reduced by any credit granted by the seller of such
equipment for the equipment being traded in, (c) any expenditures for the
purchase price of any property, plant or equipment purchased within one
year of the consummation of any sale, lease, transfer or other disposition
of any asset of the U.S. Borrower or any of its Restricted Subsidiaries in
accordance with the provisions of Section 5.02(d) to the extent purchased
with Net Cash Proceeds of such sale, lease, transfer or other disposition,
(d) Investments made pursuant to Section 5.02(e)(vii), or (e) any
acquisition by the U.S. Borrower or any of its Restricted Subsidiaries (by
purchase or otherwise) of all or substantially all of the business,
property or fixed assets of, or the stock or other evidence of beneficial
ownership of, any Restricted Subsidiary or any division, business unit or
line of business of any Restricted Subsidiary in accordance with Section
5.02(e).
"CAPITALIZED LEASES" means all leases that have been or should be, in
accordance with GAAP, recorded as capitalized leases.
"CASH COLLATERAL ACCOUNT" has the meaning specified in the Pledge
Agreement.
"CASH EQUIVALENTS" means (i) marketable securities (a) issued or
directly and unconditionally guaranteed as to interest and principal by the
United States government or (b) issued by any agency of the United States
of America the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within 24 months after the date
of acquisition thereof; (ii) marketable direct obligations issued by any
state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof, in each case maturing
within 24 months after the date of acquisition thereof and having, at the
time of the acquisition thereof, an investment grade rating generally
obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc.
<PAGE>
9
("MOODY'S"); (iii) commercial paper maturing no more than 12 months from
the date of creation thereof and having, at the time of the acquisition
thereof, a rating of a least A-2 from S&P or at least P-2 from Moody's;
(iv) domestic and eurodollar certificates of deposit or bankers'
acceptances maturing within 24 months after the date of acquisition thereof
and issued or accepted by any Lender or by any other commercial bank that
has combined capital and surplus of not less than $250,000,000; (v)
repurchase agreements with a term of not more than 30 days for underlying
securities of the types described in clauses (i), (ii) and (iv) above
entered into with any commercial bank meeting the requirements specified in
clause (iv) above or with any securities dealer of recognized national
standing, (vi) shares of investment companies that are registered under the
Investment Company Act of 1940 and that invest solely in one or more of the
types of investments referred to in clauses (i) through (v) above, and
(vii) in the case of any Restricted Subsidiary which is not a U.S. Person,
high quality, short-term liquid Investments made by such Restricted
Subsidiary in the ordinary course of managing its surplus cash position in
a manner consistent with past practices.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System maintained by the U.S. Environmental
Protection Agency.
"CHANGE OF CONTROL" means, and shall be deemed to have occurred, if:
(i) (a) the Investor Group shall at any time not own, in the aggregate,
directly or indirectly, beneficially and of record, at least 35% of the
outstanding Voting Stock of U.S. Borrower (other than as the result of one
or more widely distributed offerings of common stock of the U.S. Borrower,
in each case whether by the U.S. Borrower or by the Investor Group) and/or
(b) any person, entity or "group" (within the meaning of Section 13(d) or
14 (d) of the Exchange Act) shall at any time have acquired direct or
indirect beneficial ownership of a percentage of the outstanding Voting
Stock of U.S. Borrower that exceeds the percentage of such Voting Stock
then beneficially owned, in the aggregate, by the Investor Group, UNLESS,
in the case of either clause (a) or (b) above, the Investor Group shall, at
the relevant time, have the collective right or ability, either by contract
or pursuant to a written proxy or other written evidence of voting power,
to elect or designate for election a majority of the Board of Directors of
the U.S. Borrower; and/or (ii) at any time Continuing Directors shall not
constitute a majority of the Board of Directors of the U.S. Borrower. For
purposes of this definition, "Continuing Director" means, as of any date of
determination, an individual (A) who is a member of the Board of Directors
of the U.S. Borrower on the Closing Date, (B) who, as of such date of
determination, has been a member of such Board of Directors for at least
the 12 preceding months (or, if such date of determination occurs during
the period comprising the first 12 months after the Closing Date, since the
Closing Date), or (C) who has been nominated to be a member of such Board
of Directors, directly or indirectly, by KKR or its Affiliates, or Persons
nominated by KKR or its Affiliates, or who has been nominated to be a
member of such Board of Directors by a majority of the other Continuing
Directors then in office.
"CITIBANK" has the meaning specified in the recital of parties to this
Agreement.
<PAGE>
10
"CITICORP" has the meaning specified in the recital of parties to this
Agreement.
"CLOSING DATE" means the date on which the Initial Extension of Credit
occurs following satisfaction or waiver of the conditions set forth in
Sections 3.01 and 3.02 of this Agreement.
"COLLATERAL" means all "Collateral" referred to in the Collateral
Documents and all other property that is or is intended to be subject to
any Lien in favor of the Administrative Agent for the benefit of the
Secured Parties.
"COLLATERAL DOCUMENTS" means the Pledge Agreement and any other
agreement that creates or purports to create a Lien in favor of the
Administrative Agent for the benefit of the Secured Parties.
"COMMITMENT" means a Term A Commitment, a Term B Commitment, a
Revolving Credit Commitment or a Letter of Credit Commitment.
"CONFIDENTIAL INFORMATION" has the meaning specified in Section 9.11.
"CONSOLIDATED" refers to the consolidation of accounts in accordance
with GAAP.
"CONVERSION", "CONVERT" and "CONVERTED" each refer to a conversion of
Advances of one Type into Advances of the other Type pursuant to
Section 2.09 or 2.10.
"CSI" has the meaning specified in the recital of parties to this
Agreement.
"CUMULATIVE AVAILABLE CONSOLIDATED NET INCOME" means, as of any date
of determination, Consolidated Net Income of the U.S. Borrower and its
Restricted Subsidiaries less cash dividends paid with respect to preferred
stock for the period (taken as one accounting period) commencing on the
Closing Date and ending on the last day of the most recent Fiscal Quarter
for which financial statements have been delivered to the Lender Parties
pursuant to Section 5.03(b) or (c).
"CURRENT ASSETS" of any Person means all assets of such Person that
would, in accordance with GAAP, be classified as current assets of a
company conducting a business the same as or similar to that of such
Person, after deducting adequate reserves in each case in which a reserve
is proper in accordance with GAAP, but excluding the current portion of any
deferred income taxes.
"CURRENT LIABILITIES" of any Person means (a) all Debt of such Person
that by its terms is payable on demand or matures within one year after the
date of determination (excluding any Debt renewable or extendible, at the
option of such Person, to a date more than one year from such date or
arising under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year
from such date) and (b) all other items (including taxes accrued as
estimated) that in accordance with GAAP would be classified
<PAGE>
11
as current liabilities of such Person, but excluding the current portion of
any deferred income taxes.
"DEBT" of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money, (b) all Obligations of such Person for
the deferred purchase price of property or services (other than trade
payables and accrued expenses incurred in the ordinary course of such
Person's business) that in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (c) all Obligations of
such Person evidenced by notes, bonds, debentures or other similar
instruments, (d) all Obligations of such Person created or arising under
any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of
the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), it being understood that
if such Person has not assumed or otherwise become liable for such
Obligations, the amount of the Debt of such Person in connection therewith
shall be limited to the lesser of the face amount of the related
Obligations or the fair market value of all property of such Person
securing such Obligations, (e) all Obligations of such Person as lessee
under Capitalized Leases, (f) all Obligations, contingent or otherwise, of
such Person under acceptance, letter of credit or similar facilities issued
for the account of such Person, (g) all Obligations of such Person in
respect of Hedge Agreements, (h) all Debt of others referred to in
clauses (a) through (g) above or clause (i) below guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly
or indirectly by such Person through an agreement (i) to pay or purchase
such Debt or to advance or supply funds for the payment or purchase of such
Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to
purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Debt or to assure the holder of such Debt against
loss, (iii) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or
(iv) otherwise to assure a creditor against loss; PROVIDED that any such
guaranteed Obligations shall not include endorsements of instruments for
deposit or collection in the ordinary course of business, and (i) all Debt
referred to in clauses (a) through (h) above of another Person secured by
(or for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including, without
limitation, accounts and contract rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of such Debt;
PROVIDED that the amount of Debt of such Person under clauses (h) and (i)
above shall (subject to any obligation set forth therein) be deemed to be
the principal amount of the Debt guaranteed or secured thereby and, with
respect to any Lien on property of such Person as described in clause (i)
above, if such Person has not assumed or otherwise become liable for any
such Debt, the amount of the Debt of such Person in connection therewith
shall be limited to the lesser of the face amount of such Debt or the fair
market value of all property of such Person securing such Debt.
"DECLINED AMOUNT" has the meaning specified in Section 2.06(c).
"DECLINING LENDER" has the meaning specified in Section 2.06(c).
<PAGE>
12
"DEFAULT" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given
or time elapse or both.
"DEFAULTED ADVANCE" means, with respect to any Lender Party at any
time, the portion of any Advance required to be made by such Lender Party
to either Borrower pursuant to Section 2.01 or 2.02 at or prior to such
time which has not been made by such Lender Party or by the Administrative
Agent for the account of such Lender Party pursuant to Section 2.02(e) as
of such time. In the event that a portion of a Defaulted Advance shall be
deemed made pursuant to Section 2.15(a), the remaining portion of such
Defaulted Advance shall be considered a Defaulted Advance originally
required to be made pursuant to Section 2.01 on the same date as the
Defaulted Advance so deemed made in part.
"DEFAULTED AMOUNT" means, with respect to any Lender Party at any
time, any amount required to be paid by such Lender Party to the
Administrative Agent or any other Lender Party hereunder or under any other
Loan Document at or prior to such time which has not been so paid as of
such time, including, without limitation, any amount required to be paid by
such Lender Party to (a) the Swing Line Bank pursuant to Section 2.02(b) to
purchase a portion of a Swing Line Advance made by the Swing Line Bank,
(b) the Issuing Bank pursuant to Section 2.03(c) to purchase a portion of a
Letter of Credit Advance made by the Issuing Bank, (c) the Administrative
Agent pursuant to Section 2.02(e) to reimburse the Administrative Agent for
the amount of any Advance made by the Administrative Agent for the account
of such Lender Party, (d) any other Lender Party pursuant to Section 2.13
to purchase any participation in Advances owing to such other Lender Party
and (e) the Administrative Agent or the Issuing Bank pursuant to
Section 8.05 to reimburse the Administrative Agent or the Issuing Bank for
such Lender Party's ratable share of any amount required to be paid by the
Lender Parties to the Administrative Agent or the Issuing Bank as provided
therein. In the event that a portion of a Defaulted Amount shall be deemed
paid pursuant to Section 2.15(b), the remaining portion of such Defaulted
Amount shall be considered a Defaulted Amount originally required to be
paid hereunder or under any other Loan Document on the same date as the
Defaulted Amount so deemed paid in part.
"DEFAULTING LENDER" means, at any time, any Lender Party that, at such
time, (a) owes a Defaulted Advance or a Defaulted Amount or (b) shall take
any action or be the subject of any action or proceeding of a type
described in Section 7.01(f).
"DOCUMENTATION AGENT" has the meaning specified in the recital of
parties to this Agreement.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender Party, the
office of such Lender Party specified as its "Domestic Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender Party, as the case may be, or such
other office of such Lender Party as such Lender Party may from time to
time specify to the U.S. Borrower and the Administrative Agent.
<PAGE>
13
"DOMESTIC SUBSIDIARY" means any Subsidiary of the U.S. Borrower which
is not a Foreign Subsidiary.
"EBITDA" means, for any period, the sum, determined on a Consolidated
basis, of the amounts for such period of (a) Net Income PLUS (b) to the
extent included in computing Net Income, the sum (without duplication) of
(i) Interest Expense, (ii) taxes computed on the basis of income,
(iii) depreciation expense, (iv) amortization expense (including
amortization of deferred financing fees), (v) any expenses or charges
incurred in connection with any issuance of debt or equity securities
(including upfront fees payable in respect of bank facilities), (vi) any
fees and expenses related to Investments permitted pursuant to Section
5.02(e) of this Agreement, (vii) losses on asset sales,
(viii) restructuring charges or reserves, (ix) any deduction for minority
interest expense, (x) fees or expenses incurred or paid by the U.S.
Borrower or any of its Restricted Subsidiaries in connection with the
Acquisition, the financing therefor and the other transactions contemplated
hereby and thereby, (xi) any other non-cash charges, (xii) any other
non-recurring charges, (xiii) currency losses and (xiv) additional expenses
in connection with labor disruptions or the potential therefor, MINUS (c)
to the extent included in computing Net Income the sum, without
duplication, of the amounts for such period of (i) any non-recurring gains,
(ii) all non-cash gains, (iii) gains on asset sales, and (iv) currency
gains, in each case of the U.S. Borrower and its Restricted Subsidiaries,
determined in accordance with GAAP for such period, PROVIDED that, for
purposes of such calculation, in the case of any Restricted Subsidiary
acquired by the U.S. Borrower or any of its Restricted Subsidiaries
following the commencement of any such period, amounts attributable to such
Restricted Subsidiary shall be calculated as though such Restricted
Subsidiary had been acquired on the first day of such period, and PROVIDED
FURTHER that for purposes of Section 5.02(e)(xi) and 5.04 only, in the case
of each Person who becomes a Restricted Subsidiary of the U.S. Borrower or
any of its Restricted Subsidiaries following the commencement of such
period, EBITDA shall be increased or decreased, as the case may be, by the
Pro Forma EBITDA Adjustment.
"ELIGIBLE ASSIGNEE" means (a) with respect to any Term B Facility or
the Revolving Credit Facility, (i) a Lender; (ii) an Affiliate of a Lender;
(iii) a commercial bank organized under the laws of the United States, or
any State thereof, and having total assets of at least $3,000,000,000;
(iv) a savings and loan association or savings bank organized under the
laws of the United States, or any State thereof, and having total assets of
at least $3,000,000,000; (v) a commercial bank organized under the laws of
any other country that is a member of the OECD or has concluded special
lending arrangements with the International Monetary Fund associated with
its General Arrangements to Borrow, or a political subdivision of any such
country, and having total assets in excess of $3,000,000,000, so long as
such bank is acting through a branch or agency located in the United
States; (vi) the central bank of any country that is a member of the OECD;
and (vii) a finance company, insurance company or other financial
institution or fund (whether a corporation, partnership, trust or other
entity) that is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business and having total
assets in excess of $250,000,000; and (viii) any other Person approved by
the Administrative Agent and the U.S. Borrower, such approval not to be
unreasonably withheld or delayed, (b) with respect to the Term A Facility,
(i) a bank listed on
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14
Schedule I or II to the Bank Act (Canada), and having a combined capital
and surplus of at least $250,000,000, and, so long as no Event of Default
has occurred and is continuing, approved by the Canadian Borrower, such
approval not to be unreasonably withheld or delayed, (ii) an Affiliate of a
Lender or (iii) any other Person approved by the Administrative Agent and
the Canadian Borrower, such approval not to be unreasonably withheld or
delayed, and (c) with respect to the Letter of Credit Facility, a Person
that is an Eligible Assignee under subclause (ii), (iii) or (v) of
clause (a) of this definition and is approved by the Administrative Agent
and the U.S. Borrower, such approval not to be unreasonably withheld or
delayed; PROVIDED, HOWEVER, that neither any Loan Party nor any Affiliate
of a Loan Party shall qualify as an Eligible Assignee under this
definition.
"ENVIRONMENTAL ACTION" means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or
potential liability, investigation, proceeding, consent order or consent
agreement relating in any way to any Environmental Law, any Environmental
Permit or Hazardous Material or arising from alleged injury or threat to
health, safety or the environment, including, without limitation, (a) by
any governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or other actions or damages and (b) by any governmental
or regulatory authority or third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive relief.
"ENVIRONMENTAL LAW" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, writ, judgment,
injunction, decree or judicial or agency interpretation, policy or guidance
relating to pollution or protection of the environment, health, safety or
natural resources, including, without limitation, those relating to the
use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Materials.
"ENVIRONMENTAL PERMIT" means any permit, approval, identification
number, license or other authorization required under any Environmental
Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA as in
effect at the date of this Agreement and any subsequent provisions of ERISA
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA AFFILIATE" means each person (as defined in Section 3(9) of
ERISA) that together with any Loan Party would be deemed to be a "single
employer" within the meaning of Section 414(b) or (c) of the Internal
Revenue Code or, solely for purposes of Section 302 of ERISA and Section
412 of the Internal Revenue Code, is treated as a single employer under
Section 414 of the Internal Revenue Code.
"EUROCURRENCY LIABILITIES" has the meaning specified in Regulation D
of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender Party,
the office of such Lender Party specified as its "Eurodollar Lending
Office" opposite its name on Schedule I
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15
hereto or in the Assignment and Acceptance pursuant to which it became a
Lender Party (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender Party as such Lender Party may
from time to time specify to the Appropriate Borrower and the
Administrative Agent.
"EURODOLLAR RATE" means, for any Interest Period for all Eurodollar
Rate Advances comprising part of the same Borrowing, an interest rate per
annum equal to the rate per annum obtained by dividing (a) the average
(rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if
such average is not such a multiple of 1/16 of 1%) of the rate per annum at
which deposits in U.S. dollars are offered by the principal office of each
of the Reference Banks in London, England to prime banks in the London
interbank market at 11:00 A.M. (London time) two Business Days before the
first day of such Interest Period in an amount substantially equal to such
Reference Bank's Eurodollar Rate Advance comprising part of such Borrowing
to be outstanding during such Interest Period (or, if any Reference Bank
shall not have such a Eurodollar Rate Advance, $1,000,000) and for a period
equal to such Interest Period by (b) a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period. The
Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance
comprising part of the same Borrowing shall be determined by the
Administrative Agent on the basis of applicable rates furnished to and
received by the Administrative Agent from the Reference Banks two Business
Days before the first day of such Interest Period, SUBJECT, HOWEVER, to the
provisions of Section 2.07.
"EURODOLLAR RATE ADVANCE" means an Advance that bears interest as
provided in Section 2.07(a)(ii).
"EURODOLLAR RATE RESERVE PERCENTAGE" for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing means the
reserve percentage applicable two Business Days before the first day of
such Interest Period under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without limitation,
any emergency, supplemental or other marginal reserve requirement) for a
member bank of the Federal Reserve System in New York City with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities
(or with respect to any other category of liabilities that includes
deposits by reference to which the interest rate on Eurodollar Rate
Advances is determined) having a term equal to such Interest Period.
"EVENTS OF DEFAULT" has the meaning specified in Section 7.01.
"EXCESS CASH FLOW" means, for any period, an amount equal to the sum,
without duplication, of:
(a) Consolidated Net Income of the U.S. Borrower and its
Restricted Subsidiaries for such period (other than any portion of
Consolidated Net Income attributable to earnings in respect of joint
venture interests in excess of dividends or
<PAGE>
16
distributions actually received by the U.S. Borrower and its
Restricted Subsidiaries), PLUS
(b) the aggregate amount of all non-cash charges deducted
in arriving at such Consolidated Net Income, PLUS
(c) the amount of any net decrease in the excess of
Consolidated Current Assets (excluding cash and Cash Equivalents) over
Consolidated Current Liabilities of the U.S. Borrower and its
Restricted Subsidiaries during such period, MINUS
(d) the aggregate amount of all non-cash credits included
in arriving at such Consolidated Net Income, PLUS
(e) the aggregate net non-cash loss realized by the U.S.
Borrower and its Restricted Subsidiaries in connection with the sale,
lease, transfer or other disposition of assets (other than sales of
inventory in the ordinary course of business) by the U.S. Borrower and
its Restricted Subsidiaries during such period, MINUS
(f) the aggregate amount of Capital Expenditures made by
the U.S. Borrower and its Restricted Subsidiaries in cash (excluding
the principal amount of any Debt incurred to finance such Capital
Expenditures, whether incurred in such period or a subsequent period)
pursuant to Section 5.02(j), MINUS
(g) the amount of any net increase in the excess of
Consolidated Current Assets (less cash and Cash Equivalents) over
Consolidated Current Liabilities of the U.S. Borrower and its
Restricted Subsidiaries during such period, MINUS
(h) the aggregate amount of any premium, make-whole or
penalty payments actually paid in cash during such period that are
required in connection with any prepayment of Debt and that are
accounted for by the U.S. Borrower as extraordinary items, MINUS
(i) the aggregate amount of all mandatory prepayments of
Revolving Credit Advances, Letter of Credit Advances and Swing Line
Advances made during such period (to the extent the Revolving Credit
Facility is permanently reduced by the amount of such prepayments),
MINUS
(j) the aggregate amount of all scheduled principal
payments of Debt of the U.S. Borrower or its Restricted Subsidiaries
(including, without limitation, Term A Advances and Term B Advances,
the principal component of payments with respect to Obligations under
Capitalized Leases and, so long as the Mexico Subsidiary is a
Restricted Subsidiary, all principal payments on revolving or term
loans of the Mexico Subsidiary (whether or not commitments are reduced
thereby), but excluding Revolving Credit Advances, Letter of Credit
Advances and Swing Line Advances), MINUS
<PAGE>
17
(k) the amount of Investments made during such period
pursuant to Section 5.02(e) to the extent that such Investments were
financed with internally generated cash flow of the U.S. Borrower and
its Restricted Subsidiaries, MINUS
(l) the aggregate amount of expenditures actually made by
the U.S. Borrower and its Restricted Subsidiaries in cash during such
period (including, without limitation, the payment of financing fees)
to the extent that such expenditures are not expensed during such
period, MINUS
(m) payments by the Borrowers and their Restricted
Subsidiaries during such period in respect of long-term liabilities of
the Borrowers and their Restricted Subsidiaries other than Debt, MINUS
(n) the amount paid during such period by the U.S. Borrower
to repurchase shares of its capital stock (and/or options or warrants
in respect thereof) held by its officers, directors and employees so
long as such repurchase is pursuant to, and in accordance with the
terms of management and/or employee stock plans, stock subscription
agreements or shareholder agreements, MINUS
(o) the aggregate net non-cash gain realized by the U.S.
Borrower and its Restricted Subsidiaries in connection with the sale,
lease, transfer or other disposition of assets (other than sales of
inventory in the ordinary course of business) by the U.S. Borrower and
its Restricted Subsidiaries during such period.
"EXISTING DEBT" means Debt of the U.S. Borrower and its Restricted
Subsidiaries outstanding immediately before giving effect to the
Acquisition.
"FACILITY" means the Term A Facility, the Term B Facility, the
Revolving Credit Facility, the Swing Line Facility or the Letter of Credit
Facility.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the
average of the quotations for such day for such transactions received by
the Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
"FISCAL QUARTER" means any fiscal quarter of the U.S. Borrower and its
Consolidated Subsidiaries that occurs within any Fiscal Year.
"FISCAL YEAR" means a fiscal year of the U.S. Borrower and its
Consolidated Subsidiaries ending on December 31 in any calendar year.
<PAGE>
18
"FIXED CHARGE COVERAGE RATIO" means, as of any date of determination,
the ratio of Consolidated EBITDA of the U.S. Borrower and its Restricted
Subsidiaries to the sum of (i) Consolidated Interest Expense, PLUS
(ii) Capital Expenditures made pursuant to Section 5.02(j)(i) from cash on
hand or Borrowings under the Revolving Credit Facility, PLUS
(iii) principal amounts of all Funded Debt payable (unless paid in a prior
period), in each case, by the U.S. Borrower and its Restricted Subsidiaries
for the most recently completed Measurement Period prior to such date
(other than mandatory prepayments pursuant to Section 2.06(b)(i), (ii) or
(iv)).
"FOREIGN GOVERNMENT SCHEME OR ARRANGEMENT" has the meaning specified
in Section 4.01(l)(ii).
"FOREIGN PLAN" has the meaning specified in Section 4.01(l)(ii).
"FOREIGN SUBSIDIARY" means any Subsidiary of the U.S. Borrower which
is a corporation organized under the laws of any jurisdiction other than
the United States or any state thereof.
"FUNDED DEBT" of any Person means Debt in respect of the Advances, in
the case of the Borrowers, and all other Debt of such Person that by its
terms matures more than one year after the date of determination or matures
within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year after such date or
arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year
after such date, including, without limitation, all amounts of Funded Debt
of such Person required to be paid or prepaid within one year after the
date of determination.
"GAAP" has the meaning specified in Section 1.03.
"GUARANTY" has the meaning specified in Section 6.01.
"GUARANTEED OBLIGATIONS" has the meaning specified in Section 6.01(a).
"HAZARDOUS MATERIALS" means (a) petroleum or petroleum products,
by-products or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and radon gas and
(b) any other chemicals, materials or substances designated, classified or
regulated as hazardous or toxic or as a pollutant or contaminant under any
Environmental Law.
"HEDGE AGREEMENTS" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements,
currency future or option contracts, commodities future or option contracts
for materials used in the ordinary course of business and other similar
agreements.
<PAGE>
19
"HEDGE BANK" means any Lender Party or any of its Affiliates in its
capacity as a party to a Bank Hedge Agreement.
"HUBCAP" has the meaning specified in the Preliminary Statements to
this Agreement.
"INDEMNIFIED PARTY" has the meaning specified in Section 9.04(b).
"INFORMATION MEMORANDUM" means the information memorandum dated
December 12, 1997 used by the Arranger in connection with the syndication
of the Commitments.
"INITIAL EXTENSION OF CREDIT" means the initial Borrowing hereunder.
"INITIAL ISSUING BANK" has the meaning specified in the recital of
parties to this Agreement.
"INITIAL LENDERS" has the meaning specified in the recital of parties
to this Agreement.
"INTEREST COVERAGE RATIO" means, as of any date of determination, the
ratio of Consolidated EBITDA of the U.S. Borrower and its Restricted
Subsidiaries to Consolidated Interest Expense of the U.S. Borrower and its
Restricted Subsidiaries for the most recently completed Measurement Period
prior to such date.
"INTEREST EXPENSE" means, for any Person for any period, cash interest
expense (including that attributable to Capital Leases in accordance with
GAAP), net of cash interest income, of such Person with respect to all
outstanding Debt of such Person, including, without limitation, all
commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and net costs under
Hedge Agreements (other than currency swap agreements, currency future or
option contracts and other similar agreements), but excluding, however,
amortization of deferred financing costs and any other amounts of non-cash
interest, all as calculated in accordance with GAAP; PROVIDED, that for
purposes of the four Fiscal Quarters immediately following the Closing
Date, Interest Expense for each Measurement Period shall be calculated
after giving pro forma effect to Debt incurred in connection with the
Acquisition, as though such Debt had been incurred on the first day of such
Measurement Period and PROVIDED FURTHER that (a) except as provided in
clause (b) below, there shall be excluded from any determination of
Consolidated Interest Expense of the U.S. Borrower and its Restricted
Subsidiaries for any period the cash interest expense (or income) of all
Unrestricted Subsidiaries for such period to the extent otherwise included
in such Consolidated Interest Expense and (b) there shall be included in
any determination of Consolidated Interest Expense for the U.S. Borrower
and its Restricted Subsidiaries for any period the cash interest expense
(or income) of any Person which becomes a Restricted Subsidiary (through an
acquisition in accordance with Section 5.02(e) or designation or otherwise)
for such entire period, assuming that any Debt incurred or prepaid in
connection with any such acquisition or designation had been incurred or
prepaid on the first day of such period.
<PAGE>
20
"INTEREST PERIOD" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing to either Borrower, the period commencing on the
date of such Eurodollar Rate Advance or the date of the Conversion of any
Base Rate Advance into such Eurodollar Rate Advance, and ending on the last
day of the period selected by such Borrower pursuant to the provisions
below and, thereafter, each subsequent period commencing on the last day of
the immediately preceding Interest Period and ending on the last day of the
period selected by such Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be one, two, three or six
months, or, if available to all of the Lenders, nine or twelve months, as
such Borrower may, upon notice received by the Administrative Agent not
later than 11:00 A.M. (New York City time) on the third Business Day prior
to the first day of such Interest Period, select; PROVIDED, HOWEVER, that:
(a) such Borrower may not select any Interest Period with
respect to any Eurodollar Rate Advance under a Facility that ends
after any principal repayment installment date for such Facility
unless, after giving effect to such selection, the aggregate principal
amount of Base Rate Advances and of Eurodollar Rate Advances having
Interest Periods that end on or prior to such principal repayment
installment date for such Facility shall be at least equal to the
aggregate principal amount of Advances under such Facility due and
payable on or prior to such date;
(b) Interest Periods commencing on the same date for
Eurodollar Rate Advances comprising part of the same Borrowing shall
be of the same duration;
(c) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, PROVIDED, HOWEVER, that, if such extension would cause
the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day; and
(d) whenever the first day of any Interest Period occurs on
a day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months
in such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"INVESTMENT" in any Person means any loan or advance to such Person,
any purchase or other acquisition of any capital stock or other ownership
or profit interest, warrants, rights, options, obligations or other
securities of such Person, any capital contribution to such Person or any
other investment in such Person, including, without limitation, any
arrangement pursuant to which the investor incurs Debt of the types
referred to in clause (h) or (i) of the definition of "DEBT" in respect of
such Person.
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21
"INVESTOR GROUP" has the meaning specified in the Preliminary
Statements to this Agreement.
"ISSUING BANK" means the Initial Issuing Bank and each Eligible
Assignee to which the Letter of Credit Commitment hereunder has been
assigned pursuant to Section 9.07.
"KKR" has the meaning specified in the Preliminary Statements to this
Agreement.
"L/C RELATED DOCUMENTS" has the meaning specified in
Section 2.04(e)(ii)(A).
"LENDER PARTY" means any Lender, the Issuing Bank or the Swing Line
Bank.
"LENDERS" means the Initial Lenders and each Person that shall become
a Lender hereunder pursuant to Section 9.07.
"LETTERS OF CREDIT" has the meaning specified in Section 2.01(e).
"LETTER OF CREDIT ADVANCE" means an advance made by the Issuing Bank
or any Revolving Credit Lender pursuant to Section 2.03(c).
"LETTER OF CREDIT AGREEMENT" has the meaning specified in
Section 2.03(a).
"LETTER OF CREDIT COMMITMENT" means, with respect to the Issuing Bank
at any time, the amount set forth opposite the Issuing Bank's name on
Schedule I hereto under the caption "Letter of Credit Commitment" or, if
the Issuing Bank has entered into one or more Assignments and Acceptances,
set forth for the Issuing Bank in the Register maintained by the
Administrative Agent pursuant to Section 9.07(d) as the Issuing Bank's
"Letter of Credit Commitment", as such amount may be reduced at or prior to
such time pursuant to Section 2.05.
"LETTER OF CREDIT FACILITY" means, at any time, an amount equal to the
lesser of (a) the amount of the Issuing Bank's Letter of Credit Commitment
at such time and (b) $20,000,000, as such amount may be reduced at or prior
to such time pursuant to Section 2.05.
"LEVERAGE RATIO" means, as of any date of determination, the ratio of
(a) total Funded Debt of the U.S. Borrower and its Restricted Subsidiaries,
LESS the amount of cash reflected on the U.S. Borrower's balance sheet for
the most recently ended Fiscal Quarter in excess of $5,000,000, to (b) (i)
for purposes of determining compliance with Section 5.02(f)(v) and 5.04(a),
50% of Consolidated EBITDA and (ii) for all other purposes, Consolidated
EBITDA, in each case, of the U.S. Borrower and its Restricted Subsidiaries
for the most recently completed Measurement Period prior to such date.
"LIEN" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, any agreement to
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22
give any of the foregoing, any lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on
title to real property.
"LIGHT WHEELS FACILITY" means the manufacturing facility of the U.S.
Borrower located in Columbia, Tennessee.
"LOAN DOCUMENTS" means (a) for purposes of this Agreement and the
Notes and any amendment or modification hereof or thereof and for all other
purposes other than for purposes of the Guaranty, the Subsidiaries Guaranty
and the Collateral Documents, (i) this Agreement, (ii) the Notes, (iii) the
Guaranty, (iv) the Subsidiaries Guaranty, (v) the Collateral Documents and
(vi) each Letter of Credit Agreement and (b) for purposes of the Guaranty,
the Subsidiaries Guaranty and the Collateral Documents, (i) this Agreement,
(ii) the Notes, (iii) the Guaranty, (iv) the Subsidiaries Guaranty, (v) the
Collateral Documents, (vi) each Letter of Credit Agreement and (vii) each
Bank Hedge Agreement, in each case as amended, supplemented or otherwise
modified from time to time.
"LOAN PARTIES" means the Borrowers and the Subsidiary Guarantors.
"MAJORITY LENDERS" means at any time Lenders owed or holding at least
a majority in interest of the sum of (a) the aggregate principal amount of
the Advances outstanding at such time, (b) the aggregate Available LC
Amount of all Letters of Credit outstanding at such time, (c) the aggregate
unused Commitments under the Term A Facility and the Term B Facility at
such time and (d) the aggregate Unused Revolving Credit Commitments at such
time; PROVIDED, HOWEVER, that, if any Lender shall be a Defaulting Lender
at such time, there shall be excluded from the determination of Majority
Lenders at such time (A) the aggregate principal amount of the Advances
owing to such Lender (in its capacity as a Lender) and outstanding at such
time, (B) such Lender's Pro Rata Share of the aggregate Available LC Amount
of all Letters of Credit issued by such Lender and outstanding at such
time, (C) the aggregate unused Term A Commitments and Term B Commitments of
such Lender at such time and (D) the Unused Revolving Credit Commitment of
such Lender at such time. For purposes of this definition, the aggregate
principal amount of Swing Line Advances owing to the Swing Line Bank and of
Letter of Credit Advances owing to the Issuing Bank and the Available LC
Amount of each Letter of Credit shall be considered to be owed to the
Revolving Credit Lenders ratably in accordance with their respective
Revolving Credit Commitments.
"MARGIN STOCK" has the meaning specified in Regulation U.
"MATERIAL ADVERSE CHANGE" means any material adverse change in the
business, financial condition, operations, assets or liabilities of any
Loan Party or any of its Subsidiaries.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, financial condition, operations, assets or liabilities of any
Loan Party or any of its Subsidiaries, (b) the rights and remedies of the
Administrative Agent or any Lender Party under any Loan Document or Related
Document or (c) the ability of any Loan Party to perform its Obligations
under any Loan Document or Related Document to which it is or is to be a
party.
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23
"MEASUREMENT PERIOD" means, as of any date of determination, (i) for
purposes of calculating the Leverage Ratio pursuant to Section 5.02(f)(v)
or 5.04(a), the most recently completed eight consecutive Fiscal Quarters
ending on or immediately prior to such date and (ii) for all other purposes
(including for purposes of calculating the Leverage Ratio pursuant to all
provisions of this Agreement other than Section 5.02(f)(v) or 5.04(a)), the
most recently completed four consecutive Fiscal Quarters ending on or
immediately prior to such date.
"MEXICO FACILITY" means the facility of the Mexico Subsidiary located
in Monterrey, Mexico.
"MEXICO SUBSIDIARY" means Accuride de Mexico, S.A. de C.V., a company
organized and existing under the laws of Mexico.
"NET CASH PROCEEDS" means, with respect to any sale, lease, transfer
or other disposition of any asset, the aggregate amount of cash received
from time to time (whether as initial consideration or through payment or
disposition of deferred consideration, but only as and when received) by or
on behalf of such Person in connection with such transaction after
deducting therefrom only (without duplication): (a) reasonable and
customary fees, commissions, expenses, issuance costs, discounts and other
costs paid by the U.S. Borrower or any of its Restricted Subsidiaries in
connection with such transaction, (b) the amount of taxes paid or estimated
to be payable in connection with or as a result of such transaction, (c)
the amount of the outstanding principal amount of, premium or penalty, if
any, and interest on any Debt (other than pursuant to the Facilities) that
is secured by a Lien on the stock or assets in question and that is
required to be repaid under the terms thereof as a result of any such
transaction, (d) the amount of any reasonable reserves established in
accordance with GAAP against any liabilities (other than taxes described in
clause (b) above) that are (i) associated with the assets that are the
subject of such transaction and (ii) retained by the U.S. Borrower or any
of its Restricted Subsidiaries and (e) the amount of any proceeds received
from the sale, lease, transfer or other disposition of any assets pursuant
to Section 5.02(d) to the extent that such proceeds are reinvested in the
business within one year following such sale, lease, transfer or other
disposition; PROVIDED, HOWEVER, that in the event the amount of any
estimated tax payable described in clause (b) above exceeds the amount
actually paid, or upon any subsequent reduction in the amount of any
reserve described in clause (d) above, the U.S. Borrower or its applicable
Restricted Subsidiary shall be deemed to have received Net Cash Proceeds in
an amount equal to such excess or reduction, at the time of payment of such
taxes or on the date of such reduction, as the case may be; PROVIDED
FURTHER that any portion of any proceeds received from the sale, lease,
transfer or other disposition of any assets pursuant to Section 5.02(d)
that has not been reinvested within such one-year period shall (i) be
deemed to be Net Cash Proceeds of such a sale occurring on the last day of
such one-year period and (ii) be applied to the prepayment of Advances in
accordance with Section 2.06(b)(ii); PROVIDED FURTHER that, for purposes of
the preceding proviso, such one-year period shall be extended by up to six
months from the last day of such one-year period so long as (A) such
proceeds are to be reinvested within such additional six-month period under
the U.S. Borrower's or any of its Restricted Subsidiaries' business plan as
most recently adopted in good faith by its board of
<PAGE>
24
directors and (B) such Person believes in good faith that such proceeds
will be so reinvested within such additional six-month period.
"NET INCOME" means, with respect to any Person for any period, the net
income (or loss) of such Person; PROVIDED that, for purposes of determining
Net Income for any Person and its Restricted Subsidiaries on a Consolidated
basis, there shall be excluded from such determination (i) any after-tax
gains or losses, and any related fees and expenses, in each case to the
extent attributable to the sale of assets, and (ii) any net extraordinary
gains (or losses).
"NOTE" means a Term A Note, a Term B Note or a Revolving Credit Note.
"NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement dated
January 15, 1998 between the U.S. Borrower and the purchasers of the
Subordinated Notes, pursuant to which the Subordinated Notes are issued.
"NOTICE OF BORROWING" has the meaning specified in Section 2.02(a).
"NOTICE OF ISSUANCE" has the meaning specified in Section 2.03(a).
"NOTICE OF RENEWAL" has the meaning specified in Section 2.01(e).
"NOTICE OF SWING LINE BORROWING" has the meaning specified in
Section 2.02(b).
"NOTICE OF TERMINATION" has the meaning specified in Section 2.01(e).
"NPL" means the National Priorities List under CERCLA.
"OBLIGATION" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether or
not the right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured or unsecured, and whether
or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 7.01(f). Without limiting the generality
of the foregoing, the Obligations of the Loan Parties under the Loan
Documents include (a) the obligation to pay principal, interest, Letter of
Credit commissions, charges, expenses, fees, attorneys' fees and
disbursements, indemnities and other amounts payable by any Loan Party
under any Loan Document and (b) the obligation of any Loan Party to
reimburse any amount in respect of any of the foregoing that any Lender
Party, in its sole discretion, may elect to pay or advance on behalf of
such Loan Party.
"OECD" means the Organization for Economic Cooperation and
Development.
"OTHER TAXES" has the meaning specified in Section 2.12(b).
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
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25
"PERFORMANCE LEVEL" means Performance Level I, Performance Level II,
Performance Level III, Performance Level IV, Performance Level V or
Performance Level VI, as the context may require.
"PERFORMANCE LEVEL I" means, at any date of determination, that the
U.S. Borrower and its Restricted Subsidiaries shall have maintained a
Leverage Ratio of less than 3.25:1.00 for the most recently completed
Measurement Period prior to such time.
"PERFORMANCE LEVEL II" means, at any date of determination, that (a)
the Leverage Ratio of the U.S. Borrower and its Restricted Subsidiaries
does not meet the requirements for Performance Level I and (b) the U.S.
Borrower and its Restricted Subsidiaries shall have maintained a Leverage
Ratio of less than 3.75:1.00 for the most recently completed Measurement
Period prior to such time.
"PERFORMANCE LEVEL III" means, at any date of determination, that (a)
the Leverage Ratio of the U.S. Borrower and its Restricted Subsidiaries
does not meet the requirements for Performance Level I or Performance Level
II and (b) the U.S. Borrower and its Restricted Subsidiaries shall have
maintained a Leverage Ratio of less than 4.25:1.00 for the most recently
completed Measurement Period prior to such time.
"PERFORMANCE LEVEL IV" means, at any date of determination, that (a)
the Leverage Ratio of the U.S. Borrower and its Restricted Subsidiaries
does not meet the requirements for Performance Level I, Performance Level
II or Performance Level III and (b) the U.S. Borrower and its Restricted
Subsidiaries shall have maintained a Leverage Ratio of less than 4.75:1.00
for the most recently completed Measurement Period prior to such time.
"PERFORMANCE LEVEL V" means, at any date of determination, that (a)
the Leverage Ratio of the U.S. Borrower and its Restricted Subsidiaries
does not meet the requirements for Performance Level I, Performance Level
II, Performance Level III or Performance Level IV and (b) the U.S. Borrower
and its Restricted Subsidiaries shall have maintained a Leverage Ratio of
less than 5.25:1.00 for the most recently completed Measurement Period
prior to such time.
"PERFORMANCE LEVEL VI" means, at any date of determination, that the
Leverage Ratio of the U.S. Borrower and its Restricted Subsidiaries does
not meet the requirements for Performance Level I, Performance Level II,
Performance Level III, Performance Level IV or Performance Level V.
"PERMITTED LIENS" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall
have been commenced: (a) Liens for taxes, assessments and governmental
charges or levies to the extent not required to be paid under
Section 5.01(b) hereof; (b) Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other similar
Liens arising in the ordinary course of business outstanding at any time
and securing indebtedness that is not overdue for a period of more than 30
days; (c) Liens arising from judgments or decrees in circumstances not
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26
constituting an Event of Default under Section 7.01(g); (d) Liens incurred
or deposits made in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance
of tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business; (e) ground
leases in respect of real property on which facilities owned or leased by
the U.S. Borrower or any of its Subsidiaries are located; (f) easements,
rights-of-way, restrictions, minor defects or irregularities in title and
other similar charges or encumbrances not interfering in any material
respect with the business of the U.S. Borrower and its Subsidiaries taken
as a whole; (g) any interest or title of a lessor or secured by a lessor's
interest under any lease permitted by this Agreement and any Liens arising
from any financing statement filed in connection with such lease; (h) Liens
in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of
goods; (i) Liens on goods the purchase price of which is financed by a
documentary letter of credit issued for the account of the U.S. Borrower or
any of its Subsidiaries, PROVIDED that such Lien secures only the
obligations of the U.S. Borrower or such Subsidiaries in respect of such
letter of credit to the extent permitted under Section 5.02(a); and (j)
leases or subleases granted to others not interfering in any material
respect with the business of the U.S. Borrower and its Subsidiaries, taken
as a whole.
"PERSON" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or agency thereof.
"PHELPS DODGE" has the meaning specified in the Preliminary Statements
to this Agreement.
"PLAN" means any multiemployer or single-employer plan, as defined in
Section 4001 of ERISA and subject to Title IV of ERISA, that is or was
within any of the preceding five plan years maintained or contributed to by
(or to which there is or was an obligation to contribute or to make
payments of) any Loan Party or an ERISA Affiliate.
"PLEDGE AGREEMENT" has the meaning specified in Section 3.01(k)(vi).
"PLEDGE AGREEMENT SUPPLEMENT" has the meaning specified in the Pledge
Agreement
"PREFERRED STOCK" means, with respect to any corporation, capital
stock issued by such corporation that is entitled to a preference or
priority over any other capital stock issued by such corporation upon any
distribution of such corporation's assets, whether by dividend or upon
liquidation.
"PREPAYMENT DATE" has the meaning specified in Section 2.06(c).
"PRO FORMA EBITDA ADJUSTMENT" means, for any period, an amount equal
to the pro forma increase or decrease in Consolidated EBITDA that the U.S.
Borrower in good faith
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27
predicts will occur as a result of reasonably identifiable and supportable
net cost savings or additional net costs that will be realizable during
such period by combining the operations associated with an acquisition with
the operations of the U.S. Borrower and its Subsidiaries; PROVIDED that, so
long as such net cost savings or additional net costs will be realizable at
any time during such period, it shall be assumed, for purposes of
projecting such pro forma increase or decrease in such Consolidated EBITDA,
that such net cost savings or additional net costs will be realizable
during the entirety of such period; and PROVIDED FURTHER that any such pro
forma increase or decrease in such Consolidated EBITDA shall be without
duplication of any net cost savings or additional net costs actually
realized during such period and already included in such Consolidated
EBITDA.
"PRO RATA SHARE" of any amount means, with respect to any Revolving
Credit Lender at any time, the product of such amount TIMES a fraction the
numerator of which is the amount of such Lender's Revolving Credit
Commitment at such time and the denominator of which is the Revolving
Credit Facility at such time.
"PURCHASE PRICE ADJUSTMENT AMOUNT" means the amount, determined
pursuant to Section 1.5 of the Stock Purchase Agreement, equal to the
lesser of zero and the difference between the "Redemption Price" and the
"Adjusted Redemption Price" (as such terms are defined in the Stock
Purchase Agreement).
"REDEEMABLE" means, with respect to any capital stock or other
ownership or profit interest, Debt or other right or Obligation, any such
right or Obligation that (a) the issuer has undertaken to redeem at a fixed
or determinable date or dates, whether by operation of a sinking fund or
otherwise, or upon the occurrence of a condition not solely within the
control of the issuer or (b) is redeemable at the option of the holder.
"REDUCTION AMOUNT" has the meaning specified in Section 2.06(b)(v).
"REFERENCE BANKS" means Citibank, Bankers Trust and Wells Fargo.
"REGISTER" has the meaning specified in Section 9.07(d).
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"RELATED DOCUMENTS" means the Subordinated Debt Documents and the
Stock Purchase Agreement.
"REPORTABLE EVENT" means an event described in Section 4043 of ERISA
and the regulations thereunder.
"REQUIREMENTS OF LAW" means, with respect to any Person, all laws,
constitutions, statutes, treaties, ordinances, rules and regulations, all
orders, writs, decrees, injunctions, judgments, determinations or awards of
an arbitrator, a court or any other governmental
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28
authority, and all governmental authorizations, binding upon or applicable
to such Person or to any of its properties, assets or businesses.
"RESPONSIBLE OFFICER" means any officer of any Loan Party or any of
its Subsidiaries.
"RESTRICTED SUBSIDIARY" means, as of any date of determination, any
Subsidiary of the U.S. Borrower which is not an Unrestricted Subsidiary.
"REVENUES" means, for any Person for any period, an amount equal to
the revenues of such Person; PROVIDED that, for purposes of such
determination, (i) the revenues of any business acquired by the U.S.
Borrower or any of its Subsidiaries during such period pursuant to Section
5.02(e)(xi) or (xii) shall be determined on a pro forma basis as if such
acquisition had been consummated on the first day of such period and
(ii) the revenues of any business sold or otherwise disposed of by the U.S.
Borrower or any of its Subsidiaries in accordance with Section 5.02(d)
during such period shall be excluded in their entirety.
"REVOLVING CREDIT ADVANCE" has the meaning specified in
Section 2.01(c).
"REVOLVING CREDIT BORROWING" means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type made by the
Revolving Credit Lenders.
"REVOLVING CREDIT COMMITMENT" means, with respect to any Revolving
Credit Lender at any time, the amount set forth opposite such Lender's name
on Schedule I hereto under the caption "Revolving Credit Commitment" or, if
such Lender has entered into one or more Assignments and Acceptances, set
forth for such Lender in the Register maintained by the Administrative
Agent pursuant to Section 9.07(d) as such Lender's "Revolving Credit
Commitment", as such amount may be reduced at or prior to such time
pursuant to Section 2.05.
"REVOLVING CREDIT FACILITY" means, at any time, the aggregate amount
of the Revolving Credit Lenders' Revolving Credit Commitments at such time.
"REVOLVING CREDIT LENDER" means any Lender that has a Revolving Credit
Commitment.
"REVOLVING CREDIT NOTE" means a promissory note of the U.S. Borrower
payable to the order of any Revolving Credit Lender, in substantially the
form of Exhibit A-3 hereto, evidencing the aggregate indebtedness of the
U.S. Borrower to such Lender resulting from the Revolving Credit Advances
made by such Lender.
"SECURED PARTIES" means the Administrative Agent, the Lender Parties
and the Lenders party to Bank Hedge Agreements.
"SOLVENT" and "SOLVENCY" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of
such Person is greater than the total amount of
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29
liabilities, including, without limitation, contingent liabilities, of such
Person, (b) the present fair salable value of the assets of such Person is
not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured,
(c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay such debts
and liabilities as they mature and (d) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an
unreasonably small capital. The amount of contingent liabilities at any
time shall be computed as the amount that, in the light of all the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"STANDBY LETTER OF CREDIT" means any Letter of Credit issued under the
Letter of Credit Facility, other than a Trade Letter of Credit.
"STOCK PURCHASE AGREEMENT" has the meaning specified in the
Preliminary Statements to this Agreement.
"SUBORDINATED DEBT" means the Debt evidenced by the Subordinated Notes
and any other Debt of the Borrowers that is subordinated to the Obligations
of the Borrowers under the Loan Documents on, and that otherwise contains,
terms and conditions satisfactory to the Majority Lenders.
"SUBORDINATED DEBT DOCUMENTS" means the Note Purchase Agreement and
all other agreements, indentures and instruments pursuant to which
Subordinated Debt is issued.
"SUBORDINATED NOTES" means the subordinated notes of the U.S. Borrower
in an aggregate principal amount of $200,000,000 issued pursuant to the
Note Purchase Agreement.
"SUBSIDIARIES GUARANTY" has the meaning specified in
Section 3.01(k)(vii).
"SUBSIDIARIES GUARANTY SUPPLEMENT" has the meaning specified in the
Subsidiaries Guaranty.
"SUBSIDIARY" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding capital stock having
ordinary voting power to elect a majority of the Board of Directors of such
corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon
the occurrence of any contingency), (b) the interest in the capital or
profits of such partnership, joint venture or limited liability company or
(c) the beneficial interest in such trust or estate is at the time directly
or indirectly owned or controlled by such Person, by such Person and one or
more of its other Subsidiaries or by one or more of such Person's other
Subsidiaries.
"SUBSIDIARY GUARANTORS" means the Restricted Subsidiaries of the U.S.
Borrower that are Domestic Subsidiaries and are listed on Schedule II
hereto, and each other Restricted
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30
Subsidiary of the U.S. Borrower that shall be required to deliver a
Subsidiaries Guaranty Supplement pursuant to Section 5.01(k).
"SURVIVING DEBT" has the meaning specified in Section 3.01(d).
"SWING LINE ADVANCE" means an advance made by (a) the Swing Line Bank
pursuant to Section 2.01(d) or (b) any Revolving Credit Lender pursuant to
Section 2.02(b).
"SWING LINE BANK" has the meaning specified in the recital of parties
to this Agreement.
"SWING LINE BORROWING" means a borrowing consisting of a Swing Line
Advance made by the Swing Line Bank.
"SWING LINE FACILITY" has the meaning specified in Section 2.01(d).
"SYNDICATION AGENT" has the meaning specified in the recital of
parties to this Agreement.
"TAXES" has the meaning specified in Section 2.12(a).
"TERM A ADVANCE" has the meaning specified in Section 2.01(a).
"TERM A BORROWING" means a borrowing consisting of simultaneous Term A
Advances of the same Type made by the Term A Lenders.
"TERM A COMMITMENT" means, with respect to any Term A Lender at any
time, the amount set forth opposite such Lender's name on Schedule I hereto
under the caption "Term A Commitment" or, if such Lender has entered into
one or more Assignments and Acceptances, set forth for such Lender in the
Register maintained by the Administrative Agent pursuant to Section 9.07(d)
as such Lender's "Term A Commitment", as such amount may be reduced at or
prior to such time pursuant to Section 2.05.
"TERM A FACILITY" means, at any time, the aggregate amount of the Term
A Lenders' Term A Commitments at such time.
"TERM A LENDER" means any Lender that has a Term A Commitment.
"TERM A NOTE" means a promissory note of the Canadian Borrower payable
to the order of any Term A Lender, in substantially the form of Exhibit A-1
hereto, evidencing the indebtedness of the Canadian Borrower to such Lender
resulting from the Term A Advance made by such Lender.
"TERM B ADVANCE" has the meaning specified in Section 2.01(b).
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31
"TERM B BORROWING" means a borrowing consisting of simultaneous Term B
Advances of the same Type made by the Term B Lenders.
"TERM B COMMITMENT" means, with respect to any Term B Lender at any
time, the amount set forth opposite such Lender's name on Schedule I hereto
under the caption "Term B Commitment" or, if such Lender has entered into
one or more Assignments and Acceptances, set forth for such Lender in the
Register maintained by the Administrative Agent pursuant to Section 9.07(d)
as such Lender's "Term B Commitment", as such amount may be reduced at or
prior to such time pursuant to Section 2.05.
"TERM B FACILITY" means, at any time, the aggregate amount of the Term
B Lenders' Term Commitments at such time.
"TERM B LENDER" means any Lender that has a Term B Commitment.
"TERM B NOTE" means a promissory note of the U.S. Borrower payable to
the order of any Term B Lender, in substantially the form of Exhibit A-2
hereto, evidencing the indebtedness of the U.S. Borrower to such Lender
resulting from the Term B Advance made by such Lender.
"TERMINATION DATE" means (a) with respect to the Revolving Credit
Facility, the Letter of Credit Facility and the Swing Line Facility, the
earlier of January 21, 2004 and the date of termination in whole of the
Revolving Credit Commitments, the Letter of Credit Commitments and the
Swing Line Commitments pursuant to Section 2.05 or 7.01, (b) with respect
to the Term A Facility, the earlier of January 21, 2005 and the date of
termination in whole of the Term A Commitments pursuant to Section 2.05 or
7.01 and (c) with respect to the Term B Facility, the earlier of January
21, 2006 and the termination in whole of the Term B Commitments pursuant to
Section 2.05 or 7.01.
"TRADE LETTER OF CREDIT" means any Letter of Credit that is issued
under the Letter of Credit Facility for the benefit of a supplier of
inventory or other goods to the U.S. Borrower or any of its Subsidiaries to
effect payment for such inventory or other goods, the conditions to drawing
under which include the presentation to the Issuing Bank of negotiable
bills of lading, invoices and related documents sufficient, in the judgment
of the Issuing Bank, to create a valid and perfected lien on or security
interest in such inventory, bills of lading, invoices and related documents
in favor of the Issuing Bank.
"TYPE" refers to the distinction between Advances bearing interest at
the Base Rate and Advances bearing interest at the Eurodollar Rate.
"UNFUNDED CURRENT LIABILITY" of any Plan means the amount, if any, by
which the present value of the accumulated benefits under the Plan as of
the close of its most recent plan year, determined in accordance with
Statement of Financial Accounting Standards No. 87 as in effect on the date
hereof, but based upon the actuarial assumptions that would be used by the
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32
Plan's actuary in a termination of the Plan, exceeds the fair market value
of the assets allocable thereto.
"UNITED STATES" and "U.S." each mean the United States of America.
"UNRESTRICTED SUBSIDIARY" means (a) any Subsidiary of the U.S.
Borrower that is formed or acquired after the Closing Date, PROVIDED, that
at the time of such formation or acquisition (or promptly thereafter) the
U.S. Borrower designates such Subsidiary as an Unrestricted Subsidiary in a
written notice to the Administrative Agent, (b) any Restricted Subsidiary
on the Closing Date (other than the Canadian Borrower) subsequently
re-designated as an Unrestricted Subsidiary by the U.S. Borrower in a
written notice to the Administrative Agent pursuant to Section 5.03(h),
PROVIDED that such re-designation shall be deemed to be an Investment on
the date of such re-designation in an Unrestricted Subsidiary in an amount
equal to the sum of (i) the net worth of such re-designated Restricted
Subsidiary immediately prior to such re-designation (such net worth to be
calculated without regard to any guaranty provided by such re-designated
Restricted Subsidiary pursuant to the Subsidiary Guaranty) plus (ii) the
aggregate principal amount of any Debt owed by such redesignated Restricted
Subsidiary to either Borrower or any other Restricted Subsidiary
immediately prior to such re-designation, all calculated, except as set
forth in the parenthetical to clause (i), on a consolidated basis in
accordance with GAAP, and (c) any Subsidiary of any Unrestricted
Subsidiary; PROVIDED, HOWEVER, that (i) at the time of any written
re-designation by the U.S. Borrower to the Administrative Agent of any
Unrestricted Subsidiary as a Restricted Subsidiary pursuant to Section
5.03(h), the Unrestricted Subsidiary so re-designated shall no longer
constitute an Unrestricted Subsidiary, (ii) no Unrestricted Subsidiary may
be re-designated as a Restricted Subsidiary if a Default or Event of
Default has occurred and is continuing or would result from such
re-designation and (iii) no Restricted Subsidiary may be re-designated as
an Unrestricted Subsidiary if a Default or Event of Default has occurred
and is continuing or would result from such re-designation; and PROVIDED
FURTHER, HOWEVER, that on or promptly after the date of its formation,
acquisition or re-designation, as applicable, each Unrestricted Subsidiary
(other than an Unrestricted Subsidiary that is a Foreign Subsidiary) shall
have entered into a tax sharing agreement containing terms that, in the
reasonable judgment of the Administrative Agent, provide for an appropriate
allocation of tax liabilities and benefits.
"UNUSED REVOLVING CREDIT COMMITMENT" means, with respect to any
Revolving Credit Lender at any time, (a) such Lender's Revolving Credit
Commitment at such time MINUS (b) the sum of (i) the aggregate principal
amount of all Revolving Credit Advances, Swing Line Advances and Letter of
Credit Advances made by such Lender (in its capacity as a Lender) and
outstanding at such time, PLUS (ii) such Lender's Pro Rata Share of (A) the
aggregate Available LC Amount of all Letters of Credit outstanding at such
time, (B) the aggregate principal amount of all Letter of Credit Advances
made by the Issuing Bank pursuant to Section 2.03(c) and outstanding at
such time and (C) the aggregate principal amount of all Swing Line Advances
made by the Swing Line Bank pursuant to Section 2.01(d) and outstanding at
such time.
"U.S. BORROWER" has the meaning specified in the recital of parties
to this Agreement.
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33
"U.S. PERSON" means any Person which is organized under the laws of a
jurisdiction of the United States.
"VOTING STOCK" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
"WELLS FARGO" has the meaning specified in the recital of parties to
this Agreement.
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.03. ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(f) ("GAAP").
SECTION 1.04. CURRENCY EQUIVALENT. For purposes of construction of
the terms hereof, the equivalent in another currency of an amount in U.S.
dollars shall be determined by using the quoted spot rate at which Citibank's
principal office in New York City offers to purchase such other currency with
the equivalent in dollars in New York City at 9:00 A.M. (New York City time) on
the date on which such equivalent is to be determined.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. THE ADVANCES. (a) THE TERM A ADVANCES. Each Term A
Lender severally agrees, on the terms and conditions hereinafter set forth, to
make a single advance (a "TERM A ADVANCE") to the Canadian Borrower on any
Business Day during the period from the date hereof until February 28, 1998, in
an amount not to exceed such Lender's Term A Commitment at such time. The Term
A Borrowing shall consist of Term A Advances made simultaneously by the Term A
Lenders ratably according to their Term A Commitments. Amounts borrowed under
this Section 2.01(a) and repaid or prepaid may not be reborrowed.
(b) THE TERM B ADVANCES. Each Term B Lender severally agrees, on
the terms and conditions hereinafter set forth, to make a single advance (a
"TERM B ADVANCE") to the U.S. Borrower on any Business Day during the period
from the date hereof until February 28, 1998, in an amount not to exceed such
Lender's Term B Commitment at such time. The Term B Borrowing shall consist of
Term B Advances made simultaneously by the Term B Lenders ratably according to
their
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Term B Commitments. Amounts borrowed under this Section 2.01(b) and repaid or
prepaid may not be reborrowed.
(c) THE REVOLVING CREDIT ADVANCES. Each Revolving Credit Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
advances (each a "REVOLVING CREDIT ADVANCE") to the U.S. Borrower from time to
time on any Business Day during the period from the date hereof until the
Termination Date in an amount for each such Advance not to exceed such Lender's
Unused Revolving Credit Commitment at such time. Each Revolving Credit
Borrowing shall be in an aggregate amount of $2,000,000 or an integral multiple
of $500,000 in excess thereof (other than a Borrowing the proceeds of which
shall be used solely to repay or prepay in full outstanding Swing Line Advances
or outstanding Letter of Credit Advances) and shall consist of Revolving Credit
Advances made simultaneously by the Revolving Credit Lenders ratably according
to their Revolving Credit Commitments. Within the limits of each Revolving
Credit Lender's Unused Revolving Credit Commitment in effect from time to time,
the U.S. Borrower may borrow under this Section 2.01(c), prepay pursuant to
Section 2.06(a) and reborrow under this Section 2.01(c).
(d) THE SWING LINE ADVANCES. The U.S. Borrower may request the
Swing Line Bank to make, and the Swing Line Bank shall make, on the terms and
conditions hereinafter set forth, Swing Line Advances to the U.S. Borrower from
time to time on any Business Day during the period from the date hereof until
the Termination Date in an aggregate amount not to exceed at any time
outstanding the lesser of (i) $10,000,000 (the "SWING LINE FACILITY") and
(ii) an amount not to exceed the aggregate of the Unused Revolving Credit
Commitments of the Revolving Credit Lenders at such time. No Swing Line Advance
shall be used for the purpose of funding the payment of principal of any other
Swing Line Advance. Each Swing Line Borrowing shall be in an amount of $500,000
or an integral multiple of $250,000 in excess thereof and shall be made as a
Base Rate Advance. Within the limits of the Swing Line Facility and within the
limits referred to in clause (ii) above, the U.S. Borrower may borrow under this
Section 2.01(d), repay pursuant to Section 2.04(d) or prepay pursuant to
Section 2.06(a) and reborrow under this Section 2.01(d).
(e) LETTERS OF CREDIT. The Issuing Bank agrees, on the terms and
conditions hereinafter set forth, to issue letters of credit (the "LETTERS OF
CREDIT") for the account of the U.S. Borrower from time to time on any Business
Day during the period from the date hereof until five Business Days before the
Termination Date (i) in an aggregate Available LC Amount for all Letters of
Credit not to exceed at any time the Issuing Bank's Letter of Credit Commitment
at such time and (ii) in an Available LC Amount for each such Letter of Credit
not to exceed an amount equal to the Unused Revolving Credit Commitments of the
Revolving Credit Lenders at such time. No Letter of Credit shall have an
expiration date (including all rights of the U.S. Borrower or the beneficiary to
require renewal) later than the earlier of five Business Days before the
Termination Date and (A) in the case of a Standby Letter of Credit, one year
after the date of issuance thereof, but may by its terms be renewable annually
upon notice (a "NOTICE OF RENEWAL") given to the Issuing Bank and the
Administrative Agent on or prior to any date for notice of renewal set forth in
such Letter of Credit (but in any event at least three Business Days prior to
the date of the proposed renewal of such Standby Letter of Credit) and upon
fulfillment of the applicable conditions set forth in Article III, unless such
Issuing Bank has notified the U.S. Borrower (with a copy to the Administrative
Agent) on or prior to the date for notice of termination set forth in such
Letter of Credit (but in any event at least 30 Business
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35
Days prior to the date of automatic renewal) of its election not to renew such
Standby Letter of Credit (a "NOTICE OF TERMINATION") and (B) in the case of a
Trade Letter of Credit, the later of 180 days after the date of issuance thereof
or five Business Days before the Termination Date; PROVIDED that the terms of
each Standby Letter of Credit that is automatically renewable annually shall
(x) require the Issuing Bank that issued such Standby Letter of Credit to give
the beneficiary named in such Standby Letter of Credit notice of any Notice of
Termination, (y) permit such beneficiary, upon receipt of such notice, to draw
under such Standby Letter of Credit prior to the date such Standby Letter of
Credit otherwise would have been automatically renewed and (z) not permit the
expiration date (after giving effect to any renewal) of such Standby Letter of
Credit in any event to be extended to a date later than 60 days before the
Termination Date. If either a Notice of Renewal is not given by the U.S.
Borrower or a Notice of Termination is given by the Issuing Bank pursuant to the
immediately preceding sentence, such Standby Letter of Credit shall expire on
the date on which it otherwise would have been automatically renewed; PROVIDED,
HOWEVER, that even in the absence of receipt of a Notice of Renewal the Issuing
Bank may in its discretion, unless instructed to the contrary by the
Administrative Agent or the U.S. Borrower, deem that a Notice of Renewal had
been timely delivered and in such case, a Notice of Renewal shall be deemed to
have been so delivered for all purposes under this Agreement. Within the limits
of the Letter of Credit Facility, and subject to the limits referred to above,
the U.S. Borrower may request the issuance of Letters of Credit under this
Section 2.01(e), repay any Letter of Credit Advances resulting from drawings
thereunder pursuant to Section 2.03(c) and request the issuance of additional
Letters of Credit under this Section 2.01(e).
SECTION 2.02. MAKING THE ADVANCES. (a) Except as otherwise provided
in Section 2.02(b) or 2.03, each Borrowing shall be made on notice, given not
later than 12:00 P.M. (New York City time) on the third Business Day prior to
the date of the proposed Borrowing in the case of a Borrowing consisting of
Eurodollar Rate Advances, or the first Business Day prior to the date of the
proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances,
by the Appropriate Borrower to the Administrative Agent, which shall give to
each Appropriate Lender prompt notice thereof by telex or telecopier. Each such
notice of a Borrowing (a "NOTICE OF BORROWING") shall be by telephone, confirmed
immediately in writing, or telex or telecopier, in substantially the form of
Exhibit B hereto, specifying therein the requested (i) date of such Borrowing,
(ii) Facility under which such Borrowing is to be made, (iii) Type of Advances
comprising such Borrowing, (iv) aggregate amount of such Borrowing and (v) in
the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest
Period for each such Advance. Each Appropriate Lender shall, before 12:00 P.M.
(New York City time) on the date of such Borrowing, make available for the
account of its Applicable Lending Office to the Administrative Agent at the
Administrative Agent's Account, in same day funds, such Lender's ratable portion
of such Borrowing in accordance with the respective Commitments under the
applicable Facility of such Lender and the other Appropriate Lenders. After the
Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent will
make such funds available to the Appropriate Borrower by crediting the
applicable Borrower's Account; PROVIDED, HOWEVER, that, in the case of any
Revolving Credit Borrowing, the Administrative Agent shall first make a portion
of such funds equal to the aggregate principal amount of any Swing Line Advances
and Letter of Credit Advances made by the Swing Line Bank or the Issuing Bank,
as the case may be, and by any other Revolving Credit Lender and outstanding on
the date of such Revolving Credit Borrowing, plus interest accrued and unpaid
thereon to and as of such date, available to the Swing Line Bank or the Issuing
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36
Bank, as the case may be, and such other Revolving Credit Lenders for repayment
of such Swing Line Advances and Letter of Credit Advances.
(b) Each Swing Line Borrowing shall be made on notice, given not
later than 1:00 P.M. (New York City time) on the date of the proposed Swing Line
Borrowing, by the U.S. Borrower to the Swing Line Bank and the Administrative
Agent. Each such notice of a Swing Line Borrowing (a "NOTICE OF SWING LINE
BORROWING") shall be by telephone, confirmed immediately in writing, or telex or
telecopier, specifying therein the requested (i) date of such Borrowing,
(ii) amount of such Borrowing and (iii) maturity of such Borrowing (which
maturity shall be no later than the seventh day after the requested date of such
Borrowing). The Swing Line Bank will make the amount thereof available to the
Administrative Agent at the Administrative Agent's Account, in same day funds.
After the Administrative Agent's receipt of such funds and upon fulfillment of
the applicable conditions set forth in Article III, the Administrative Agent
will make such funds available to the U.S. Borrower by crediting its Borrower's
Account. Upon written demand by the Swing Line Bank, with a copy of such demand
to the Administrative Agent, each other Revolving Credit Lender shall purchase
from the Swing Line Bank, and the Swing Line Bank shall sell and assign to each
such other Revolving Credit Lender, such other Lender's Pro Rata Share of such
outstanding Swing Line Advance as of the date of such demand, by making
available for the account of its Applicable Lending Office to the Administrative
Agent for the account of the Swing Line Bank, by deposit to the Administrative
Agent's Account, in same day funds, an amount equal to the portion of the
outstanding principal amount of such Swing Line Advance to be purchased by such
Lender. The U.S. Borrower hereby agrees to each such sale and assignment. Each
Revolving Credit Lender agrees to purchase its Pro Rata Share of an outstanding
Swing Line Advance on (i) the Business Day on which demand therefor is made by
the Swing Line Bank, PROVIDED that notice of such demand is given not later than
1:00 P.M. (New York City time) on such Business Day or (ii) the first Business
Day next succeeding such demand if notice of such demand is given after such
time. Upon any such assignment by the Swing Line Bank to any other Revolving
Credit Lender of a portion of a Swing Line Advance, the Swing Line Bank
represents and warrants to such other Lender that the Swing Line Bank is the
legal and beneficial owner of such interest being assigned by it, but makes no
other representation or warranty and assumes no responsibility with respect to
such Swing Line Advance, the Loan Documents or any Loan Party. If and to the
extent that any Revolving Credit Lender shall not have so made the amount of
such Swing Line Advance available to the Administrative Agent, such Revolving
Credit Lender agrees to pay to the Administrative Agent forthwith on demand such
amount together with interest thereon, for each day from the date of demand by
the Swing Line Bank until the date such amount is paid to the Administrative
Agent, at the Federal Funds Rate. If such Lender shall pay to the
Administrative Agent such amount for the account of the Swing Line Bank on any
Business Day, such amount so paid in respect of principal shall constitute a
Swing Line Advance made by such Lender on such Business Day for purposes of this
Agreement, and the outstanding principal amount of the Swing Line Advance made
by the Swing Line Bank shall be reduced by such amount on such Business Day.
(c) Anything in subsection (a) above to the contrary
notwithstanding, (i) neither Borrower may select Eurodollar Rate Advances for
the initial Borrowing hereunder or for any Borrowing if the aggregate amount of
such Borrowing is less than $2,000,000 or if the obligation of the Appropriate
Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to
Section 2.09 or Section 2.10 and (ii) the Term A Advances may not be outstanding
as part of more than 3
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37
separate Borrowings, the Term B Advances may not be outstanding as part of more
than 3 separate Borrowings and the Revolving Credit Advances made on any date
may not be outstanding on any date as part of more than 10 separate Borrowings.
(d) Each Notice of Borrowing and Notice of Swing Line Borrowing
shall be irrevocable and binding on the Appropriate Borrower. In the case of
any Borrowing that the related Notice of Borrowing specifies is to be comprised
of Eurodollar Rate Advances, the Appropriate Borrower shall indemnify each
Appropriate Lender against any loss, cost or expense incurred by such Lender as
a result of any failure to fulfill on or before the date specified in such
Notice of Borrowing for such Borrowing the applicable conditions set forth in
Article III, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund the
Advance to be made by such Lender as part of such Borrowing when such Advance,
as a result of such failure, is not made on such date.
(e) Unless the Administrative Agent shall have received notice from
an Appropriate Lender prior to the date of any Borrowing under a Facility under
which such Lender has a Commitment that such Lender will not make available to
the Administrative Agent such Lender's ratable portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date of such Borrowing in accordance with
subsection (a) or (b) of this Section 2.02 and the Administrative Agent may, in
reliance upon such assumption, make available to the Appropriate Borrower on
such date a corresponding amount. If and to the extent that such Lender shall
not have so made such ratable portion available to the Administrative Agent,
such Lender and such Borrower severally agree to repay or pay to the
Administrative Agent forthwith on demand such corresponding amount and to pay
interest thereon, for each day from the date such amount is made available to
the Appropriate Borrower until the date such amount is repaid or paid to the
Administrative Agent, at (i) in the case of such Borrower, the interest rate
applicable at such time under Section 2.07 to Advances comprising such Borrowing
and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender
shall pay to the Administrative Agent such corresponding amount, such amount so
paid shall constitute such Lender's Advance as part of such Borrowing for all
purposes.
(f) The failure of any Lender to make the Advance to be made by it
as part of any Borrowing shall not relieve any other Lender of its obligation,
if any, hereunder to make its Advance on the date of such Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on the date of any Borrowing.
SECTION 2.03. ISSUANCE OF AND DRAWINGS AND REIMBURSEMENT UNDER
LETTERS OF CREDIT. (a) REQUEST FOR ISSUANCE. Each Letter of Credit shall be
issued upon notice, given not later than 12:00 P.M. (New York City time) on the
fifth Business Day prior to the date of the proposed issuance of such Letter of
Credit, or such shorter period as may be agreed upon by the Issuing Bank, by the
U.S. Borrower to the Issuing Bank, which shall give to the Administrative Agent
and each Revolving Credit Lender prompt notice thereof by telex or telecopier.
Each such notice of issuance of a Letter of Credit (a "NOTICE OF ISSUANCE")
shall be by telephone, confirmed immediately in writing, or telex or telecopier,
specifying therein the requested (A) date of such issuance (which shall be a
Business
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38
Day), (B) Available LC Amount of such Letter of Credit, (C) expiration date of
such Letter of Credit, (D) name and address of the beneficiary of such Letter of
Credit and (E) form of such Letter of Credit, and shall be accompanied by such
application and agreement for letter of credit as the Issuing Bank may specify
to the U.S. Borrower for use in connection with such requested Letter of Credit
(a "LETTER OF CREDIT AGREEMENT"). If (x) the requested form of such Letter of
Credit is acceptable to the Issuing Bank in its sole discretion and (y) it has
not received notice of objection to such issuance from the Administrative Agent,
the Issuing Bank will, upon fulfillment of the applicable conditions set forth
in Article III, make such Letter of Credit available to the U.S. Borrower at its
office referred to in Section 9.02 or as otherwise agreed with the U.S. Borrower
in connection with such issuance. In the event and to the extent that the
provisions of any Letter of Credit Agreement shall conflict with this Agreement,
the provisions of this Agreement shall govern.
(b) LETTER OF CREDIT REPORTS. The Issuing Bank shall furnish
(A) to the Administrative Agent on the first Business Day of each week a written
report summarizing issuance and expiration dates of Letters of Credit issued
during the previous week and drawings during such week under all Letters of
Credit, (B) to each Revolving Credit Lender on the first Business Day of each
month a written report summarizing issuance and expiration dates of Letters of
Credit issued during the preceding month and drawings during such month under
all Letters of Credit and (C) to the Administrative Agent and each Revolving
Credit Lender on the first Business Day of each calendar quarter a written
report setting forth the average daily aggregate Available LC Amount during the
preceding calendar quarter of all Letters of Credit.
(c) DRAWING AND REIMBURSEMENT. The payment by the Issuing Bank of
a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by the Issuing Bank of a Letter of Credit Advance,
which shall be a Base Rate Advance, in the amount of such draft. Upon written
demand by the Issuing Bank, with a copy of such demand to the Administrative
Agent, each Revolving Credit Lender shall purchase from the Issuing Bank, and
the Issuing Bank shall sell and assign to each such Revolving Credit Lender,
such Lender's Pro Rata Share of such outstanding Letter of Credit Advance as of
the date of such purchase, by making available for the account of its Applicable
Lending Office to the Administrative Agent for the account of the Issuing Bank,
by deposit to the Administrative Agent's Account, in same day funds, an amount
equal to the portion of the outstanding principal amount of such Letter of
Credit Advance to be purchased by such Lender. Promptly after receipt thereof,
the Administrative Agent shall transfer such funds to the Issuing Bank. The
U.S. Borrower hereby agrees to each such sale and assignment. Each Revolving
Credit Lender agrees to purchase its Pro Rata Share of an outstanding Letter of
Credit Advance on (i) the Business Day on which demand therefor is made by the
Issuing Bank, provided notice of such demand is given not later than 12:00 P.M.
(New York City time) on such Business Day or (ii) the first Business Day next
succeeding such demand if notice of such demand is given after such time. Upon
any such assignment by the Issuing Bank to any other Revolving Credit Lender of
a portion of a Letter of Credit Advance, the Issuing Bank represents and
warrants to such other Lender that the Issuing Bank is the legal and beneficial
owner of such interest being assigned by it, but makes no other representation
or warranty and assumes no responsibility with respect to such Letter of Credit
Advance, the Loan Documents or any Loan Party. If and to the extent that any
Revolving Credit Lender shall not have so made the amount of such Letter of
Credit Advance available to the Administrative Agent, such Revolving Credit
Lender agrees to pay to the Administrative Agent forthwith on demand such
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39
amount together with interest thereon, for each day from the date of demand by
the Issuing Bank until the date such amount is paid to the Administrative Agent,
at the Federal Funds Rate for its account or the account of the Issuing Bank, as
applicable. If such Lender shall pay to the Administrative Agent such amount
for the account of the Issuing Bank on any Business Day, such amount so paid in
respect of principal shall constitute a Letter of Credit Advance made by such
Lender on such Business Day for purposes of this Agreement, and the outstanding
principal amount of the Letter of Credit Advance made by the Issuing Bank shall
be reduced by such amount on such Business Day.
(d) FAILURE TO MAKE LETTER OF CREDIT ADVANCES. The failure of any
Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.
SECTION 2.04. REPAYMENT OF ADVANCES. (a) TERM A ADVANCES. The
Canadian Borrower shall repay to the Administrative Agent for the ratable
account of the Term A Lenders the aggregate outstanding principal amount of the
Term A Advances on the following dates in the amounts indicated (which amounts
shall be reduced as a result of the application of prepayments in accordance
with the order of priority set forth in Section 2.06):
DATE AMOUNT
---- ------
January 21, 1999 $600,000
January 21, 2000 $600,000
January 21, 2001 $600,000
January 21, 2002 $600,000
January 21, 2003 $600,000
January 21, 2004 $600,000
January 21, 2005 $56,400,000
PROVIDED, HOWEVER, that the final principal installment shall be repaid on the
Termination Date and in any event shall be in an amount equal to the aggregate
principal amount of the Term A Advances outstanding on such date.
(b) TERM B ADVANCES. The U.S. Borrower shall repay to the
Administrative Agent for the ratable account of the Term B Lenders the aggregate
outstanding principal amount of the Term B Advances on the following dates in
the amounts indicated (which amounts shall be reduced as a result of the
application of prepayments in accordance with the order of priority set forth in
Section 2.06):
DATE AMOUNT
---- ------
January 21, 1999 $750,000
January 21, 2000 $750,000
January 21, 2001 $750,000
January 21, 2002 $750,000
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40
January 21, 2003 $750,000
January 21, 2004 $750,000
January 21, 2005 $750,000
January 21, 2006 $69,750,000
PROVIDED, HOWEVER, that the final principal installment shall be repaid on the
Termination Date and in any event shall be in an amount equal to the aggregate
principal amount of the Term B Advances outstanding on such date.
(c) REVOLVING CREDIT ADVANCES. The U.S. Borrower shall repay to
the Administrative Agent for the ratable account of the Revolving Credit Lenders
on the Termination Date the aggregate outstanding principal amount of the
Revolving Credit Advances then outstanding.
(d) SWING LINE ADVANCES. The U.S. Borrower shall repay to the
Administrative Agent for the account of the Swing Line Bank and each other
Revolving Credit Lender that has made a Swing Line Advance the outstanding
principal amount of each Swing Line Advance made by each of them on the earlier
of the maturity date specified in the applicable Notice of Swing Line Borrowing
(which maturity shall be no later than the seventh day after the requested date
of such Borrowing) and the Termination Date.
(e) LETTER OF CREDIT ADVANCES. (i) The U.S. Borrower shall repay
to the Administrative Agent for the account of the Issuing Bank and each other
Revolving Credit Lender that has made a Letter of Credit Advance on the earlier
of demand and the Termination Date the outstanding principal amount of each
Letter of Credit Advance made by each of them.
(ii) The Obligations of the U.S. Borrower under this Agreement, any
Letter of Credit Agreement and any other agreement or instrument relating to any
Letter of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, such Letter of Credit
Agreement and such other agreement or instrument under all circumstances,
including, without limitation, the following circumstances:
(A) any lack of validity or enforceability of any Loan Document,
any Letter of Credit Agreement, any Letter of Credit or any other agreement
or instrument relating thereto (all of the foregoing being, collectively,
the "L/C RELATED DOCUMENTS");
(B) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations of the U.S. Borrower in
respect of any L/C Related Document or any other amendment or waiver of or
any consent to departure from all or any of the L/C Related Documents;
(C) the existence of any claim, set-off, defense or other right
that the U.S. Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or any
other Person, whether in connection with the transactions contemplated by
the L/C Related Documents or any unrelated transaction;
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41
(D) any statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
(E) payment by the Issuing Bank under a Letter of Credit against
presentation of a draft or certificate or other document that does not
strictly comply with the terms of such Letter of Credit;
(F) any exchange, release or non-perfection of any Collateral or
other collateral, or any release or amendment or waiver of or consent to
departure from the Guaranty, the Subsidiaries Guaranty or any other
guarantee, for all or any of the Obligations of the U.S. Borrower in
respect of the L/C Related Documents; or
(G) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the U.S. Borrower or a guarantor.
SECTION 2.05. TERMINATION OR REDUCTION OF THE COMMITMENTS.
(a) OPTIONAL. Either Borrower may, upon at least two Business Days' notice to
the Administrative Agent, terminate in whole or reduce in part the unused
portions of the Term A Commitments, the Term B Commitments, the Letter of Credit
Facility and the Unused Revolving Credit Commitments; PROVIDED, HOWEVER, that
each partial reduction of a Facility (i) shall be in an aggregate amount of
$1,000,000 or an integral multiple of $500,000 in excess thereof and (ii) shall
be made ratably among the Appropriate Lenders in accordance with their
Commitments with respect to such Facility.
(b) MANDATORY. (i) The Revolving Credit Facility shall be
automatically and permanently reduced on a pro rata basis (A) on each date on
which prepayment thereof is required to be made pursuant to Section 2.06(b)(i),
(ii) or (iv), in an amount equal to the applicable Reduction Amount and (B) if
on January 21, 2003 the Revolving Credit Facility shall be greater than
$100,000,000, on January 21, 2003, in an amount such that the Revolving Credit
Facility immediately after giving effect to such reduction shall be
$100,000,000, PROVIDED that each such reduction of the Revolving Credit Facility
pursuant to clauses (A) and (B) above shall be made ratably among the Revolving
Credit Lenders in accordance with their Revolving Credit Commitments.
(ii) The Letter of Credit Facility shall be permanently reduced from
time to time on the date of each reduction in the Revolving Credit Facility by
the amount, if any, by which the amount of the Letter of Credit Facility exceeds
the Revolving Credit Facility after giving effect to such reduction of the
Revolving Credit Facility.
SECTION 2.06. PREPAYMENTS. (a) OPTIONAL. The Appropriate Borrower
may, on same Business Day's notice in the case of Base Rate Advances and one
Business Day's notice in the case of Eurodollar Rate Advances, in each case to
the Administrative Agent stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the Appropriate Borrower
shall, prepay the outstanding aggregate principal amount of the Advances
comprising part of the same Borrowing in whole or ratably in part, together with
accrued interest to the date of such
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42
prepayment on the aggregate principal amount prepaid; PROVIDED, HOWEVER, that
(x) each partial prepayment shall be in an aggregate principal amount of
$1,000,000 or an integral multiple of $500,000 in excess thereof and (y) if any
prepayment of a Eurodollar Rate Advance is made on a date other than the last
day of an Interest Period for such Advance such Borrower shall also pay any
amounts owing pursuant to Section 9.04(c). Each such prepayment of any Term A
Advances or Term B Advances shall be applied to the installments thereof in the
manner specified by the Appropriate Borrower.
(b) MANDATORY. (i) The Borrowers shall, on the 130th day
following the end of each Fiscal Year, if the Leverage Ratio for the Measurement
Period ending on the last day of such Fiscal Year exceeds 4.00:1.00, prepay an
aggregate principal amount of the Advances comprising part of the same
Borrowings in an amount equal to the remainder of (A) 50% of the amount of
Excess Cash Flow for such Fiscal Year MINUS (B) the aggregate amount of any
optional prepayments of Term Advances or, to the extent such prepayments
permanently reduced the Revolving Credit Facility, the amount of any optional
prepayments of Revolving Credit Advances, Swing Line Advances or Letter of
Credit Advances made during such Fiscal Year. Each such prepayment shall,
except as otherwise provided in Section 2.06(c) below, be applied FIRST to the
Term A Facility and/or the Term B Facility and to the installments thereof in
the manner specified by the Appropriate Borrower (but pro rata among the Term A
Lenders and/or the Term B Lenders which are not Declining Lenders) and SECOND to
the Revolving Credit Facility as set forth in clause (v) below.
(ii) The Borrowers shall, on the date of receipt of the Net Cash
Proceeds by any Loan Party or any of its Restricted Subsidiaries from the sale,
lease, transfer or other disposition of any assets of any Loan Party or any of
its Restricted Subsidiaries, prepay an aggregate principal amount of the
Advances comprising part of the same Borrowings equal to the amount of such Net
Cash Proceeds. Each such prepayment shall, except as otherwise provided in
Section 2.06(c) below, be applied FIRST ratably to the Term A Facility and the
Term B Facility and to the next two installments thereof and SECOND ratably to
the Term A Facility and the Term B Facility and pro rata to the remaining
installments thereof, and THIRD to the Revolving Credit Facility as set forth in
clause (v) below.
(iii) The U.S. Borrower shall, on each Business Day, prepay an
aggregate principal amount of the Revolving Credit Advances comprising part of
the same Borrowings, the Letter of Credit Advances and the Swing Line Advances
equal to the amount by which (A) the sum of the aggregate principal amount of
(x) the Revolving Credit Advances, (y) the Letter of Credit Advances and (z) the
Swing Line Advances then outstanding plus the aggregate Available LC Amount of
all Letters of Credit then outstanding exceeds (B) the Revolving Credit Facility
on such Business Day (after giving effect to any permanent reduction thereof
pursuant to Section 2.05 on such Business Day).
(iv) In the event that a Term A Lender or a Term B Lender is a
Declining Lender pursuant to Section 2.06(c) below, the U.S. Borrower shall
prepay, in accordance with clause (v) below, an aggregate principal amount of
the Revolving Credit Advances comprising part of the same Borrowings in an
amount equal to 50% of the Declined Amount.
(v) Prepayments of the Revolving Credit Facility made pursuant to
clause (i), (ii), (iii) or (iv) of this Section 2.06(b) or pursuant to Section
2.06(c) below shall be FIRST applied to prepay
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43
Letter of Credit Advances then outstanding until such Advances are paid in full,
SECOND applied to prepay Swing Line Advances then outstanding until such
Advances are paid in full and THIRD applied to prepay Revolving Credit Advances
then outstanding comprising part of the same Borrowings until such Advances are
paid in full; and, in the case of prepayments of the Revolving Credit Facility
required pursuant to clause (i), (ii) or (iv) above, the amount remaining (if
any) after the prepayment in full of the Advances then outstanding (the sum of
such prepayment amounts and remaining amount being referred to herein as the
"REDUCTION AMOUNT") may be retained by the U.S. Borrower and the Revolving
Credit Facility shall be permanently reduced as set forth in Section 2.05(b)(i).
(vi) All prepayments under this subsection (b) shall be made
together with accrued interest to the date of such prepayment on the principal
amount prepaid.
(vii) Notwithstanding any of the other provisions of this Section
2.06(b), so long as no Default under Section 7.01(a) or 7.01(f) or Event of
Default shall have occurred and be continuing, if any prepayment of Eurodollar
Rate Advances is required to be made under this Section 2.06(b) other than on
the last day of the Interest Period therefor, the Borrower to which such
Eurodollar Rate Advances were made may, in its sole discretion, deposit the
amount of any such prepayment otherwise required to be made hereunder into the
Cash Collateral Account of such Borrower until the last day of such Interest
Period, at which time the Administrative Agent shall, subject to the provisions
of Section 2.06(c) below, be authorized (without any further action by or notice
to or from such Borrower) to apply such amount to the prepayment of such
Advances in accordance with Section 2.06(b).
(c) TERM OPT-OUT. Notwithstanding anything to the contrary
contained in Section 2.06(b), with respect to any prepayment of the Term A
Advances or Term B Advances required pursuant to Section 2.06(b)(i) or (ii)
above, any Term A Lender or Term B Lender, at its option, may elect not to
accept its ratable portion of such prepayment, in which event the provisions of
the next sentence shall apply. Any Lender declining such prepayment (such
Lender being a "DECLINING LENDER" and the amount of such Lender's ratable
portion of such prepayment being the "DECLINED AMOUNT") shall give written
notice to the Administrative Agent by 11:00 a.m. (New York City time) on the
Business Day immediately preceding the date on which such prepayment would
otherwise be made (the "PREPAYMENT DATE"). On the Prepayment Date, 50% of the
Declined Amount shall be used to prepay outstanding Revolving Credit Advances in
accordance with Section 2.06(b)(iv) above, and the Borrowers may elect, in their
discretion to retain the remaining portion of any such Declined Amount.
SECTION 2.07. INTEREST. (a) SCHEDULED INTEREST. Each Borrower
shall pay interest on the unpaid principal amount of each Advance owing by it to
each Lender from the date of such Advance until such principal amount shall be
paid in full, at the following rates per annum:
(i) BASE RATE ADVANCES. During such periods as such Advance is a
Base Rate Advance, a rate per annum equal at all times to the sum of
(A) the Base Rate in effect from time to time PLUS (B) the Applicable
Margin in effect from time to time, payable in arrears quarterly on the
last Business Day of each March, June, September and December during such
periods, SUBJECT, HOWEVER, to the provisions of subsection (b) of this
Section 2.07.
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(ii) EURODOLLAR RATE ADVANCES. During such periods as such Advance
is a Eurodollar Rate Advance, a rate per annum equal at all times during
each Interest Period for such Advance to the sum of (A) the Eurodollar Rate
for such Interest Period for such Advance PLUS (B) the Applicable Margin in
effect on the first day of such Interest Period, payable in arrears on the
last day of such Interest Period and, if such Interest Period has a
duration of more than three months, on each day that occurs during such
Interest Period every three months from the first day of such Interest
Period and on the date such Eurodollar Rate Advance shall be Converted or
paid in full, SUBJECT, HOWEVER, to the provisions of subsection (b) of this
Section 2.07.
(b) DEFAULT INTEREST. If all or a portion of (i) the principal
amount of any Advance or (ii) any interest payable thereon or fees or other
amounts payable under this Agreement shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amounts shall bear
interest, payable on demand, at a rate per annum that is (x) in the case of
overdue principal, the rate that would otherwise be applicable thereto PLUS 2%
per annum or (y) in the case of any overdue interest, fees or other amounts
payable, to the extent permitted by applicable law, the rate described in
Section 2.07(a)(i) PLUS 2% per annum, in each case, from the date of such
non-payment to the date on which such amount is paid in full (after as well as
before judgment).
(c) NOTICE OF INTEREST RATE. Promptly after receipt of a Notice of
Borrowing pursuant to Section 2.02(a), the Administrative Agent shall give
notice to the Appropriate Borrower and each Appropriate Lender of the applicable
interest rate determined by the Administrative Agent for purposes of clause
(a)(i) or (ii), and the applicable rate, if any, furnished by each Reference
Bank for the purpose of determining the applicable interest rate under clause
(a)(ii).
(d) INTEREST RATE DETERMINATION. (i) Each Reference Bank agrees
to furnish to the Administrative Agent timely information for the purpose of
determining each Eurodollar Rate. If any one or more of the Reference Banks
shall not furnish such timely information to the Administrative Agent for the
purpose of determining any such interest rate, the Administrative Agent shall
determine such interest rate on the basis of timely information furnished by the
remaining Reference Banks.
(ii) If fewer than two Reference Banks are able to furnish timely
information to the Administrative Agent for determining the Eurodollar Rate for
any Eurodollar Rate Advances,
(A) the Administrative Agent shall forthwith notify the Appropriate
Borrower and the Lenders that the interest rate cannot be determined for
such Eurodollar Rate Advances,
(B) each such Advance will automatically, on the last day of the
then existing Interest Period therefor, convert into a Base Rate Advance
(or if such Advance is then a Base Rate Advance, will continue as a Base
Rate Advance), and
(C) the obligation of the Lenders to make, or to Convert Advances
into, Eurodollar Rate Advances shall be suspended until the Administrative
Agent shall notify the Appropriate Borrower and the Lenders that the
circumstances causing such suspension no longer exist.
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45
SECTION 2.08. FEES. (a) COMMITMENT FEE. The U.S. Borrower shall
pay to the Administrative Agent for the account of each Lender having a
Revolving Credit Commitment a commitment fee, from the date hereof in the case
of each Initial Lender and from the effective date specified in the Assignment
and Acceptance pursuant to which it became a Lender in the case of each other
Lender until the Termination Date, payable in arrears on the date of the initial
Borrowing hereunder, thereafter quarterly on the last Business Day of each
March, June, September and December, commencing March 31, 1998, and on the
Termination Date, at the rate per annum equal to the Applicable Percentage of
the sum of the average daily Unused Revolving Credit Commitment of such Lender
PLUS its Pro Rata Share of the average daily outstanding Swing Line Advances
during such quarter; PROVIDED, HOWEVER, that no commitment fee shall accrue on
any of the Commitments of a Defaulting Lender so long as such Lender shall be a
Defaulting Lender.
(b) LETTER OF CREDIT FEES, ETC. (i) The U.S. Borrower shall pay
to the Administrative Agent for the account of each Revolving Credit Lender a
commission, payable in arrears quarterly on the last Business Day of each March,
June, September and December, commencing March 31, 1998, and on the earliest to
occur of the full drawing expiration, termination or cancellation of any such
Letter of Credit and on the Termination Date, on such Lender's Pro Rata Share of
the average daily aggregate Available LC Amount of all Letters of Credit
outstanding from time to time at a rate per annum equal to the Applicable Margin
for Eurodollar Rate Advances then in effect LESS 0.125% per annum.
(ii) The U.S. Borrower shall pay to the Issuing Bank, for its own
account, (A) a fronting fee, payable in arrears quarterly on the last Business
Day of each March, June, September and December, commencing March 31, 1998, and
on the Termination Date, on the average daily aggregate Available LC Amount of
all Letters of Credit outstanding from time to time at the rate of 0.125% per
annum and (B) such other reasonable and customary commissions, transfer fees and
other fees and charges in connection with the issuance or administration of each
Letter of Credit as the U.S. Borrower and the Issuing Bank shall agree.
(c) ADMINISTRATIVE AGENT'S FEES. The U.S. Borrower shall pay to
the Administrative Agent for its own account such fees as may from time to time
be agreed between the U.S. Borrower and the Administrative Agent.
SECTION 2.09. CONVERSION OF ADVANCES. (a) OPTIONAL. Either
Borrower may on any Business Day, upon notice given to the Administrative Agent
not later than 12:00 P.M. (New York City time) on the third Business Day prior
to the date of the proposed Conversion and subject to the provisions of
Sections 2.07 and 2.10, Convert all or any portion of the Advances of one Type
owed by it comprising the same Borrowing into Advances of the other Type;
PROVIDED, HOWEVER, that any Conversion of Eurodollar Rate Advances into Base
Rate Advances shall be made only on the last day of an Interest Period for such
Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar
Rate Advances shall be in an amount not less than the minimum amount specified
in Section 2.02(c), no Conversion of any Advances shall result in more separate
Borrowings than permitted under Section 2.02(c) and each Conversion of Advances
comprising part of the same Borrowing under any Facility shall be made ratably
among the Appropriate Lenders in accordance with their Commitments under such
Facility. Each such notice of Conversion shall, within the restrictions
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46
specified above, specify (i) the date of such Conversion, (ii) the Advances to
be Converted and (iii) if such Conversion is into Eurodollar Rate Advances, the
duration of the initial Interest Period for such Advances. Each notice of
Conversion shall be irrevocable and binding on such Borrower.
(b) MANDATORY. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $2,000,000, such
Advances shall automatically Convert into Base Rate Advances.
(ii) If the Appropriate Borrower shall fail to select the duration
of any Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify such Borrower and the Appropriate
Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance.
(iii) Upon the occurrence and during the continuance of any Default
under Section 7.01(a), (x) each Eurodollar Rate Advance will automatically, on
the last day of the then existing Interest Period therefor, Convert into a Base
Rate Advance and (y) the obligation of the Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended.
SECTION 2.10. INCREASED COSTS, ETC. (a) In the event that, due to
either (i) the introduction of or any change (other than any change by way of
imposition or increase of reserve requirements included in the Eurodollar Rate
Reserve Percentage) in or in the interpretation or administration of any
applicable law or regulation after the Closing Date, (ii) the compliance with
any applicable guideline or request from any central bank or other governmental
authority (whether or not having the force of law) or (iii) any other
circumstance affecting the interbank Eurodollar market or the position of any
Lender Party in such market which leads such Lender Party to reasonably
determine that the Eurodollar Rate for any Interest Period for any Eurodollar
Rate Advance made by such Lender Party will not adequately reflect the cost to
such Lender of making, funding or maintaining such Eurodollar Rate Advance for
such Interest Period, there shall be any increase in the cost to or reduction in
the amount received or receivable by any Lender Party as a result of agreeing to
make or of making, funding or maintaining Eurodollar Rate Advances or of
agreeing to issue or of issuing or maintaining Letters of Credit or of agreeing
to make or of making or maintaining Letter of Credit Advances (excluding for
purposes of this Section 2.10 any such increased costs resulting from (A) Taxes
or Other Taxes (as to which Section 2.12 shall govern) and (B) changes in the
basis of taxation of overall net income or overall gross income by the United
States or Canada or by the foreign jurisdiction or state under the laws of which
such Lender Party is organized or has its Applicable Lending Office or any
political subdivision thereof), then the U.S. Borrower shall from time to time,
upon demand by such Lender Party (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such
Lender Party additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender Party, in
its reasonable discretion, shall determine) sufficient to compensate such Lender
Party for such increased cost; PROVIDED, HOWEVER, that a Lender Party claiming
additional amounts under this Section 2.10(a) agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
designate a different Applicable Lending Office for any Advances affected by
such event if the
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47
making of such a designation would avoid the need for, or reduce the amount of,
such increased cost that may thereafter accrue; PROVIDED that such designation
is made on terms that such Lender Party and its Applicable Lending Office suffer
no economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of this subsection (a). A
certificate as to the amount of such increased cost and showing in reasonable
detail the basis for the calculation thereof, submitted to such Borrower by such
Lender Party at the time of demand, shall be conclusive and binding for all
purposes, absent manifest error.
(b) If, due to either (i) the introduction of or any change in or
in the interpretation or administration of any applicable law or regulation
after the Closing Date or (ii) the compliance with any applicable guideline or
request from any central bank or other governmental authority (whether or not
having the force of law), there shall be any increase in the amount of capital
required or expected to be maintained by any Lender Party or any corporation
controlling such Lender Party which has or would have the effect of reducing the
rate of return on such Lender Party's capital or assets as a result of or based
upon the existence of such Lender Party's commitments and obligations under this
Agreement to a level below that which such Lender Party could have achieved but
for such change or compliance (taking into consideration such Lender Party's or
any corporation controlling such Lender Party's policies with respect to capital
adequacy), then, upon demand by such Lender Party (with a copy of such demand to
the Administrative Agent), the U.S. Borrower shall pay to the Administrative
Agent for the account of such Lender Party, from time to time as specified by
such Lender Party, additional amounts sufficient to compensate such Lender Party
in the light of such circumstances, it being understood and agreed that a Lender
Party shall not be entitled to such compensation as a result of such Lender
Party's compliance with, or pursuant to any request or directive to comply with,
any such law, regulation, guideline or request in effect on the Closing Date.
Any amount payable pursuant to this Section 2.10(b) shall be payable only to the
extent that such Lender Party reasonably determines such increase in capital to
be allocable to the existence of such Lender Party's commitment to lend or to
issue Letters of Credit hereunder or to the issuance or maintenance of any
Letters of Credit. A certificate as to such amounts and showing in reasonable
detail the basis for the calculation thereof submitted to such Borrower by such
Lender Party at the time of demand shall be conclusive and binding for all
purposes, absent manifest error.
(c) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
with respect to any Eurodollar Rate Advance affected by circumstances described
in this subsection (c), such Borrower will, and with respect to any Eurodollar
Rate Advance affected by circumstances described in subsections (a) or (b)
above, such Borrower may, either (i) on the last day of the then existing
Interest Period therefor, convert each Eurodollar Rate Advance affected by such
circumstances into a Base Rate Advance or (ii) if the affected Eurodollar Rate
Advance is then being made pursuant to a Borrowing, cancel such Borrowing by
giving the Administrative Agent telephonic notice (confirmed promptly in
writing) thereof on the same date that such Borrower was notified by a Lender
Party pursuant to subsection (a) or (b) above or this subsection (c) (as
applicable); PROVIDED, that if more than one Lender Party is affected at any
time, then all affected Lender Parties must be treated in the same manner
pursuant to this Section 2.10(c). In
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48
the event of an illegality as described in clause (i) of this subsection (c) the
obligation of the Appropriate Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended until the Administrative Agent shall
notify the Appropriate Borrower that such Lender has determined that the
circumstances causing such suspension no longer exist; PROVIDED, HOWEVER, that,
before making any such demand, such Lender Party agrees to use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Applicable Lending Office for any
Advances affected by such event if the making of such a designation would allow
such Lender Party or its Applicable Lending Office to continue to perform its
obligations to make Eurodollar Rate Advances or to continue to fund or maintain
Eurodollar Rate Advances; PROVIDED that such designation is made on terms that
such Lender Party and its Applicable Lending Office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of this subsection.
(d) Anything in this Agreement to the contrary notwithstanding, to
the extent any notice under Section 2.10, 2.12 or 9.04(c) is given by any Lender
Party more than 180 days after such Lender Party has knowledge (or should have
had knowledge) of the occurrence of the event giving rise to the additional
cost, reduction in amounts, loss, tax or other additional amounts described in
such Section 2.10, 2.12 or 9.04(c), as the case may be, such Lender Party shall
not be entitled to compensation under such Section for any such amounts incurred
or accruing prior to the giving of such notice to the Appropriate Borrower.
SECTION 2.11. PAYMENTS AND COMPUTATIONS. (a) Each Borrower shall
make each payment owed by it hereunder and under the Notes, irrespective of any
right of counterclaim or set-off (except as otherwise provided in Section 2.15),
not later than 12:00 P.M. (New York City time) on the day when due (or, in the
case of payments made by the U.S. Borrower pursuant to Section 6.01, on the date
of demand therefor) in U.S. dollars to the Administrative Agent at the
Administrative Agent's Account in same day funds. The Administrative Agent will
promptly thereafter cause like funds to be distributed (i) if such payment by a
Borrower is in respect of principal, interest, commitment fees or any other
Obligation then payable hereunder and under the Notes to more than one Lender
Party, to such Lender Parties for the account of their respective Applicable
Lending Offices ratably in accordance with the amounts of such respective
Obligations then payable to such Lender Parties and (ii) if such payment by a
Borrower is in respect of any Obligation then payable hereunder to one Lender
Party, to such Lender Party for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement. Upon
its acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 9.07(d), from and after
the effective date of such Assignment and Acceptance, the Administrative Agent
shall make all payments hereunder and under the Notes in respect of the interest
assigned thereby to the Lender Party assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) If the Administrative Agent receives funds for application to
the Obligations under the Loan Documents under circumstances for which the Loan
Documents do not specify the Advances or the Facility to which, or the manner in
which, such funds are to be applied, the Administrative Agent may, but shall not
be obligated to, elect to distribute such funds to each Lender
<PAGE>
49
Party ratably in accordance with such Lender Party's proportionate share of the
principal amount of all outstanding Advances and the Available LC Amount of all
Letters of Credit then outstanding, in repayment or prepayment of such of the
outstanding Advances or other Obligations owed to such Lender Party, and for
application to such principal installments, as the Administrative Agent shall
direct.
(c) The Borrowers hereby authorize each Lender Party, if and to the
extent payment owed to such Lender Party is not made when due hereunder or, in
the case of a Lender, under the Note held by such Lender, to charge from time to
time against any or all of the Appropriate Borrower's accounts with such Lender
Party any amount so due.
(d) All computations of interest, fees and commissions shall be
made by the Administrative Agent on the basis of a year of 360 days, in each
case for the actual number of days (including the first day but excluding the
last day) occurring in the period for which such interest, fees or commissions
are payable; PROVIDED that (i) interest in respect of which the rate of interest
is calculated on the basis of clause (a) of the definition of "Base Rate"
contained in Section 1.01, (ii) commitment fees payable pursuant to Section
2.08(a) and (iii) Letter of Credit fees payable pursuant to Section 2.08(b)
shall be calculated on the basis of a year of 365 (or 366, as the case may be)
days for the actual number of days elapsed; and PROVIDED FURTHER, that for
purposes of the INTEREST ACT (Canada), whenever interest hereunder is to be
calculated at a rate based upon a 360 day period (the "APPLICABLE RATE"), the
rate or percentage of interest on a yearly basis is equivalent to such
Applicable Rate multiplied by the actual number of days in the year divided by
360. Each determination by the Administrative Agent of an interest rate, fee or
commission hereunder shall be conclusive and binding for all purposes, absent
manifest error.
(e) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or commitment fee, as
the case may be; PROVIDED, HOWEVER, that, if such extension would cause payment
of interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
(f) Unless the Administrative Agent shall have received notice from
the Appropriate Borrower prior to the date on which any payment is due to any
Lender Party hereunder that such Borrower will not make such payment in full,
the Administrative Agent may assume that such Borrower has made such payment in
full to the Administrative Agent on such date and the Administrative Agent may,
in reliance upon such assumption, cause to be distributed to each such Lender
Party on such due date an amount equal to the amount then due such Lender Party.
If and to the extent such Borrower shall not have so made such payment in full
to the Administrative Agent, each such Lender Party shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender
Party together with interest thereon, for each day from the date such amount is
distributed to such Lender Party until the date such Lender Party repays such
amount to the Administrative Agent, at the Federal Funds Rate.
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50
SECTION 2.12. TAXES. (a) Any and all payments by either Borrower
hereunder or under the Notes shall be made, in accordance with Section 2.11,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, EXCLUDING, (i) in the case of each Lender Party and the
Administrative Agent, (A) taxes that are imposed on its overall net income by
the United States and taxes that are imposed on its overall net income or, in
the case of any Term A Lender, capital (and franchise taxes imposed in lieu
thereof) by the state, province or other jurisdiction under the laws of which
such Lender Party or the Administrative Agent (as the case may be) is organized
or any political subdivision thereof and (B) any taxes imposed on the
Administrative Agent or any Lender Party as a result of a current or former
connection between the Administrative Agent or such Lender Party, as the case
may be, and the jurisdiction imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising from
the Administrative Agent or such Lender Party having executed, delivered or
performed its obligations or received any payment under, or sought enforcement
of, this Agreement) and, (ii) (A) in the case of each Lender Party, taxes that
are imposed on its overall net income (and franchise taxes imposed in lieu
thereof) by the state, province or other jurisdiction of such Lender Party's
Applicable Lending Office or any political subdivision thereof and (B) in the
case of each Term A Lender, taxes that are imposed on its overall capital under
the federal or provincial laws of Canada (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities in respect of
payments hereunder or under the Notes being hereinafter referred to as "TAXES")
unless such Borrower is required by law or the interpretation or administration
thereof to withhold or deduct Taxes. If either Borrower shall be required by
law or the interpretation or administration thereof by the relevant taxing
authority to deduct any Taxes from or in respect of any sum payable hereunder or
under any Note to any Lender Party or the Administrative Agent, (x) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.12) such Lender Party or the Administrative Agent (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (y) such Borrower shall make such deductions and (z) such
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law; PROVIDED, however, that no
Borrower shall be required to increase any such amounts otherwise payable to a
Lender Party that is not organized under the laws of the United States or a
state thereof so long as such Lender Party fails to comply with the requirements
of subsection (e) below.
(b) In addition, each Borrower shall pay any present or future
stamp, documentary, excise, property or similar taxes, charges or levies that
arise from any payment made by it hereunder or under the Notes or from the
execution, delivery or registration of, performing under, or otherwise with
respect to, this Agreement or the Notes (hereinafter referred to as "OTHER
TAXES").
(c) Each Borrower shall indemnify each Lender Party and the
Administrative Agent for and hold it harmless against the full amount of Taxes
and Other Taxes, and for the full amount of taxes of any kind imposed by any
jurisdiction on amounts payable under this Section 2.12, imposed on or paid by
such Lender Party or the Administrative Agent (as the case may be), and any
liability (including penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto that would not have arisen but for the
Appropriate Borrower's failure to pay any Taxes or Other Taxes when due to the
appropriate taxing authority or remit to the Administrative Agent the receipts
or
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51
other documentary evidence required under subsection (d) below. This
indemnification shall be made within 30 days from the date such Lender Party or
the Administrative Agent (as the case may be) makes written demand therefor.
(d) Promptly after the date of any payment of Taxes, the
Appropriate Borrower shall furnish to the Administrative Agent, at its address
referred to in Section 9.02, the original or a certified copy of a receipt
evidencing such payment. In the case of any payment hereunder or under the
Notes by or on behalf of such Borrower through an account or branch outside the
United States or by or on behalf of such Borrower by a payor that is not a
United States person, if such Borrower determines that no Taxes are payable in
respect thereof, such Borrower shall furnish, or shall cause such payor to
furnish, to the Administrative Agent, at such address, an opinion of counsel
reasonably acceptable to the Administrative Agent stating that such payment is
exempt from Taxes. For purposes of this subsection (d) and subsection (e), the
terms "UNITED STATES" and "UNITED STATES PERSON" shall have the meanings
specified in Section 7701 of the Internal Revenue Code.
(e) Each Lender Party organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution and
delivery of this Agreement in the case of each Initial Lender or Initial Issuing
Bank, as the case may be, and on the date of the Assignment and Acceptance
pursuant to which it becomes a Lender Party in the case of each other Lender
Party, and from time to time thereafter as requested in writing by the U.S.
Borrower (but only so long thereafter as such Lender Party remains lawfully able
to do so), provide each of the Administrative Agent and the U.S. Borrower with
two original properly completed and duly executed Internal Revenue Service
forms 1001 or 4224 or (in the case of a Lender Party that has certified in
writing to the Administrative Agent that it is not a "bank" as defined in
Section 881(c)(3)(A) of the Internal Revenue Code) form W-8 (and, if such Lender
Party delivers a form W-8, a certificate representing that such Lender Party is
not a "bank" for purposes of Section 881(c) of the Internal Revenue Code, is not
a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Internal Revenue Code) of such Borrower and is not a controlled foreign
corporation related to such Borrower (within the meaning of Section 864(d)(4) of
the Internal Revenue Code)), as appropriate, or any successor or other form
prescribed by the Internal Revenue Service, certifying that such Lender Party is
exempt from or entitled to a reduced rate of United States withholding tax on
payments pursuant to this Agreement or the Notes or, in the case of a Lender
Party providing a form W-8, certifying that such Lender Party is a foreign
corporation, partnership, estate or trust. Each such Lender Party hereby
agrees, from time to time after the initial delivery by such Lender Party of
such forms or certificates, whenever a lapse in time or change in circumstances
renders such forms or certificates obsolete or inaccurate in any material
respect, that such Lender Party shall promptly (i) deliver to the U.S. Borrower
and the Administrative Agent two new original copies of Internal Revenue Service
forms 1001 or 4224, or (in the case of a Lender Party that has certified in
writing to the Administrative Agent that it is not a "bank" as defined in
Section 881(c)(3)(A) of the Internal Revenue Code) form W-8 (and, if such Lender
Party delivers a form W-8, a certificate representing that such Lender Party is
not a "bank" for purposes of Section 881(c) of the Internal Revenue Code, is not
a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Internal Revenue Code) of such Borrower and is not a controlled foreign
corporation related to such Borrower (within the meaning of Section 864(d)(4) of
the Internal Revenue Code)), as appropriate, properly completed and duly
executed by such Lender Party or (ii) notify the Administrative Agent and the
U.S. Borrower of its inability to deliver any such forms
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52
or certificates. If the forms provided by a Lender Party at the time such
Lender Party first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from Taxes unless and until such Lender Party
provides the appropriate form certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such form; PROVIDED, HOWEVER, that, if at the date of
the Assignment and Acceptance pursuant to which a Lender Party becomes a party
to this Agreement, the Lender Party assignor was entitled to payments under
subsection (a) in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Lender Party assignee on such date. If any form
or document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001,
4224 or W-8 (or the related certificate described above), that the Lender Party
reasonably considers to be confidential, the Lender Party shall give notice
thereof to such Borrower and shall not be obligated to include in such form or
document such confidential information.
(f) In respect of any Term A Advance made to the Canadian Borrower
by any Lender Party, such Lender Party (i) represents and warrants to the
Canadian Borrower that, in respect of any payments of interest, fees or other
amounts constituting income that would be taxable to such Term A Lender pursuant
to Part I of the INCOME TAX ACT (CANADA) made to it by the Canadian Borrower,
such Lender Party will be entitled to receive such payments free and clear of,
and without any obligation on the part of the Canadian Borrower to make
deduction for or on account of, any income or capital taxes imposed by Canada or
any political subdivision or taxing authority thereof or therein, PROVIDED, that
such Lender Party is a resident of Canada for purposes of the INCOME TAX ACT
(CANADA) at the time such payments are made; and (ii) agrees that if such Lender
Party is not a resident of Canada at the time such payments are made that the
Canadian Borrower may withhold and remit Taxes pursuant to subsection (a) (and
(c), if applicable) and that such Lender Party shall not be entitled to
indemnification under subsection (a) or (c) with respect to Taxes or Other Taxes
imposed by Canada or any political subdivision or taxing authority thereof or
therein that arise by virtue of such Lender Party being a non-resident of Canada
for purposes of the INCOME TAX ACT (CANADA); and (iii) covenants and agrees to
promptly advise the U.S. Borrower if such Lender Party changes its residency for
purposes of the INCOME TAX ACT (CANADA) and to cooperate with the Canadian
Borrower to provide, at either Borrower's reasonable request, information
necessary to determine the amount of withholding or deduction that may be
required.
(g) For any period with respect to which either (i) a Lender Party
has failed to provide the U.S. Borrower with the appropriate form described in
subsection (e) above (OTHER THAN if such failure is due to a change in law
occurring after the date on which a form originally was required to be provided
or if such form otherwise is not required under subsection (e) above) or (ii)
any representation or certification made by a Lender Party pursuant to
subsection (e) or (f) above is incorrect in any material respect at the time a
payment hereunder is made (other than by reason of any change in treaty, law or
regulation having effect after the date of such representation or certification
when made), such Lender Party shall not be entitled to indemnification under
subsection (a) or (c) with respect to Taxes imposed by the United States or
Canada by reason of such failure or incorrectness, as
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53
the case may be; PROVIDED, HOWEVER, that should a Lender Party become subject to
Taxes because of its failure to deliver a form required hereunder, such Borrower
shall take such steps as such Lender Party shall reasonably request to assist
such Lender Party to recover such Taxes.
(h) Any Lender Party claiming any additional amounts payable
pursuant to this Section 2.12 agrees to use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Applicable Lending Office or designate a different
Applicable Lending Office if the making of such a change or designation would
avoid the need for, or reduce the amount of, any such additional amounts that
may thereafter accrue, PROVIDED, that such change or designation is made on
terms that such Lender Party and its Applicable Lending Office suffer no
economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of subsection (a) or (c)
above.
(i) If the U.S. Borrower determines in good faith that a reasonable
basis exists for contesting any taxes for which indemnification has been
demanded hereunder, the relevant Lender Party or the Administrative Agent, as
applicable, shall cooperate with the U.S. Borrower in challenging such taxes at
the U.S. Borrower's expense if so requested by the U.S. Borrower. If any Lender
Party or the Administrative Agent, as applicable, receives a refund of a tax for
which a payment has been made by the U.S. Borrower pursuant to this Section,
which refund in the good faith judgment of such Lender Party or Administrative
Agent, as the case may be, is attributable to such payment made by the U.S.
Borrower, then the Lender Party or the Administrative Agent, as the case may be,
shall reimburse the U.S. Borrower for such amount as the Lender Party or the
Administrative Agent, as the case may be, determines to be the proportion of the
refund as will leave it, after such reimbursement, in no better or worse
position than it would have been in if the payment had not been required. If a
Lender Party or the Administrative Agent is required to return all or a portion
of any refund for which reimbursement was made under the preceding sentence to
the authority that granted such refund, the U.S. Borrower shall pay over to such
Lender Party or the Administrative Agent, as the case may be, the portion of
such reimbursement as will leave such Lender Party or the Administrative Agent,
as the case may be, in no better or worse position than if no such reimbursement
had been made. A Lender Party or the Administrative Agent shall claim any
refund that it determines in good faith is available to it, unless it concludes
in its reasonable discretion that it would be adversely affected by making such
a claim; PROVIDED, HOWEVER, that each Lender Party and the Administrative Agent
shall be fully justified in refusing to claim any such refund, unless, if it so
requests, it shall first be indemnified to its satisfaction against any expense
that may be incurred by it in connection therewith. Nothing herein contained
shall interfere with the right of a Lender or the Administrative Agent to
arrange its tax affairs in whatever manner it thinks fit nor oblige any Lender
or the Administrative Agent to disclose any information relating to its tax
affairs or any computations in respect thereof or require any Lender or the
Administrative Agent to do anything that would prejudice its ability to benefit
from any other reliefs, remissions or repayments to which it may be entitled.
(j) Each Lender Party represents and agrees that, on the date
hereof and at all times during the term of this Agreement, it is not and will
not be a conduit entity participating in a conduit financing arrangement (as
defined United States Treasury regulations Section 881-3) with respect to the
Borrowings hereunder (other than a conduit financing arrangement in which the
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54
Appropriate Borrower, or an Affiliate thereof, is a financing entity) unless the
Appropriate Borrower has consented to such arrangement prior thereto.
SECTION 2.13. SHARING OF PAYMENTS, ETC. If any Lender Party shall
obtain at any time any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) (a) on account of Obligations
due and payable to such Lender Party hereunder and under the Loan Documents at
such time in excess of its ratable share (according to the proportion of (i) the
amount of such Obligations due and payable to such Lender Party at such time to
(ii) the aggregate amount of the Obligations due and payable to all Lender
Parties hereunder and under the Loan Documents at such time) of payments on
account of the Obligations due and payable to all Lender Parties hereunder and
under the Loan Documents at such time obtained by all the Lender Parties at such
time or (b) on account of Obligations owing (but not due and payable) to such
Lender Party hereunder and under the Loan Documents at such time in excess of
its ratable share (according to the proportion of (i) the amount of such
Obligations owing to such Lender Party at such time to (ii) the aggregate amount
of the Obligations owing (but not due and payable) to all Lender Parties
hereunder and under the Loan Documents at such time) of payments on account of
the Obligations owing (but not due and payable) to all Lender Parties hereunder
and under the Loan Documents at such time obtained by all of the Lender Parties
at such time, such Lender Party shall forthwith purchase from the other Lender
Parties such participations in the Obligations due and payable or owing to them,
as the case may be, as shall be necessary to cause such purchasing Lender Party
to share the excess payment ratably with each of them; PROVIDED, HOWEVER, that
if all or any portion of such excess payment is thereafter recovered from such
purchasing Lender Party, such purchase from each other Lender Party shall be
rescinded and such other Lender Party shall repay to the purchasing Lender Party
the purchase price to the extent of such Lender Party's ratable share (according
to the proportion of (i) the purchase price paid to such Lender Party to
(ii) the aggregate purchase price paid to all Lender Parties) of such recovery
together with an amount equal to such Lender Party's ratable share (according to
the proportion of (i) the amount of such other Lender Party's required repayment
to (ii) the total amount so recovered from the purchasing Lender Party) of any
interest or other amount paid or payable by the purchasing Lender Party in
respect of the total amount so recovered. Each Borrower agrees that any Lender
Party so purchasing a participation from another Lender Party pursuant to this
Section 2.13 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender Party were the direct creditor of such
Borrower in the amount of such participation.
SECTION 2.14. USE OF PROCEEDS. The proceeds of the Advances and
issuances of Letters of Credit shall be available (and each Borrower agrees that
it shall use such proceeds and Letters of Credit), directly or indirectly,
solely to finance a portion of the cash consideration paid in connection with
the Acquisition and to pay transaction fees and expenses associated therewith,
and to provide working capital for the U.S. Borrower and its Subsidiaries and
for other general corporate purposes.
SECTION 2.15. DEFAULTING LENDERS. (a) In the event that, at any one
time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting
Lender shall owe a Defaulted Advance to either Borrower and (iii) such Borrower
shall be required to make any payment hereunder or under any other Loan Document
to or for the account of such Defaulting Lender, then such Borrower may,
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55
so long as no Default shall occur or be continuing at such time and to the
fullest extent permitted by applicable law, set off and otherwise apply the
Obligation of such Borrower to make such payment to or for the account of such
Defaulting Lender against the obligation of such Defaulting Lender to make such
Defaulted Advance. In the event that, on any date, such Borrower shall so set
off and otherwise apply its obligation to make any such payment against the
obligation of such Defaulting Lender to make any such Defaulted Advance on or
prior to such date, the amount so set off and otherwise applied by such Borrower
shall constitute for all purposes of this Agreement and the other Loan Documents
an Advance by such Defaulting Lender made on the date under the Facility
pursuant to which such Defaulted Advance was originally required to have been
made pursuant to Section 2.01. Such Advance shall be a Base Rate Advance and
shall be considered, for all purposes of this Agreement, to comprise part of the
Borrowing in connection with which such Defaulted Advance was originally
required to have been made pursuant to Section 2.01, even if the other Advances
comprising such Borrowing shall be Eurodollar Rate Advances on the date such
Advance is deemed to be made pursuant to this subsection (a). Each Borrower
shall notify the Administrative Agent at any time such Borrower exercises its
right of set-off pursuant to this subsection (a) and shall set forth in such
notice (A) the name of the Defaulting Lender and the Defaulted Advance required
to be made by such Defaulting Lender and (B) the amount set off and otherwise
applied in respect of such Defaulted Advance pursuant to this subsection (a).
Any portion of such payment otherwise required to be made by either Borrower to
or for the account of such Defaulting Lender which is paid by such Borrower,
after giving effect to the amount set off and otherwise applied by such Borrower
pursuant to this subsection (a), shall be applied by the Administrative Agent as
specified in subsection (b) or (c) of this Section 2.15.
(b) In the event that, at any one time, (i) any Lender Party shall
be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount
to the Administrative Agent or any of the other Lender Parties and (iii) the
Appropriate Borrower shall make any payment hereunder or under any other Loan
Document to the Administrative Agent for the account of such Defaulting Lender,
then the Administrative Agent may, on its behalf or on behalf of such other
Lender Parties and to the fullest extent permitted by applicable law, apply at
such time the amount so paid by such Borrower to or for the account of such
Defaulting Lender to the payment of each such Defaulted Amount to the extent
required to pay such Defaulted Amount. In the event that the Administrative
Agent shall so apply any such amount to the payment of any such Defaulted Amount
on any date, the amount so applied by the Administrative Agent shall constitute
for all purposes of this Agreement and the other Loan Documents payment, to such
extent, of such Defaulted Amount on such date. Any such amount so applied by
the Administrative Agent shall be retained by the Administrative Agent or
distributed by the Administrative Agent to such other Lender Parties, ratably in
accordance with the respective portions of such Defaulted Amounts payable at
such time to the Administrative Agent and such other Lender Parties and, if the
amount of such payment made by such Borrower shall at such time be insufficient
to pay all Defaulted Amounts owing at such time to the Administrative Agent and
the other Lender Parties, in the following order of priority:
(i) FIRST, to the Administrative Agent for any Defaulted Amount
then owing to the Administrative Agent; and
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56
(ii) SECOND, to any other Lender Parties for any Defaulted Amounts
then owing to such other Lender Parties, ratably in accordance with such
respective Defaulted Amounts then owing to such other Lender Parties.
Any portion of such amount paid by such Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.15.
(c) In the event that, at any one time, (i) any Lender Party shall
be a Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted
Advance or a Defaulted Amount and (iii) either Borrower, the Administrative
Agent or any other Lender Party shall be required to pay or distribute any
amount hereunder or under any other Loan Document to or for the account of such
Defaulting Lender, then such Borrower or such other Lender Party shall pay such
amount to the Administrative Agent to be held by the Administrative Agent, to
the fullest extent permitted by applicable law, in escrow or the Administrative
Agent shall, to the fullest extent permitted by applicable law, hold in escrow
such amount otherwise held by it. Any funds held by the Administrative Agent in
escrow under this subsection (c) shall be deposited by the Administrative Agent
in an account with Citibank, in the name and under the control of the
Administrative Agent, but subject to the provisions of this subsection (c). The
terms applicable to such account, including the rate of interest payable with
respect to the credit balance of such account from time to time, shall be
Citibank's standard terms applicable to escrow accounts maintained with it. Any
interest credited to such account from time to time shall be held by the
Administrative Agent in escrow under, and applied by the Administrative Agent
from time to time in accordance with the provisions of, this subsection (c).
The Administrative Agent shall, to the fullest extent permitted by applicable
law, apply all funds so held in escrow from time to time to the extent necessary
to make any Advances required to be made by such Defaulting Lender and to pay
any amount payable by such Defaulting Lender hereunder and under the other Loan
Documents to the Administrative Agent or any other Lender Party, as and when
such Advances or amounts are required to be made or paid and, if the amount so
held in escrow shall at any time be insufficient to make and pay all such
Advances and amounts required to be made or paid at such time, in the following
order of priority:
(i) FIRST, to the Administrative Agent for any amount then due and
payable by such Defaulting Lender to the Administrative Agent hereunder;
(ii) SECOND, to any other Lender Parties for any amount then due and
payable by such Defaulting Lender to such other Lender Parties hereunder,
ratably in accordance with such respective amounts then due and payable to
such other Lender Parties; and
(iii) THIRD, to such Borrower for any Advance then required to be
made by such Defaulting Lender pursuant to a Commitment of such Defaulting
Lender.
In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by the Administrative Agent to such Lender Party and applied by
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such Lender Party to the Obligations owing to such Lender Party at such time
under this Agreement and the other Loan Documents ratably in accordance with the
respective amounts of such Obligations outstanding at such time.
(d) The rights and remedies against a Defaulting Lender under this
Section 2.15 are in addition to other rights and remedies that either Borrower
may have against such Defaulting Lender with respect to any Defaulted Advance
and that the Administrative Agent or any Lender Party may have against such
Defaulting Lender with respect to any Defaulted Amount.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF
CREDIT. The obligation of each Lender to make an Advance on the occasion of the
Initial Extension of Credit hereunder is subject to the satisfaction of the
following conditions precedent before or concurrently with the Initial Extension
of Credit:
(a) The Acquisition shall have been consummated in accordance with
the terms of the Stock Purchase Agreement without any waiver or amendment
thereto (unless such amendment or waiver in the reasonable judgment of the
Administrative Agent is not adverse in any material respect to the
interests of the Lender Parties), and in compliance with all applicable
laws.
(b) The U.S. Borrower (i) shall have received not less than
$108,000,000 in cash for the purchase of common equity by the Investor
Group, representing approximately 90% of the outstanding common equity, and
(ii) shall have received approximately $200,000,000 in gross cash proceeds
from the sale of the Subordinated Notes.
(c) The Administrative Agent shall be reasonably satisfied with the
corporate and legal structure and capitalization of each Loan Party,
including the terms and conditions of the charter, bylaws and each class of
capital stock of each Loan Party and of each agreement or instrument
relating to such structure or capitalization.
(d) The Administrative Agent shall be reasonably satisfied that all
Existing Debt, other than the Debt identified on Schedule 3.01(d) (the
"SURVIVING DEBT"), has been prepaid, redeemed or defeased in full or
otherwise satisfied and extinguished and that all such Surviving Debt shall
be on terms and conditions reasonably satisfactory to the Administrative
Agent.
(e) Before giving effect to the Acquisition and the other
transactions contemplated by this Agreement, there shall have occurred no
material adverse change in the business, financial condition, operations,
assets, liabilities or prospects of any Loan Party or any of its
Subsidiaries since June 30, 1997.
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(f) There shall have occurred no material adverse change in loan
syndication, financial or capital market conditions generally that has
impaired or could reasonably be expected to impair syndication of the
Facilities.
(g) There shall exist no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of its Subsidiaries pending or
threatened before any court, governmental agency or arbitrator that
(i) would reasonably be likely to have a Material Adverse Effect or
(ii) purports to affect the legality, validity or enforceability of the
Acquisition, this Agreement, any Note, any other Loan Document, any Related
Document or the consummation of the transactions contemplated hereby.
(h) Nothing shall have come to the attention of the Lender Parties
to lead them to believe (i) that the Information Memorandum was or has
become misleading, incorrect or incomplete in any material respect,
(ii) that, following the consummation of the Acquisition, either Borrower
or its Subsidiaries would not have good and marketable title to all
material assets of such Borrower and such Subsidiaries reflected in the
Information Memorandum and (iii) that the Acquisition will have a Material
Adverse Effect; without limiting the generality of the foregoing, the
Lender Parties shall have been given such access to the management,
records, books of account, contracts and properties of the Borrowers and
their respective Restricted Subsidiaries as they shall have reasonably
requested.
(i) All governmental and third party consents and approvals
necessary in connection with the Acquisition, the Loan Documents and the
Related Documents and the transactions contemplated thereby shall have been
obtained (without the imposition of any conditions that are not reasonably
acceptable to the Administrative Agent) and shall remain in effect; all
applicable waiting periods shall have expired without any action being
taken by any competent authority; and no law or regulation shall be
applicable in the reasonable judgment of the Administrative Agent that
restrains, prevents or imposes materially adverse conditions upon the
Acquisition, the Loan Documents and the Related Documents and the
transactions contemplated thereby.
(j) The Administrative Agent shall have received the fees referred
to in Section 2.08(c) to be received on the Closing Date and under a
separate letter agreement dated December 2, 1997 between the U.S. Borrower
and the Administrative Agent.
(k) The Administrative Agent shall have received on or before the
day of the Initial Extension of Credit the following, each dated such day
(unless otherwise specified), in form and substance reasonably satisfactory
to the Administrative Agent (unless otherwise specified) and (except for
the Notes) in sufficient copies for each Lender Party:
(i) The Notes payable to the order of the Lenders.
(ii) Certified copies of the resolutions of the Board of
Directors of each Borrower and each other Loan Party approving each
Loan Document and Related Document to which it is or is to be a party
and the transactions contemplated thereby,
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and of all documents evidencing other necessary corporate action and
governmental and other third party approvals and consents, if any,
with respect to the Acquisition, this Agreement, the Notes, each other
Loan Document and each Related Document.
(iii) A copy of a certificate of the Secretary of State of
the jurisdiction of its incorporation, or in the case of the Canadian
Borrower, the Ministry of Consumer and Commercial Relations of the
Province of Ontario, dated reasonably near the date of the Initial
Extension of Credit, listing the charter of each Borrower and each
other Loan Party and each amendment thereto on file in his office and
certifying that (A) such amendments are the only amendments to such
Borrower's or such other Loan Party's charter on file in his office,
(B) each such Borrower and each such other Loan Party have paid all
franchise taxes to the date of such certificate and (C) each Borrower
and each other Loan Party are duly incorporated and in good standing
under the laws of the State or Province of the jurisdiction of its
incorporation.
(iv) A certificate of each Borrower and each other Loan
Party, signed on behalf of such Borrower and such other Loan Party by
its President or a Vice President and its Secretary or any Assistant
Secretary, dated the date of the Initial Extension of Credit (the
statements made in which certificate shall be true on and as of the
date of the Initial Extension of Credit), certifying as to (A) the
absence of any amendments to the charter of such Borrower or such
other Loan Party since the date of the certificate referred to in
Section 3.01(k)(iii), (B) a true and correct copy of the bylaws of
such Borrower and such other Loan Party as in effect on the date of
the Initial Extension of Credit, (C) the absence of any proceeding for
the dissolution or liquidation of such Borrower or such other Loan
Party, (D) the truth and accuracy of the representations and
warranties contained in the Loan Documents in all material respects as
though made on and as of the date of the Initial Extension of Credit,
(E) the absence of any event occurring and continuing, or resulting
from the Initial Extension of Credit, that constitutes a Default, and
(F) in the case of the U.S. Borrower only, the completion of the
restructuring contemplated by the memorandum attached hereto as
Schedule 3.01(l).
(v) A certificate of the Secretary or an Assistant
Secretary of each Borrower and each other Loan Party certifying the
names and true signatures of the officers of such Borrower and such
other Loan Party authorized to sign this Agreement, the Notes, each
other Loan Document and each Related Document to which they are or are
to be parties and the other documents to be delivered hereunder and
thereunder.
(vi) A pledge agreement in substantially the form of
Exhibit D hereto (together with each other pledge agreement or Pledge
Agreement Supplement delivered pursuant to Section 5.01(k), in each
case as amended, supplemented or otherwise modified from time to time
in accordance with its terms, the "PLEDGE AGREEMENT"), duly executed
by the U.S. Borrower and the Canadian Borrower, together with:
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(A) certificates representing 100% of the issued and
outstanding stock (or other ownership or profit interest) owned
by the U.S. Borrower of all of its first-tier Subsidiaries
(other than Unrestricted Subsidiaries), accompanied by undated
stock powers executed in blank; PROVIDED that no more than 66%
of the issued and outstanding stock of any first-tier Foreign
Subsidiaries of the U.S. Borrower (other than Unrestricted
Subsidiaries and the Canadian Borrower) shall be required to be
pledged,
(B) copies of proper financing statements, to be duly filed
on or before the day of the Initial Extension of Credit under
the Uniform Commercial Code of all jurisdictions that the
Administrative Agent may deem necessary or desirable in order
to perfect and protect the first priority liens and security
interests created under the Pledge Agreement, covering the
Collateral described in the Pledge Agreement,
(C) completed requests for information, dated on or before
the date of the Initial Extension of Credit, listing all other
effective financing statements filed in the jurisdictions
referred to in clause (B) above that name the U.S. Borrower or
any other Loan Party as debtor, together with copies of such
other financing statements,
(D) evidence of the completion of all other recordings and
filings of or with respect to the Pledge Agreement that the
Administrative Agent may reasonably deem necessary or desirable
in order to perfect and protect the Liens created thereby, and
(E) evidence that all other action that the Administrative
Agent may reasonably deem necessary or desirable in order to
perfect and protect the first priority liens and security
interests created under the Pledge Agreement has been taken.
(vii) A guaranty in substantially the form of Exhibit E
hereto (together with each other guaranty required to be delivered as
of the Closing Date pursuant to Section 5.01(k), in each case as
amended, supplemented or otherwise modified from time to time in
accordance with its terms, the "SUBSIDIARIES GUARANTY"), duly executed
by each of the Subsidiary Guarantors.
(viii) Certified copies of each of the Related Documents, duly
executed by the parties thereto and in form and substance satisfactory
to the Lender Parties, together with all agreements, instruments and
other documents delivered in connection therewith.
(ix) Such financial, business and other information
regarding each Loan Party as the Lender Parties shall have reasonably
requested, including, without limitation, (A) audited Consolidated
financial statements of the U.S. Borrower and its
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61
Consolidated Subsidiaries for Fiscal Years 1995 and 1996, (B)
unaudited Consolidated financial statements of the U.S. Borrower and
its consolidated Subsidiaries for each Fiscal Quarter in Fiscal Year
1997 that ended more than 45 days prior to the initial Closing Date,
(C) a Consolidated pro forma balance sheet of the U.S. Borrower and
its Consolidated Subsidiaries as of the Closing Date after giving
effect to the Acquisition and other transactions and financings
contemplated by the Related Documents and the Loan Documents, and
(D) Consolidated forecasted financial statements of the U.S. Borrower
and its Consolidated Subsidiaries for the five-year period after the
Closing Date, all of the foregoing (including, without limitation, the
statements to be delivered pursuant to clauses (A) through (D) above)
to be in form and substance reasonably satisfactory to the
Administrative Agent.
(x) Letters and certificates, in substantially the form of
Exhibit H and I hereto, respectively, attesting to the Solvency of
each of the Borrowers after giving effect to the Acquisition and the
other transactions contemplated hereby, from its chief financial
officer or, in the case of the Canadian Borrower, its assistant
treasurer, and a nationally recognized appraisal firm, valuation
consultant or investment banking firm satisfactory to the
Administrative Agent.
(xi) A favorable opinion of Latham and Watkins, U.S. counsel
for the Borrowers, in substantially the form of Exhibit F-1 hereto and
as to such other matters as any Lender Party through the
Administrative Agent may reasonably request.
(xii) A favorable opinion of Osler, Hoskin & Harcourt,
Canadian counsel for the Canadian Borrower, in substantially the form
of Exhibit F-2 and as to such other matters as any Lender Party
through the Administrative Agent may reasonably request.
(xiii) A favorable opinion of Shearman & Sterling, counsel for
the Administrative Agent, in form and substance satisfactory to the
Administrative Agent.
(l) On or prior to the Closing Date the U.S. Borrower shall have
completed the restructuring contemplated by the memorandum attached hereto
as Schedule 3.01(l).
SECTION 3.02. CONDITIONS PRECEDENT TO EACH BORROWING AND ISSUANCE.
The obligation of each Appropriate Lender to make an Advance (other than a
Letter of Credit Advance made by the Issuing Bank or a Revolving Credit Lender
pursuant to Section 2.03(c) and a Swing Line Advance made by a Revolving Credit
Lender pursuant to Section 2.02(b)) on the occasion of each Borrowing (including
the Initial Extension of Credit), and the obligation of the Issuing Bank to
issue a Letter of Credit (including the initial issuance) or renew a Letter of
Credit and the right of the U.S. Borrower to request a Swing Line Borrowing,
shall be subject to the further conditions precedent that on the date of such
Borrowing or issuance or renewal (a) the following statements shall be true in
all material respects (and each of the giving of the applicable Notice of
Borrowing, Notice of Swing Line Borrowing, Notice of Issuance or Notice of
Renewal and the acceptance by the Appropriate Borrower of the proceeds of such
Borrowing or of such Letter of Credit or the renewal of such Letter of Credit
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shall constitute a representation and warranty by such Borrower that both on the
date of such notice and on the date of such Borrowing or issuance or renewal
such statements are true):
(i) the representations and warranties contained in each Loan
Document are correct in all material respects on and as of such date,
before and after giving effect to such Borrowing or issuance or renewal and
to the application of the proceeds therefrom, as though made on and as of
such date, other than any such representations or warranties that, by their
terms, refer to a specific date other than the date of such Borrowing or
issuance or renewal, in which case, as of such specific date; and
(ii) no event has occurred and is continuing, or would result from
such Borrowing or issuance or renewal or from the application of the
proceeds therefrom, that constitutes a Default.
SECTION 3.03. DETERMINATIONS UNDER SECTION 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lender Parties unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
Party prior to the Initial Extension of Credit specifying its objection thereto
and, if the Initial Extension of Credit consists of a Borrowing, such Lender
Party shall not have made available to the Administrative Agent such Lender
Party's ratable portion of such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF EACH BORROWER. Each
Borrower represents and warrants as follows:
(a) LOAN PARTIES - DUE ORGANIZATION; GOOD STANDING; CORPORATE POWER
AND AUTHORITY; CAPITAL STOCK. Each Loan Party (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which it
owns or leases property or in which the conduct of its business requires it
to so qualify or be licensed, except where the failure to be so qualified
or in good standing has not had or would not reasonably be likely to have a
Material Adverse Effect and (iii) has all requisite corporate power and
authority (including, without limitation, all material governmental
licenses, permits and other approvals) to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to
be conducted. All of the outstanding capital stock of the U.S. Borrower
has been validly issued, is fully paid and non-assessable and is owned by
the Investor Group and Phelps Dodge in the amounts specified on
Schedule 4.01(a) free and clear of all Liens.
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(b) LOAN PARTIES' SUBSIDIARIES - DUE ORGANIZATION; GOOD STANDING;
CORPORATE AUTHORIZATION AND AUTHORITY; CAPITAL STOCK. Set forth on
Schedule 4.01(b) hereto is a complete and accurate list of all Subsidiaries
of each Loan Party as of the date of such schedule, showing as of the date
hereof (as to each such Subsidiary) the jurisdiction of its incorporation,
the number of shares of each class of capital stock authorized, and the
number outstanding, on the date hereof and the percentage of the
outstanding shares of each such class owned (directly or indirectly) by
such Loan Party and the number of shares covered by all outstanding
options, warrants, rights of conversion or purchase and similar rights at
the date hereof. All of the outstanding capital stock of all of such
Subsidiaries has been validly issued, is fully paid and non-assessable and
is owned by such Loan Party or one or more of its Subsidiaries free and
clear of all Liens, except those created under the Loan Documents. Each
such Subsidiary (i) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation,
(ii) is duly qualified and in good standing as a foreign corporation in
each other jurisdiction in which it owns or leases property or in which the
conduct of its business requires it to so qualify or be licensed, except
where the failure to be so qualified or in good standing has not had or
would not reasonably be likely to have a Material Adverse Effect and
(iii) has all requisite corporate power and authority (including, without
limitation, all governmental licenses, permits and other approvals) to own
or lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted.
(c) DUE AUTHORIZATION OF LOAN DOCUMENTS; NON-CONTRAVENTION, ETC.
The execution, delivery and performance of each Loan Document and each
Related Document have been duly authorized by all necessary corporate
action on the part of each Loan Party that is a party thereto, and do not
(i) contravene such Loan Party's charter or bylaws, (ii) violate any
applicable provision of any material law (including, without limitation,
the Securities Exchange Act of 1934 and the Racketeer Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of 1970),
rule, regulation (including, without limitation, Regulation X of the Board
of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination or award applicable to such Borrower or
to its Subsidiaries, (iii) result in the breach of, or constitute a default
under, any loan agreement, indenture, mortgage, deed of trust or other
financial instrument, or any material contract or agreement, binding on or
affecting any Loan Party, any of its Subsidiaries or any of their
properties or (iv) except for the Liens created under the Loan Documents,
result in or require the creation or imposition of any Lien upon or with
respect to any of the properties of any Loan Party or any of its
Subsidiaries.
(d) GOVERNMENTAL AND THIRD PARTY APPROVALS. Other than those that
have already been obtained and as set forth in Schedule 4.01(d) and are in
full force and effect, or as would not reasonably be expected to have a
Material Adverse Effect, no authorization or approval (including, in the
case of the Canadian Borrower, exchange control approval) or other action
by, and no notice to or filing with, any governmental authority or
regulatory body or any other third party is required for (i) the due
execution, delivery, recordation, filing or performance by any Loan Party
of any Loan Document or any Related Document to which it is or is to be a
party and (ii) the consummation of the transactions contemplated by the
Loan Documents and the Related Agreements.
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(e) DUE EXECUTION AND DELIVERY; BINDING OBLIGATION. Each of the
Loan Documents has been duly executed and delivered by each Loan Party
party thereto and is the legal, valid and binding obligation of each Loan
Party party thereto, enforceable against such Loan Party in accordance with
its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditor's rights
generally or by general principles of equity.
(f) HISTORICAL FINANCIAL STATEMENTS. The Consolidated balance
sheet of each of such Borrower and its respective Subsidiaries as at
December 31, 1996, and the related Consolidated statements of income and
cash flow of such Borrower and its Subsidiaries for the fiscal year then
ended, accompanied by an opinion of Deloitte & Touche LLP, independent
public accountants, and the Consolidated balance sheet of such Borrower and
its Subsidiaries as at September 30, 1997, and the related Consolidated
statements of income and cash flow of such Borrower and its Subsidiaries
for the nine months then ended, duly certified by the chief financial
officer of such Borrower, copies of which have been furnished to each
Lender Party, fairly present in all material respects, subject, in the case
of said balance sheets as at September 30, 1997, and said statements of
income and cash flows for the nine months then ended, to year-end audit
adjustments, the Consolidated financial condition of such Borrower and its
respective Subsidiaries as at such dates and the Consolidated results of
the operations of such Borrower and its Subsidiaries for the periods ended
on such dates, all in accordance with generally accepted accounting
principles applied on a consistent basis (unless otherwise expressly noted
therein), and since December 31, 1996, there has been no Material Adverse
Change other than as a result of the Acquisition and the transactions
contemplated hereby.
(g) PRO FORMA FINANCIAL STATEMENTS. The Consolidated pro forma
balance sheet of such Borrower and its Subsidiaries as at September 30,
1997, and the related Consolidated pro forma statement of income and cash
flow of such Borrower and its Subsidiaries for the nine months then ended,
certified by the chief financial officer of such Borrower, copies of which
have been furnished to each Lender Party, fairly present in all material
respects the Consolidated pro forma financial condition of such Borrowers
and its Subsidiaries as at such date and the Consolidated pro forma results
of operations of such Borrower and its Subsidiaries for the period ended
on such date, in each case giving effect to the Acquisition and the other
transactions contemplated hereby.
(h) FORECASTS. The Consolidated forecasted balance sheets, income
statements and cash flows statements of the U.S. Borrower and its
Subsidiaries delivered to the Lender Parties pursuant to
Section 3.01(k)(ix) or 5.03 were prepared in good faith on the basis of the
estimates and assumptions stated therein, which estimates and assumptions
were believed to be reasonable and fair in the light of conditions existing
at the time made, it being understood by the Lender Parties that such
projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections
may differ from the projected results.
(i) OTHER INFORMATION. Neither the Information Memorandum nor any
other information, exhibit or report furnished by any Loan Party to the
Administrative Agent or any
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Lender Party in writing in connection with the negotiation of the Loan
Documents or pursuant to the terms of the Loan Documents contained any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements made herein and therein, taken as a whole,
not misleading at such time in light of the circumstances in which the same
were made, it being understood that for purposes of this Section 4.01(i),
such factual information does not include projections and pro forma
financial information.
(j) LITIGATION, ETC. There is no action, suit, investigation,
litigation or proceeding affecting any Loan Party or any of its
Subsidiaries, including any Environmental Action, pending or, to the
knowledge of either Borrower, threatened before any court, governmental
agency or arbitrator that (i) could reasonably be expected to have a
Material Adverse Effect or (ii) purports to affect the legality, validity
or enforceability of the Acquisition, this Agreement, any Note, any other
Loan Document or any Related Document or the consummation of the
transactions contemplated hereby.
(k) COMPLIANCE WITH MARGIN REGULATIONS. (i) Such Borrower is not
engaged in the business of extending credit for the purpose of purchasing
or carrying Margin Stock, and no proceeds of any Advance or drawings under
any Letter of Credit will be used to purchase or carry any Margin Stock or
to extend credit to others for the purpose of purchasing or carrying any
Margin Stock.
(ii) Following application of the proceeds of each Advance or
drawing under each Letter of Credit, not more than 25 percent of the value
of the assets (either of either Borrower only or of either Borrower and its
Subsidiaries on a Consolidated basis) subject to the provisions of
Section 5.02(a) or 5.02(d) or subject to any restriction contained in any
agreement or instrument between either Borrower and any Lender Party or any
Affiliate of any Lender Party relating to Debt and within the scope of
Section 7.01(e) will be Margin Stock.
(l) EMPLOYEE BENEFIT PLANS AND ERISA RELATED MATTERS. (i) Each
Plan is in compliance with ERISA, the Internal Revenue Code and any
applicable Requirement of Law; no Reportable Event has occurred (or is
reasonably likely to occur) with respect to any Plan; no Plan is insolvent
or in reorganization (or is reasonably likely to be insolvent or in
reorganization), and no written notice of any such insolvency or
reorganization has been given to the Borrower, any Subsidiary or any ERISA
Affiliate; no Plan (other than a multiemployer plan ) has an accumulated or
waived funding deficiency (or is reasonably likely to have such a
deficiency); neither any Loan Party nor any ERISA Affiliate has incurred
(or is reasonably expected to incur) any liability to or on account of a
Plan pursuant to Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069,
4201 or 4204 of ERISA or Section 4971 or 4975 of the Internal Revenue Code
or has been notified in writing that it will incur any liability under any
of the foregoing Sections with respect to any Plan; no proceedings have
been instituted (or are reasonably likely to be instituted) to terminate or
to reorganize any Plan or to appoint a trustee to administer any Plan, and
no written notice of any such proceedings has been given to any Loan Party
or any ERISA Affiliate; and no lien imposed under the Internal Revenue Code
or ERISA on the assets of any Loan Party or any ERISA Affiliate exists on
account of any Plan (or is reasonably likely to exist) nor has any Loan
Party or any ERISA Affiliate been notified in
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writing that such a lien will be imposed on the assets of any Loan Party or
any ERISA Affiliate on account of any Plan, EXCEPT to the extent that a
breach of any of the foregoing representations and warranties in this
Section 4.01(l)(i) would not result, individually or in the aggregate, in
an amount of liability that would be reasonably likely to have a Material
Adverse Effect. No Plan (other than a multiemployer plan) has an Unfunded
Current Liability that would, individually or when taken together with any
other liabilities referenced in this Section 4.01(l)(i), be reasonably
likely to have a Material Adverse Effect. With respect to Plans that are
multiemployer plans (as defined in Section 3(37) of ERISA), the
representations and warranties in this Section 4.01(l)(i), other than any
made with respect to (a) liability under Section 4201 or 4204 of ERISA or
(b) liability for termination or reorganization of such Plans under ERISA,
are made to the best knowledge of the Borrowers.
(ii) With respect to each scheme or arrangement mandated by a
government other than the United States (a "FOREIGN GOVERNMENT SCHEME OR
ARRANGEMENT") and with respect to each employee benefit plan maintained or
contributed to by any Subsidiary of any Loan Party that is not subject to
United States law (a "FOREIGN PLAN"), except as in the aggregate could not
reasonably be expected to have Material Adverse Effect:
(A) Any employer and employee contributions required by law
or by the terms of any Foreign Government Scheme or Arrangement or any
Foreign Plan have been made, or if applicable, accrued, in accordance
with normal accounting practices.
(B) The fair market value of the assets of each funded
Foreign Plan, the liability of each insurer for any Foreign Plan
funded through insurance or the book reserve established for any
Foreign Plan, together with any accrued contributions, is sufficient
to procure or provide for the accrued benefit obligations, as of the
date hereof, with respect to all current and former participants in
such Foreign Plan according to the actuarial assumptions and
valuations most recently used to determine employer contributions to
such Foreign Plan.
(C) Each Foreign Plan required to be registered has been
registered and has been maintained in good standing with applicable
regulatory authorities.
(m) ENVIRONMENTAL MATTERS. (i) Other than instances of
noncompliance that could not reasonably be expected to have a Material
Adverse Effect: (A) the U.S. Borrower and its Subsidiaries are in
compliance with all Environmental Laws in all jurisdictions in which such
Borrower and each of its Subsidiaries are currently doing business
(including, without limitation having obtained all material Environmental
Permits required under Environmental Laws) and (B) the U.S. Borrower will
comply and cause each of their Subsidiaries to comply with all such
Environmental Laws (including, without limitation, all Environmental
Permits required under Environmental Laws).
(ii) Neither Borrower nor any of its Subsidiaries has treated,
stored, transported or disposed of Hazardous Materials at or from any
currently or formerly owned real estate or
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facility relating to its business in a manner that could reasonably be
expected to have a Material Adverse Effect.
(n) SECURITIES LAWS. Neither any Loan Party nor any of its
Subsidiaries is an "investment company," or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended.
(o) SOLVENCY. Each Loan Party is, individually and together with
its Subsidiaries, Solvent.
(p) EXISTING DEBT. Set forth on Schedule 4.01(p) hereto is a
complete and accurate list of all Existing Debt (other than Surviving
Debt), showing as of the date of such Schedule the principal amount
outstanding thereunder, and such principal amount has not been increased
from that amount shown on such Schedule.
(q) SURVIVING DEBT. Set forth on Schedule 3.01(d) hereto is a
complete and accurate list of all Surviving Debt, showing as of the date of
such Schedule the principal amount outstanding thereunder, the maturity
date thereof and the amortization schedule therefor, and such principal
amount has not been increased from that amount shown on such Schedule.
ARTICLE V
COVENANTS OF THE BORROWERS
SECTION 5.01. AFFIRMATIVE COVENANTS. So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender Party
shall have any Commitment hereunder, each Borrower will:
(a) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable laws,
rules, regulations and orders, such compliance to include, without
limitation, compliance with ERISA, Environmental Laws and the Racketeer
Influenced and Corrupt Organizations Chapter of the Organized Crime Control
Act of 1970, except such as may be contested in good faith or as to which a
bona fide dispute may exist and except to the extent that noncompliance
therewith could not reasonably be expected to have a Material Adverse
Effect.
(b) PAYMENT OF TAXES, ETC. Pay and discharge, and cause each of
its Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all material taxes, assessments and governmental charges or
levies imposed upon it or upon its property prior to the date on which
material penalties attach thereto, and (ii) all lawful material claims
that, if unpaid, might by law become a material Lien upon the property of
the U.S. Borrower or its Restricted Subsidiaries not otherwise expressly
permitted under this Agreement; PROVIDED,
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HOWEVER, that neither Borrower nor any of its Subsidiaries shall be
required to pay or discharge any such tax, assessment, charge or claim that
is being contested in good faith and by proper proceedings and as to which
appropriate reserves (in the good faith judgment of its management) are
being maintained in accordance with GAAP.
(c) MAINTENANCE OF INSURANCE. Maintain, and cause each of its
Restricted Subsidiaries to maintain, insurance with responsible and
reputable insurance companies or associations (at the time the relevant
coverage is placed or renewed) in such amounts and covering such risks as
is usually carried by companies engaged in the same or similar businesses
and owning similar properties in the same general areas in which such
Borrower or such Restricted Subsidiary operates.
(d) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain, its
existence, legal structure, legal name, rights (charter and statutory),
permits, licenses, approvals, privileges and franchises, except to the
extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; PROVIDED, HOWEVER, that each Borrower and its
Restricted Subsidiaries may consummate any merger or consolidation
permitted under Section 5.02(c) and PROVIDED FURTHER that neither Borrower
nor any of its Restricted Subsidiaries shall be required to preserve any
right, permit, license, approval, privilege or franchise if the Board of
Directors of such Borrower or such Restricted Subsidiary shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of such Borrower or such Restricted Subsidiary, as the case may
be, and that the loss thereof is not disadvantageous in any material
respect to such Borrower, such Restricted Subsidiary or the Lender Parties.
(e) CONDUCT OF BUSINESS. From and after the Closing Date, cause,
and cause its Subsidiaries (taken as a whole) to, engage primarily in (i)
the vehicle component business and any activity or business incidental,
directly related or similar thereto, or any other lines of business carried
on by such Borrower and its Subsidiaries on the Closing Date or utilizing
such Borrower's or Subsidiaries' manufacturing capabilities on the Closing
Date and (ii) other businesses or activities that constitute a reasonable
extension, development or expansion thereof or that are ancillary or
reasonably related thereto.
(f) VISITATION RIGHTS. At any reasonable time and from time to
time, upon reasonable notice and during normal business hours, permit any
authorized representatives designated by the Administrative Agent or the
Majority Lenders to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, such Borrower
and any of its Restricted Subsidiaries, and to discuss the affairs,
finances and accounts of such Borrower and any of its Restricted
Subsidiaries with any of their officers or directors and with their
independent certified public accountants, PROVIDED, that such Borrower may,
if it so chooses, be present at or participate in any such discussion.
(g) KEEPING OF BOOKS. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct entries
shall be made of all financial
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transactions and the assets and business of such Borrower and each such
Subsidiary in accordance with generally accepted accounting principles in
effect from time to time.
(h) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and
cause each of its Restricted Subsidiaries to maintain and preserve, all of
its properties that are used or useful in the conduct of its business
(including intellectual property) in good working order and condition,
ordinary wear and tear excepted, in each case consistent with past
practice, and will from time to time make or cause to be made all
appropriate repairs, renewals and replacements thereof, except where the
failure to do so would not reasonably be likely to have a Material Adverse
Effect.
(i) TRANSACTIONS WITH AFFILIATES. Conduct, and cause each of its
Restricted Subsidiaries to conduct, all transactions otherwise permitted
under the Loan Documents with any of their Affiliates on terms that are
fair and reasonable and no less favorable to such Borrower or such
Restricted Subsidiary than it would obtain in a comparable arm's-length
transaction with a Person not an Affiliate, other than (i) transactions
between or among the Loan Parties and any Restricted Subsidiaries of the
U.S. Borrower, (ii) payment of customary annual fees to KKR or its
Affiliates for management consulting and financial services rendered to
such Borrower and its Restricted Subsidiaries and investment banking fees
paid to KKR or its Affiliates for services rendered to such Borrower and
its Restricted Subsidiaries in connection with divestitures, acquisitions,
financings and other transactions to the extent permitted under this
Agreement, (iii) reasonable and customary fees paid to members of the U.S.
Borrower's board of directors, (iv) transactions permitted by
Section 5.02(f), and (v) transactions otherwise expressly permitted
hereunder.
(j) APPLICATION OF TERM A ADVANCE. On the day on which the Term A
Loan is borrowed, cause the proceeds received by the Canadian Borrower from
the Term A Advance to be distributed by dividend or intercompany loan to
the U.S. Borrower, net of the amount of any Canadian withholding taxes or
to repay outstanding intercompany loans owed to the U.S. Borrower.
(k) COVENANT TO GUARANTY OBLIGATIONS AND TO GIVE SECURITY. When
any new Restricted Subsidiary of the U.S. Borrower is formed, acquired or
designated by the U.S. Borrower or any of its Restricted Subsidiaries,
then, in each case at the expense of the U.S. Borrower,
(i) within 20 days after such formation, acquisition or
designation, in the case of a new Restricted Subsidiary that is a
Domestic Subsidiary of the U.S. Borrower or any of its Restricted
Subsidiaries, cause each such Restricted Subsidiary to duly execute
and deliver to the Administrative Agent a Subsidiaries Guaranty
Supplement under which such Restricted Subsidiary guarantees payment
of all the Obligations of the Borrowers under the Loan Documents;
PROVIDED, that no Restricted Subsidiary which is not wholly-owned
(directly or indirectly) by the U.S. Borrower and the organizational
documents or agreements with other shareholders of which prohibit the
issuance of any such guaranty shall be required to issue such guaranty
if, after using its
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reasonable efforts, the U.S. Borrower has failed to obtain any
necessary consents or approvals for the issuance of such guaranty,
(ii) within 20 days after such formation, acquisition or
designation in the case of a wholly-owned Restricted Subsidiary which
is a first-tier Subsidiary of the U.S. Borrower, cause the U.S.
Borrower, to pledge the stock of each such Restricted Subsidiary and
to duly execute and deliver a Pledge Agreement Supplement covering
such stock and/or a new pledge agreement in substantially the form of
the Pledge Agreement or otherwise in form and substance satisfactory
to the Administrative Agent, pledging 100% of the issued and
outstanding stock owned by the U.S. Borrower in such Restricted
Subsidiary, together with delivery to the Administrative Agent of
certificates representing such pledged stock accompanied by undated
stock powers executed in blank; PROVIDED, in the case of a first-tier
Restricted Subsidiary which is a Foreign Subsidiary (other than
Canadian Borrower) the U.S. Borrower shall not be required to pledge
more than 66% of the issued and outstanding stock of such Restricted
Subsidiary, and PROVIDED FURTHER, that the stock of any Restricted
Subsidiary which is not wholly-owned (directly or indirectly) will be
owned by a wholly owned first-tier Restricted Subsidiary of the U.S.
Borrower whose stock or other equity interests have been pledged in
accordance with the Loan Documents,
(iii) within 20 days after such request, take whatever action
(including, without limitation, the filing of Uniform Commercial Code
financing statements, the giving of notices and the endorsement of
notices on title documents) as may be reasonably necessary or
advisable in the opinion of the Administrative Agent to vest in the
Administrative Agent (or in any representative of the Administrative
Agent designated by it) valid and subsisting Liens on the properties
purported to be subject to the Pledge Agreement Supplement or pledge
agreement delivered pursuant to this Section 5.01(k), enforceable
against all third parties in accordance with their terms, and
(iv) within 60 days after such request, deliver to the
Administrative Agent a signed copy of a favorable opinion, addressed
to the Administrative Agent, of counsel for the Borrowers reasonably
acceptable to the Administrative Agent as to the matters contained in
clauses (i), (ii) and (iii) above, as to such guarantees and security
agreements being legal, valid and binding obligations of each of the
Borrowers and their respective Restricted Subsidiaries enforceable in
accordance with their terms and as to such other matters as the
Administrative Agent may reasonably request.
(l) INVESTMENTS IN CANADIAN BORROWER. In the case of the U.S.
Borrower, make loans or advances, or make equity contributions, to the
Canadian Borrower from time to time in amounts sufficient to enable the
Canadian Borrower to perform its Obligations pursuant to Sections 2.02(d),
2.04, 2.06, 2.07, 2.12, 9.04(b) and 9.12(b).
(m) ESTABLISHMENT OF CASH MANAGEMENT SYSTEMS. Within 180 days of
the Closing Date, establish and maintain lockbox accounts and other cash
management systems reasonably acceptable to the Administrative Agent.
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SECTION 5.02. NEGATIVE COVENANTS. So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender Party
shall have any Commitment hereunder, neither Borrower will, at any time:
(a) LIENS, ETC. Create, incur, assume or suffer to exist, or
permit any of its Restricted Subsidiaries to create, incur, assume or
suffer to exist, any Lien on or with respect to any of its properties of
any character (including, without limitation, accounts) whether now owned
or hereafter acquired, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Liens;
(iii) Liens existing on the date hereof and described on
Schedule 5.02(a) hereto;
(iv) (A) purchase money Liens upon or in real property or
equipment acquired or held by the Borrowers or any of their Restricted
Subsidiaries in the ordinary course of business to secure the purchase
price of such property or equipment or to secure Debt incurred solely
for the purpose of financing the acquisition, construction or
improvement of any such property or equipment to be subject to such
Liens, or Liens existing on any such property or equipment at the time
of acquisition (other than any such Liens created in contemplation of
such acquisition that do not secure the purchase price), or
extensions, renewals or replacements of any of the foregoing for the
same or a lesser amount and (B) Liens to secure Debt incurred within
270 days of the acquisition, construction or improvement of fixed or
capital assets to finance the acquisition, construction or improvement
of such fixed or capital assets or otherwise incurred during such 270
day period in respect of Capital Expenditures permitted pursuant to
Section 5.02(j); PROVIDED, HOWEVER, that no such Lien shall extend to
or cover any property other than the property or equipment being
acquired, constructed or improved, and no such extension, renewal or
replacement shall extend to or cover any property not theretofore
subject to the Lien being extended, renewed or replaced; and PROVIDED
FURTHER, HOWEVER, that the aggregate principal amount of the Debt
secured by Liens permitted by this clause (iv) shall not exceed the
aggregate amount permitted under Section 5.02(b)(iii)(B) at any time
outstanding and that any such Debt shall not otherwise be prohibited
by the terms of the Loan Documents;
(v) Liens arising in connection with Capitalized Leases
permitted under Section 5.02(b)(iii)(B); PROVIDED that no such Lien
shall extend to or cover any Collateral or assets other than the
assets subject to such Capitalized Leases;
(vi) with respect to any Debt incurred pursuant to Section
5.02(b)(iii)(D) or (F) Liens (A) placed upon the assets of any
Restricted Subsidiary to secure Debt of
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such Restricted Subsidiary incurred in connection with any acquisition
by such Restricted Subsidiary or (B) placed upon the assets or stock
(unless required to be pledged to the Administrative Agent pursuant to
Section 5.01(k)) of any acquired Person to secure a guarantee by such
Person of any Debt of a Borrower or any Restricted Subsidiary;
(vii) the replacement, extension or renewal of any Lien
permitted hereunder upon or in the same property theretofore subject
thereto or the replacement, extension or renewal (without increase in
the amount or change in any direct or contingent obligor) of the Debt
secured thereby;
(viii) Liens on the stock and/or assets of the Mexico
Subsidiary to secure Debt permitted under Section 5.02(b)(ii)(B); and
(ix) other Liens securing Obligations of the U.S. Borrower
and its Restricted Subsidiaries in an aggregate principal amount not
to exceed $10,000,000 at any time outstanding.
(b) DEBT. Create, incur, assume or suffer to exist, or permit any
of its Restricted Subsidiaries to create, incur, assume or suffer to exist,
any Debt other than:
(i) in the case of the Borrowers,
(A) Subordinated Debt evidenced by the Subordinated Notes,
and any Debt extending the maturity of, or refinancing, in
whole or in part such Subordinated Notes, PROVIDED that the
terms of any such extension or refinancing, and of any
agreement entered into and of any instrument issued in
connection therewith, are not prohibited by the Loan Documents,
PROVIDED, FURTHER, that the principal amount of such Debt shall
not be increased above the principal amount thereof outstanding
immediately prior to such extension or refinancing, PROVIDED,
FURTHER, that the terms relating to principal amount,
amortization, maturity, interest rate, subordination, and other
material terms of any such extension or refinancing and of any
agreement entered into and of any instrument issued in
connection therewith, are no less favorable in any material
respect to the Loan Parties or the Lender Parties than the
terms of the Subordinated Notes.
(B) Debt in respect of Hedge Agreements incurred in the
ordinary course of business and consistent with prudent
business practice, and
(C) Debt consisting of any undertaking by the U.S. Borrower
to guaranty the obligations of the Mexico Subsidiary, in an
aggregate principal amount not to exceed $35,000,000;
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73
(ii) in the case of any of its Restricted Subsidiaries (A)
Debt owed to the Borrowers or to a Restricted Subsidiary of the
Borrowers, and (B) in the case of the Mexico Subsidiary only, Debt in
an aggregate amount not to exceed $35,000,000 at any time outstanding;
and
(iii) in the case of the Borrowers and any of their
Restricted Subsidiaries,
(A) Debt under the Loan Documents,
(B) Debt secured by Liens permitted by Section 5.02(a)(iv)
and Capitalized Leases not to exceed an aggregate amount equal
to $50,000,000 at any time outstanding,
(C) the Surviving Debt, and any Debt extending the maturity
of, or refunding or refinancing, in whole or in part, any
Surviving Debt, provided that the terms of any such extending,
refunding or refinancing Debt, and of any agreement entered
into and of any instrument issued in connection therewith, are
not prohibited by the Loan Documents, PROVIDED that the
principal amount of such Surviving Debt shall not be increased
above the principal amount thereof outstanding immediately
prior to such extension, refunding or refinancing, and the
direct and contingent obligors therefor shall not be changed,
as a result of or in connection with such extension, refunding
or refinancing,
(D) Debt of any Person existing at the time such Person is
merged into or consolidated with, or acquired by, either
Borrower or any Restricted Subsidiary or becomes a Restricted
Subsidiary of either Borrower in accordance with the provisions
of Section 5.02(e)(xi) or (xii); PROVIDED that such Debt was
not incurred in contemplation of such merger, consolidation or
investment; and PROVIDED FURTHER that neither Borrower nor any
Restricted Subsidiary which acquired such Person is liable for
such Debt; and PROVIDED FURTHER, that the aggregate amount of
all Debt incurred pursuant hereunder shall, when taken together
with any Debt incurred pursuant to clause (F) of this Section
5.02(b)(iii), in no event exceed $100,000,000 in the aggregate
at any time outstanding,
(E) indorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of
business,
(F) Debt incurred in connection with an Investment made
pursuant to Section 5.02(e)(xi) or (xii); PROVIDED, that the
aggregate amount of all Debt incurred pursuant hereunder shall,
when taken together with any Debt incurred pursuant to clause
(D) of this Section 5.02(b)(iii), in no event exceed
$100,000,000 in the aggregate at any time outstanding,
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74
(G) Debt consisting of guaranty Obligations in the ordinary
course of business of the obligations of suppliers, customers,
franchisees and licensees of the U.S. Borrower and its
Restricted Subsidiaries,
(H) Debt in respect of any bankers' acceptance, letter of
credit, warehouse receipt or similar facilities entered into in
the ordinary course of business, and
(I) other Debt outstanding in an aggregate amount not to
exceed $50,000,000 at any time outstanding.
(c) MERGERS, ETC. Merge into or consolidate with any Person or
permit any Person to merge into it, or permit any of its Restricted
Subsidiaries to do so, except that (i) any Restricted Subsidiary of either
Borrower may merge into or consolidate with any other Restricted Subsidiary
of such Borrower, (ii) either Borrower's Restricted Subsidiaries may merge
into such Borrower and (iii) either Borrower or any of its Restricted
Subsidiaries may merge into or consolidate with any other Person or permit
any other Person to merge into or consolidate with it; PROVIDED HOWEVER,
that in each case referred to in clause (i) through (iii) above,
immediately after giving effect thereto, no event shall occur and be
continuing or result therefrom that constitutes a Default and, in the case
of any merger or consolidation to which any Loan Party is a party, the
corporation formed by such consolidation or into which such Loan Party
shall be merged shall, at the effective time of such merger or
consolidation, (A) assume such Loan Party's Obligations under the Loan
Documents and performance of such Loan Party's covenants under the Loan
Documents to which it is a party in a writing satisfactory in form and
substance to the Majority Lenders and (B), if a party to the Pledge
Agreement, take or have taken all action required by Section 9 of the
Pledge Agreement, and take or have taken such other action as may be
necessary or desirable, or as the Administrative Agent may request, in
order to preserve the Liens, and continue the perfection thereof with the
same priority, as granted and provided for or purported to be granted and
provided for by the Pledge Agreement.
(d) SALES, ETC. OF ASSETS. Sell, lease, transfer or otherwise
dispose of, or permit any of its Restricted Subsidiaries to sell, lease,
transfer or otherwise dispose of, any assets, or grant any option or other
right to purchase, lease or otherwise acquire any assets, except:
(i) sales, transfers or other dispositions of used or
surplus equipment, vehicles, inventory or other assets in the ordinary
course of its business;
(ii) sales of assets for fair value in an aggregate amount
not to exceed $100,000,000 during the term of this Agreement; PROVIDED
that (A) any non-cash consideration in respect of such sale in the
form of Debt of any Person in an amount in excess of $5,000,000 shall
be evidenced by a promissory note which shall be pledged to the
Administrative Agent for the benefit of the Secured Parties pursuant
to the Pledge Agreement as security for the Obligations of such
pledgor hereunder, and the Net Cash Proceeds of any such sales shall
be applied pursuant to, and in the amount
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75
and the order of priority set forth in, Section 2.06(b)(ii), (B)
immediately before and after giving effect to such sale, no Default
shall have occurred and be continuing or would result therefrom and
(C) with respect to any such sale (or series of related sales) in an
aggregate amount in excess of $10,000,000, immediately after giving
effect to such sale, the U.S. Borrower and its Restricted Subsidiaries
shall be in pro forma compliance with the covenants contained in
Section 5.04, calculated based on the relevant financial statements
delivered pursuant to Section 5.03(b) or (c), as though such sale had
occurred at the beginning of the Measurement Period covered thereby,
as evidenced by a certificate of the chief financial officer of the
U.S. Borrower furnished to the Lender Parties demonstrating such
compliance; and
(iii) sales or contributions of equipment or other personal
property to Restricted Subsidiaries or other joint ventures; PROVIDED,
that the aggregate fair market value of the assets so sold or
contributed (determined, in each case, at the time of such sale or
contribution) does not exceed $15,000,000 during the term of this
Agreement.
(e) INVESTMENTS IN OTHER PERSONS. Make or hold, or permit any of
its Restricted Subsidiaries to make or hold, any Investment in any Person
other than:
(i) Investments existing on December 31, 1997 and described
on Schedule 5.02(e), and any extensions, renewals or reinvestments
thereof, so long as the aggregate amount of all Investments pursuant
to this clause (measured by the amount actually invested) is not
increased at any time above the amount of such Investments existing on
such date;
(ii) loans and advances to employees in the ordinary course
of the business of the Borrowers and their Restricted Subsidiaries as
presently conducted in an aggregate amount not to exceed $5,000,000 at
any time outstanding and other loans and advances to employees for the
purchase of capital stock of the U.S. Borrower;
(iii) Investments by the Borrowers and their Restricted
Subsidiaries in Cash Equivalents;
(iv) Investments by the Borrowers in Hedge Agreements
permitted under Section 5.02(b)(i)(B);
(v) Investments consisting of intercompany Debt permitted
under Section 5.02(b)(ii);
(vi) Investments received in connection with the bankruptcy
or reorganization of suppliers or customers and in settlement of
delinquent obligations of, and other disputes with, customers arising
in the ordinary course of business;
(vii) Investments to the extent that payment for such
Investments is made solely with capital stock of the U.S. Borrower;
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76
(viii) Investments constituting non-cash proceeds of sales,
transfers and other dispositions of assets to the extent permitted by
Section 5.02(d)(ii);
(ix) Investments made to pay for the repurchase, retirement
or other acquisition of the capital stock of the U.S. Borrower in an
aggregate amount at the time of such Investment not in excess of the
lesser of (i) the Available Amount at such time and (ii) the aggregate
amount of such Investments then permitted to be made under the
Subordinated Debt Documents;
(x) In the case of the U.S. Borrower, Investments required
pursuant to Section 5.01(l);
(xi) (A) Investments in Restricted Subsidiaries and (B)
Investments in other Persons in an aggregate amount not to exceed
$25,000,000; PROVIDED that with respect to all such Investments (A)
immediately before and after giving effect thereto, no Default shall
have occurred and be continuing or would result therefrom; (B) any
business acquired or invested in pursuant to this clause shall comply
with the requirements of Section 5.01(e); (C) immediately after giving
effect to the acquisition of a company or business pursuant to this
clause, the U.S. Borrower and its Restricted Subsidiaries shall be in
pro forma compliance with the covenants contained in Section 5.04,
calculated based on the relevant financial statements delivered
pursuant to Section 5.03(b) or (c), as though such acquisition had
occurred at the beginning of the Measurement Period covered thereby,
as evidenced by a certificate of the chief financial officer of the
U.S. Borrower furnished to the Lender Parties demonstrating such
compliance; and (D) the U.S. Borrower shall have a Leverage Ratio,
calculated based on the relevant financial statements delivered
pursuant to Section 5.03(b) or (c), as though such acquisition had
occurred at the beginning of the Measurement Period covered thereby,
as evidenced by a certificate of the chief financial officer of the
U.S. Borrower furnished to the Lender Parties demonstrating such
compliance, for any such Investment made prior to December 31, 2000,
of less than or equal to 6.50:1.00 and for any such Investment made
thereafter, of less than or equal to 6.00:1.00; and
(xii) other Investments in other Persons in an aggregate
amount not to exceed $25,000,000 plus, at any time, the Available
Amount at such time; PROVIDED that with respect to all such
Investments (A) immediately before and after giving effect thereto, no
Default shall have occurred and be continuing or would result
therefrom; (B) any business acquired or invested in pursuant to this
clause shall comply with the requirements of Section 5.01(e); (C)
immediately after giving effect to the acquisition of a company or
business pursuant to this clause, the U.S. Borrower and its Restricted
Subsidiaries shall be in pro forma compliance with the covenants
contained in Section 5.04, calculated based on the relevant financial
statements delivered pursuant to Section 5.03(b) or (c), as though
such acquisition had occurred at the beginning of the Measurement
Period covered thereby, as evidenced by a certificate of the chief
financial officer of the U.S. Borrower furnished to the Lender Parties
demonstrating such compliance.
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77
(f) DIVIDENDS, ETC. In the case only of the U.S. Borrower, declare
or pay any dividends, purchase, redeem, retire, defease or otherwise
acquire for value any of its capital stock or any warrants, rights or
options to acquire such capital stock, now or hereafter outstanding, return
any capital to its stockholders as such, make any distribution of assets,
capital stock, warrants, rights, options, obligations or securities to its
stockholders as such, or permit any of its Subsidiaries to purchase,
redeem, retire, defease or otherwise acquire for value any capital stock of
the U.S. Borrower or any warrants, rights or options to acquire such
capital stock or to issue or sell any such capital stock or any warrants,
rights or options to acquire such capital stock, except that, so long as no
Default shall have occurred and be continuing at the time of any action
described below or would result therefrom, (i) the U.S. Borrower may
declare and pay dividends and distributions payable only in common stock of
the U.S. Borrower, (ii) the U.S. Borrower may redeem in whole or in part
any capital stock of the U.S. Borrower for another class of capital stock
or rights to acquire capital stock of the U.S. Borrower or with proceeds
from substantially concurrent equity contributions or issuances of new
shares of capital stock, PROVIDED that such other class of capital stock
contains terms and provisions at least as advantageous to the Lender
Parties as those contained in the capital stock redeemed thereby, (iii) the
U.S. Borrower may repurchase shares of its capital stock (and/or options or
warrants in respect thereof) held by its officers, directors and employees
so long as such repurchase is pursuant to, and in accordance with the terms
of, management and/or employee stock plans, stock subscription agreements
on shareholder agreements, (iv) either Borrower may make Investments
permitted by Section 5.02(e)(vii), and (v) the U.S. Borrower may, so long
as after giving effect to the payment of any dividends pursuant to this
subclause (v) the Leverage Ratio is less than or equal to 4.00:1.00, pay
dividends in any Fiscal Year in an amount not to exceed 50% of the
Cumulative Available Consolidated Net Income.
(g) PREPAYMENTS, ETC. OF DEBT. Prepay, redeem, purchase, defease
or otherwise satisfy prior to the scheduled maturity thereof in any manner,
or make any payment in violation of any subordination terms of, any
Subordinated Debt; PROVIDED, HOWEVER, that so long as no Default or Event
of Default has occurred and is continuing, the U.S. Borrower may optionally
prepay, repurchase or redeem Subordinated Notes (i) for an aggregate price
not in excess of the Available Amount at the time of such prepayment,
repurchase or redemption or (ii) with the proceeds of subordinated Debt
that (A) is permitted by Section 5.02(b) and (B) has terms material to the
interests of the Lender Parties not materially less advantageous to the
Lender Parties.
(h) AMENDMENT, ETC. OF SUBORDINATED DEBT DOCUMENTS. Amend or
otherwise change any of the terms of any Subordinated Debt Document in a
manner that would be adverse to the Lender Parties in any material respect.
(i) PARTNERSHIPS, ETC. Become a general partner in any general or
limited partnership or joint venture which is not a limited liability
entity, or permit any of its Restricted Subsidiaries to do so, other than
any Restricted Subsidiary the sole assets of which consist of its interest
in such partnership or joint venture.
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78
(j) CAPITAL EXPENDITURES. (i) Make, or permit any of its
Restricted Subsidiaries to make, any Capital Expenditures that would cause
the aggregate amount of all Capital Expenditures of the U.S. Borrower and
its Restricted Subsidiaries in any Fiscal Year (exclusive of those
described in clauses (ii), (iii) and (iv) below) to exceed an amount equal
to (A) for the Fiscal Year 1998, $35,000,000, (B) for the Fiscal Years 1999
and 2000, $20,000,000 and (C) for each year thereafter, the greater of
$15,000,000 and 5% of Consolidated Revenues, in each case as determined at
the end of the prior Fiscal Year PLUS, in each case, the Available Amount,
PROVIDED that the unused portion of Capital Expenditures permitted in any
Fiscal Year and not used in such period may be carried over and added to
the amount otherwise permitted in the immediately three succeeding Fiscal
Years, it being understood that for purposes of the foregoing, the
Borrowers and their Restricted Subsidiaries shall be deemed to have used
the amount originally available during each such succeeding Fiscal Year
prior to any such carry-over amount, and PROVIDED FURTHER, that the
aggregate amount so carried over at any time may not exceed $20,000,000;
(ii) Make, or permit any of its Restricted Subsidiaries to make, any
Capital Expenditures in the Light Wheels Facility, except that such Capital
Expenditures may be made in an amount not to exceed $30,000,000 in the
aggregate through December 31, 2002;
(iii) Make or permit any of its Restricted Subsidiaries to make, any
Capital Expenditures in the Mexico Facility, except that the Mexico
Subsidiary may make such Capital Expenditures in an amount not to exceed
$33,000,000 in the aggregate through December 31, 2002; and
(iv) Make or permit any of its Restricted Subsidiaries to make, any
other Capital Expenditures, except that such Capital Expenditures may be
made in an aggregate amount not to exceed the lesser of $10,000,000 and the
Purchase Price Adjustment Amount.
SECTION 5.03. REPORTING REQUIREMENTS. So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender Party
shall have any Commitment hereunder, each Borrower will furnish to the Lender
Parties:
(a) DEFAULT OR LITIGATION NOTICE. Promptly upon any Responsible
Officer of either Borrower or any of their respective Subsidiaries
obtaining knowledge thereof, notice of (i) the occurrence of any event that
constitutes a Default or an Event of Default, which notice shall specify
the nature thereof, the period of existence thereof and what action the
appropriate Borrower proposes to take with respect thereto, and (ii) any
litigation or governmental proceeding pending against either Borrower or
any of their respective Subsidiaries that could reasonably be expected to
result in a Material Adverse Effect.
(b) QUARTERLY FINANCIALS. As soon as available and in any event
within 60 days after the end of each of the first three Fiscal Quarters of
each Fiscal Year, a Consolidated balance sheet of (i) the U.S. Borrower and
its Subsidiaries and (ii) if the U.S. Borrower has any Unrestricted
Subsidiaries, the U.S. Borrower and its Restricted Subsidiaries, in each
case as of the end of such Fiscal Quarter and the related Consolidated
statements of income and cash
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79
flow for the period commencing at the end of the previous Fiscal Quarter
and ending with the end of such Fiscal Quarter and for the period
commencing at the end of the previous Fiscal Year and ending with the end
of such Fiscal Quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding Fiscal
Year, all in reasonable detail and duly certified (subject to year-end
audit adjustments) by the chief financial officer of such Borrower as
having been prepared in accordance with GAAP, together with (i) a
certificate of said officer stating that no Default has occurred and is
continuing or, if a Default has occurred and is continuing, a statement as
to the nature thereof and the action that such Borrower has taken and
proposes to take with respect thereto, (ii) a schedule in form satisfactory
to the Administrative Agent of the computations used by the U.S. Borrower
in determining compliance with the covenants contained in Sections 5.02(j)
and 5.04, PROVIDED that in the event of any change in GAAP used in the
preparation of such financial statements, the U.S. Borrower shall also
provide, if necessary for the determination of compliance with Sections
5.02(j) and 5.04, a statement of reconciliation conforming such financial
statements to GAAP and (iii) if there is any change in the Pro Forma EBITDA
Adjustment from the amount set forth in any certificate previously
delivered to the Administrative Agent pursuant to Section 5.03(g), setting
forth the recalculated amount of such Pro Forma EBITDA Adjustment and, in
reasonable detail satisfactory to the Administrative Agent, the
calculations and basis thereof.
(c) ANNUAL FINANCIALS. As soon as available and in any event
within 120 days after the end of each Fiscal Year, a Consolidated balance
sheet of (i) such Borrower and its Subsidiaries and (ii) if the U.S.
Borrower has any Unrestricted Subsidiaries, such Borrower and its
Restricted Subsidiaries, in each case as of the end of such Fiscal Year and
the related Consolidated statements of income and cash flow for such Fiscal
Year setting forth in each case in comparative form the corresponding
figures for the previous Fiscal Year, accompanied by an opinion which shall
be unqualified as to the scope of the audit and as to the going concern
status of such Borrower and its Subsidiaries or such Borrower and its
Restricted Subsidiaries, as the case may be, taken as a whole, of Deloitte
& Touche LLP or other independent public accountants of recognized standing
acceptable to the Majority Lenders, together with (A) a certificate of such
accounting firm to the Lender Parties stating that in the course of the
regular audit of the business of such Borrower and its Subsidiaries or such
Borrower and its Restricted Subsidiaries, as the case may be, which audit
was conducted by such accounting firm in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge that a
Default has occurred and is continuing, or if, in the opinion of such
accounting firm, a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof, (B) a schedule in form
satisfactory to the Administrative Agent of the computations used by the
U.S. Borrower in determining, as of the end of such Fiscal Year, compliance
with the covenants contained in Sections 5.02(j) and 5.04, PROVIDED that in
the event of any change in GAAP used in the preparation of such financial
statements, the U.S. Borrower shall also provide, if necessary for the
determination of compliance with Sections 5.02(j) and 5.04, a statement of
reconciliation conforming such financial statements to GAAP and (C) a
certificate of the chief financial officer of such Borrower stating that no
Default has occurred and is continuing or, if a default has occurred and is
continuing, a statement as to the nature thereof and the action that such
Borrower has taken and proposes to take with respect thereto.
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(d) ANNUAL FORECASTS. As soon as available and in any event no
later than 60 days after the beginning of each Fiscal Year, forecasts
prepared by management of such Borrower, in reasonable detail and in form
customarily prepared by management of such Borrower for its internal use
and setting forth an explanation for the principal assumptions on which
such forecasts were based, of balance sheets, income statements and cash
flow statements on a monthly basis for the Fiscal Year following such
Fiscal Year then ended and on an annual basis for each of the four Fiscal
Years thereafter.
(e) ERISA. Promptly after any Loan Party or any ERISA Affiliate
obtains knowledge, or has reason to know, of the occurrence of any of the
following events that individually or in the aggregate (including in the
aggregate such events previously disclosed or exempt from disclosure
hereunder, to the extent the liability therefor remains outstanding), would
be reasonably likely to have a Material Adverse Effect, a certificate of a
Responsible Officer of the U.S. Borrower setting forth details as to such
occurrence and the action, if any, that any Loan Party or any ERISA
Affiliate is required or proposes to take, together with any notices
(required, proposed or otherwise) given to or filed with or by or received
by any Loan Party, any ERISA Affiliate, the PBGC, a Plan participant (other
than notices relating to an individual participant's benefits) or the Plan
administrator with respect thereto: that a Reportable Event has occurred;
that an accumulated funding deficiency has been incurred or an application
has been or is to be made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under
Section 412 of the Internal Revenue Code with respect to a Plan; that a
Plan having an Unfunded Current Liability has been or is to be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA
(including the giving of written notice thereof); that a Plan has an
Unfunded Current Liability that has or is reasonably expected to result in
a lien under ERISA or the Internal Revenue Code; that proceedings are
reasonably expected to be or have been instituted to terminate a Plan
having an Unfunded Current Liability (including the giving of written
notice thereof); that a proceeding has been instituted against any Loan
Party or any ERISA Affiliate pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; that the PBGC has notified any Loan
Party or any ERISA Affiliate of its intention to appoint a trustee to
administer any Plan; that any Loan Party or any ERISA Affiliate has failed
to make a required installment or other payment pursuant to Section 412 of
the Internal Revenue Code with respect to a Plan; or that any Loan Party or
any ERISA Affiliate has incurred or is reasonably expected to incur (or has
been notified in writing that it will incur) any liability (including any
contingent or secondary liability) to or on account of a Plan pursuant to
Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of
ERISA or Section 4971 or 4975 or the Internal Revenue Code.
(f) ENVIRONMENTAL CONDITIONS. Promptly after obtaining knowledge
of any one or more of the following environmental matters, unless such
environmental matters would not, individually or when aggregated with all
other such matters, be reasonably expected to result in a Material Adverse
Effect:
(i) notice of any pending or threatened Environmental Claim
against the U.S. Borrower or any of its Subsidiaries or any Real
Estate (as defined below);
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(ii) notice of any condition or occurrence on any Real
Estate that (x) results in noncompliance by the U.S. Borrower or any
of its Subsidiaries with any applicable Environmental Law or (y) could
reasonably be anticipated to form the basis of an Environmental Claim
against the U.S. Borrower or any of its Subsidiaries or any Real
Estate;
(iii) notice of any condition or occurrence on any Real
Estate that could reasonably be anticipated to cause such Real Estate
to be subject to any restrictions on the ownership, occupancy, use or
transferability of such Real Estate under any Environmental Law; and
(iv) notice of the taking of any removal or remedial action
in response to the actual or alleged presence of any Hazardous
Material on any Real Estate.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action
and the U.S. Borrower's response thereto. The term "REAL ESTATE" shall
mean land, buildings and improvements owned or leased by the U.S. Borrower
or any of its Subsidiaries, but excluding all operating fixtures and
equipment, whether or not incorporated into improvements.
(g) PRO FORMA EBITDA ADJUSTMENT CERTIFICATE. Upon the consummation
of the acquisition of any Restricted Subsidiary, a certificate of the chief
financial officer of the U.S. Borrower demonstrating compliance with the
provisions of Section 5.02(e)(xi) and 5.04 and, if there is to be any Pro
Forma EBITDA Adjustment, setting forth the amount of such Pro Forma EBITDA
Adjustment and, in reasonable detail satisfactory to the Administrative
Agent, setting forth the calculations and basis therefor.
(h) DESIGNATION CERTIFICATE. Upon the designation of any
Subsidiary (A) as a Restricted Subsidiary from an Unrestricted Subsidiary
or (B) as an Unrestricted Subsidiary from a Restricted Subsidiary, a
certificate of the chief financial officer of the U.S. Borrower certifying
as to compliance with the provisions of Section 5.02(a), 5.02(b) and
5.02(e) and demonstrating compliance with the provisions of Section 5.04
and setting forth the calculations and basis therefor, in each case after
giving effect to such designation in reasonable detail satisfactory to the
Administrative Agent.
(i) SECURITIES REPORTS/OTHER INFORMATION. Promptly after the
sending or filing thereof, copies of all proxy statements, financial
statements and reports that any Loan Party or any of its Subsidiaries sends
to its stockholders, and copies of all regular, periodic and special
reports, and all registration statements, that any Loan Party or any of its
Subsidiaries files with the Securities and Exchange Commission or any
governmental authority that may be substituted therefor, or with any
national securities exchange (in each case to the extent not theretofore
delivered to the Lender Parties pursuant to this Agreement), and with
reasonable promptness such other information (financial or otherwise) as
the Administrative Agent on its own behalf or on behalf of any Lender Party
may reasonably request in writing from time to time
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SECTION 5.04. FINANCIAL COVENANTS. So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender Party
shall have any Commitment hereunder, the U.S. Borrower will:
(a) LEVERAGE RATIO. Maintain at the end of each Fiscal Quarter a
Leverage Ratio of not more than the ratio set forth below for each
Measurement Period set forth below:
MEASUREMENT
PERIOD ENDING RATIO
------------- -----
March 31, 1998 6.000
June 30, 1998 6.000
September 30, 1998 6.000
December 31, 1998 6.000
March 31, 1999 5.750
June 30, 1999 5.750
September 30, 1999 5.750
December 31, 1999 5.750
March 31, 2000 5.500
June 30, 2000 5.500
September 30, 2000 5.500
December 31, 2000 5.500
March 31, 2001 5.250
June 30, 2001 5.250
September 30, 2001 5.250
December 31, 2001 5.000
March 31, 2002 5.000
June 30, 2002 5.000
September 30, 2002 4.750
December 31, 2002 4.750
March 31, 2003 4.500
June 30, 2003 4.500
September 30, 2003 4.250
December 31, 2003 4.250
March 31, 2004 4.000
and thereafter
(b) INTEREST COVERAGE RATIO. Maintain at the end of each
Fiscal Quarter an Interest Coverage Ratio of not less than the ratio
set forth below for each Measurement Period set forth below:
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83
MEASUREMENT
PERIOD ENDING RATIO
------------- -----
March 31, 1998 1.500
June 30, 1998 1.500
September 30, 1998 1.500
December 31, 1998 1.500
March 31, 1999 1.500
June 30, 1999 1.500
September 30, 1999 1.500
December 31, 1999 1.500
March 31, 2000 1.625
June 30, 2000 1.625
September 30, 2000 1.625
December 31, 2000 1.625
March 31, 2001 1.750
June 30, 2001 1.750
September 30, 2001 1.750
December 31, 2001 1.750
March 31, 2002 2.000
June 30, 2002 2.000
September 30, 2002 2.000
December 31, 2002 2.000
March 31, 2003 2.000
June 30, 2003 2.000
September 30, 2003 2.000
December 31, 2003 2.000
March 31, 2004 2.000
June 30, 2004 2.000
September 30, 2004 2.500
and thereafter
(c) FIXED CHARGE COVERAGE RATIO. Maintain at the end of
each Fiscal Quarter a Fixed Charge Coverage of not less than the ratio
set forth below for each Measurement Period set forth below:
MEASUREMENT
PERIOD ENDING RATIO
------------- -----
March 31, 1998
and thereafter 1.050
ARTICLE VI
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GUARANTY
SECTION 6.01. GUARANTY. The U.S. Borrower hereby unconditionally and
irrevocably guarantees (the provisions set forth in this Article VI being the
"GUARANTY") the punctual payment when due, whether at scheduled maturity or at a
date fixed for prepayment or by acceleration, demand or otherwise, of all of the
Obligations of the Canadian Borrower now or hereafter existing under or in
respect of the Loan Documents, whether direct or indirect, absolute or
contingent, and whether for principal, interest, fees, indemnification payments,
costs, expenses or otherwise (such Obligations being the "GUARANTEED
OBLIGATIONS"), and agrees to pay any and all expenses (including, without
limitation, reasonable fees and expenses of counsel) incurred by the
Administrative Agent or any of the other Lender Parties in enforcing any rights
under this Guaranty. Without limiting the generality of the foregoing, the
liability of the U.S. Borrower shall extend to all amounts that constitute part
of the Guaranteed Obligations and would be owed by the Canadian Borrower under
or in respect of the Loan Documents but for the fact that such Guaranteed
Obligations are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Canadian
Borrower.
SECTION 6.02. GUARANTY ABSOLUTE. (a) The U.S. Borrower guarantees
that all of the Guaranteed Obligations will be paid strictly in accordance with
the terms of the Loan Documents, regardless of any Requirements of Law now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Administrative Agent or any of the other Lender Parties with
respect thereto. The Obligations of the U.S. Borrower under this Guaranty are
independent of the Guaranteed Obligations or any other Obligations of the
Canadian Borrower under or in respect of the Loan Documents, and a separate
action or actions may be brought and prosecuted against the U.S. Borrower to
enforce this Guaranty, irrespective of whether any action is brought against the
Canadian Borrower or whether the Canadian Borrower is joined in any such action
or actions. The liability of the U.S. Borrower under this Guaranty shall be
absolute, unconditional and irrevocable irrespective of, and the U.S. Borrower
hereby irrevocably waives any defenses it may now have or may hereafter acquire
in any way relating to, any and all of the following:
(i) any lack of validity or enforceability of any of the Loan
Documents or any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations or any other
Obligations of the Canadian Borrower under or in respect of the Loan
Documents, or any other amendment or waiver of or any consent to departure
from any of the Loan Documents (including, without limitation, any increase
in the Guaranteed Obligations resulting from the extension of additional
credit to the Canadian Borrower or any of its Subsidiaries or otherwise);
(iii) any taking, exchange, release or nonperfection of any of the
Collateral, or any taking, release or amendment or waiver of, or consent to
departure from, the Subsidiaries Guaranty or any other guarantee, for all
or any of the Guaranteed Obligations;
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85
(iv) any manner of application of Collateral, or proceeds thereof,
to all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other Obligations of the Canadian Borrower under or in respect of
the Loan Documents, or any other property and assets of the Canadian
Borrower or any of its Subsidiaries;
(v) any change, restructuring or termination of the legal structure
or existence of the Canadian Borrower or any of its Subsidiaries;
(vi) any failure of any of the Lender Parties to disclose to the
Canadian Borrower any information relating to the business, condition
(financial or otherwise), operations, performance, properties or prospects
of the Canadian Borrower now or hereafter known to such Lender Party;
(vii) the failure of any other Person to execute the Subsidiaries
Guaranty or any other guarantee or agreement or the release or reduction of
liability of the Canadian Borrower or any other guarantor or surety with
respect to the Guaranteed Obligations; or
(viii) any other circumstance (including, without limitation, any
statute of limitations or any existence of or reliance on any
representation by the Administrative Agent or any of the other Lender
Parties) that might otherwise constitute a defense available to, or a
discharge of, the U.S. Borrower or any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Administrative Agent or any of the other
Lender Parties or by any other Person upon the insolvency, bankruptcy or
reorganization of the Canadian Borrower or otherwise, all as though such payment
had not been made, and the U.S. Borrower hereby unconditionally and irrevocably
agrees that it will indemnify the Administrative Agent and each of the other
Lender Parties, upon demand, for all of the costs and expenses (including,
without limitation, reasonable fees and expenses of counsel) incurred by the
Administrative Agent or such other Lender Party in connection with any such
rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference,
a fraudulent transfer or a similar payment under any bankruptcy, insolvency or
similar Requirements of Law.
(b) The U.S. Borrower hereby further agrees that, as between the
U.S. Borrower, on the one hand, and the Administrative Agent and the Lender
Parties, on the other hand, (i) the Guaranteed Obligations of the Canadian
Borrower may be declared to be forthwith due and payable as provided in Section
7.01 (and shall be deemed to have become automatically due and payable in the
circumstances provided in Section 7.01) for purposes of this Guaranty,
notwithstanding any stay, injunction or other prohibition preventing such
declaration in respect of such Guaranteed Obligations (or preventing such
Guaranteed Obligations from becoming automatically due and payable) as against
any other Person and (ii) in the event of any declaration of acceleration of
such Guaranteed Obligations (or such Guaranteed Obligations being deemed to have
become automatically due and payable) as provided in Section 7.01, such
Guaranteed Obligations (whether or not due and payable by the
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86
Canadian Borrower) shall forthwith become due and payable by the U.S. Borrower
for all purposes of this Guaranty.
SECTION 6.03. WAIVERS AND ACKNOWLEDGMENTS. (a) The U.S. Borrower
hereby unconditionally and irrevocably waives promptness, diligence, notice of
acceptance, presentment, demand for performance, notice of nonperformance,
default, protest, dishonor and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty, and any requirement that the
Administrative Agent or any of the other Lender Parties protect, secure, perfect
or insure any Lien or any property or assets subject thereto or exhaust any
right or take any action against the Canadian Borrower or any other Person or
any of the Collateral.
(b) The U.S. Borrower hereby waives (i) any defense arising by
reason of any claim or defense based upon an election of remedies by the
Administrative Agent or the other Lender Parties which in any manner impairs,
reduces, releases or otherwise adversely affects the subrogation, reimbursement,
exoneration, contribution or indemnification rights of the U.S. Borrower or any
other rights of the U.S. Borrower to proceed against the Canadian Borrower, any
other guarantor or any other Person or any of the Collateral, and (ii) any
defense based on any right of setoff or counterclaim against or in respect of
the Obligations of the U.S. Borrower under this Guaranty.
(c) The U.S. Borrower hereby unconditionally and irrevocably waives
any duty on the part of the Administrative Agent or any of the other Lender
Parties to disclose to the U.S. Borrower any fact or other matter relating to
the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Canadian Borrower or any of its Subsidiaries or
the property and assets thereof now or hereafter known by the Administrative
Agent or such other Lender Party.
(d) The U.S. Borrower hereby unconditionally waives any right to
revoke this Guaranty, and acknowledges that this Guaranty is continuing in
nature and applies to all Guaranteed Obligations, whether existing now or in the
future.
(e) The U.S. Borrower hereby acknowledges that it will receive
substantial direct and indirect benefits from the financing arrangements
contemplated by the Loan Documents and that the waivers set forth in Section
6.02 and in this Section 6.03 are knowingly made in contemplation of such
benefits.
SECTION 6.04. SUBROGATION. The U.S. Borrower hereby unconditionally
and irrevocably agrees not to exercise any rights that it may now have or may
hereafter acquire against the Canadian Borrower or any other insider guarantor
that arise from the existence, payment, performance or enforcement of the
Obligations of the U.S. Borrower under this Guaranty or any of the other Loan
Documents, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Administrative Agent or any of the
other Lender Parties against the Canadian Borrower or any other insider
guarantor or any Collateral, whether or not such claim, remedy or right arises
in equity or under contract, statute, common law or any other Requirements of
Law, including, without limitation, the right to take or receive from such other
Loan Party or any other insider guarantor, directly or
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87
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
such time as all of the Guaranteed Obligations and all of the other amounts
payable under this Guaranty shall have been paid in full in cash. If any amount
shall be paid to the U.S. Borrower in violation of the immediately preceding
sentence at any time prior to the latest of the payment in full in cash of all
of the Guaranteed Obligations and all of the other amounts payable under this
Guaranty, such amount shall be received and held in trust for the benefit of the
Administrative Agent and the other Lender Parties, shall be segregated from the
other property and funds of the U.S. Borrower and shall be delivered forthwith
to the Administrative Agent in the same form as so received (with any necessary
endorsement or assignment) to be credited and applied to the Guaranteed
Obligations and the other amounts payable under this Guaranty, whether matured
or unmatured, in accordance with the terms of the Loan Documents, or to be held
as Collateral for any of the Guaranteed Obligations or any of the other amounts
payable under this Guaranty thereafter arising. If (i) the U.S. Borrower shall
pay to the Administrative Agent all or any part of the Guaranteed Obligations
and (ii) all of the Guaranteed Obligations and all of the other amounts payable
under this Guaranty shall have been paid in full in cash, the Administrative
Agent and the other Lender Parties will, at the U.S. Borrower's request and
expense, execute and deliver to the U.S. Borrower appropriate documents, without
recourse and without representation or warranty, necessary to evidence the
transfer of subrogation to the U.S. Borrower of an interest in the Guaranteed
Obligations resulting from the payment made by the U.S. Borrower under this
Guaranty.
SECTION 6.05. CONTINUING GUARANTY; ASSIGNMENTS. This Guaranty is a
continuing guarantee and shall (a) remain in full force and effect until the
payment in full in cash of all of the Guaranteed Obligations and all of the
other amounts payable under this Guaranty, (b) be binding upon the U.S. Borrower
and its successors and assigns and (c) inure to the benefit of, and be
enforceable by, the Administrative Agent and the other Lender Parties and their
respective successors, transferees and assigns. Without limiting the generality
of clause (c) of the immediately preceding sentence, any of the Lender Parties
may assign or otherwise transfer all or any portion of its rights and
obligations under this Agreement (including, without limitation, all or any
portion of its Commitment or Commitments, the Advances owing to it and the Note
or Notes held by it) to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Lender
under this Article VI or otherwise, in each case as provided in Section 9.07.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. EVENTS OF DEFAULT. If any of the following events
("EVENTS OF DEFAULT") shall occur and be continuing:
(a) either Borrower shall (i) fail to pay any principal of any
Advance owing by it when the same shall become due and payable or (ii) fail
to pay any interest on any Advance owing by it, or any fees payable
pursuant to Section 2.08, or any other amounts owing by it under any Loan
Document, in each case within five days after the due date thereof; or
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88
(b) any representation or warranty made by any Loan Party in any
Loan Document or any certificate delivered or required to be delivered
pursuant thereto shall prove to have been untrue in any material respect on
the date as of which made or deemed made; or
(c) either Borrower shall default in the due performance or
observance by it of any term, covenant or agreement required to be
performed or observed by it contained in Section 5.01(j), 5.02, 5.03(a) or
5.04; or
(d) any Loan Party shall default in the due performance or
observance by it of any other term, covenant or agreement contained in any
Loan Document on its part to be performed or observed if such failure shall
remain unremedied for 30 days after written notice thereof shall have been
given to the U.S. Borrower by the Administrative Agent or any Lender Party;
or
(e) any Loan Party or any of its Subsidiaries shall fail to pay any
principal of, premium or interest on or any other amount payable in respect
of any Debt that is outstanding in a principal amount of at least
$20,000,000 (or its equivalent in another currency) either individually or
in the aggregate (but excluding Debt outstanding hereunder) of such Loan
Party or such Subsidiary (as the case may be), when the same becomes due
and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after
the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or
condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity
of such Debt or otherwise to cause, or to permit the holder thereof to
cause, such Debt to mature; or any such Debt shall be declared to be due
and payable or required to be prepaid or redeemed (other than by a
regularly scheduled required prepayment or redemption), purchased or
defeased, or an offer to prepay, redeem, purchase or defease such Debt
shall be required to be made other than in connection with a sale of assets
permitted by Section 5.02(d), in each case prior to the stated maturity
thereof; or
(f) any Loan Party or any of its Subsidiaries shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against any Loan Party or any of its Subsidiaries seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property and, in
the case of any such proceeding instituted against it (but not instituted
by it) that is being diligently contested by it in good faith, either such
proceeding shall remain undismissed or unstayed for a period of 60 days or
any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of
a receiver, trustee, custodian or other similar official for, it or any
substantial part of its property) shall occur; or any Loan Party or any of
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89
its Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this subsection (f); or
(g) one or more judgments or decrees shall be entered against
either Borrower or any of the Restricted Subsidiaries involving a liability
of $20,000,000 or more in the aggregate for all such judgments and decrees
for the Borrowers and their Restricted Subsidiaries (to the extent not paid
or fully covered by insurance provided by a carrier not disputing coverage)
and any such judgments or decrees shall not have been satisfied, vacated,
discharged or stayed or bonded pending appeal within 60 days from the entry
thereof; or
(h) any provision of any Loan Document after delivery thereof
pursuant to Section 3.01 or 5.01(k) shall for any reason cease to be valid
and binding on or enforceable against any Loan Party party to it, or any
such Loan Party shall so state in writing; or
(i) any Collateral Document after delivery thereof pursuant to
Section 3.01 or 5.01(k) shall for any reason (other than pursuant to the
terms thereof) cease to create a valid and perfected first priority lien on
and security interest in the Collateral purported to be covered thereby; or
(j) any Change of Control shall occur; or
(k) (i) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof or a waiver of such
standard or extension of any amortization period is sought or granted under
Section 412 of the Internal Revenue Code; any Plan is or shall have been
terminated or is the subject of termination proceedings under ERISA
(including the giving of written notice thereof); an event shall have
occurred or a condition shall exist in either case entitling the PBGC to
terminate any Plan or to appoint a trustee to administer any Plan
(including the giving of written notice thereof); any Plan shall have an
accumulated funding deficiency (whether or not waived); or any Loan Party
or any ERISA Affiliate has incurred or is likely to incur a liability to or
on account of a Plan under Section 409, 502(i), 502(1), 515, 4062, 4063,
4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Internal
Revenue Code (including the giving of written notice thereof); and (ii)
there could result from any event or events set forth in clause (i) of this
Section 7.01(k) the imposition of a lien, the granting of a security
interest, or a liability, or the reasonable likelihood of incurring a lien,
security interest or liability; and (iii) such lien, security interest or
liability will or would be reasonably likely to result in a liability of
any Loan Party or any ERISA Affiliate of $20,000,000 or more;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Majority Lenders, by notice to the Appropriate
Borrower, declare the obligation of each Appropriate Lender to make Advances
(other than Letter of Credit Advances by the Issuing Bank or a Revolving Credit
Lender pursuant to Section 2.03(c) and Swing Line Advances by a Revolving Credit
Lender pursuant to Section 2.02(b)) and of the Issuing Bank to issue Letters of
Credit to be terminated, whereupon the same shall forthwith terminate, and
(ii) shall at the request, or may with the consent, of the Majority Lenders,
(A) by notice to the Appropriate Borrower, declare the Notes, all interest
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90
thereon and all other amounts payable under this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon the Notes, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by each Borrower and (B) by notice to each party
required under the terms of any agreement in support of which a Standby Letter
of Credit is issued, request that all Obligations under such agreement be
declared to be due and payable; PROVIDED, HOWEVER, that in the event of an
actual or deemed entry of an order for relief with respect to any Loan Party or
any of its Restricted Subsidiaries under the Federal Bankruptcy Code, (x) the
obligation of each Lender to make Advances (other than Letter of Credit Advances
by the Issuing Bank or a Revolving Credit Lender pursuant to Section 2.03(c) and
Swing Line Advances by a Revolving Credit Lender pursuant to Section 2.02(b))
and of the Issuing Bank to issue Letters of Credit shall automatically be
terminated and (y) the Notes, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
each Borrower.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
SECTION 8.01. AUTHORIZATION AND ACTION. Each Lender Party (in its
capacities as a Lender, the Swing Line Bank (if applicable), the Issuing Bank
(if applicable) and a potential Hedge Bank) hereby appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement and the other Loan Documents as
are delegated to the Administrative Agent by the terms hereof and thereof,
together with such powers and discretion as are reasonably incidental thereto.
As to any matters not expressly provided for by the Loan Documents (including,
without limitation, enforcement or collection of the Notes), the Administrative
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Majority
Lenders, and such instructions shall be binding upon all Lender Parties and all
holders of Notes; PROVIDED, HOWEVER, that the Administrative Agent shall not be
required to take any action that exposes the Administrative Agent to personal
liability or that is contrary to this Agreement or applicable law. The
Administrative Agent agrees to give to each Lender Party prompt notice of each
notice given to it by either Borrower pursuant to the terms of this Agreement.
SECTION 8.02. ADMINISTRATIVE AGENT'S RELIANCE, ETC. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with the Loan Documents, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent: (a) may treat the payee of any Note as the
holder thereof until the Administrative Agent receives and accepts an Assignment
and Acceptance entered into by the Lender that is the payee of such Note, as
assignor, and an Eligible Assignee, as assignee, as provided in Section 9.07;
(b) may consult with legal counsel (including counsel for any Loan Party),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or
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91
experts; (c) makes no warranty or representation to any Lender Party and shall
not be responsible to any Lender Party for any statements, warranties or
representations (whether written or oral) made in or in connection with the Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of any
Loan Document on the part of any Loan Party or to inspect the property
(including the books and records) of any Loan Party; (e) shall not be
responsible to any Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; and (f) shall incur no liability under or
in respect of any Loan Document by acting upon any notice, consent, certificate
or other instrument or writing (which may be by telegram, telecopy or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
SECTION 8.03. CITICORP AND AFFILIATES. With respect to its
Commitments, the Advances made by it and the Notes issued to it, Citicorp shall
have the same rights and powers under the Loan Documents as any other Lender
Party and may exercise the same as though it were not the Administrative Agent;
and the term "Lender Party" or "Lender Parties" shall, unless otherwise
expressly indicated, include Citicorp in its individual capacity. Citicorp and
its Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage
in any kind of business with, any Loan Party, any of its Subsidiaries and any
Person who may do business with or own securities of any Loan Party or any such
Subsidiary, all as if Citicorp were not the Administrative Agent and without any
duty to account therefor to the Lender Parties.
SECTION 8.04. LENDER PARTY CREDIT DECISION. Each Lender Party
acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender Party and based on the financial
statements referred to in Section 4.01 and such other documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender Party also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender Party 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.
SECTION 8.05. INDEMNIFICATION. (a) Each Lender Party severally
agrees to indemnify the Administrative Agent (to the extent not promptly
reimbursed by the Borrowers) from and against such Lender Party's ratable share
(determined as provided below) of any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against the Administrative Agent in any way relating to or arising out
of the Loan Documents or any action taken or omitted by the Administrative Agent
under the Loan Documents; PROVIDED, HOWEVER, that no Lender Party shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender Party agrees to reimburse the
Administrative Agent promptly upon demand for its ratable share of any costs and
expenses (including, without limitation, reasonable fees and expenses of
counsel) payable by the
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Borrowers under Section 9.04, to the extent that the Administrative Agent is not
promptly reimbursed for such costs and expenses by the Borrowers. For purposes
of this Section 8.05(a), the Lender Parties' respective ratable shares of any
amount shall be determined, at any time, according to the sum of (i) the
aggregate principal amount of the Advances outstanding at such time and owing to
the respective Lender Parties, (ii) their respective Pro Rata Shares of the
aggregate Available LC Amount of all Letters of Credit outstanding at such time,
(iii) the aggregate unused portions of their respective Term A Commitments and
Term B Commitments at such time and (iv) their respective Unused Revolving
Credit Commitments at such time; PROVIDED that the aggregate principal amount of
Swing Line Advances owing to the Swing Line Bank and of Letter of Credit
Advances owing to the Issuing Bank shall be considered to be owed to the
Revolving Credit Lenders ratably in accordance with their respective Revolving
Credit Commitments. In the event that any Defaulted Advance shall be owing by
any Defaulting Lender at any time, such Lender Party's Commitment with respect
to the Facility under which such Defaulted Advance was required to have been
made shall be considered to be unused for purposes of this Section 8.05(a) to
the extent of the amount of such Defaulted Advance. The failure of any Lender
Party to reimburse the Administrative Agent promptly upon demand for its ratable
share of any amount required to be paid by the Lender Party to the
Administrative Agent as provided herein shall not relieve any other Lender Party
of its obligation hereunder to reimburse the Administrative Agent for its
ratable share of such amount, but no Lender Party shall be responsible for the
failure of any other Lender Party to reimburse the Administrative Agent for such
other Lender Party's ratable share of such amount. Without prejudice to the
survival of any other agreement of any Lender Party hereunder, the agreement and
obligations of each Lender Party contained in this Section 8.05(a) shall survive
the payment in full of principal, interest and all other amounts payable
hereunder and under the other Loan Documents.
(b) Each Revolving Credit Lender severally agrees to indemnify the
Issuing Bank (to the extent not promptly reimbursed by the Borrowers) from and
against such Lender Party's ratable share (determined as provided below) of any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against the Issuing
Bank in any way relating to or arising out of the Loan Documents or any action
taken or omitted by the Issuing Bank under the Loan Documents; PROVIDED,
HOWEVER, that no Lender Party shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Issuing Bank's gross
negligence or willful misconduct. Without limitation of the foregoing, each
such Lender Party agrees to reimburse the Issuing Bank promptly upon demand for
its ratable share of any costs and expenses (including, without limitation,
reasonable fees and expenses of counsel) payable by the Borrowers under Section
9.04, to the extent that the Issuing Bank is not promptly reimbursed for such
costs and expenses by the Borrowers. For purposes of this Section 8.05(b), the
Lender Parties' respective ratable shares of any amount shall be determined, at
any time, according to the sum of (i) the aggregate principal amount of the
Advances outstanding at such time and owing to the respective Lender Parties,
(ii) their respective Pro Rata Shares of the aggregate Available LC Amount of
all Letters of Credit outstanding at such time, (iii) the aggregate unused
portions of their respective Term A Commitments and Term B Commitments at such
time PLUS (iv) their respective Unused Revolving Credit Commitments at such
time; PROVIDED that the aggregate principal amount of Swing Line Advances owing
to the Swing Line Bank and of Letter of Credit Advances owing to the Issuing
Bank shall be considered to be owed to the Revolving Credit Lenders ratably in
accordance with their
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respective Revolving Credit Commitments. In the event that any Defaulted
Advance shall be owing by any Defaulting Lender at any time, such Lender Party's
Commitment with respect to the Facility under which such Defaulted Advance was
required to have been made shall be considered to be unused for purposes of this
Section 8.05(b) to the extent of the amount of such Defaulted Advance. The
failure of any Lender Party to reimburse the Issuing Bank promptly upon demand
for its ratable share of any amount required to be paid by the Lender Parties to
the Issuing Bank as provided herein shall not relieve any other Lender Party of
its obligation hereunder to reimburse the Issuing Bank for its ratable share of
such amount, but no Lender Party shall be responsible for the failure of any
other Lender Party to reimburse the Issuing Bank for such other Lender Party's
ratable share of such amount. Without prejudice to the survival of any other
agreement of any Lender Party hereunder, the agreement and obligations of each
Lender Party contained in this Section 8.05(b) shall survive the payment in full
of principal, interest and all other amounts payable hereunder and under the
other Loan Documents.
SECTION 8.06. SUCCESSOR ADMINISTRATIVE AGENTS. The Administrative
Agent may resign as to any or all of the Facilities at any time by giving
written notice thereof to the Lender Parties and the Borrowers and may be
removed as to all of the Facilities at any time with or without cause by the
Majority Lenders. Upon any such resignation or removal, the Majority Lenders
shall, with the consent of the U.S. Borrower (such consent not to be
unreasonably withheld or delayed) have the right to appoint a successor
Administrative Agent as to such of the Facilities as to which the Administrative
Agent has resigned or been removed. If no successor Administrative Agent shall
have been so appointed by the Majority Lenders and consented to by the U.S.
Borrower, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Lender Parties and with the consent
of the U.S. Borrower (such consent not to be unreasonably withheld or delayed)
appoint a successor Administrative Agent, which shall be a commercial bank
organized under the laws of the United States or of any State thereof and having
a combined capital and surplus of at least $250,000,000. Upon the acceptance of
any appointment as Administrative Agent hereunder by a successor Administrative
Agent as to all of the Facilities and upon the execution and filing or recording
of such financing statements, or amendments thereto, and such other instruments
or notices, as may be necessary or desirable, or as the Majority Lenders may
request, in order to continue the perfection of the Liens granted or purported
to be granted by the Collateral Documents, such successor Administrative Agent
shall succeed to and become vested with all the rights, powers, discretion,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
the Loan Documents. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent as to less than all of the
Facilities and upon the execution and filing or recording of such financing
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as the Majority Lenders may request, in order to
continue the perfection of the Liens granted or purported to be granted by the
Collateral Documents, such successor Administrative Agent shall succeed to and
become vested with all the rights, powers, discretion, privileges and duties of
the retiring Administrative Agent as to such Facilities, other than with respect
to funds transfers and other similar aspects of the administration of Borrowings
under such Facilities, issuances of Letters of Credit (notwithstanding any
resignation as Administrative Agent with respect to the Letter of Credit
Facility) and payments by the Borrowers in respect of such Facilities, and the
retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement
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as to such Facilities, other than as aforesaid. After any retiring
Administrative Agent's resignation or removal hereunder as Administrative Agent
as to all of the Facilities, the provisions of this Article VIII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent as to any Facilities under this Agreement.
SECTION 8.07. ARRANGER, SYNDICATION AGENT AND DOCUMENTATION AGENT.
The Arranger, the Syndication Agent and the Documentation Agent shall have no
duties or obligations under this Agreement or the other Loan Documents in their
respective capacities as Arranger, Syndication Agent and Documentation Agent.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement or the Notes or any other Loan Document, nor consent
to any departure by either Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed (or, in the case of the
Collateral Documents, consented to) by the Majority Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; PROVIDED, HOWEVER, that (a) no amendment,
waiver or consent shall, unless in writing and signed by all of the Lenders
(other than any Lender that is, at such time, a Defaulting Lender), do any of
the following at any time: (i) waive any of the conditions specified in
Section 3.01 or, in the case of the Initial Extension of Credit, Section 3.02,
(ii) change the number of Lenders or the percentage of (x) the Commitments, (y)
the aggregate unpaid principal amount of the Advances or (z) the aggregate
Available LC Amount of outstanding Letters of Credit that, in each case, shall
be required for the Lenders or any of them to take any action hereunder, (iii)
release all or substantially all of the Collateral in any transaction or series
of related transactions, (iv) amend this Section 9.01, (v) release the U.S.
Borrower from its guaranty obligations or reduce or limit the obligations of the
U.S. Borrower under Section 6.01 of the Guaranty or (vi) otherwise limit either
Borrower's liability with respect to the Obligations owing to the Administrative
Agent and the Lender Parties under any of the Loan Documents, (b) no amendment,
waiver or consent shall, unless in writing and signed by the Majority Lenders
and each Appropriate Lender if affected by such amendment, waiver or consent,
(i) increase the Commitments of such Lender or subject such Lender to any
additional obligations, (ii) reduce the principal of, or interest (other than a
waiver of increased interest following Default pursuant to Section 2.07(b)) on,
the Notes held by such Lender or any fees or other amounts payable hereunder to
such Lender or (iii) postpone any date fixed for any payment of interest on the
Notes held by such Lender or any fees or other amounts payable hereunder to such
Lender or the final maturity date of any Facility and (c) no amendment, waiver
or consent shall, unless in writing and signed by the Majority Lenders (all of
which shall be Appropriate Lenders), waive, reduce, postpone or change the order
of application of, or right to decline to receive, any repayment or prepayment
of principal required to be paid pursuant Sections 2.04 or 2.06; PROVIDED,
HOWEVER, that no amendment, waiver or consent shall, unless in writing and
signed by the Swing Line Bank or the Issuing Bank, as the case may be, in
addition to the Lenders required above to take such action, affect the rights or
obligations of the Swing Line Bank or of the Issuing Bank, as the case may be,
under this Agreement; and PROVIDED FURTHER that
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no amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Administrative Agent under this
Agreement.
SECTION 9.02. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered,
if to the U.S. Borrower, to its address at 2315 Adams Lane, P.O. Box 40,
Henderson, KY 42420, Attn: William Greubel, with a copy to KKR at 2800 Sand Hill
Road, Suite 200, Menlo Park, CA 94205, Attn: Todd Fisher; if to the Canadian
Borrower, addressed to it c/o the U.S. Borrower at the U.S. Borrower's address;
if to any Initial Lender or the Initial Issuing Bank, to its Domestic Lending
Office specified opposite its name on Schedule I hereto; if to any other Lender
Party, to its Domestic Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender Party; and if to the Administrative Agent,
to its address at 399 Park Avenue, New York, New York 10043, Attention: James
Garvin; or, as to either Borrower or the Administrative Agent, to such other
address as shall be designated by such party in a written notice to the other
parties and, as to each other party, at such other address as shall be
designated by such party in a written notice to the U.S. Borrower and the
Administrative Agent pursuant to this Section 9.02. All such notices and
communications shall, when mailed, telegraphed, telecopied or telexed, be
effective when deposited in the mails, delivered to the telegraph company,
transmitted by telecopier or confirmed by telex answerback, respectively, except
that notices and communications to the Administrative Agent pursuant to Sections
2.02, 2.03, 2.05, 2.06(a) and (c) and 2.09(a) and with respect to selected
Interest Periods in respect of Eurodollar Rate Advances shall not be effective
until received by the Administrative Agent. Delivery by telecopier of an
executed counterpart of any amendment or waiver of any provision of this
Agreement or the Notes or of any Exhibit hereto to be executed and delivered
hereunder shall be effective as delivery of a manually executed counterpart
thereof.
SECTION 9.03. NO WAIVER; REMEDIES. No failure on the part of any
Lender Party or the Administrative Agent to exercise, and no delay in
exercising, any right hereunder or under any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 9.04. COSTS, EXPENSES. (a) Each Borrower agrees to pay on
demand (i) all costs and expenses of the Administrative Agent in connection with
the preparation, execution, delivery, administration, modification and amendment
of the Loan Documents (including, without limitation, (A) all due diligence,
collateral review, syndication, transportation, computer, duplication,
appraisal, audit, insurance, consultant, search, filing and recording fees and
expenses and (B) the reasonable fees and expenses of counsel for the
Administrative Agent with respect thereto, with respect to advising the
Administrative Agent as to its rights and responsibilities, or the perfection,
protection or preservation of rights or interests, under the Loan Documents,
with respect to negotiations with any Loan Party or with other creditors of any
Loan Party or any of its Subsidiaries arising out of any Default or any events
or circumstances that may give rise to a Default and with respect to presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally and any
proceeding ancillary thereto) and (ii) all costs and
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expenses of the Administrative Agent and the Lender Parties in connection with
the enforcement of the Loan Documents, whether in any action, suit or
litigation, any bankruptcy, insolvency or other similar proceeding affecting
creditors' rights generally (including, without limitation, the reasonable fees
and expenses of counsel for the Administrative Agent and each Lender Party with
respect thereto).
(b) Each Borrower agrees to indemnify and hold harmless the
Administrative Agent, each Lender Party and each of their Affiliates and their
officers, directors, employees, agents and advisors (each, an "INDEMNIFIED
PARTY") from and against any and all claims, damages, losses, liabilities and
expenses (including, without limitation, reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or by reason of
(including, without limitation, in connection with any investigation, litigation
or proceeding or preparation of a defense in connection therewith) (i) the
Facilities, the actual or proposed use of the proceeds of the Advances or the
Letters of Credit, the Loan Documents or any of the transactions contemplated
thereby, including, without limitation, any acquisition or proposed acquisition
(including, without limitation, the Acquisition and any of the other
transactions contemplated hereby) by the Investor Group or any of their
Subsidiaries or Affiliates of all or any portion of the stock or substantially
all the assets of such Borrower or any of its Subsidiaries or (ii) the actual or
alleged presence of Hazardous Materials on any property of any Loan Party or any
of its Subsidiaries or any Environmental Action relating in any way to any Loan
Party or any of its Subsidiaries, except to the extent, in each case, such
claim, damage, loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct. In the case of an
investigation, litigation or other proceeding to which the indemnity in this
Section 9.04(b) applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by any Loan Party, its
directors, shareholders or creditors or an Indemnified Party or any Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated.
(c) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by either Borrower to or for the account of a
Lender Party other than on the last day of the Interest Period for such Advance,
as a result of a payment or Conversion pursuant to Section 2.09(b)(i) or
2.10(d), acceleration of the maturity of the Notes pursuant to Section 7.01 or
for any other reason, such Borrower shall, upon demand by such Lender Party
(with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender Party any amounts required
to compensate such Lender Party for any additional losses, costs or expenses
that it may reasonably incur as a result of such payment, including, without
limitation, any loss (including loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender Party to fund or maintain such Advance.
(d) If any Loan Party fails to pay when due any costs, expenses or
other amounts payable by it under any Loan Document, including, without
limitation, fees and expenses of counsel and indemnities, such amount may be
paid on behalf of such Loan Party by the Administrative Agent or any Lender
Party, in its sole discretion.
(e) Without prejudice to the survival of any other agreement of any
Loan Party hereunder or under any other Loan Document, the agreements and
obligations of the Borrowers
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contained in Sections 2.10 and 2.12 and this Section 9.04 shall survive the
payment in full of principal, interest and all other amounts payable hereunder
and under any of the other Loan Documents.
SECTION 9.05. RIGHT OF SET-OFF. Upon (a) the occurrence and during
the continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 7.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 7.01, each Lender Party and each of its respective
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender Party or such
Affiliate to or for the credit or the account of either Borrower against any and
all of the Obligations of such Borrower now or hereafter existing under this
Agreement and the Note or Notes (if any) held by such Lender Party, irrespective
of whether such Lender Party shall have made any demand under this Agreement or
such Note or Notes and although such obligations may be unmatured. Each Lender
Party agrees promptly to notify such Borrower after any such set-off and
application; PROVIDED, HOWEVER, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Lender
Party and its respective Affiliates under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that such Lender Party and its respective Affiliates may have.
SECTION 9.06. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by each Borrower and the Administrative Agent
and when the Administrative Agent shall have been notified by each Initial
Lender and the Initial Issuing Bank that such Initial Lender and the Initial
Issuing Bank has executed it and thereafter shall be binding upon and inure to
the benefit of each Borrower, the Administrative Agent and each Lender Party and
their respective successors and assigns, except that neither Borrower shall have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Lender Parties.
SECTION 9.07. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may,
with the consent of the Administrative Agent, and, so long as no Event of
Default has occurred and is continuing, with the consent of the Appropriate
Borrower (in each case, such consent not to be unreasonably withheld), assign to
one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment or Commitments, the Advances owing to it and the Note or Notes held
by it); PROVIDED, however, that no consent by either Borrower or the
Administrative Agent shall be required for an assignment to any Person who is an
Affiliate of such Lender, and PROVIDED, FURTHER, that (i) each such assignment
shall be of a uniform, and not a varying, percentage of all rights and
obligations under and in respect of one or more Facilities, (ii) except in the
case of an assignment to a Person that, immediately prior to such assignment,
was a Lender or an assignment of all of a Lender's rights and obligations under
this Agreement or all of a Lender's rights and obligations with respect to its
Term B Commitment, the amount of the Commitment of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than $5,000,000 (or integral multiples of $1,000,000 in excess thereof),
(iii) each such assignment shall be to an Eligible Assignee, and (vi) the
parties to each such assignment shall execute and deliver to the Administrative
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with any Note or Notes subject to such assignment and,
other
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than in the case of an assignment to an Affiliate of such Lender, a processing
and recordation fee of $3,000; PROVIDED, however, that the foregoing processing
and recordation fee for any assignment made pursuant to this Section 9.07 on or
prior to March 31, 1998 which is, in the opinion of the Administrative Agent,
associated with the original syndication of the Facilities, will be waived.
(b) Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in such Assignment and Acceptance,
(x) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender or
Issuing Bank, as the case may be, hereunder and (y) the Lender or Issuing Bank
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's or Issuing Bank's rights and obligations under this
Agreement, such Lender or Issuing Bank shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
Lender Party assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than
as provided in such Assignment and Acceptance, such assigning Lender Party makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to the financial condition of either Borrower or any
other Loan Party or the performance or observance by any Loan Party of any of
its obligations under any Loan Document or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Administrative Agent, such assigning Lender Party or
any other Lender Party 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; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Loan Documents as are delegated to the
Administrative Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of this Agreement are required to be performed by it as a Lender or
Issuing Bank, as the case may be.
(d) The Administrative Agent, acting for this purpose (but only for
this purpose) as the agent of the Borrowers, shall maintain at its address
referred to in Section 9.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the
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names and addresses of the Lender Parties and the Commitment under each Facility
of, and principal amount of the Advances owing under each Facility to, each
Lender Party from time to time (the "REGISTER"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Administrative Agent and the Lender Parties shall treat each
Person whose name is recorded in the Register as a Lender Party hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by the Borrowers or any Lender Party at any reasonable time and from time to
time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender Party and an assignee, together with any Note or Notes subject
to such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit C
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Appropriate Borrower. In the case of any assignment by a Lender, within five
Business Days after its receipt of such notice, the Appropriate Borrower, at its
own expense, shall execute and deliver to the Administrative Agent in exchange
for the surrendered Note or Notes a new Note to the order of such Eligible
Assignee in an amount equal to the Commitment assumed by it under a Facility
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained a Commitment hereunder under such Facility, a new Note to the order of
the assigning Lender in an amount equal to the Commitment retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note or Notes, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A-1, A-2 or A-3 hereto, as the
case may be.
(f) The Issuing Bank may, with the consent of the Administrative
Agent, and, so long as no Event of Default shall have occurred and be
continuing, with the consent of the U.S. Borrower (such consent not to be
unreasonably withheld), assign to an Eligible Assignee all of its rights and
obligations under the undrawn portion of its Letter of Credit Commitment at any
time; PROVIDED, HOWEVER, that (i) each such assignment shall be to an Eligible
Assignee and (ii) the parties to each such assignment shall execute and deliver
to the Administrative Agent, for its acceptance and recording in the Register,
an Assignment and Acceptance, together with a processing and recordation fee of
$3,000.
(g) Each Lender Party may sell participations to one or more
Persons (other than any Loan Party or any of its Affiliates) in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Advances owing to it and
the Note or Notes (if any) held by it); PROVIDED, HOWEVER, that (i) such Lender
Party's rights and obligations under this Agreement (including, without
limitation, its Commitments) shall remain unchanged, (ii) such Lender Party
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Lender Party shall remain the holder of any such
Note for all purposes of this Agreement, (iv) the Borrowers, the Administrative
Agent and the other Lender Parties shall continue to deal solely and directly
with such Lender Party in connection with such Lender Party's rights and
obligations under this Agreement, (v) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by any Loan
Party therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest (other than increased interest
following
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Default pursuant to Section 2.07(b)) on, the Notes or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation,
postpone any Termination Date, or date fixed for payment of interest on, the
Notes or any fees or other amounts payable hereunder, in each case to the extent
subject to such participation, or release the U.S. Borrower from its Obligations
under Article VI hereof, or all or substantially all of the Collateral, and (vi)
neither Borrower shall be subject to any increased liability to any Lender Party
pursuant to this Agreement by virtue of such participation.
(h) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 9.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrowers furnished to such Lender
Party by or on behalf of the Borrowers; PROVIDED, HOWEVER, that, prior to any
such disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any Confidential Information
received by it from such Lender Party.
(i) Notwithstanding any other provision set forth in this
Agreement, any Lender Party may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without limitation,
the Advances owing to it and the Note or Notes held by it) in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System.
SECTION 9.08. REPLACEMENTS OF LENDERS UNDER CERTAIN CIRCUMSTANCES.
The U.S. Borrower shall be permitted to replace any Lender that (a) requests
reimbursement for amounts owing pursuant to Section 2.10 or 2.12, (b) is
affected in the manner described in Section 2.10(d) and as a result thereof any
of the actions described in such Section is required to be taken or (c) becomes
a Defaulting Lender, with a replacement bank or other financial institution,
PROVIDED that (i) such replacement does not conflict with any Requirement of
Law, (ii) no Event of Default shall have occurred and be continuing at the time
of such replacement, (iii) the Appropriate Borrower shall repay (or the
replacement bank or institution shall purchase, at par) all Loans and other
amounts (other than any disputed amounts), pursuant to Section 2.10, 2.11 or
2.12, as the case may be) owing to such replaced Lender prior to the date of
replacement, (iv) the replacement bank or institution, if not already a Lender,
and the terms and conditions of such replacement, shall be reasonably
satisfactory to the Administrative Agent, (v) the replaced Lender shall be
obligated to make such replacement in accordance with the provisions of Section
9.07 (provided that such Borrower shall be obligated to pay the registration and
processing fee referred to therein) and (vi) any such replacement shall not be
deemed to be a waiver of any rights that either Borrower, the Administrative
Agent or any other Lender Party shall have against the replaced Lender.
SECTION 9.09. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
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SECTION 9.10. NO LIABILITY OF THE ISSUING BANK. The U.S. Borrower
assumes all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit with respect to its use of such Letter of Credit. Neither
the Issuing Bank nor any of its officers or directors shall be liable or
responsible for: (a) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith;
(b) the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by the Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, EXCEPT that the
U.S. Borrower shall have a claim against the Issuing Bank, and the Issuing Bank
shall be liable to the U.S. Borrower, to the extent of any direct, but not
consequential, damages suffered by the U.S. Borrower that the U.S. Borrower
proves were caused by (i) the Issuing Bank's willful misconduct or gross
negligence in determining whether documents presented under any Letter of Credit
comply with the terms of the Letter of Credit or (ii) the Issuing Bank's willful
failure to make lawful payment under a Letter of Credit after the presentation
to it of a draft and certificates strictly complying with the terms and
conditions of the Letter of Credit. In furtherance and not in limitation of the
foregoing, the Issuing Bank may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
SECTION 9.11. CONFIDENTIALITY. The Administrative Agent and each
Lender shall hold all non-public information furnished by or on behalf of either
Borrower in connection with such Lender's evaluation of whether to become a
Lender hereunder or obtained by such Lender or the Administrative Agent pursuant
to the requirements of this Agreement ("CONFIDENTIAL INFORMATION"), in
accordance with its customary procedure for handling confidential information of
this nature and (in the case of a Lender that is a bank) in accordance with safe
and sound banking practices. Neither the Administrative Agent nor any Lender
Party shall disclose any Confidential Information to any Person without the
consent of the Borrowers, other than (a) to the Administrative Agent's or such
Lender Party's Affiliates and their officers, directors, employees, agents and
advisors and to actual or prospective Eligible Assignees and participants, and
then only on a confidential basis, (b) as required by any law, rule or
regulation or judicial process and (c) as requested or required by any state,
federal or foreign authority or examiner regulating such Lender Party or the
Administrative Agent.
SECTION 9.12. JURISDICTION, ETC. (a) Each of the parties hereto
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is a party, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. Each Borrower
irrevocably consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to such
Borrower at its address specified in Section 9.02 and agrees that nothing herein
shall affect the right to effect service of process in any other manner
permitted by law or shall
<PAGE>
102
limit the right to sue in any other jurisdiction. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or any of the other Loan Documents in the courts of
any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any of the
other Loan Documents to which it is a party in any New York State or federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
SECTION 9.13. JUDGMENT. (a) If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due hereunder or under
any of the other Loan Documents in U.S. dollars into another currency, the
parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures the Administrative Agent could purchase U.S. dollars with
such other currency at Citibank on the Business Day preceding that on which
final judgment is given.
(b) The obligation of each Borrower in respect of any sum due from
it to any Lender Party or the Administrative Agent hereunder or under any of the
other Loan Documents held by such Lender Party shall, notwithstanding any
judgment in a currency other than U.S. dollars, be discharged only to the extent
that on the Business Day of receipt by such Lender Party or the Administrative
Agent (as the case may be) of any sum adjudged to be so due in such other
currency such Lender Party or the Administrative Agent (as the case may be) may
in accordance with normal banking procedures purchase U.S. dollars with such
other currency; if the U.S. dollars so purchased are less than the sum
originally due by such Borrower to such Lender Party or the Administrative Agent
(as the case may be) in U.S. dollars, such Borrower agrees, as a separate
obligation and notwithstanding any such judgment, to indemnify such Lender Party
or the Administrative Agent (as the case may be) against such loss, and if the
U.S. dollars so purchased exceed the sum originally due by such Borrower to any
Lender Party or the Administrative Agent (as the case may be) in U.S. dollars,
such Lender Party or the Administrative Agent (as the case may be) agrees to
remit to such Borrower such excess.
SECTION 9.14. GOVERNING LAW. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of
New York, United States.
SECTION 9.15. WAIVER OF JURY TRIAL. Each of the Borrowers, the
Administrative Agent and the Lender Parties irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to any of the Loan
Documents, the Advances or the actions of the Administrative Agent or any Lender
Party in the negotiation, administration, performance or enforcement thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
ACCURIDE CORPORATION, as U.S.
Borrower
By /s/ William P. Greubel
---------------------------------
Name: William P. Greubel
Title: President
ACCURIDE CANADA INC., as Canadian
Borrower
By /s/ J. Greg Szabo
---------------------------------
Name: J. Greg Szabo
Title: President
CITICORP USA, INC., as
Administrative Agent and Swing Line
Bank
By /s/ Charles Foster
---------------------------------
Name: Charles Foster
Title: Attorney-in-Fact
CITIBANK, N.A., as Initial Issuing
Bank
By /s/ Charles Foster
---------------------------------
Name: Charles Foster
Title: Attorney-in-Fact
CITICORP SECURITIES, INC., as
Arranger
By /s/ Charles Foster
---------------------------------
Name: Charles Foster
Title: Attorney-in-Fact
<PAGE>
BANKERS TRUST COMPANY, as
Syndication Agent
By /s/ Mary Jo Jolly
---------------------------------
Name: Mary Jo Jolly
Title: Assistant Vice President
WELLS FARGO BANK N.A., as
Documentation Agent
By /s/ Illegible
---------------------------------
Name:
Title:
<PAGE>
INITIAL LENDERS
BANK OF AMERICA CANADA
By /s/ Richard Hall
---------------------------------
Name: Richard Hall
Title: Vice President
<PAGE>
BANK OF AMERICA NT & SA
By /s/ Francis J. Griffin
---------------------------------
Name: Francis J. Griffin
Title: Attorney-in-fact
<PAGE>
THE BANK OF NEW YORK
By /s/ Edward J. Dougherty III
---------------------------------
Name: Edward J. Dougherty III
Title: U.S. Commercial Banking
<PAGE>
THE BANK OF NOVA SCOTIA, SAN
FRANCISCO AGENCY
By /s/ John Quick
---------------------------------
Name: John Quick
Title: Senior Vice President
<PAGE>
BANKERS TRUST COMPANY
By /s/ Mary Jo Jolly
---------------------------------
Name: Mary Jo Jolly
Title: Assistant Vice President
<PAGE>
CITIBANK CANADA
By /s/ Erich Schumacker
---------------------------------
Name: Erich Schumacker
Title: Vice President
<PAGE>
CITICORP USA, INC.
By /s/ Charles Foster
---------------------------------
Name: Charles Foster
Title: Attorney-in-fact
<PAGE>
COMERICA BANK
By /s/ Mark B. Grover
---------------------------------
Name: Mark B. Grover
Title: Vice President
<PAGE>
DEEPROCK & COMPANY
By: Eaton Vance Management
as Investment Advisor
By /s/ Scott H. Page
---------------------------------
Name: Scott H. Page
Title: Vice President
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Ronna Bury-Prince
---------------------------------
Name: Ronna Bury-Prince
Title: Vice President
<PAGE>
FIRST CHICAGO NBD BANK, CANADA
By /s/ Ronna Bury-Prince
---------------------------------
Name: Ronna Bury-Prince
Title: Vice President
<PAGE>
FLEET NATIONAL BANK
By /s/ Illegible
---------------------------------
Name:
Title: Director
<PAGE>
FUJI BANK CANADA
By /s/ Daniel Lee
---------------------------------
Name: Daniel Lee
Title: Vice President
<PAGE>
THE FUJI BANK, LIMITED, NEW YORK
BRANCH
By /s/ Teiji Teramoto
---------------------------------
Name: Teiji Teramoto
Title: Vice President & Manager
<PAGE>
KZH-SOLEIL CORPORATION
By /s/ U Conway
---------------------------------
Name: U Conway
Title:
<PAGE>
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By
---------------------------------
Name:
Title:
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By /s/ John H. Chaplin
---------------------------------
Name: John H. Chaplin
Title: Vice President
<PAGE>
NATIONAL WESTMINSTER BANK PLC
By /s/ Andrew S. Weinberg
---------------------------------
Name: Andrew S. Weinberg
Title: Senior Vice President
<PAGE>
PRIME INCOME TRUST
By /s/ Rajesh K. Gupta
---------------------------------
Name: Rajesh K. Gupta
Title: Senior Vice President
<PAGE>
ROYAL BANK OF CANADA
By /s/ John J. D'Angilo
---------------------------------
Name: John J. D'Angilo
Title: Manager
By /s/ P.R. Everest
---------------------------------
Name: P.R. Everest
Title: Manager - Commercial
Markets
<PAGE>
THE SUMITOMO BANK, LIMITED
By /s/ John C. Kissinger
---------------------------------
Name: John C. Kissinger
Title: Joint General Manager
<PAGE>
THE SUMITOMO BANK OF CANADA
By /s/ Alfred Lee
---------------------------------
Name: Alfred Lee
Title: Vice President
<PAGE>
WELLS FARGO BANK N.A.
By /s/ David A. Neumann
---------------------------------
Name: David A. Neumann
Title: Vice President
<PAGE>
Exhibit 10.21
ACCURIDE CORPORATION
$200,000,000
9 1/4% Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
January 15, 1998
BT ALEX. BROWN INCORPORATED
CITICORP SECURITIES, INC.
J.P. MORGAN SECURITIES INC.
c/o BT ALEX. BROWN INCORPORATED
Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
Accuride Corporation, a Delaware corporation (the ACOMPANY@), hereby
confirms its agreement with each of BT Alex. Brown Incorporated, Citicorp
Securities, Inc. and J.P. Morgan Securities Inc. (collectively, the "INITIAL
PURCHASERS"), as set forth below.
1. THE NOTES. Subject to the terms and conditions herein contained, the
Company proposes to issue and sell to the Initial Purchasers $200,000,000
aggregate principal amount of its 9 1/4% Senior Subordinated Notes due 2008 (the
"NOTES"). The Notes are to be issued under an indenture (the "INDENTURE") to be
dated as of January 21, 1998 by and between the Company and U.S. Trust Company
of California, N.A., as Trustee (the "TRUSTEE").
The Notes will be offered and sold (the "OFFERING") to the Initial
Purchasers without being registered under the Securities Act of 1933, as amended
(the "ACT"), in reliance on exemptions therefrom.
In connection with the sale of the Notes, the Company has prepared a
preliminary offering memorandum dated January 4, 1998 (the "PRELIMINARY
MEMORANDUM") and a final offering memorandum dated the date hereof (the "FINAL
MEMORANDUM"; the Preliminary Memorandum and the Final Memorandum each herein
being referred to as a "MEMORANDUM"), each setting forth or including
descriptions of the terms of the Notes and the terms of the Offering and the
transactions contemplated hereby, the Company and its business.
The Company understands that the Initial Purchasers propose to make an
offering of the Notes only on the terms and in the manner set forth in the Final
Memorandum and Section 8 hereof as soon
<PAGE>
as the Initial Purchasers deem advisable after this Agreement has been executed
and delivered, to (i) persons in the United States whom the Initial Purchasers
reasonably believe to be qualified institutional buyers ("QUALIFIED
INSTITUTIONAL BUYERS" or "QIBS") as defined in Rule 144A under the Act, as such
rule may be amended from time to time ("RULE 144A") and (ii) in offshore
transactions in reliance on Regulation S under the Act.
The Initial Purchasers and their direct and indirect transferees of
the Notes will be entitled to the benefits of the Registration Rights Agreement,
substantially in the form attached hereto as EXHIBIT A (the "REGISTRATION RIGHTS
AGREEMENT"), to be dated the Closing Date (as defined in Section 3 below),
pursuant to which the Company will agree, among other things, to (i) file a
registration statement (the "EXCHANGE OFFER REGISTRATION STATEMENT") with the
Securities and Exchange Commission (the "COMMISSION") registering the Exchange
Notes (as defined in the Registration Rights Agreement) under the Act or (ii)
under certain circumstances file a shelf registration statement pursuant to Rule
415 registering the Notes under the Act (the "Shelf Registration Statement").
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to each Initial Purchaser that:
(a) Neither the Final Memorandum nor any amendment or supplement
thereto as of the date thereof and at all times subsequent thereto up to
the Closing Date (as defined in Section 3 below) contained or will contain
any untrue statement of a material fact or omitted or will omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this Section 2(a) do not apply
to statements or omissions made in reliance upon and in conformity with
information relating to the Initial Purchasers furnished to the Company in
writing by the Initial Purchasers expressly for use in the Final Memorandum
or any amendment or supplement thereto.
(b) The Company, each of its Significant Subsidiaries (as such term
is defined in Regulation S-X promulgated under the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT")) and each of AKW, L.P. ("AKW"),
Accuride de Mexico S.A. de C.V. ("ADM") and AOT, Inc. ("AOT", and, together
with AKW and ADM, the "Ventures") is (i) a corporation, limited liability
company or limited partnership, as applicable, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation, (ii) has all requisite organizational power and authority to
own, lease and operate its properties, and to conduct its business as
described in the Preliminary Memorandum and the Final Memorandum and (iii)
is duly qualified to do business in each jurisdiction in which it owns or
leases real property or in which the conduct of its business requires such
qualification except where the failure to be so qualified would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), business or
results of operations of the Company and its subsidiaries, taken as a whole
(a 'MATERIAL ADVERSE EFFECT').
(c) As of September 30, 1997, the Company had the authorized, issued
and outstanding capitalization as set forth under the heading
"Capitalization" in the Final Memorandum. All of the issued and
outstanding shares of capital stock or limited partnership interests or
membership interests, as the case may be, of the Company, each of its
Significant Subsidiaries and each of the Ventures have been duly authorized
and validly issued, and were not issued in violation of any preemptive or
similar rights, and all shares of capital stock of the Company and each of
its subsidiaries and each of the Ventures that is a corporation are fully
paid and nonassessable. Except as otherwise stated in the Final
Memorandum, all of the outstanding shares of capital stock or
2
<PAGE>
limited partnership interests or membership interests, as the case may be,
of each of the Company's subsidiaries and each of the Ventures are owned,
directly or indirectly, by the Company and all of the outstanding shares of
capital stock, limited partnership interests or membership interests, as
the case may be, of the Company, each of its subsidiaries and each of the
Ventures are free and clear of all liens, encumbrances, equities and claims
or restrictions on transferability (other than those imposed by the Act and
the securities or "Blue Sky" laws of certain jurisdictions) or voting,
other than those contained in (i) the senior secured term loan facility by
and among the Company and the lenders named therein and the senior secured
term loan facility by and among Accuride Canada, Inc. and the lenders named
therein (together, the "Term Loan Facilities"), (ii) the Company's senior
secured revolving credit facility by and among the Company and the lenders
named therein (the "Revolving Credit Facility" and, together with the Term
Loan Facilities, the "Credit Facilities"), (iii) the Stock Subscription and
Redemption Agreement, dated as of November 17, 1997 (the "Subscription
Agreement"), by and among the Company, Hubcap Acquisition LLC and Phelps
Dodge Corporation, (iv) the ADM Credit Facility (as such term is defined in
the Final Memorandum) (v) the Stockholders' Agreement, dated June 12, 1991,
between the Company and Goodyear Tire and Rubber Company, as amended May 9,
1996, (vi) the Service Agreement, dated as of June 14, 1991, between AOT
and the Company, as amended May 7, 1996 and as further amended or extended,
(vii) the Contribution Agreement, dated as of May 1, 1997, among the
Company, Kaiser Aluminum Chemical Corporation ("Kaiser"), AKW General
Partner L.L.C. and AKW, and related agreements, (viii) Limited Partnership
Agreement of AKW L.P., dated as of May 1, 1997; (ix) Limited Liability
Company Agreement of AKW General Partner LLC, dated as of May 1, 1997; (x)
the Letter of Intent, dated September 16, 1996, from the Company to Kaiser
regarding AKW, (xi) the Memorandum of Agreement regarding Cast Aluminum
Wheel Venture, dated December 1, 1995, between the Company and Speedline
Aluminum S.p.A., and related agreements; (xii) the Joint Venture Agreement,
dated November 5, 1997, among the Company, Industria Automotriz S.A. de
C.V., Grupo Industrial Ramirez, S.A. and ADM, and related agreements;
(xiii) the ADM Credit Facility and (xiv) the bylaws of ADM. Except as
disclosed in or contemplated by the Final Memorandum and the financial
statements of the Company, and the related notes thereto included in the
Final Memorandum, none of the Company or any Significant Subsidiary has
outstanding any options to purchase or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares
of its capital stock or any such options, rights, convertible securities or
obligations.
(d) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Notes and
the Exchange Notes (as defined in the Registration Rights Agreement). The
Notes, when issued, will be substantially in the form contemplated by the
Indenture. The Notes and the Exchange Notes have been duly and validly
authorized by the Company and, when issued, authenticated and delivered in
accordance with the provisions of the Indenture (assuming due
authorization, execution and delivery of the Indenture by the Trustee) and,
in the case of the Notes, when delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement and the
Indenture, and, in the case of the Exchange Notes, when issued and
delivered upon exchange for the Notes in accordance with the terms of the
Registration Rights Agreement and the Indenture, will constitute valid and
legally binding obligations of the Company, entitled to the benefits of the
Indenture, and enforceable against the Company in accordance with their
terms, except to the extent that the enforcement of the Notes and the
Exchange Notes may be subject to (i) bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally,
and (ii) general principles of equity (regardless of whether enforcement is
3
<PAGE>
in a proceeding at law or in equity) and the discretion of the court before
which any proceeding therefor may be brought.
(e) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Indenture. The
Indenture meets the requirements for qualification under the Trust
Indenture Act of 1939, as amended (the "TIA"). The Indenture has been duly
and validly authorized by the Company. Assuming the due authorization,
execution and delivery of the Indenture by the Trustee, the Indenture, when
executed and delivered by the Company, will constitute a valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that (A) the enforcement
thereof may be subject to (i) bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforcement is in a
proceeding at law or in equity) and the discretion of the court before
which any proceeding therefor may be brought and (B) any rights to
indemnity or contribution thereunder may be limited by federal or state
securities laws or public policy considerations. With respect to the
foregoing, the Company makes no representation or warranty with respect to
the indemnification provisions contained in Section 607 of the Indenture to
the extent they are deemed by a court of law to be contrary to public
policy.
(f) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Registration Rights
Agreement. The Registration Rights Agreement has been duly and validly
authorized by the Company. Assuming the due authorization, execution and
delivery of the Registration Rights Agreement by the Initial Purchasers,
the Registration Rights Agreement, when executed and delivered by the
Company, will constitute a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except to the extent that (A) the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforcement is in a
proceeding at law or in equity) and the discretion of the court before
which any proceeding therefor may be brought and (B) any rights to
indemnity or contribution thereunder may be limited by federal or state
securities laws or public policy considerations.
(g) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Subscription
Agreement. The Subscription Agreement has been duly and validly
authorized, executed and delivered by the Company. Assuming that the
Subscription Agreement has been duly authorized, executed and delivered by
the other parties thereto, the Subscription Agreement constitutes a valid
and legally binding agreement of the Company, enforceable against the
Company in accordance with its terms, except to the extent that (A) the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity (regardless of whether enforcement is in a proceeding at law or in
equity) and the discretion of the court before which any proceeding
therefor may be brought and (B) any rights to indemnity or contribution
thereunder may be limited by federal or state securities laws or public
policy considerations.
(h) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. This Agreement and the
consummation by the Company of the transactions contemplated hereby have
been duly authorized by the Company and this Agreement has been duly
executed and
4
<PAGE>
delivered by the Company. The execution, delivery and performance by the
Company of this Agreement, the Indenture and the Registration Rights
Agreement, and the consummation of the transactions contemplated hereby and
thereby will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (i) any of the terms or
provisions of any indenture, mortgage, deed of trust, loan agreement, note,
lease, license, franchise agreement, permit, certificate, contract,
partnership, joint venture agreement or other agreement or instrument to
which the Company, any of its Significant Subsidiaries or any of the
Ventures is a party or to which any of them or their respective properties
or assets is subject (collectively, "CONTRACTS"), (ii) the charter or
by-laws (or similar organizational document) of the Company, any of its
Significant Subsidiaries or any of the Ventures, or (iii) (assuming
compliance with all applicable state securities laws or "Blue Sky" laws)
any statute, judgment, decree, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company, any of
its Significant Subsidiaries or any of the Ventures or any of their
respective properties, except in the case of (i) or (iii) for such
breaches, violations or defaults which would not, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect; no
consent, approval, authorization or order of, or filing with, any court or
governmental agency or body is required for the issuance and sale by the
Company of the Notes to the Initial Purchasers or the consummation of the
transactions contemplated by this Agreement in connection with the issuance
or sale of the Notes except such as (i) have been obtained or made, (ii)
may be required to comply with the provisions of the Registration Rights
Agreement or the Credit Facilities, or (iii) may be required under state
securities laws or "Blue Sky" laws.
(i) The audited consolidated financial statements of the Company and
its consolidated subsidiaries, and the related notes thereto, included in
the Final Memorandum present fairly in all material respects the
consolidated financial position of the Company and its consolidated
subsidiaries, as of the respective dates of such financial statements, and
the results of operations and changes in financial position of the Company
for the respective periods covered thereby. Such statements and related
notes have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis, except as otherwise stated
therein. The summary and selected financial data set forth in the Final
Memorandum under the captions "Capitalization," "Summary Historical
Consolidated Financial and Other Data," "Summary Pro Forma Consolidated
Financial Data," "Pro Forma Consolidated Condensed Financial Statements,"
"Selected Historical Consolidated Financial and Other Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" fairly present in all material respects (subject to year-end
audit adjustments with respect to interim financial information) the
information set forth therein on the basis stated in the Final Memorandum.
The other financial and statistical information and data set forth in the
Preliminary Memorandum and the Final Memorandum are based on or derived
from sources which the Company and the subsidiaries believe to be reliable
and materially accurate. Deloitte & Touche LLP, who has certified certain
financial statements of the Company and its consolidated subsidiaries, and
whose report appears in the Final Memorandum, is an independent public
accounting firm within the meaning of the Act and the rules and regulations
promulgated thereunder.
(j) The pro forma consolidated condensed financial statements and
other pro forma financial information (including the notes thereto)
included in the Final Memorandum (A) present fairly in all material
respects the information shown therein and (B) have been prepared in
accordance with applicable requirements of Regulation S-X promulgated under
the Exchange Act. The assumptions used in the preparation of the pro forma
financial statements and other pro forma consolidated condensed financial
information included in the Final Memorandum are reasonable
5
<PAGE>
and the adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein.
(k) Except as disclosed in the Final Memorandum, none of the Company,
any of its Significant Subsidiaries or any of the Ventures is (i) in
violation of its charter or by-laws (or similar organizational document),
(ii) in breach or violation of any statute, judgment, decree, order, rule
or regulation applicable to the Company, its Significant Subsidiaries or
the Ventures or any of their properties or assets, or (iii) in breach or
default in the performance of any Contract, or to which any of the property
or assets of the Company or such Significant Subsidiaries or the Ventures
is subject, except for any such violation, breach or default that would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(l) The descriptions in the Final Memorandum of statutes, legal and
governmental proceedings and contracts and other documents are accurate and
fairly present in all material respects the information that would be
required to be described in a registration statement under the Act or in a
document incorporated by reference therein.
(m) The Notes, the Indenture and the Registration Rights Agreement
conform in all material respects to the descriptions thereof contained in
the Final Memorandum.
(n) Except as disclosed in the Final Memorandum, there is (i) no
action, suit or proceeding before or by any court, arbitrator or
governmental agency, body or official, domestic or foreign, now pending, or
to the knowledge of the Company, threatened or contemplated to which the
Company, any of its Significant Subsidiaries or any of the Ventures is or
may be a party or to which the business or property of the Company, any of
its Significant Subsidiaries or any of the Ventures is or may be subject,
(ii) to the knowledge of the Company, its Significant Subsidiaries and the
Ventures, no statute, rule, regulation or order that has been enacted,
adopted or issued by any governmental agency or that has been proposed by
any governmental body (other than "Blue Sky" laws, regulations or orders),
or (iii) no injunction, restraining order or order of any nature by a
federal or state court of competent jurisdiction to which the Company, any
of its Significant Subsidiaries or any of the Ventures is or may be
subject, issued and outstanding that, in the case of clauses (i), (ii) or
(iii) above, except as disclosed in the Final Memorandum, would reasonably
be expected to (x) have a Material Adverse Effect or (y) seek to restrain,
enjoin, interfere with or adversely affect the transactions contemplated by
this Agreement in any material respect.
(o) Except as otherwise disclosed in the Final Memorandum, each of
the Company, its Significant Subsidiaries and the Ventures has good and
marketable title, free and clear of all liens, claims, encumbrances and
restrictions, to all property and assets described in the Final Memorandum
as being owned by it and good title to all leasehold estates in the real
property described in the Final Memorandum as being leased by it except for
(i) liens for taxes not yet due and payable, (ii) such liens and
encumbrances as are contemplated by the Credit Facilities, (iii) such
liens, claims, encumbrances and restrictions as do not materially interfere
with the use made and proposed to be made of such properties (including,
without limitation, purchase money mortgages), and (iv) to the extent the
failure to have such title or the existence of such liens, claims,
encumbrances and restrictions would not have a Material Adverse Effect.
(p) Since the respective dates as of which information is given in
the Final Memorandum, and except as described in or specifically
contemplated by the Final Memorandum: (i) the Company, its Significant
Subsidiaries and the Ventures have not incurred any material
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liabilities or obligations, direct or contingent, or entered into any
material agreement or other material transaction, which is not in the
ordinary course of business; (ii) the Company has not paid or declared any
dividends or other distributions with respect to its capital stock and the
Company, its Significant Subsidiaries and the Ventures are not in default
in the payment of principal or interest on any outstanding debt
obligations; and (iii) there has not been any change in the condition
(financial or otherwise), business or results of operations of the Company,
its Significant Subsidiaries and the Ventures, taken as a whole, which
could have a Material Adverse Effect.
(q) The Company, each of its subsidiaries and each of the Ventures
own or possess adequate licenses or other rights to use all patents,
trademarks, service marks, trade names and copyrights necessary to conduct
the business described in the Final Memorandum, except where the failure to
own or possess or have the ability to acquire any of the foregoing would
not have a Material Adverse Effect, and none of the Company, any of its
subsidiaries or any of the Ventures has received any notice of infringement
of or conflict with asserted rights of others with respect to any patents,
trademarks, service marks, trade names or copyrights which, if such
assertion of infringement or conflict were sustained, would have a Material
Adverse Effect.
(r) None of the Company, any of its Significant Subsidiaries or any
of the Ventures has any material liability for any prohibited transaction
or funding deficiency or any complete or partial withdrawal liability with
respect to any pension, profit sharing or other plan which is subject to
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
to which it makes or ever has made a contribution and in which any employee
of it is or has ever been a participant. With respect to such plans, the
Company, each of its subsidiaries and each of the Ventures is in compliance
in all material respects with all applicable provisions of ERISA.
(s) Except as disclosed in the Final Memorandum, none of the Company,
any of its Significant Subsidiaries or any of the Ventures is involved in
any material labor dispute nor, to the best of the knowledge of the
Company, its Significant Subsidiaries and each of the Ventures, is any
material labor dispute threatened which, if such dispute were to occur,
would reasonably be expected to have a Material Adverse Effect.
(t) Except as disclosed in the Final Memorandum and except as would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, to the best of the knowledge of the Company, the
Company, its Significant Subsidiaries and each of the Ventures are in
material compliance with all applicable existing federal, state, local and
foreign laws and regulations relating to the protection of human health or
the environment or imposing liability or requiring standards of conduct
concerning any Hazardous Materials ('ENVIRONMENTAL LAWS'). The term
'HAZARDOUS MATERIAL' means (a) any 'hazardous substance' as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (b) any Ahazardous waste@ as defined by the Resource
Conservation and Recovery Act, as amended, (c) any petroleum or petroleum
product, (d) any polychlorinated biphenyl and (e) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental
Law. Except as disclosed in the Final Memorandum, none of the Company, any
of its subsidiaries or any of the Ventures has received any written notice
and there is no pending or, to the best knowledge of the Company,
threatened action, suit or proceeding before or by any court or
governmental agency or body alleging liability (including, without
limitation, alleged or potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) of the Company, any of its
Significant Subsidiaries or any of the Ventures
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arising out of, based on or resulting from (i) the presence or release into
the environment of any Hazardous Material at any location owned or operated
by the Company, any of its Significant Subsidiaries or any of the Ventures
or previously owned by the Company, any of its Significant Subsidiaries or
any of the Ventures, or (ii) any violation or alleged violation of any
Environmental Law, in either case (x) which alleged or potential liability
would be required to be described in a registration statement under the
Act, or (y) which alleged or potential liability, singly or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
(u) Each of the Company, its subsidiaries and the Ventures has filed
all necessary federal, state and foreign income and franchise tax returns,
except where the failure to so file such returns would not, individually or
in the aggregate, have a Material Adverse Effect, and has paid all material
taxes shown as due thereon; and other than tax deficiencies which the
Company, any subsidiary or any of the Ventures is contesting in good faith
and for which the Company, such subsidiary or such Ventures has provided
adequate reserves, there is no tax deficiency that has been asserted
against the Company, any of the subsidiaries or any of the Ventures that
would have, individually or in the aggregate, a Material Adverse Effect.
(v) Each of the Company, its subsidiaries and the Ventures possesses
all licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and have made all declarations and filings with, all
appropriate federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, presently
required or necessary to own or lease, as the case may be, and to operate
their respective properties and to carry on the business of the Company,
its subsidiaries and the Ventures as now conducted as set forth in the
Final Memorandum, the lack of which would have a Material Adverse Effect
("Permits"); each of the Company, its subsidiaries and the Ventures has
fulfilled and performed all of its respective obligations with respect to
such Permits and, to the best knowledge of the Company, no event has
occurred which allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other impairment of the
rights of the holder of any such Permit, except where the failure to
fulfill or perform such obligations or such impairment, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; and none of the Company, any subsidiary or any Venture has
received any notice of any proceeding relating to revocation or
modification of any such Permit, except as described in the Final
Memorandum and except where such revocation or modification would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(w) None of the Company, any of its subsidiaries or any of the
Ventures or any of their respective Affiliates (as defined in Rule 501(b)
of Regulation D under the Act) has directly, or through any agent, (i)
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any "security" (as defined in the Act) which is or reasonably
could be integrated with the sale of the Notes in a manner that would
require the registration under the Act of the Notes or (ii) engaged in any
form of general solicitation or general advertising (as those terms are
used in Regulation D under the Act) in connection with the offering of the
Notes or in any manner involving a public offering within the meaning of
Section 4(2) of the Act. Assuming (i) the representations and warranties
of the Initial Purchasers in Section 8 hereof are true and correct in all
material respects, (ii) compliance by the Initial Purchasers with the
offering and transfer restrictions described in the Final Memorandum and
(iii) the accuracy of the representations, warranties and agreements of
each of the purchasers to whom the Initial Purchasers initially resells the
Notes in compliance with Section 8 hereof, it is not necessary in
connection with the offer, sale and delivery of the Notes to
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<PAGE>
the Initial Purchasers in the manner contemplated by this Agreement to
register any of the Notes under the Act or to qualify the Indenture under
the TIA.
(x) No securities of the Company are of the same class (within the
meaning of Rule 144A under the Act) as the Notes and listed on a national
securities exchange registered under Section 6 of the Exchange Act, or
quoted in a U.S. automated inter-dealer quotation system.
(y) None of the Company, any of its Significant Subsidiaries or any
of the Ventures is an Ainvestment company@ or "promoter" or "principal
underwriter" for an "investment company" under the Investment Company Act
of 1940, as amended, and the rules and regulations thereunder.
(z) The Company, each of its Significant Subsidiaries and each of the
Ventures maintain insurance insuring against such losses and risks as the
Company reasonably believes is adequate to protect the Company, each of its
Significant Subsidiaries and each of the Ventures and their respective
businesses, except where the failure to maintain such insurance would not
reasonably be expected to have a Material Adverse Effect.
(aa) None of the Company, any of its Significant Subsidiaries or any
of the Ventures has taken nor will it take, directly or indirectly, any
action designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of the Notes or to facilitate
the sale or resale of the Notes.
(bb) Neither the issuance, sale and delivery of the Notes, nor the
application of the proceeds thereof by the Company, its Significant
Subsidiaries and the Ventures as set forth in the Final Memorandum, will
violate Regulations G, T, U or X promulgated by the Board of Governors of
the Federal Reserve System.
(cc) Other than as contemplated by this Agreement or the Subscription
Agreement, or as otherwise described in the Final Memorandum, there is no
broker, finder or other party that is entitled to receive from the Company
any brokerage or finder's fee or other fee or commission as a result of any
of the transactions contemplated hereby or thereby.
(dd) The Company has complied with all provisions of Section 517.075
Florida Statutes, relating to doing business with the Government of Cuba or
with any person or any affiliate located in Cuba.
(ee) Other than the Registration Rights Agreement and the actions
permitted thereby or as otherwise disclosed in the Final Memorandum, there
are no contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any debt securities of
the Company owned or to be owned by such person or to require the Company
to include such debt securities in the securities registered pursuant to an
Exchange Offer Registration Statement or Shelf Registration Statement, or
in any securities being registered pursuant to any other registration
statement filed by the Company under the Act.
(ff) The Company has not distributed and will not distribute any
offering material in connection with the offering and sale of the Notes
other than the Final Memorandum and the other materials permitted by the
Act.
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Each certificate signed by any officer of the Company and delivered to the
Initial Purchasers or counsel for the Initial Purchasers shall be deemed a joint
and several representation and warranty by the Company and each of the
subsidiaries to each Initial Purchaser as to the matters covered thereby.
3. PURCHASE, SALE AND DELIVERY OF THE NOTES. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchasers, and each Initial Purchaser agrees
severally, but not jointly, to purchase from the Company, the principal amount
of Notes set forth opposite such Initial Purchaser's name on Schedule I hereto
at 99.448% of their principal amount. One or more certificates in definitive
form for the Notes that the Initial Purchasers have agreed to purchase
hereunder, and in such denomination or denominations and registered in such name
or names as the Initial Purchasers request upon notice to the Company at least
48 hours prior to the Closing Date, shall be delivered by or on behalf of the
Company to the Initial Purchasers, against payment by or on behalf of the
Initial Purchasers of the purchase price therefor by wire transfer (immediately
available funds), to such account or accounts as the Company shall specify prior
to the Closing Date, or by such means as the parties hereto shall agree prior to
the Closing Date. Such delivery of and payment for the Notes shall be made at
the offices of Latham & Watkins, 885 Third Avenue, New York, New York 10022 at
10:00 a.m., New York time, on January 21, 1998, or at such other place, time or
date as the Initial Purchasers, on the one hand, and the Company, on the other
hand, may agree upon, such time and date of delivery against payment being
herein referred to as the "CLOSING DATE." The Company will make such
certificate or certificates for the Notes available for checking and packaging
by the Initial Purchasers at the offices of BT Securities Corporation in New
York, New York, or at such other place as BT Securities Corporation may
designate, at least 24 hours prior to the Closing Date.
4. RESALE BY INITIAL PURCHASERS. The Initial Purchasers propose to
resell the Notes at the price and upon the terms set forth in the Final
Memorandum, as soon as practicable after this Agreement is entered into and as
in the judgement of the Initial Purchasers is advisable.
5. AGREEMENTS OF THE COMPANY. The Company covenants and agrees with each
of the Initial Purchasers as follows:
(a) The Company will not amend or supplement the Final Memorandum or
any amendment or supplement thereto of which the Initial Purchasers shall
not previously have been advised and furnished a copy for a reasonable
period of time prior to the proposed amendment or supplement and as to
which the Initial Purchasers shall not have given their consent. The
Company will, promptly, upon the reasonable request of the Initial
Purchasers or counsel for the Initial Purchasers, make any amendments or
supplements to the Preliminary Memorandum or the Final Memorandum that may
be necessary or advisable in connection with the resale of the Notes by the
Initial Purchasers.
(b) The Company will cooperate with the Initial Purchasers in
arranging for the qualification of the Notes for offering and sale under
the securities or "Blue Sky" laws of such jurisdictions as the Initial
Purchasers may designate and will continue such qualifications in effect
for as long as may be necessary to complete the resale of the Notes;
PROVIDED, HOWEVER, that in connection therewith, the Company shall not be
required to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction or subject itself to
taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.
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(c) If, any time prior to the completion of the distribution by the
Initial Purchasers of the Notes, any event occurs or information becomes
known as a result of which the Final Memorandum as then amended or
supplemented would include any untrue statement of a material fact, or omit
to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or
if for any other reason it is necessary at any time to amend or supplement
the Final Memorandum to comply with applicable law, the Company will
promptly notify the Initial Purchasers thereof and will prepare, at its own
expense, an amendment or supplement to the Final Memorandum that corrects
such statement or omission or effects such compliance.
(d) The Company will, without charge, furnish to the Initial
Purchasers and their counsel as many copies of the Preliminary Memorandum
and the Final Memorandum or any amendment or supplement thereto as the
Initial Purchasers may from time to time reasonably request. The Company
consents to the use, in accordance with the provisions of the Act and with
the securities or "Blue Sky" laws of the jurisdictions in which the Notes
are offered by the several Initial Purchasers and by dealers, of each
Preliminary Memorandum and Final Memorandum furnished by the Company.
(e) The Company will apply the net proceeds from the sale of the
Notes to be sold by it hereunder for the purposes set forth under "Use of
Proceeds" in the Final Memorandum.
(f) For so long as any of the Notes remain outstanding, the Company
will furnish to the Initial Purchasers, upon request, copies of all reports
and other communications (financial or otherwise) furnished by the Company
to the Trustee or to the holders of the Notes and, as soon as available,
copies of any reports or financial statements furnished to or filed by the
Company with the Commission or any national securities exchange on which
any class of securities of the Company may be listed.
(g) None of the Company or any of its affiliates will sell, offer for
sale or solicit offers to buy or otherwise negotiate in any respect of any
"security" (as defined in the Act) which could be integrated with the sale
of the Notes in a manner which would require the registration under the Act
of the Notes.
(h) The Company will not, and will not permit any of its subsidiaries
to, engage in any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) in connection with the
offering of the Notes or in any manner involving a public offering within
the meaning of Section 4(2) of the Act.
(i) For as long as it is required to do so under the Indenture, the
Company will make available at its expense, upon request, to any holder of
such Notes and any prospective purchasers thereof, the information
specified in Rule 144A(d)(4) under the Act, unless the Company is then
subject to Section 13 or 15(d) of the Exchange Act.
(j) The Company will use its best efforts to (i) permit the Notes to
be designated PORTAL securities in accordance with the rules and
regulations adopted by NASD relating to trading in the Private Offerings,
Resales and Trading through Automated Linkages market (the "PORTAL MARKET")
and (ii) permit the Notes to be eligible for clearance and settlement
through The Depository Trust Company.
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<PAGE>
(k) Prior to the effective date of the Exchange Offer Registration
Statement or the sale of all the Notes under the Shelf Registration
Statement, the Company shall take such steps as shall be necessary to
ensure that the Company shall not become an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
The Initial Purchasers may, in their sole discretion, waive in writing the
performance by the Company of any one or more of the foregoing covenants or
extend the time for their performance.
6. EXPENSES. The Company agrees to pay all costs and expenses incident
to the performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 11 hereof, including all costs and expenses incident to
(i) the costs of printing, word processing or other production of documents for
the Preliminary Memorandum and the Final Memorandum and any amendment or
supplement thereto, and any "Blue Sky" memoranda, (ii) all arrangements relating
to the delivery to the Initial Purchasers of copies of the foregoing documents,
(iii) the fees and disbursements of counsel, the accountants and any other
experts or advisors retained by the Company (but not the Initial Purchasers),
(iv) preparation (including printing), issuance and delivery to the Initial
Purchasers of the Notes, (v) the qualification of the Notes under state
securities and "Blue Sky" laws, including filing fees and fees and disbursements
of counsel for the Initial Purchasers relating thereto, (vi) expenses in
connection with any meetings with prospective investors in the Notes; (vii) fees
and expenses of the Trustee including fees and expenses of its counsel,
(viii) all expenses and listing fees incurred in connection with the application
for quotation of the Notes on the PORTAL Market, and (ix) any fees charged by
investment rating agencies for the rating of the Notes. If the sale of the
Notes provided for herein is not consummated because any condition to the
obligations of the Initial Purchasers set forth in Section 7 hereof is not
satisfied, because this Agreement is terminated pursuant to Section 11(a)(i)
hereof or because of any failure, refusal or inability on the part of the
Company to perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder (other than by reason of a default by the
Initial Purchasers), the Company agrees to promptly reimburse the Initial
Purchasers upon demand (accompanied by documentation) for all reasonable out-of-
pocket expenses (including reasonable fees, disbursements and charges of Simpson
Thacher & Bartlett, counsel for the Initial Purchasers) that shall have been
incurred by the Initial Purchasers in connection with the proposed purchase and
sale of the Notes.
7. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The several
obligations of the Initial Purchasers to purchase and pay for the Notes shall be
subject to the satisfaction or waiver of the following conditions on or prior to
the Closing Date:
(a) On the Closing Date, there shall have been furnished to the
Initial Purchasers, in form and substance satisfactory to the Initial
Purchasers, opinions, each addressed to the Initial Purchasers and dated
the Closing Date, of (i) Latham & Watkins, counsel for the Company,
substantially in the form of Annex I-A hereto, (ii) Scott A. Crozier, Esq.,
General Counsel to Phelps Dodge Corporation, substantially in the form of
Annex I-B hereto, and (iii) Osler, Haskin & Harcourt, Canadian counsel to
the Company, substantially in the form of Annex I-C hereto.
(b) On the Closing Date, the Initial Purchasers shall have received
the opinion in form and substance satisfactory to the Initial Purchasers,
dated as of the Closing Date and addressed to the Initial Purchasers, of
Simpson Thacher & Bartlett, counsel for the Initial Purchasers, with
respect to certain legal matters as you reasonably may request. In
rendering such opinion, Simpson Thacher & Bartlett shall have received and
may rely upon such certificates and other documents and information as it
may reasonably request to enable them to pass upon such matters.
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(c) The Initial Purchasers shall have received from Deloitte & Touche
LLP, independent accountants, a comfort letter or letters, the first one to
be dated the date of this Agreement and the second one to be dated the
Closing Date, in form and substance satisfactory to the Initial Purchasers
(which comfort letters shall include reference to the performance of a
review conducted in accordance with the American Institute of Certified
Public Accountants' Statements on Standards for Accounting and Review
Services on the consolidated financial statements of the Company for the
year ended December 31, 1997).
(d) The representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects on and as
of the date of this Agreement and on and as of the Closing Date as if made
on and as of the Closing Date; the statements of the officers of the
Company made pursuant to any certificate delivered in accordance with the
provisions hereof shall be true and correct as of the date made and on and
as of the Closing Date; and the Company shall have performed in all
material respects all covenants and agreements and satisfied in all
material respects all conditions on their part to be performed or satisfied
hereunder at or prior to the Closing Date.
(e) The sale of the Notes hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(f) The Initial Purchasers shall have received a certificate of the
Company executed by (i) the president or any vice president and (ii) the
chief financial or accounting officer of the Company, dated the Closing
Date, to the effect that:
(A) The representations and warranties of the Company
in this Agreement are true and correct in all material respects as of
the date of this Agreement and as of the Closing Date (except to the
extent such representations or warranties specifically relate to an
earlier date and time) and the Company has complied in all material
respects with all the agreements and satisfied all the conditions on
its part to be performed or satisfied under this Agreement on or prior
to the Closing Date;
(B) Each of the respective signers of the certificate
has carefully examined the Final Memorandum; in his opinion and to the
best of his knowledge, neither the Final Memorandum nor any amendment
or supplement thereto includes any untrue statement of a material fact
or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(C) At the Closing Date, since the respective dates as
of which information is given in the Final Memorandum (exclusive of
any amendment or supplement after the date hereof), there has not
occurred any event or events that, individually or in the aggregate,
would have a Material Adverse Effect (except as disclosed in or
contemplated by the Final Memorandum); and
(D) The sale of the Notes hereunder has not been
enjoined (temporarily or permanently).
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(g) On the Closing Date, the Initial Purchasers shall have received
the Registration Rights Agreement executed by the Company and, assuming due
execution and delivery by the Initial Purchasers, such agreement shall be
in full force and effect.
(h) The Indenture shall have been duly executed and delivered by the
Company and duly authorized, executed and delivered by the Trustee, and the
Notes shall have been duly executed and delivered by the Company and duly
authenticated by the Trustee.
(i) The Company shall have received from Hubcap Acquisition LLC or an
affiliate thereof an equity investment equal to $108.0 million, pursuant to
the Subscription Agreement.
(j) The Company shall have entered into the Credit Facilities for an
aggregate borrowing of up to $275.0 million and shall have delivered fully
executed agreements with respect to the Credit Facilities.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to the Initial Purchasers and, as to legal matters, to Simpson Thacher &
Bartlett, counsel for the Initial Purchasers. The Company shall furnish you
with such manually signed or conformed copies of such opinions, certificates,
letters and documents as you reasonably request.
8. OFFERING OF NOTES; RESTRICTIONS ON TRANSFER.
(a) Each of the Initial Purchasers represents and warrants (as to
itself only) that it is a QIB. Each Initial Purchaser has advised the Company
that it proposes to offer the Initial Notes for resale upon the terms and
conditions set forth in this Agreement and in the Final Memorandum. Each
Initial Purchaser acknowledges and agrees that the Initial Notes have not been
and, other than pursuant to the Company's obligations under the Registration
Rights Agreement, will not be, registered under the Act, and may not be offered
or sold within the United States unless the Initial Notes are registered under
the Act or an exemption from the registration requirements of the Act is
available. Each of the Initial Purchasers hereby represents and warrants and
agrees with, the Company (as to itself only) that (i) it has not and will not
solicit offers for, or offer or sell, the Initial Notes by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Act; and (ii) it has and will solicit offers for the
Initial Notes only from, and will offer the Initial Notes only to (A) in the
case of offers inside the United States, persons whom the Initial Purchasers
reasonably believe to be QIBs or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchasers that each such
account is a QIB, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A and (B) in the case of offers outside the United States, to persons
other than U.S. persons ("FOREIGN PURCHASERS," which term shall include dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)); PROVIDED,
HOWEVER, that, in the case of this clause (B), in purchasing such Initial Notes
such persons are deemed to have represented and agreed as provided under the
caption "Transfer Restrictions" contained in the Final Memorandum (or, if the
Final Memorandum is not in existence, in the most recent Memorandum).
(b) Each of the Initial Purchasers represents and warrants (as to
itself only) with respect to offers and sales outside the United States that (i)
it has and will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers Initial Notes or
has in its possession or distributes any Memorandum or any such other material,
in all cases at its own expense; (ii)
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the Initial Notes have not been and will not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S under the Act or pursuant to an exemption from the
registration requirements of the Act; (iii) it has offered the Initial Notes and
will offer and sell the Initial Notes (A) as part of its distribution at any
time and (B) otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, only in accordance with Rule 903 of Regulation S
and, accordingly, neither it nor any persons acting on its behalf have engaged
or will engage in any directed selling efforts (within the meaning of Regulation
S) with respect to the Initial Notes, and any such persons have complied and
will comply with the offering restrictions requirement of Regulation S; and (iv)
it agrees that, at or prior to confirmation of sales of the Initial Notes, it
will have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases Initial Notes from it
during the restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been
registered under the United States Securities Act of 1933
(the "Securities Act") and may not be offered and sold
within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of the distribution of
the Securities at any time or (ii) otherwise until 40 days
after the later of the commencement of the offering and the
closing date of the offering, except in either case in
accordance with Regulation S (or Rule 144A if available)
under the Securities Act. Terms used above have the meaning
given to them in Regulation S."
Terms used in this Section 8 and not defined in this Agreement have the meanings
given to them in Regulation S under the Act.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless the Initial
Purchasers, each of their officers and directors, and each person, if any,
who controls any Initial Purchaser within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, against any losses, claims, damages
or liabilities to which the Initial Purchasers, each of their officers and
directors, or such controlling person may become subject under the Act, the
Exchange Act or otherwise, insofar as any such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or
supplement thereto or any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon
written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Notes under the securities or
"Blue Sky" laws thereof or filed with any securities association or
securities exchange (each, an "APPLICATION"); or
(ii) the omission or alleged omission to state, in any Memorandum
or any amendment or supplement thereto or any Application, a material
fact required to be stated therein or necessary to make the statements
therein not misleading,
and will reimburse (promptly following the receipt of invoices
therefor), as incurred, the Initial Purchasers and each such controlling
person for any reasonable legal or other expenses incurred by the Initial
Purchasers or such controlling person in connection with investigating,
defending against
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or appearing as a third-party witness in connection with any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, the Company will not
be liable in any such case to the extent that any such loss, claim, damage,
or liability arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in any Memorandum or
any amendment or supplement thereto or any Application in reliance upon and
in conformity with written information concerning the Initial Purchasers
furnished to the Company by the Initial Purchasers specifically for use
therein and PROVIDED FURTHER, that the Company will not be liable to the
Initial Purchasers or any person controlling the Initial Purchasers with
respect to any such untrue statement or omission made in any Preliminary
Memorandum that is corrected in the Final Memorandum (or any amendment or
supplement thereto) if the person asserting any such loss, claim, damage or
liability purchased the Notes from any Initial Purchaser in reliance upon a
Preliminary Memorandum but was not sent or given a copy of the Final
Memorandum (as amended or supplemented) at or prior to the written
confirmation of the sale of such Notes to such person, unless such failure
to deliver the Final Memorandum (as amended or supplemented) was a result
of noncompliance by the Company with Section 5(d) of this Agreement. This
indemnity agreement will be in addition to any liability that Company may
otherwise have to the indemnified parties. The Company shall not be liable
under this Section 9 for any settlement of any claim or action effected
without its prior written consent, which shall not be unreasonably
withheld.
(b) The Initial Purchasers, severally and not jointly, agree to
indemnify and hold harmless the Company, its directors, its officers and
each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act against any losses, claims,
damages or liabilities to which the Company or any director, officer or
controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
Memorandum or any amendment or supplement thereto or any Application, or
(ii) the omission or the alleged omission to state therein a material fact
required to be stated in any Memorandum or any amendment or supplement
thereto or any Application, or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information concerning such Initial Purchasers, furnished to the Company by
the Initial Purchasers specifically for use therein; and subject to the
limitation set forth immediately preceding this clause, will reimburse, as
incurred, any reasonable legal or other expenses incurred by the Company or
any director, officer or controlling person in connection with
investigating or defending against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any
liability that the Initial Purchasers may otherwise have to the indemnified
parties. No Initial Purchaser shall be liable under this Section 9 for any
settlement of any claim or action effected without their consent, which
shall not be unreasonably withheld.
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(c) Promptly after receipt by an indemnified party under this Section
9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying party of
the commencement thereof in writing; but the omission to so notify the
indemnifying party (i) will not relieve it from any liability under
paragraph (a) or (b) above unless and to the extent such failure results in
the forfeiture by the indemnifying party of substantial rights and defenses
or material prejudice and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than
the indemnification obligation provided in paragraphs (a) and (b) above.
In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be one or more legal defenses available to it
and/or other indemnified parties that are different from or additional to
those available to the indemnifying party, then, the indemnifying party
shall not have the right to direct the defense of such action on behalf of
such indemnified party or parties and such indemnified party or parties
shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not be liable
to such indemnified party under this Section 9 for any legal or other
expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying
party shall not be liable for the expenses of more than one separate
counsel (in addition to local counsel) in any one action or separate but
substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, designated by BT Alex. Brown
Incorporated in the case of paragraph (a) of this Section 9 or the Company
in the case of paragraph (b) of this Section 9, representing the
indemnified parties under such paragraph (a) or paragraph (b), as the case
may be, who are parties to such action or actions) or (ii) the indemnifying
party has authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such
notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the
prior written consent of the indemnifying party (which consent shall not be
unreasonably withheld), unless such indemnified party waived in writing its
rights under this Section 9, in which case the indemnified party may effect
such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 9 is unavailable to, or
insufficient to hold harmless, an indemnified party in respect of any
losses, claims, damages or liabilities (or actions in respect thereof),
each indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the
indemnifying party or parties on the one hand and the indemnified party on
the other from the offering of the Notes or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, not only
such relative benefits but also the relative fault of the
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indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative benefits
received by the Company on the one hand and any Initial Purchaser on the
other shall be deemed to be in the same proportion as the total net
proceeds from the Offering (before deducting expenses) received by the
Company bear to the total discounts received by the Initial Purchasers.
The relative fault of the parties shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand, or any
Initial Purchaser on the other, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission or alleged statement or omission, and any other equitable
considerations appropriate in the circumstances. The Company and the
Initial Purchasers agree that it would not be equitable if the amount of
such contribution were determined by pro rata or per capita allocation or
by any other method of allocation that does not take into account the
equitable considerations referred to in the first sentence of this
paragraph (d). Notwithstanding any other provision of this paragraph (d),
no Initial Purchaser shall be obligated to make contributions hereunder
that in the aggregate exceed the total discount and other compensation
received by such Initial Purchaser under this Agreement, less the aggregate
amount of any damages that such Initial Purchaser has otherwise been
required to pay by reason of the untrue or alleged untrue statements or the
omissions or alleged omissions to state a material fact, and no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this
paragraph (d), each person, if any, who controls any Initial Purchasers
within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act and each of the Initial Purchasers' officers and directors shall have
the same rights to contribution as such Initial Purchaser, and each
director or officer of the Company and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, shall have the same rights to contribution as the
Company.
10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The respective
indemnities, agreements, representations, warranties, covenants and other
statements of the Company, of its officers and of the Initial Purchasers set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of (i) any investigation made by or on behalf of any Initial
Purchaser or the Company or any of its or their partners, officers or directors
or any controlling person, as the case may be, and (ii) delivery of and payment
for the Notes. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 9 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
11. TERMINATION OF AGREEMENT. Without limiting the right to terminate
this Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated in the sole discretion of the
Initial Purchasers by notice to the Company given at or prior to the
Closing Date in the event that the Company shall have failed, refused or
been unable to perform all obligations and satisfy all conditions on its
part to be performed or satisfied hereunder at or prior thereto or, if at
or prior to the Closing Date:
(i) any of the Company, its Significant Subsidiaries or the
Ventures shall have sustained any loss or interference with respect to
its businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor
dispute or any legal or governmental proceeding, which loss or
interference has
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had or has a Material Adverse Effect, or there shall have been any
material adverse change, or any development involving a prospective
material adverse change (including, without limitation, a change in
management or control of the Company), in the business, results of
operations or condition (financial or other) of the Company, its
subsidiaries and the Ventures, taken as a whole, except in each case
as described in or contemplated by the Final Memorandum (exclusive of
any amendment or supplement thereto);
(ii) trading in securities generally on the New York Stock
Exchange, American Stock Exchange or the NASDAQ National Market shall
have been suspended or minimum or maximum prices shall have been
established on any such exchange;
(iii) a banking moratorium shall have been declared by New York
or United States authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States, or (C) any material change in the
financial markets of the United States which in the case of (A), (B)
or (C) above and in the sole judgment of the Initial Purchasers, makes
it impracticable or inadvisable to proceed with the offering or the
delivery of the Notes as contemplated by the Final Memorandum.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become effective
upon the execution and delivery hereof by the parties hereto.
13. INFORMATION FURNISHED BY THE INITIAL PURCHASERS. The statements set
forth in the last paragraph on the cover page, the stabilization legend on page
i, the statements in the first, third and fourth paragraphs, the fourth and
fifth sentences of the sixth paragraph, and the seventh and eighth paragraphs
under the caption "Private Placement" in the Final Memorandum (to the extent
such statements relate to the Initial Purchasers) constitute the only
information furnished by or on behalf of the Initial Purchasers to the Company
for the purposes of Sections 2(a) and 9 hereof. The Initial Purchasers confirm
that such statements (to the extent such statements relate to the Initial
Purchasers) are correct.
14. MISCELLANEOUS. Except as otherwise provided herein, notice given
pursuant to any provision of this Agreement shall be in writing and shall be
delivered (i) if to the Company, at the office of the Company at 2315 Adams
Lane, P.O. Box 40, Henderson, Kentucky, 42420, Attention: Chief Financial
Officer, with a copy to Randall C. Bassett, Latham & Watkins, 633 West Fifth
Street, Suite 4000, Los Angeles, California 90071; or (ii) if to the Initial
Purchasers, care of BT Alex. Brown Incorporated, Bankers Trust Plaza, 130
Liberty Street, New York, New York 10006, Attention: Corporate Finance
Department, with a copy to Arthur D. Robinson, Esq., Simpson Thacher & Bartlett,
425 Lexington Avenue, New York, New York 10017.
15. SUCCESSORS. This Agreement has been and is made solely for the
benefit of the several Initial Purchasers, the Company, its directors and
officers, and the other controlling persons referred to in Section 9 hereof and
their respective successors and assigns, to the extent provided herein, and no
other person shall acquire or have any right under or by virtue of this
Agreement except that (i) the indemnities of the Company contained in Section 9
of this Agreement shall also be for the benefit of any person or persons
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<PAGE>
who control the Initial Purchasers within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act and (ii) the indemnities of the Initial
Purchasers contained in Section 9 of this Agreement shall also be for the
benefit of the directors of the Company, its officers and any person or persons
who control the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act. Neither the term 'successor' nor the term
'successors and assigns' as used in this Agreement shall include a purchaser
from any Initial Purchaser of any of the Notes in his status as such purchaser.
16. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
17. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
18. GENERAL. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be signed in various counterparts
which together constitute one and the same instrument. If signed in
counterparts, this Agreement shall not become effective unless at least one
counterpart hereof shall have been executed and delivered on behalf of each
party hereto.
In this Agreement the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and the Initial Purchasers.
[signature page follows]
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Initial Purchasers.
Very truly yours,
ACCURIDE CORPORATION
By: /s/ William P. Greubel
-----------------------
Name: William P. Greubel
Title: President
The foregoing Purchase Agreement is hereby confirmed and accepted by us in New
York, New York as of the date first above written.
BT ALEX. BROWN INCORPORATED
By: /s/ George C. Hartmann, Jr.
---------------------------
Name: George C. Hartmann, Jr.
Title: Managing Director
CITICORP SECURITIES, INC.
By: /s/ Scott Vallar
---------------------------
Name: Scott Vallar
Title: Managing Director
J.P. MORGAN SECURITIES INC.
By: /s/ John Gilbert
---------------------------
Name: John Gilbert
Title: Vice President
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SCHEDULE I
PRINCIPAL AMOUNT OF
INITIAL PURCHASER NOTES
BT Alex. Brown Incorporate$ 120,000,000
Citicorp Securities, Inc 40,000,000
J.P. Morgan Securities Inc 40,000,000
$ 200,000,000
ANNEX I-A
Opinion of Latham & Watkins
Referred to in Section 7(a) hereof
1. The Company and each of the Subsidiaries (a) is a corporation,
limited liability company or limited partnership, as applicable, duly organized,
validly existing and in good standing under the laws of the State of Delaware
and (b) has all requisite organizational power and authority to own, lease and
operate its properties and to conduct its business as described in the Final
Memorandum.
2. The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
3. The Indenture has been duly authorized, executed and delivered by
the Company and, assuming the due authorization, execution and delivery thereof
by the Trustee, will be a legally valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
4. The Notes have been duly authorized by the Company and, when
executed, issued and authenticated in accordance with the terms of the Indenture
and delivered to and paid for by you in accordance with the terms of the
Purchase Agreement, will be legally valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms.
5. The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and, assuming the due authorization,
execution and delivery thereof by you, will be a legally valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms.
6. The statements made in the Final Memorandum under the captions
"Description of Notes" and "Exchange Offer; Registration Rights," insofar as
they purport to constitute summaries of certain terms of documents referred to
therein, constitute accurate summaries of the terms of such documents in all
material respects.
7. No registration of the Notes under the Securities Act, and no
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the "TIA"), is required for the purchase of the Notes by you or the initial
resale of the Notes by you to eligible purchasers, in each case, in the manner
contemplated by the Purchase Agreement. We express no opinion, however, as to
when or under what circumstances any Notes initially sold by you may be
reoffered or resold.
8. The execution, delivery and performance by the Company of the
Purchase Agreement, the Indenture and the Registration Rights Agreement and the
issuance, sale and delivery of the
E-1
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Notes to you will not result in a breach or a default under (or an event that
with notice or passage of time or both would constitute a default under) or
violation of any of (a) except as set forth in the Final Memorandum, the terms
or provisions of any contract to which the Company is a party and which has been
identified to us by the Company as material and listed on Annex A attached
hereto (the "Material Agreements"), except for any such breach, violation,
default or event that could not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect"), (b) the Governing
Documents of the Company or any of the Subsidiaries, or (c) to our knowledge,
any federal or New York statute, rule, regulation, judgment, decree or order, or
the DGCL or any rule or regulation thereunder or any judgment, decree or order
pursuant thereto, known to us to be applicable to the Company or the
Subsidiaries or any of their respective properties or assets, except for any
such conflict, breach or violation that would not individually or in the
aggregate have a Material Adverse Effect.
9. The Company has the authorized, issued and outstanding capital
stock as set forth under "Capitalization" in the Final Memorandum. All the
shares of capital stock, limited partnership interests and membership interests
of Kentucky Holding, Accuride Henderson, Henderson LLC, Tennessee Holding,
Accuride Columbia and Columbia LP have been duly authorized and validly issued,
and all of the shares of capital stock of Kentucky Holding, Accuride Henderson,
Tennessee Holding and Accuride Columbia are fully paid and nonassessable.
10. Neither the sale, issuance, or delivery of the Notes will violate
Regulation G, T (assuming that you do not sell the Notes to any person or entity
subject to Regulation T for such person's or entity's own account), U or X of
the Board of Governors of the Federal Reserve System.
11. No securities of the same class (within the meaning of Rule
144A(d)(3) under the Act) as the Notes are listed on any national securities
exchange registered under Section 6 of the Exchange Act or quoted on an
automated inter-dealer quotation system.
12. No consent, approval authorization or order of, or filing or
qualification with, any federal or New York governmental agency or body or any
Delaware governmental agency or body acting pursuant to the DGCL or, to our
knowledge, any federal or New York court or any Delaware court acting pursuant
to the DGCL, is required in connection with the sale of the Notes by the Company
pursuant to the Purchase Agreement, except such as may be required under state
securities law, as to which we express no opinion, and such as may be required
under the TIA in connection with the Purchase Agreement and the Registration
Rights Agreement, and those that have already been obtained.
13. The Company, immediately after the sale of the Notes to be sold
hereunder and the application of the proceeds from such sale (as described in
the Final Memorandum under the caption "Use of Proceeds"), will not be an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended.
14. The descriptions in the Final Memorandum of contracts and other
documents are accurate and fairly present in all material respects the
information that would be required to be described in a registration statement
under the Act or in a document incorporated by reference therein. To our
knowledge, there are no contracts or documents of the Company or its
Subsidiaries that would be required to be described in a registration statement
under the Act or in a document incorporated by reference therein, that are not
otherwise described in the Final Memorandum.
In addition, we have participated in conferences with officers and
other representatives of the Company, counsel to the Company, representatives of
the independent public accountants for the
I-2
<PAGE>
Company, and your representatives, at which the contents of the Final Memorandum
and related matters were discussed and, although we are not passing upon, and do
not assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Final Memorandum (except and only to the extent set
forth in paragraph 6) and have not made any independent check or verification
thereof, during the course of such participation, no facts came to our attention
that caused us to believe that the Final Memorandum, as of its date, contained
an untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, it being understood that we express
no belief with respect to the financial statements and schedules or other
financial data included in the Final Memorandum.
I-3
<PAGE>
ANNEX I-B
Opinion of Scott A. Crozier, Esq.
Referred to in Section 7(a) hereof
1. CORPORATE STATUS AND AUTHORITY. The Company is a corporation,
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. The Company has all necessary corporate power to conduct its
business and to own or lease its properties, as now conducted, owned or leased.
2. NO CONFLICTS. Except as set forth in Section 2.2 of the
Shareholder's Disclosure Schedule, the execution and delivery by the Shareholder
and the Company of the Agreement and the Documents, the performance by them of
their respective obligations thereunder and the consummation of the transactions
contemplated thereby will not result in (i) any conflict with the certificate of
incorporation or the by-laws of the Shareholder or the Company, (ii) a violation
or breach of, or constitute an event of default under, any contract, agreement,
note, bond, mortgage, indenture, license, lease or other instrument or
obligation known to me to which the Shareholder or the Company is a party or by
which the Shareholder or the Company is bound, except where such breaches or
defaults would not have, individually or in the aggregate, a Material Adverse
Effect and would not, individually or in the aggregate, reasonably be expected
to materially impair the ability of the Shareholder or the Company to perform
their respective obligations under, or to consummate the transactions
contemplated by the Agreement and the Documents, (iii) a breach, violation of or
default under any statute, regulation, order or decree known to me to be
applicable to the Shareholder or the Company or any of their respective assets
under the federal laws of the United States except where such breaches or
defaults would not have, individually or in the aggregate, a Material Adverse
Effect or (iv) to my knowledge, the creation of any Lien on any asset or
properties owned or used by the Company or its Subsidiaries, except for such
Liens as would not have, individually or in the aggregate, a Material Adverse
Effect and would not, individually or in the aggregate, reasonably be expected
to materially impair the ability of the Shareholder or the Company to perform
their respective obligations under, or to consummate the transactions
contemplated by the Agreement and the Documents.
3. CAPITALIZATION OF THE COMPANY. After giving effect to the
purchase by the Company of the Redeemed Shares from the Shareholder and the
issuance and sale by the Company of the Shares to the Purchaser, the authorized
capital stock of the Company will consist of 1,000 shares of common stock, 100
of which will be issued and outstanding and 90 of which will be held in
treasury. All of the foregoing 100 outstanding shares of common stock are or
will be, upon issuance thereof pursuant to the Agreement, duly authorized,
validly issued, fully paid and non-assessable. There are no other shares of
capital stock or other voting securities of the Company authorized, issued or
outstanding. There are no outstanding options, warrants, conversion, exchange
or other rights or agreements of any kind (other then the Agreement) for the
purchase or acquisition from, or the sale or issuance by, the Shareholder or the
Company of any shares of stock of the Company, and no authorization therefor has
been given.
4. SUBSIDIARIES. Each of Accuride Texas, Inc. and Accuride
Ventures, Inc. is a corporation duly incorporated, validly existing and in good
standing under the laws of Delaware. AKW, L.P. is a limited partnership, duly
formed, validly existing and in good standing under the laws of the state of
Delaware. AKW General Partner, L.L.C. is a limited liability company duly
formed, validly existing and in good standing under the laws of the state of
Delaware.
The Company has no Subsidiaries other than the Subsidiaries listed in
Section 2.5 of the Shareholder's Disclosure Schedule. All of the outstanding
shares of capital stock of each of Accuride Texas, Inc. and Accuride Ventures,
Inc. are duly authorized, validly issued, fully paid and non-assessable
IB-1
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and, to my knowledge, owned, directly or indirectly, by the Company free and
clear of all liens. To my knowledge, there are no outstanding options,
warrants, conversion, exchange or other rights or agreements of any kind (other
than the Agreement) for the purchase or acquisition from, or the sale or
issuance by, the Shareholder or the company of any shares of stock of any of the
Company's Subsidiaries, and no authorization therefor has been given. Each of
Accuride Texas, Inc., Accuride Ventures, Inc., AKW L.P. and AKW General Partner
L.L.C. has all requisite corporate power to conduct its business and to own or
lease its properties, as now conducted, owned or leased. Each of Accuride
Texas, Inc., Accuride Ventures, Inc., AKW, L.P. and AKW General Partner L.L.C.
is duly qualified to do business in each jurisdiction except where the failure
to be so qualified would not reasonably be expected to have a Material Adverse
Effect.
5. LITIGATION. Except as otherwise set forth in Section 2.13 of the
Shareholder's Disclosure Schedule, there are no Actions pending or, to the
knowledge of the Shareholder, threatened, against the Company or any of its
Subsidiaries, to the shareholder's knowledge, any officers or directors of the
Company and its Subsidiaries as such or the Shareholder in the Shareholder's
capacity as a shareholder of the Company, whether at law or in equity, whether
civil or criminal in nature and whether before or by any Governmental Authority,
(i) which have a stated damage claim greater than, or which have had a demand
made in excess of or which involve an amount in controversy greater than $1
million or, if no such damage claim is stated, demand is made or the amount in
controversy does not involve more than $1 million, would reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect or would,
individually or in the aggregate, reasonably be expected to materially impair
the ability of the Shareholder or the Company to perform their respective
obligations under, or to consummate the transactions contemplated by, the
Agreement and the Documents, or (ii) which question the validity of the
Agreement or any action taken or to be taken by the Shareholder, the Company or
any of the Subsidiaries in connection herewith.
IB-2
<PAGE>
ANNEX I-C
Opinion of Osler, Hoskin & Harcourt
Referred to in Section 7(a) hereof
1. The Canadian Subsidiary is a corporation incorporated and validly
existing under the laws of Ontario.
2. The Canadian Subsidiary has full corporate power and authority to
own, lease and operate its properties and to conduct its business as described
in the Final Memorandum.
IC-1
<PAGE>
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------------------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
<CAPTION>
1993 1994 1995 1996 1997 1996 1997
--------- --------- --------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income before income taxes................... $ 24,828 $ 41,407 $ 47,322 $ 43,916 $ 49,995 $ 8,726 $ 14,805
Less
- ---------------------------------------------
Equity in earnings of AKW.................. -- -- -- -- (4,197) -- $ (4,197)
Capitalized interest....................... (977) (177) (97) -- -- -- --
Plus
- ---------------------------------------------
Cash received from AKW..................... -- -- -- -- 2,483 -- 2,483
Fixed charges.............................. 1,937 611 535 374 486 35,064 35,176
--------- --------- --------- --------- --------- ----------- ------------
Earnings computation......................... $ 25,788 $ 41,841 $ 47,760 $ 44,290 $ 48,767 $ 43,790 $ 48,267
--------- --------- --------- --------- --------- ----------- ------------
--------- --------- --------- --------- --------- ----------- ------------
Fixed charges
- ---------------------------------------------
Interest expense........................... $ 614 $ 90 $ 35 $ 33 $ 145 $ 34,723 $ 34,835
Capitalized interest....................... 977 177 97 -- -- -- --
Interest portion of rent expense........... 346 344 403 341 341 341 341
--------- --------- --------- --------- --------- ----------- ------------
$ 1,937 $ 611 $ 535 $ 374 $ 486 $ 35,064 $ 35,176
--------- --------- --------- --------- --------- ----------- ------------
--------- --------- --------- --------- --------- ----------- ------------
Ratio of earnings to fixed charges........... 13.3 68.5 89.3 118.4 100.4 1.25 1.37
</TABLE>
<PAGE>
Exhibit 21.1
SUBSIDIARIES OF THE REGISTRANT
Name of Subsidiary State of Incorporation/Formation
------------------ --------------------------------
Accuride Canada, Inc. Ontario, Canada
Accuride Texas, Inc. Delaware
Accuride Ventures, Inc. Delaware
Accuride de Mexico, S.A. de C.V. Mexico
Servicios AISA Mexico
AKW, L.P. Delaware
AKW General Partner, L.L.C. Delaware
Accuride Kentucky Holding Company Delaware
Accuride Tennessee Holding Company Delaware
Accuride Henderson Facilities Management Delaware
Corporation
Accuride Henderson Limited Liability Delaware
Company
Accuride Columbia Limited Partnership Delaware
Accuride Columbia Facilities Management Delaware
Corporation
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Accuride Corporation on
Form S-4 of our report dated January 28, 1998, appearing in the Prospectus,
which is part of such Registration Statement, and to the reference to us under
the heading "Experts" in such Prospectus.
DELOITTE & TOUCHE LLP
Indianapolis, Indiana
April 14, 1998
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
_________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) / /
_________________________
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
(Exact name of trustee as specified in its charter)
95-4311476
(I.R.S. employer
identification No.)
515 South Flower Street, Suite 2700
Los Angeles, CA 90071
(Address of principal (Zip Code)
executive offices)
DWIGHT LIU
515 South Flower Street, Suite 2700
Los Angeles, California 90071
(213) 861-5000
(Name, address, including zip code and telephone number of agent for service)
____________________________
Accuride Corporation
(Exact name of obligor as specified in its charter)
DELAWARE 61-1109077
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
<PAGE>
2315 Adams Lane
Henderson, KY 42420
(Address of principal chief executive offices)
GENERAL
1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Comptroller of the Currency
490 L'Enfant Plaza East, S.W.
Washington, D.C. 20219
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, D.C. 20429
Federal Reserve Bank (12th District)
San Francisco, California
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15.
The obligor currently is not in default under any of its outstanding
securities for which U.S. Trust Company of California, N.A. is Trustee.
Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14
and 15 of Form T-1 are not required under General Instruction B.
<PAGE>
16. List of Exhibits
T-1.1 - A copy of the Articles of Association of U.S. Trust Company of
California, N.A. currently in effect; incorporated herein by reference
to Exhibit T-1.1 filed with Form T-1 Statement, Registration No. 33-33031.
T-1.2 - Included in Exhibit T-1.1
T-1.3 - Included in Exhibit T-1.1
T-1.4 - A copy of the By-Laws of U.S. Trust Company of California, N.A.,
as amended to date; incorporated by reference to Exhibit T-1.4 filed with Form
T-1 Statement, Registration No. 33-54136.
T-1.6 - The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939; incorporated herein by reference to Exhibit
T-1.6 filed with Form T-1 Statement, Registration No. 33-33031.
T-1.7 - A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority.
NOTE
As of May 30, 1998 the Trustee had 20,000 shares of Capital Stock outstanding,
all of which are owned by U.S. Trust Corporation.
The responses to Items 2, 5, 6, 7, 8, 9, 10, 11 and 14 set forth the information
requested as though U. S. Trust Company of California, N.A. and U.S. Trust
Corporation were the "trustee."
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
<PAGE>
Pursuant to the requirements of the Trust Indenture of Act of 1939, the trustee,
U.S. Trust Company of California, N.A., a corporation organized and existing
under the laws of the State of California, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Los Angeles, and State of
California, on the 30th day of May, 1998.
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
Trustee
By: /s/ Sandree' Parks
--------------------------------
Sandee' Parks
Authorized Signatory
<PAGE>
U.S. Trust Company of California, N.A. Call Date: 12/31/97
515 South Flower Street, Suite 2700 Vendor ID: D
Los Angeles, CA 90071 Transit #: 12204024
ST-BK: 06-0784 FFIEC 033
Cert#: 33332 Page RC-1
9
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR December 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
C200
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C> <C>
1. Cash and balances due from depository institutions (from schedule RC-A).. RCON
a. Noninterest-bearing balances and currency and coin (1)................ 0081 7,614 1.a
b. Interest bearing balances (2)......................................... 0071 239 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)............ 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D).......... 1773 178,381 2.b
3. Federal funds sold and securities purchased under agreements to resell... 1350 60,000 3.
4. Loans and lease financing receivables: RCON
a. Loans and leases, net of unearned income (from Schedule RC-C)......... 2122 55706 4.a
b. LESS: Allowance for loan and lease losses............................. 3123 1,000 4.b
c. LESS: Allocated transfer risk reserve................................. 3128 0 4.c
d. Loans and leases, net of unearned income, allowance, and reserve RCON 54,706
(item 4.a minus 4.b and 4.c).......................................... 2125 4.d
5. Trading assets........................................................... 3545 0 5.
6. Premises and fixed assets (including capitalized leases)................. 2145 6,801 6.
7. Other real estate owned (from Schedule RC-M)............................. 2150 0 7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M)..................................................... 2130 0 8.
9. Customers' liability to this bank on acceptances outstanding............. 2155 0 9.
10. Intangible assets (from Schedule RC-M)................................... 2143 2,380 10.
11. Other assets (from Schedule RC-F)........................................ 2160 5,307 11.
12. Total assets (sum of items 1 through 11)................................. 2170 315,428 12.
</TABLE>
- ----------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
U.S. Trust Company of California, N.A. Call Date: 12/31/97 ST-BK: 06-0784 FFIEC 033
515 South Flower Street, Suite 2700 Vendor ID: D Cert #: 33332 Page RC-2
Los Angeles, CA 90071 Transit #: 12204024
---------
10
---------
</TABLE>
Schedule RC -- Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
<S> <C> <C> <C> <C> <C> <C>
13. Deposits
a. In domestic offices (sum of totals of RCON
columns A and C from Schedule RC-E)................................... 2200 277,226 13.a.
RCON
(1) Noninterest-bearing (1)........................................... 6631 33,806 13.a.1
(2) Interest-bearing.................................................. 6636 243,420
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(1) Noninterest-bearing ..............................................
(2) Interest-bearing..................................................
14. Federal funds purchased(2) and securities sold under agreements to
repurchase: RCON 0 14
2800
15. a. Demand notes issued to the U.S. Treasury.............................. 2840 0 15.a
b. Trading liabilities................................................... 3548 0 15.b
16. Other borrowed money (includes mortgage indebtedness and obligations
under capitalized leases):
a. With a remaining maturity of one year or less......................... 2332 0 16.a
b. With a remaining maturity of more than one year through three years... A547 0 16.b
c. With a remaining maturity of more than three years.................... A548 0 16.c
17. Not applicable
18. Bank's liability on acceptances executed and outstanding................. 2920 0 18.
19. Subordinated notes and debentures........................................ 3200 0 19.
20. Other liabilities (from Schedule RC-G)................................... 2930 8,609 20.
21. Total liabilities (sum of items 13 through 20)........................... 2948 285,835 21.
22. Not applicable...........................................................
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus............................ 3838 5,000 23.
24. Common stock............................................................. 3230 2,000 24.
25. Surplus (exclude all surplus related to preferred stock)................. 3839 12,745 25.
26. a. Undivided profits and capital reserves................................ 3632 8,609 26.a
b. Net unrealized holding gains (losses) on available-for-sale
securities............................................................ 8434 1,239 26.b
27. Cumulative foreign currency translation adjustments......................
28. a. Total equity capital (sum of items 23 through 27)..................... 3210 29,593 28.
29. Total liabilities and equity capital (sum of items 21 and 28)............ 3300 315,428 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external RCON
auditors as of any date during 1996.......................................................... 6724 N/A M.1
</TABLE>
<TABLE>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by external auditors (may be required by state
certified public accounting firm which submits a chartering authority)
report on the bank 5 = Review of the bank's financial statements by external
2 = Independent audit of the bank's parent holding auditors
company conducted in accordance with generally 6 = Compilation of the bank's financial statements by
accepted auditing standards by a certified public external auditors
accounting firm which submits a report on the 7 = Other audit procedures (excluding tax preparation
consolidated holding company (but not on the bank work)
separately) 8 = No external audit work
3 = Directors' examination of the bank conducted in
accordance with generally accepted auditing standards
by a certified public accounting firm (may be
required by state chartering authority)
</TABLE>
- ----------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited life preferred stock and related surplus.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF ACCURIDE CORPORATION AT DECEMBER 31, 1997 (DOLLARS
IN THOUSANDS) AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 1995, 1996 AND 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996 DEC-31-1997
<PERIOD-END> DEC-31-1995 DEC-31-1996 DEC-31-1997
<CASH> 9,466 6,311 7,418
<SECURITIES> 0 0 0
<RECEIVABLES> 36,140 31,272 38,044
<ALLOWANCES> 1,153 1,595 967
<INVENTORY> 20,663 27,379 29,107
<CURRENT-ASSETS> 73,762 74,522 91,971
<PP&E> 244,333 252,597 285,898
<DEPRECIATION> 121,625 138,817 151,901
<TOTAL-ASSETS> 298,900 288,703 347,447
<CURRENT-LIABILITIES> 29,511 29,603 57,137
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 164,631 180,168 178,931
<OTHER-SE> 74,450 48,283 77,124
<TOTAL-LIABILITY-AND-EQUITY> 298,900 288,703 347,447
<SALES> 357,802 307,830 332,966
<TOTAL-REVENUES> 357,802 307,830 332,966
<CGS> 293,253 246,107 266,972
<TOTAL-COSTS> 16,869 17,941 21,316
<OTHER-EXPENSES> 1,375 381 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 35 33 145
<INCOME-PRETAX> 47,322 43,916 49,995
<INCOME-TAX> 20,730 17,450 22,158
<INCOME-CONTINUING> 26,592 26,466 27,837
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 26,592 26,466 27,837
<EPS-PRIMARY> 1.108 1.103 1.160
<EPS-DILUTED> 1.108 1.103 1.160
</TABLE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
9 1/4% SENIOR SUBORDINATED NOTES DUE 2008
OF
ACCURIDE CORPORATION
PURSUANT TO THE PROSPECTUS DATED , 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 1998 (THE "EXPIRATION DATE"), UNLESS THE
EXCHANGE OFFER IS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION, IN WHICH
CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST DATE AND TIME TO
WHICH THE EXCHANGE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN AT ANY TIME
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
THE EXCHANGE AGENT IS:
U.S. Trust Company of California, N.A.
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY HAND DELIVERY:
c/o United States Trust Company of New York c/o United States Trust Company of New York
P.O. Box Peter Cooper Station 111 Broadway, Lower Level
New York, New York 10276-0841 New York, New York 10006
Attn: Corporate Trust and Agency Services Attn: Corporate Trust and Agency Service
BY OVERNIGHT DELIVERY: BY FACSIMILE:
c/o United States Trust Company of New York 212-420-6155
770 Broadway, 13th Floor
New York, New York 10003 CONFIRM BY TELEPHONE:
ATTN: CORPORATE TRUST AND AGENCY SERVICES
800-255-2398
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
<PAGE>
The undersigned acknowledges receipt of the Prospectus dated ,
1998 (the "Prospectus"), of Accuride Corporation, a Delaware corporation (the
"Company"), and this Letter of Transmittal (the "Letter of Transmittal"), which
together with the Prospectus constitutes the Company's offer (the "Exchange
Offer") to exchange $1,000 principal amount of its 9 1/4% Senior Subordinated
Notes due 2008, Series B (the "Exchange Notes") for each $1,000 principal amount
of its outstanding 9 1/4% Senior Subordinated Notes due 2008, Series A (the
"Private Notes"). Recipients of the Prospectus should read the requirements
described in such Prospectus with respect to eligibility to participate in the
Exchange Offer. Capitalized terms used but not defined herein have the meaning
given to them in the Prospectus.
The undersigned hereby tenders the Private Notes described in the box
entitled "Description of Private Notes" below pursuant to the terms and
conditions described in the Prospectus and this Letter of Transmittal. The
undersigned is the registered owner of all the Private Notes and the undersigned
represents that it has received from each beneficial owner of Private Notes
("Beneficial Owners") a duly completed and executed form of "Instruction to
Registered Holder from Beneficial Owner" accompanying this Letter of
Transmittal, instructing the undersigned to take the action described in this
Letter of Transmittal.
This Letter of Transmittal is to be used by a holder of Private Notes (i) if
certificates representing Private Notes are to be forwarded herewith, (ii) if
delivery of Private Notes is to be made by book-entry transfer to the Exchange
Agent's account at The Depository Trust Company ("DTC"), pursuant to the
procedures set forth in the section of the Prospectus entitled "The Exchange
Offer -- Procedures for Tendering," or (iii) if a tender is made pursuant to the
guaranteed delivery procedures in the section of the Prospectus entitled "The
Exchange Offer -- Guaranteed Delivery Procedures."
The undersigned hereby represents and warrants that the information received
from the beneficial owners is accurately reflected in the boxes entitled
"Beneficial Owner(s) -- Purchaser Status" and "Beneficial Owner(s) --
Residence."
Any beneficial owner whose Private Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder of Private Notes promptly and
instruct such registered holder of Private Notes to tender on behalf of the
beneficial owner. If such beneficial owner wishes to tender on its own behalf,
such beneficial owner must, prior to completing and executing this Letter of
Transmittal and delivering its Private Notes, either make appropriate
arrangements to register ownership of the Private Notes in such beneficial
owner's name or obtain a properly completed bond power from the registered
holder of Private Notes. The transfer of record ownership may take considerable
time.
In order to properly complete this Letter of Transmittal, a holder of
Private Notes must (i) complete the box entitled "Description of Private Notes,"
(ii) complete the boxes entitled "Beneficial Owner(s) -- Purchaser Status" and
"Beneficial Owner(s) -- Residence," (iii) if appropriate, check and complete the
boxes relating to book-entry transfer, guaranteed delivery, Special Issuance
Instructions and Special Delivery Instructions, (iv) sign the Letter of
Transmittal by completing the box entitled "Sign Here" and (v) complete the
Substitute Form W-9. Each holder of Private Notes should carefully read the
detailed instructions below prior to completing the Letter of Transmittal.
Holders of Private Notes who desire to tender their Private Notes for
exchange and (i) whose Private Notes are not immediately available or (ii) who
cannot deliver their Private Notes, this Letter of Transmittal and all other
documents required hereby to the Exchange Agent on or prior to the Expiration
Date, must tender the Private Notes pursuant to the guaranteed delivery
procedures set forth in the section of the Prospectus entitled "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 2.
Holders of Private Notes who wish to tender their Private Notes for exchange
must complete columns (1) through (3) in the box below entitled "Description of
Private Notes," complete the boxes entitled and
2
<PAGE>
sign the box below entitled "Sign Here." If only those columns are completed,
such holder of Private Notes will have tendered for exchange all Private Notes
listed in column (3) below. If the holder of Private Notes wishes to tender for
exchange less than all of such Private Notes, column (4) must be completed in
full. In such case, such holder of Private Notes should refer to Instruction 5.
<TABLE>
<CAPTION>
DESCRIPTION OF PRIVATE NOTES
(1) (2) (3) (4)
PRINCIPAL
AMOUNT
PRIVATE TENDERED
NOTE FOR
NAME(S) AND ADDRESS(ES) OF REGISTERED NUMBER(S) AGGREGATE EXCHANGE
HOLDER(S) OF PRIVATE NOTE(S), EXACTLY AS (ATTACH PRINCIPAL (MUST BE IN
NAME(S) SIGNED AMOUNT INTEGRAL
APPEAR(S) ON PRIVATE NOTE CERTIFICATE(S) LIST IF REPRESENTED BY MULTIPLES OF
(PLEASE FILL IN, IF BLANK) NECESSARY) CERTIFICATE(S)(2) $1,000)(3)
<S> <C> <C> <C>
</TABLE>
(1) Need not be completed by book-entry holders.
(2) Unless indicated in the column "Principal Amount Tendered For Exchange," any
tendering Holder of 9 1/4% Senior Subordinated Notes due 2008 will be deemed
to have tendered the entire aggregate principal amount represented by the
column labeled "Aggregate Principal Amount Represented by Certificate(s)."
(3) The minimum permitted tender is $1,000 in principal amount of 9 1/4% Senior
Subordinated Notes due 2008. All other tenders must be in integral multiples
of $1,000.
3
<PAGE>
<TABLE>
<S> <C>
/ / CHECK HERE IF TENDERED PRIVATE NOTES ARE ENCLOSED HEREWITH.
/ / CHECK HERE IF TENDERED PRIVATE NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO
THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING (FOR
USE BY ELIGIBLE INSTITUTIONS (AS HEREINAFTER DEFINED) ONLY):
Name of Tendering Institution:
Account Number:
Transaction Code Number:
/ / CHECK HERE IF TENDERED PRIVATE NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE
INSTITUTIONS ONLY):
Name of Registered Holder of Private Note(s):
Date of Execution of Notice of Guaranteed Delivery:
Window Ticket Number (if available):
Name of Institution which Guaranteed Delivery:
Account Number (if delivered by book-entry transfer):
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE
PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
Address:
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8) (SEE INSTRUCTIONS 1, 6, 7 AND 8)
To be completed ONLY (i) if the Exchange To be completed ONLY (i) if the Exchange
Notes issued in exchange for Private Notes, Notes issued in exchange for Private Notes,
certificates for Private Notes in a certificates for Private Notes in a
principal amount not exchanged for Exchange principal amount not exchanged for Exchange
Notes, or Private Notes (if any) not Notes, or Private Notes (if any) not
tendered for exchange, are to be issued in tendered for exchange, are to be mailed or
the name of someone other than the delivered (i) to someone other than the
undersigned or (ii) if Private Notes undersigned or (ii) to the undersigned at an
tendered by book-entry transfer which are address other than the address shown below
not exchanged are to be returned by credit the undersigned's signature.
to an account maintained at DTC.
<S> <C>
Issue to: Mail or delivered to:
Name Name
(PLEASE PRINT) (PLEASE PRINT)
Address Address
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY (TAXPAYER IDENTIFICATION OR SOCIAL SECURITY
NO.) NO.)
Credit Private Notes not exchanged and
delivered by book-entry transfer to DTC
account set forth below:
(ACCOUNT NUMBER)
</TABLE>
<TABLE>
<S> <C>
BENEFICIAL OWNER(S)-- RESIDENCE
STATE OF DOMICILE/PRINCIPAL PLACE OF PRINCIPAL AMOUNT OF PRIVATE NOTES
BUSINESS OF HELD FOR ACCOUNT OF BENEFICIAL
EACH BENEFICIAL OWNER OF PRIVATE OWNER(S)
NOTES
</TABLE>
BENEFICIAL OWNER(S) -- PURCHASER STATUS
The beneficial owner of each of the Private Notes described herein is (check the
box that applies):
/ / A "Qualified Institutional Buyer" (as defined in Rule 144A under the
Securities Act)
/ / An "Institutional Accredited Investor" (as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act)
/ / A non "U.S. person" (as defined in Regulation S of the Securities Act) that
purchased the Private Notes outside the United States in accordance with
Rule 903 or 904 of the Securities Act
/ / OTHER (describe)
- ---------------------------------------------------------------------
- --------------------------------------------------------------------------------
5
<PAGE>
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
Pursuant to the offer by Accuride Corporation, a Delaware corporation (the
"Company"), upon the terms and subject to the conditions set forth in the
Prospectus dated , 1998 (the "Prospectus") and this Letter of
Transmittal (the "Letter of Transmittal"), which together with the Prospectus
constitutes the Company's offer (the "Exchange Offer") to exchange $1,000
principal amount of its 9 1/4% Senior Subordinated Notes due 2008, Series B (the
"Exchange Notes") for each $1,000 principal amount of its outstanding 9 1/4%
Senior Subordinated Notes due 2008, Series A (the "Private Notes"), the
undersigned hereby tenders to the Company for exchange the Private Notes
indicated above.
By executing this Letter of Transmittal and subject to and effective upon
acceptance for exchange of the Private Notes tendered for exchange herewith, the
undersigned will have irrevocably sold, assigned, transferred and exchanged, to
the Company, all right, title and interest in, to and under all of the Private
Notes tendered for exchange hereby, and hereby will have appointed the Exchange
Agent as the true and lawful agent and attorney-in-fact (with full knowledge
that the Exchange Agent also acts as agent of the Company) of such holder of
Private Notes with respect to such Private Notes, with full power of
substitution to (i) deliver certificates representing such Private Notes, or
transfer ownership of such Private Notes on the account books maintained by DTC
(together, in any such case, with all accompanying evidences of transfer and
authenticity), to the Company, (ii) present and deliver such Private Notes for
transfer on the books of the Company and (iii) receive all benefits and
otherwise exercise all rights and incidents of beneficial ownership with respect
to such Private Notes, all in accordance with the terms of the Exchange Offer.
The power of attorney granted in this paragraph shall be deemed to be
irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that (i) the undersigned is
the owner of the Private Notes tendered hereby; (ii) has a net long position
within the meaning of Rule 14e-4 ("Rule 14e-4") under the Securities Exchange
Act as amended equal to or greater than the principal amount of Private Notes
tendered hereby; (iii) the tender of such Private Notes complies with Rule 14e-4
(to the extent that Rule 14e-4 is applicable to such exchange); (iv) the
undersigned has full power and authority to tender, exchange, assign and
transfer the Private Notes; and (v) that when such Private Notes are accepted
for exchange by the Company, the Company will acquire good and marketable title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claims. The undersigned will, upon receipt, execute
and deliver any additional documents deemed by the Exchange Agent or the Company
to be necessary or desirable to complete the exchange, assignment and transfer
of the Private Notes tendered for exchange hereby.
By tendering, the undersigned hereby further represents to the Company that
(i) the Exchange Notes to be acquired by the undersigned in exchange for the
Private Notes tendered hereby and any beneficial owner(s) of such Private Notes
in connection with the Exchange Offer will be acquired by the undersigned and
such beneficial owner(s) in the ordinary course of their respective businesses,
(ii) the undersigned have no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes, (iii) if the undersigned
is a resident of the State of California, it falls under the self-executing
institutional investor exemption set forth under Section 25102(i) of the
Corporate Securities Law of 1968 and Rules 260.102.10 and 260.105.14 of the
California Blue Sky Regulations, (iv) if the undersigned is a resident of the
Commonwealth of Pennsylvania, it falls under the self-executing institutional
investor exemption set forth under Sections 203(c), 102(d) and (k) of the
Pennsylvania Securities Act of 1972, Section 102.111 of the Pennsylvania Blue
Sky Regulations and an interpretive opinion dated November 16, 1985, (v) the
undersigned and each beneficial owner acknowledge and agree that any person who
is a broker-dealer registered under the Exchange Act or is participating in the
Exchange Offer for the purpose of distributing the Exchange Notes must comply
with the registration and prospectus delivery requirements
6
<PAGE>
of the Securities Act in connection with a secondary resale transaction of the
Exchange Notes acquired by such person and cannot rely on the position of the
staff of the Commission set forth in certain no-action letters, (vi) the
undersigned and each beneficial owner understand that a secondary resale
transaction described in clause (v) above and any resales of Exchange Notes
obtained by the undersigned in exchange for the Private Notes acquired by the
undersigned directly from the Company should be covered by an effective
registration statement containing the selling securityholder information
required by Item 507 or Item 508, as applicable, of Regulation S-K of the
Commission and (vii) neither the undersigned nor any beneficial owner is an
"affiliate," as defined under Rule 405 under the Securities Act, of the Company.
If the undersigned is a broker-dealer that will receive Exchange Notes for its
own account in exchange for Private Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes; however, by so acknowledging
and by delivering a prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. A broker-dealer
may not participate in the Exchange Offer with respect to the Private Notes
acquired other than as a result of market-making activities or other trading
activities.
For purposes of the Exchange Offer, the Company will be deemed to have
accepted for exchange, and to have exchanged, validly tendered Private Notes,
if, as and when the Company gives oral or written notice thereof to the Exchange
Agent. Tenders of Private Notes for exchange may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration Date. See "The Exchange
Offer -- Withdrawal of Tenders" in the Prospectus. Any Private Notes tendered by
the undersigned and not accepted for exchange will be returned to the
undersigned at the address set forth above unless otherwise indicated in the box
above entitled "Special Delivery Instructions" as promptly as practicable after
the Expiration Date.
The undersigned acknowledges that the Company's acceptance of Private Notes
validly tendered for exchange pursuant to any one of the procedures described in
the section of the Prospectus entitled "The Exchange Offer" and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Exchange
Offer.
Unless otherwise indicated in the box entitled "Special Issuance
Instructions," please return any Private Notes not tendered for exchange in the
name(s) of the undersigned. Similarly, unless otherwise indicated in the box
entitled "Special Delivery Instructions," please mail any certificates for
Private Notes not tendered or exchanged (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s). In the event that both "Special Issuance Instructions" and
"Special Delivery Instructions" are completed, please issue the certificates
representing the Exchange Notes issued in exchange for the Private Notes
accepted for exchange in the name(s) of, and return any Private Notes not
tendered for exchange or not exchanged to, the person(s) so indicated. The
undersigned recognizes that the Company has no obligation pursuant to the
"Special Issuance Instructions" and "Special Delivery Instructions" to transfer
any Private Notes from the name of the holder of Private Note(s) thereof if the
Company does not accept for exchange any of the Private Notes so tendered for
exchange or if such transfer would not be in compliance with any transfer
restrictions applicable to such Private Note(s).
IN ORDER TO VALIDLY TENDER PRIVATE NOTES FOR EXCHANGE, HOLDERS OF PRIVATE
NOTES MUST COMPLETE, EXECUTE, AND DELIVER THIS LETTER OF TRANSMITTAL.
Except as stated in the Prospectus, all authority herein conferred or agreed
to be conferred shall survive the death, incapacity or dissolution of the
undersigned, and any obligation of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as otherwise stated in the Prospectus, this tender for
exchange of Private Notes is irrevocable.
7
<PAGE>
SIGN HERE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF OWNER(S))
Date
- ---------, 1998
Must be signed by the registered holder(s) of Private Notes exactly as name(s)
appear(s) on certificate(s) representing the Private Notes or on a security
position listing or by person(s) authorized to become registered Private Note
holder(s) by certificates and documents transmitted herewith. If signature is by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, please
provide the following information. (See Instruction 6).
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Capacity (full title)
- -------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Include Zip Code
Principal place of business (if different from address listed above):
- -------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone No. (___)_______________________________________________
Tax Identification or Social Security Nos.
- ------------------------------------------------------
Please complete Substitute Form W-9
GUARANTEE OF SIGNATURE(S)
(SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 1)
Authorized Signature:
- -----------------------------------------------------------------------
Dated:
- --------------------------------------------------------------------------------
Name and Title:
- ---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Name of Firm:
- -----------------------------------------------------------------------------
8
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by an institution
which is (1) a member of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., (2) a commercial bank or trust
company having an office or correspondent in the United States, or (3) an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act which is a member of one of the following recognized Signature
Guarantee Programs (an "Eligible Institution"):
a. The Securities Transfer Agents Medallion Program (STAMP)
b. The New York Stock Exchange Medallion Signature Program (MSP)
c. The Stock Exchange Medallion Program (SEMP)
Signatures on this Letter of Transmittal need not be guaranteed (i) if this
Letter of Transmittal is signed by the registered holder(s) of the Private Notes
tendered herewith and such registered holder(s) have not completed the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (ii) if such Private Notes are
tendered for the account of an Eligible Institution. IN ALL OTHER CASES, ALL
SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
2. DELIVERY OF THIS LETTER OF TRANSMITTAL AND PRIVATE NOTES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed by holders
of Private Notes (i) if certificates are to be forwarded herewith or (ii) if
tenders are to be made pursuant to the procedures for tender by book-entry
transfer or guaranteed delivery set forth in the section of the Prospectus
entitled "The Exchange Offer." Certificates for all physically tendered Private
Notes or any timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth on the cover of this Letter of Transmittal prior to 5:00 p.m.,
New York City time, on the Expiration Date. Holders of Private Notes who elect
to tender Private Notes and (i) whose Private Notes are not immediately
available or (ii) who cannot deliver the Private Notes, this Letter of
Transmittal or other required documents to the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date must tender their Private Notes
according to the guaranteed delivery procedures set forth in the Prospectus.
Holders may have such tender effective if: (a) such tender is made through an
Eligible Institution; (b) prior to 5:00 p.m., New York City time, on the
Expiration Date, the Exchange Agent has received from such Eligible Institution
a properly completed and duly executed Notice of Guaranteed Delivery, setting
forth the name and address of the holder of such Private Notes, the certificate
numbers(s) of such Private Notes and the principal amount of Private Notes
tendered for exchange, stating that tender is being made thereby and
guaranteeing that, within five New York Stock Exchange trading days after the
Expiration Date, this Letter of Transmittal (or facsimile thereof), together
with the certificate(s) representing such Private Notes (or a Book-Entry
Confirmation), in proper form for transfer, and any other documents required by
this Letter of Transmittal, will be deposited by such Eligible Institution with
the Exchange Agent; and (c) a properly executed Letter of Transmittal (or
facsimile hereof), as well as the certificate(s) for all tendered Private Notes
in proper form for transfer or a Book-Entry Confirmation, together with any
other documents required by this Letter of Transmittal, are received by the
Exchange Agent within five New York Stock Exchange trading days after the
Expiration Date.
THE METHOD OF DELIVERY OF PRIVATE NOTES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE
9
<PAGE>
AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NEITHER THIS LETTER OF TRANSMITTAL NOR ANY PRIVATE NOTES SHOULD
BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS
FOR SUCH HOLDERS.
No alternative, conditional or contingent tenders will be accepted. All
tendering holders of Private Notes, by execution of this Letter of Transmittal
(or facsimile hereof, if applicable), waive any right to receive notice of the
acceptance of their Private Notes for exchange.
3. INADEQUATE SPACE. If the space provided in the box entitled "Description
of Private Notes" above is inadequate, the certificate numbers and principal
amounts of the Private Notes being tendered should be listed on a separate
signed schedule affixed hereto.
4. WITHDRAWALS. A tender of Private Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date by delivery of
written notice or facsimile of withdrawal to the Exchange Agent at the address
set forth on the cover of this Letter of Transmittal. To be effective, a notice
of withdrawal of Private Notes must (i) specify the name of the person who
tendered the Private Notes to be withdrawn (the "Depositor"), (ii) identify the
Private Notes to be withdrawn (including the certificate number or numbers and
aggregate principal amount of such Private Notes), and (iii) be signed by the
holder of Private Notes in the same manner as the original signature on the
Letter of Transmittal by which such Private Notes were tendered (including any
required signature guarantees). All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company in its sole discretion, whose determination shall be final and
binding on all parties. Any Private Notes so withdrawn will thereafter be deemed
not validly tendered for purposes of the Exchange Offer and no Exchange Notes
will be issued with respect thereto unless the Private Notes so withdrawn are
validly retendered. Properly withdrawn Private Notes may be retendered by
following one of the procedures described in the section of the Prospectus
entitled "The Exchange Offer -- Procedures for Tendering" at any time prior to
5:00 p.m., New York City time, on the Expiration Date.
5. PARTIAL TENDERS. Tenders of Private Notes will be accepted only in
integral multiples of $1,000 principal amount. If a tender for exchange is to be
made with respect to less than the entire principal amount of any Private Notes,
fill in the principal amount of Private Notes which are tendered for exchange in
column (4) of the box entitled "Description of Private Notes," as more fully
described in the footnotes thereto. In case of a partial tender for exchange, a
new certificate, in fully registered form, for the remainder of the principal
amount of the Private Notes, will be sent to the holders of Private Notes unless
otherwise indicated in the appropriate box on this Letter of Transmittal as
promptly as practicable after the expiration or termination of the Exchange
Offer.
6. SIGNATURES ON THIS LETTER OF TRANSMITTAL, POWERS OF ATTORNEY AND
ENDORSEMENTS.
a. The signature(s) of the holder of Private Notes on this Letter of
Transmittal must correspond with the name(s) as written on the face of the
Private Notes without alternation, enlargement or any change whatsoever.
b. If tendered Private Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
c. If any tendered Private Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter of Transmittal and any necessary or required
documents as there are different registrations or certificates.
10
<PAGE>
d. When this Letter of Transmittal is signed by the holder of the Private
Notes listed and transmitted hereby, no endorsements of Private Notes or bond
powers are required. If, however, Private Notes not tendered or not accepted,
are to be issued or returned in the name of a person other than the holder of
Private Notes, then the Private Notes transmitted hereby must be endorsed or
accompanied by a properly completed bond power, in a form satisfactory to the
Company, in either case signed exactly as the name(s) of the holder of Private
Notes appear(s) on the Private Notes. Signatures on such Private Notes or bond
powers must be guaranteed by an Eligible Institution (unless signed by an
Eligible Institution).
e. If this Letter of Transmittal or Private Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with this Letter of Transmittal.
f. If this Letter of Transmittal is signed by a person other than the
registered holder of Private Notes listed, the Private Notes must be endorsed or
accompanied by a properly completed bond power, in either case signed by such
registered holder exactly as the name(s) of the registered holder of Private
Notes appear(s) on the certificates. Signatures on such Private Notes or bond
powers must be guaranteed by an Eligible Institution (unless signed by an
Eligible Institution).
7. TRANSFER TAXES. Except as set forth in this Instruction 7, the Company
will pay all transfer taxes, if any, applicable to the exchange of Private Notes
pursuant to the Exchange Offer. If, however, a transfer tax is imposed for any
reason other than the exchange of Private Notes pursuant to the Exchange Offer,
then the amount of such transfer taxes (whether imposed on the registered holder
or any other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemptions therefrom is not submitted with
this Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
8. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If the Exchange Notes are to
be issued, or if any Private Notes not tendered for exchange are to be issued or
sent to someone other than the holder of Private Notes or to an address other
than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed. Holders of Private Notes tendering Private Notes by
book-entry transfer may request that Private Notes not accepted be credited to
such account maintained at DTC as such holder of Private Notes may designate.
9. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt), compliance with conditions, acceptance and
withdrawal of tendered Private Notes will be determined by the Company in its
sole discretion, which determination shall be final and binding. The Company
reserves the absolute right to reject any and all Private Notes not properly
tendered or any Private Notes the Company's acceptance of which would, in the
opinion of counsel for the Company, be unlawful. The Company also reserves the
right to waive any defects, irregularities or conditions of tender as to
particular Private Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Private Notes must be
cured within such time as the Company shall determine. Although the Company
intends to notify holders of defects or irregularities with respect to tenders
of Private Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Private Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Private Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in this Letter of
Transmittal, as soon as practicable following the Expiration Date.
11
<PAGE>
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive,
amend or modify certain of the specified conditions as described under "The
Exchange Offer -- Conditions" in the Prospectus in the case of any Private Notes
tendered (except as otherwise provided in the Prospectus).
11. MUTILATED, LOST, STOLEN OR DESTROYED PRIVATE NOTES. Any tendering
Holder whose Private Notes have been mutilated, lost, stolen or destroyed,
should contact the Exchange Agent at the address indicated herein for further
instructions.
12. REQUESTS FOR INFORMATION OR ADDITIONAL COPIES. Requests for information
or for additional copies of the Prospectus and this Letter of Transmittal may be
directed to the Exchange Agent at the address or telephone number set forth on
the cover of this Letter of Transmittal.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF, IF
APPLICABLE) TOGETHER WITH CERTIFICATES, OR CONFIRMATION OF BOOK-ENTRY OR THE
NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED
BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE.
IMPORTANT TAX INFORMATION
Under current federal income tax law, a holder of Private Notes whose
tendered Private Notes are accepted for exchange may be subject to backup
withholding unless the holder provides the Company (as payor), through the
Exchange Agent, with either (i) such holder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 attached hereto, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such holder of Private Notes
is awaiting a TIN) and that (A) the holder of Private Notes has not been
notified by the Internal Revenue Service that he or she is subject to backup
withholding as a result of a failure to report all interest or dividends or (B)
the Internal Revenue Service has notified the holder of Private Notes that he or
she is no longer subject to backup withholding; or (ii) an adequate basis for
exemption from backup withholding. If such holder of Private Notes is an
individual, the TIN is such holder's social security number. If the Exchange
Agent is not provided with the correct taxpayer identification number, the
holder of Private Notes may be subject to certain penalties imposed by the
Internal Revenue Service.
Certain holders of Private Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. Exempt holders of Private Notes should indicate their
exempt status on Substitute Form W-9. A foreign individual may qualify as an
exempt recipient by submitting to the Exchange Agent a properly completed
Internal Revenue Service Form W-8 (which the Exchange Agent will provide upon
request) signed under penalty of perjury, attesting to the holder's exempt
status. See the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 (the "Guidelines") for additional instructions.
If backup withholding applies, the Company is required to withhold 31% of
any payment made to the holder of Private Notes or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
The holder of Private Notes is required to give the Exchange Agent the TIN
(e.g., social security number or employer identification number) of the record
owner of the Private Notes. If the Private Notes are held in more than one name
or are not held in the name of the actual owner, consult the enclosed Guidelines
for additional guidance regarding which number to report.
12
<PAGE>
INSTRUCTION TO REGISTERED HOLDER
FROM BENEFICIAL OWNER
OF 9 1/4% SENIOR SUBORDINATED NOTES DUE 2008
OF ACCURIDE CORPORATION
The undersigned hereby acknowledges receipt of the Prospectus dated ,
1998 (the "Prospectus") of Accuride Corporation, a Delaware corporation (the
"Company") and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Company's offer (the "Exchange
Offer"). Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
This will instruct you, the registered holder, as to the action to be taken
by you relating to the Exchange Offer with respect to the 9 1/4% Senior
Subordinated Notes due 2008 (the "Private Notes") held by you for the account of
the undersigned.
The aggregate face amount of the Private Notes held by you for the account
of the undersigned is (FILL IN AMOUNT):
$_________ of the Private Notes.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
/ / To TENDER the following Private Notes held by you for the account of the
undersigned (INSERT PRINCIPAL AMOUNT OF PRIVATE NOTES TO BE TENDERED, IF ANY):
$_________ of the Private Notes.
/ / NOT to TENDER any Private Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Private Notes held by you for
the account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner of the Private Notes, including but not limited to the
representations that (i) the undersigned's principal residence is in the state
of (FILL IN STATE) ________, (ii) the undersigned is acquiring the Exchange
Notes in the ordinary course of business of the undersigned, (iii) the
undersigned has no arrangement or understanding with any person to participate
in the distribution of Exchange Notes, (iv) the undersigned acknowledges that
any person who is a broker-dealer registered under the Exchange Act or is
participating in the Exchange Offer for the purpose of distributing the Exchange
Notes must comply with the registration and prospectus delivery requirements of
the Securities Act of 1933, as amended, in connection with a secondary resale
transaction of the Exchange Notes acquired by such person and cannot rely on the
position of the Staff of the Securities and Exchange Commission set forth in
certain no-action letters (See the section of the Prospectus entitled "The
Exchange Offer -- Resale of the Exchange Notes"), (v) the undersigned
understands that a secondary resale transaction described in clause (iv) above
and any resales of Exchange Notes obtained by the undersigned in exchange for
the Private Notes acquired by the undersigned directly from the Company should
be covered by an effective registration statement containing the selling
securityholder information required by Item 507 or Item 508, if applicable, of
Regulation S-K of the Commission, (vi) the undersigned is not an "affiliate," as
defined in Rule 405 under the Securities Act, of the Company, and (vii) if the
undersigned is a broker-dealer that will receive Exchange Notes for its own
account in exchange for Private Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes; however, by so acknowledging
and by delivering a prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act; (b) to agree,
on behalf of the undersigned, as set forth in the Letter of Transmittal; and (c)
to take such other action as necessary under the Prospectus or the Letter of
Transmittal to effect the valid tender of Private Notes.
13
<PAGE>
The purchaser status of the undersigned is (check the box that applies):
/ / A "Qualified Institutional Buyer" (as defined in Rule 144A under the
Securities Act)
/ / An "Institutional Accredited Investor" (as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act)
/ / A non "U.S. person" (as defined in Regulation S of the Securities Act) that
purchased the Private Notes outside the United States in accordance with
Rule 904 of the Securities Act
/ / Other (describe) __________________________________________________________
SIGN HERE
Name of Beneficial Owner(s): ___________________________________________________
________________________________________________________________________________
Signature(s): __________________________________________________________________
Name(s) (PLEASE PRINT): ________________________________________________________
________________________________________________________________________________
Address: _______________________________________________________________________
Principal place of business (if different from address listed above): __________
Telephone Number(s): ___________________________________________________________
Taxpayer Identification or Social Security Number(s): __________________________
Date: __________________________________________________________________________
14
<PAGE>
PAYER'S NAME:
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN
THE BOX AT RIGHT
AND CERTIFY BY SIGNING AND DATING Social Security Number
BELOW
FORM W-9 OR
Employer Identification
Number
DEPARTMENT OF THE TREASURY PART 2--Certification Under
Penalties of Perjury, I certify
that:
(1) The number shown on this form PART 3--
is my current taxpayer
identification
INTERNAL REVENUE SERVICE number (or I am waiting for a
number to be issued to me) and
Awaiting TIN / /
PAYER'S REQUEST FOR (2) I am not subject to backup
withholding either because I
have not been
notified by the Internal Revenue
Service (the "IRS") that I am
subject
TAXPAYER IDENTIFICATION to backup withholding as a result
of failure to report all interest
or
dividends, or the IRS has notified
me that I am no longer
NUMBER (TIN) subject to backup withholding.
Certification instructions--You must cross out item (2) in
Part 2 above if you have been notified by the IRS that you
are subject to backup withholding because of
underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you are
subject to backup withholding you receive another
notification from the IRS stating that you are no longer
subject to backup withholding, do not cross out item (2).
SIGNATURE Date
NAME
ADDRESS
CITY STATE ZIP CODE
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
15
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECK THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
<TABLE>
<CAPTION>
PAYOR'S NAME: U.S TRUST COMPANY OF CALIFORNIA, N.A.
<S> <C>
CERTIFICATE OF AWAITING
TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer
identification number has not been issued to me, and either (a)
I have mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b)
I intend to mail or deliver such an application in the near
future. I understand that if I do not provide a taxpayer
identification number within sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld
until I provide such a number.
Signature Date
</TABLE>
16
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
9 1/4% SENIOR SUBORDINATED NOTES DUE 2008
THIS FORM OR ONE SUBSTANTIALLY EQUIVALENT HERETO, MUST BE USED BY ANY HOLDER OF
9 1/4% SENIOR SUBORDINATED NOTES DUE 2008 (THE "PRIVATE NOTES") OF ACCURIDE
CORPORATION, A DELAWARE CORPORATION (THE "COMPANY"), WHO WISHES TO TENDER
PRIVATE NOTES PURSUANT TO THE COMPANY'S EXCHANGE OFFER, AS DEFINED IN THE
PROSPECTUS DATED , 1998 (THE "PROSPECTUS") AND (i) WHOSE PRIVATE NOTES
ARE NOT IMMEDIATELY AVAILABLE OR (ii) WHO CANNOT DELIVER SUCH PRIVATE NOTES OR
ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL ON OR BEFORE THE
EXPIRATION DATE (AS DEFINED IN THE PROSPECTUS) OR (iii) WHO CANNOT COMPLY WITH
THE BOOK-ENTRY TRANSFER PROCEDURE ON A TIMELY BASIS. SUCH FORM MAY BE DELIVERED
BY FACSIMILE TRANSMISSION, MAIL OR HAND DELIVERY TO THE EXCHANGE AGENT. SEE "THE
EXCHANGE OFFER -- GUARANTEED DELIVERY PROCEDURES" IN THE PROSPECTUS.
ACCURIDE CORPORATION
NOTICE OF GUARANTEED DELIVERY
TO: U.S TRUST COMPANY OF CALIFORNIA, N.A., THE EXCHANGE AGENT
<TABLE>
<CAPTION>
BY REGISTERED OR CERTIFIED MAIL: BY HAND DELIVERY:
<S> <C>
c/o United States Trust Company of New York c/o United States Trust Company of New York
P.O. Box Peter Cooper Station 111 Broadway, Lower Level
New York, New York 10276-0841 New York, New York 10006
Attn. Corporate Trust and Agency Services Attn: Corporate Trust and Agency Services
<CAPTION>
BY OVERNIGHT DELIVERY:
<S> <C>
c/o United States Trust Company of New York BY FACSIMILE (FOR ELIGIBLE INSTITUTIONS
ONLY):
770 Broadway, 13th Floor (212) 420-6155
New York, New York 10003
<CAPTION>
Attn: Corporate Trust and Agency Services CONFIRM RECEIPT OF NOTICE OF GUARANTEED
<S> <C>
Confirm by Telephone:
800-255-2398
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to the Company upon the terms and subject to
the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Private Notes specified below pursuant to the guaranteed delivery procedures set
forth under the caption "The Exchange Offer -- Guaranteed Delivery Procedures"
in the Prospectus. By so tendering, the undersigned does hereby make, at and as
of the date hereof, the representations and warranties of a tendering Holder of
Private Notes set forth in the Letter of Transmittal. The undersigned hereby
tenders the Private Notes listed below:
<TABLE>
<CAPTION>
CERTIFICATE NUMBERS
(IF AVAILABLE) PRINCIPAL AMOUNT TENDERED
<S> <C>
</TABLE>
All authority herein conferred or agreed to be conferred shall survive the
death, incapacity, or dissolution of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
<TABLE>
<S> <C>
If Private Notes will be tendered SIGN HERE
by book-entry transfer:
--------------------------------------------
Signature(s)
Name of Tendering Institution: --------------------------------------------
- -------------------------------------------- --------------------------------------------
Name(s) (Please Print)
The Depository Trust Company --------------------------------------------
Account No.: ---------------------------- --------------------------------------------
Address
--------------------------------------------
Zip Code
--------------------------------------------
Area Code and Telephone No.
Date: --------------------------------------
</TABLE>
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in a Recognized Signature Guarantee Medallion
Program, guarantees deposit with the Exchange Agent of the Letter of Transmittal
(or facsimile thereof), together with the Private Notes tendered hereby in
proper form for transfer, or confirmation of the book-entry transfer of such
Private Notes into the Exchange Agent's account at the Depository Trust Company,
pursuant to the procedure for book-entry transfer set forth in the Prospectus,
and any other required documents, all by 5:00 p.m., New York City time, on the
fifth New York Stock Exchange trading day following the Expiration Date (as
defined in the Prospectus).
SIGN HERE
- --------------------------------------------------------------------------------
Name of Firm
- --------------------------------------------------------------------------------
Authorized Signature
- --------------------------------------------------------------------------------
Name (Please print)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
Zip Code
- --------------------------------------------------------------------------------
Area Code and Telephone No.
- --------------------------------------------------------------------------------
Date:
DO NOT SEND CERTIFICATES FOR PRIVATE NOTES WITH THIS FORM. ACTUAL SURRENDER
OF CERTIFICATES FOR PRIVATE NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED
BY, A COPY OF THE PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL.
3
<PAGE>
INSTRUCTIONS
1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by
the Exchange Agent at one of its addresses set forth on the cover hereof
prior to the Expiration Date. The method of delivery of this Notice of
Guaranteed Delivery and all other required documents to the Exchange Agent
is at the election and risk of the Holder but, except as otherwise provided
below, the delivery will be deemed made only when actually received by the
Exchange Agent. Instead of delivery by mail, it is recommended that holders
use an overnight or hand delivery service, properly insured. If such
delivery is by mail, it is recommended that the Holder use properly insured,
registered mail with return receipt requested. For a full description of the
guaranteed delivery procedures, see the Prospectus under the caption "The
Exchange Offer -- Guaranteed Delivery Procedures." In all cases, sufficient
time should be allowed to assure timely delivery. No Notice of Guaranteed
Delivery should be sent to the Company.
2. SIGNATURE ON THIS NOTICE OF GUARANTEED DELIVERY; GUARANTEE OF
SIGNATURES. If this Notice of Guaranteed Delivery is signed by the
registered Holder(s) of the Private Notes referred to herein, then the
signature must correspond with the name(s) as written on the face of the
Private Notes without alteration, enlargement or any change whatsoever. If
this Notice of Guaranteed Delivery is signed by a person other than the
registered Holder(s) of any Private Notes listed, this Notice of Guaranteed
Delivery must be accompanied by a properly completed bond power signed as
the name of the registered Holder(s) appear(s) on the face of the Private
Notes without alteration, enlargement or any change whatsoever. If this
Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person should
so indicate when signing, and, unless waived by the Company, evidence
satisfactory to the Company of their authority so to act must be submitted
with this Notice of Guaranteed Delivery.
3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
Exchange Offer or the procedure for consenting and tendering as well as
requests for assistance or for additional copies of the Prospectus, the
Letter of Transmittal and this Notice of Guaranteed Delivery, may be
directed to the Exchange Agent at the address set forth on the cover hereof
or to your broker, dealer, commercial bank or trust company.
4
